Uranium Developers on Demand and Supply Constraints in the Strengthening Bull Market

• The uranium market is poised for significant growth driven by increasing demand from nuclear energy and constrained supply, creating a compelling opportunity for investors.
• Several US-focused uranium companies who attended PDAC, including Myriad Uranium, GTI Energy, IsoEnergy, Premier American Uranium, and Energy Fuels, are advancing high-quality projects in stable jurisdictions with the potential for strong returns.
• These companies are making progress on key milestones such as resource expansion, economic studies, and production readiness, providing potential catalysts for share price appreciation.
• Geopolitical factors, including a focus on domestic energy security and reducing dependence on foreign sources, are creating additional tailwinds for the US uranium industry.
• While risks remain, a diversified portfolio of quality uranium developers offers investors leverage to rising uranium prices and the opportunity to participate in the global shift towards clean nuclear energy.

The uranium market is poised for significant growth in the coming years, driven by the convergence of several powerful trends. Nuclear energy, fueled by uranium, is experiencing a global renaissance as countries seek reliable, low-carbon energy sources to meet rising electricity demand while reducing greenhouse gas emissions.

At the same time, uranium supply is likely to struggle to keep pace with this growing demand, setting the stage for a sustained period of higher uranium prices. For investors, the uranium sector offers a compelling opportunity to gain exposure to the clean energy transition while also potentially capturing outsize returns.

The Nuclear Renaissance and Rising Uranium Demand

Nuclear power is a critical component of the global shift towards cleaner energy sources. As countries around the world set increasingly ambitious decarbonization targets, many are turning to nuclear as a reliable source of baseload electricity generation. China, for example, plans to build 150 new reactors over the next 15 years, while India aims to increase its nuclear power capacity nearly 10-fold by mid-century. In the United States and Europe, existing reactors are seeking extensions to their operating lives.

This nuclear renaissance is driving significant growth in uranium demand. The World Nuclear Association estimates that global uranium demand will increase by nearly 60% by 2040 in its base case scenario, and could more than double in the high case. Even if only a portion of proposed new reactors are built, uranium demand is set to increase steadily for the foreseeable future.

Constrained Uranium Supply

While demand for uranium is undoubtedly rising, the supply side of the equation faces significant challenges in the coming years. Uranium prices have been depressed for much of the past decade following the Fukushima disaster in 2011, leading to years of underinvestment in new mine supply.

Major uranium producers like Cameco and Kazatomprom have cut production in recent years, with Cameco even resorting to buying material on the spot market to fulfill its contracts. Many industry insiders believe these supply cuts are insufficient to meet rising demand, and that new mines will be needed. However, the long lead times and high capital costs associated with new uranium developments mean any increase in mine supply will take time to materialize.

Denison Mines

Denison Mines (TSX:DML) is a Saskatchewan-focused uranium mining, development, and exploration company advancing the Wheeler River Project, with its Phoenix deposit set to become Canada's first in-situ uranium mine targeting production in the first half of 2028. The company has systematically de-risked the project technically since 2019 and is in the final stages of regulatory approval, with CNSC hearing dates scheduled for October and December 2025.

Phoenix is expected to produce between 7-9 million pounds of uranium annually during its first five years and 3-5 million pounds annually in the latter five years of its mine life, with potential for the Griffin deposit to add another 9 million pounds annually for six more years. Denison has a strong balance sheet with no debt, positioning it to minimize equity dilution as it moves toward construction, which could begin in 2026 following regulatory approval.

"To think that we will have this enormous Supply response is, I think, naive. We will have less response than people believe if they look at all of the different reports and pitches from all the different companies doing their best."

Premier American Uranium

Colin Healey, CEO of Premier American Uranium, sees the market giving little recognition to the strong uranium fundamentals:

"We're in an extremely bullish scenario for uranium. We're looking at some of the best fundamentals in the uranium sector since post Fukushima."

Regarding the US uranium landscape, CEO Colin Healey noted,

"New Mexico is historically the fourth largest uranium producing jurisdiction in the world. [Premier American Uranium] company is focused on private land in the Grants Mineral Belt with nearly 350 million pounds of historic production."

Premier American Uranium is consolidating US uranium projects, anchored by its 23.5 million pound deposit on private land in New Mexico. A preliminary economic assessment is underway, with potential production of 1 million pounds annually. PUR is also advancing the Cyclone project in Wyoming, with successful 2024 drilling and permits in place for a 2025 program.

Energy Fuels

Energy Fuels is building a comprehensive critical minerals portfolio spanning uranium production, rare earth processing and heavy mineral sands development. The company is the leading US uranium producer, with several mines and the only operating conventional mill in the country.

President and CEO Mark Chalmers highlighted the company's technical achievements at its White Mesa Mill:

"We built a plant for $20 million where most people to build that equivalent plant would have been hundreds of millions of dollars."

"So many people told us it was going to take perhaps years to troubleshoot that circuit, and in one week we were making on-spec material in NdPr."

Energy Fuels is advancing three major projects toward final investment decisions in the next 12-18 months positioning itself as a key player in addressing U.S. critical minerals security, with plans to meet 50% of the nation's rare earth needs in addition to uranium production.

Myriad Uranium

Myriad Uranium is advancing two high-quality projects in the US, including the Copper Mountain project in Wyoming with a historical resource of 15-30 million pounds and significant exploration upside. The company recently confirmed high-grade mineralization at Copper Mountain and has doubled its land position, potentially adding another 10-20 million pounds.

The company's newly acquired Red Basin project in New Mexico hosts a historical resource of 1.5-6.5 million pounds of shallow, high-grade uranium. The company is taking a systematic, low-cost approach to expanding these resources.

As CEO Thomas Lamb explains, "There's a lot of equity incentive - that's the foundational sort of incentive for us as management. We want to build up a company as efficiently as we can, with lots of uranium, so that when the liquidity event happens, when the market gets moving again, we have the big upside and really move, especially relative to our peers."

GTI Energy

GTI Energy is focused on in-situ recovery (ISR) uranium projects in Wyoming's uranium-rich region. The company's key Lo Herma project hosts an 8.57 million pound resource, comparable to other economic projects in the area. Technical work, including successful metallurgical and permeability testing, is complete for a feasibility study due in the coming months. GTI is considering multiple strategic options, including developing Lo Herma as a standalone operation or as a satellite deposit.

Despite current market challenges, Executive Director Bruce Lane remains optimistic about the longer-term outlook,

"We know the Japanese will be in the [uranium] market, we know the Koreans will be in the market, the Chinese are in the market, so it is going to unfreeze at some point."

IsoEnergy

IsoEnergy offers exposure to a diversified portfolio of uranium assets across Canada, the US and Australia. The company's flagship Hurricane deposit in Canada's Athabasca Basin is the focus of current expansion drilling. In the US, IsoEnergy's past-producing Tony M mine in Utah provides near-term production optionality. The company also controls the Coles Hill project in Virginia, the largest undeveloped uranium deposit in the US at 160 million pounds.

CEO Philip Williams sees IsoEnergy as more than just a pure-play uranium company:

"In the uranium space, single asset, single jurisdiction companies are inherently more risky and very hard to navigate. Our approach is to have a portfolio diversified by geography, diversified by deposit type, diversified by stage of development."

Geopolitical Tailwinds

Geopolitical factors are creating additional momentum for uranium prices, particularly in the United States. Russia's invasion of Ukraine and the subsequent global energy crisis have brought energy security to the forefront. The US and its allies are seeking to reduce dependence on Russian energy while also securing domestic critical mineral supply chains, including uranium.

The Biden administration has voiced support for the nuclear industry and has proposed a national strategic uranium reserve to support domestic producers. There are also bipartisan legislative efforts to implement purchasing quotas requiring US utilities to buy American-mined uranium. These initiatives would accelerate development of US uranium projects.

The Investment Opportunity in Uranium Developers

For investors looking to gain exposure to the emerging bull market in uranium, US-focused developers offer significant potential. These companies are advancing low-cost, scalable projects in stable jurisdictions at a time when the sector is just beginning to recover.

Many developers are trading at deep discounts to their underlying asset values, despite making steady progress on their projects. As the broader market begins to appreciate the strength of the uranium fundamentals, these stocks could offer asymmetric returns.

Energy Fuels' CEO Mark Chalmers sees the uranium market bifurcating, with utilities willing to pay much higher term prices compared to the spot market:

"The price of uranium at the true replacement value. You got to find that pound, you got to permit that pound, you got to build that project, and you've got to produce it and you got to reclaim it, and right now at $65, it's nowhere close to replacement value."

However, uranium investing is not without risks. These are generally small, pre-revenue companies that will require ongoing capital to advance their projects. They may be vulnerable to volatility in the broader commodity markets. Permitting and other development risks can also impact company valuations.

The key for investors is to identify companies with quality assets, experienced management teams, and sufficient capital to weather any short-term volatility. By taking a portfolio approach and performing thorough due diligence, investors can position themselves for outsize potential returns as the uranium bull market plays out in the coming years.

The Investment Thesis for Uranium

• Nuclear energy is critical for global decarbonization goals, driving demand growth.
• Mine supply is likely to be constrained after years of low prices and underinvestment.
• Geopolitical factors favor increased US uranium production for energy security.
• Uranium equities offer leverage to rising prices and asymmetric return potential.
• Focus on developers with quality US assets and potential near-term catalysts.
• Consider a portfolio approach to manage development and permitting risks.
• Position for the long-term as uranium bull market is likely in early innings.

Key Takeaways

The uranium sector is in the early stages of a potentially sustained bull market as rising demand from nuclear power collides with supply constraints after a decade of underinvestment. Geopolitical factors are creating additional tailwinds, with governments supporting domestic production for energy security. US uranium developers offer investors exposure to this opportunity through high-quality projects in stable jurisdictions. However, risks remain, and investors should be prepared for volatility. Taking a diversified approach and focusing on companies with experienced teams and quality assets is key. The upside potential is significant for those willing to do the work and take a long-term view.