Uranium Outlook Extremely Positive at Key Industry Conference

• Uranium conference provides positive outlook for uranium market and prices
• Supply side seen as perilous; existing operations have issues, new projects not coming online quickly
• $76 spot price seen as lagging indicator; resistance will push price higher
• Advanced developers like Bannerman Energy face challenges getting projects financed and operating
• Overall mood very confident in uranium sector fundamentals and future growth

The recent Global Uranium Conference in Adelaide offered an overwhelmingly positive outlook on the uranium market from key industry executives and analysts. With uranium prices rising to $76 per pound, participants see further gains ahead as the market transitions from years of oversupply to mounting deficits. However, the sector faces serious challenges around bringing new production online to meet growing demand.

Conference attendee Brandon Munro, CEO of Bannerman Energy, described an upbeat mood around sharing insights into uranium supply and demand fundamentals. He characterized the market as transitioning to a sellers' market but not quite there yet. Supplies are extremely tight, with existing operations facing problems and new projects slow to start up. However, producers feel little pressure to lock in contracts. The lagging uranium price has upside room to run.

Uranium Conference Provides Upbeat Outlook Amid Market Transition

On the perilous supply side, Munro noted, "The picture really emerged in this conference...that there's fragility associated with the supply picture that a casual observer of this sector would not understand." He highlighted issues at major mines like Cigar Lake and Kazatomprom, along with the lack of advanced projects ready to fill the gap. "It's multi-layered," Munro emphasized about the layers of potential disruption.

Market analyst James Wood of Regal Funds Management summed it up from an investor perspective, saying, "I don't even watch analyst price decks....I look at money flows, your 15-day moving average is so much more important to me being a long-short fund than what it’s going to be in five years' time."

Growing Demand Amid Falling Supplies

The uranium market is undergoing a major transition after years of oversupply led prices to collapse from nearly $140 per pound before Fukushima to around $20. With most mines losing money at low prices, exploration and development stalled.  Meanwhile, demand kept growing as nuclear power expanded globally, and utilities worked through excess inventories.

Now the market is flipping into undersupply. World reactor demand requires about 205 million pounds of U3O8 annually, but mines only produce about 130 million pounds. The shortfall increasingly relies on stockpiles and secondary supplies that are shrinking. Global consumption is expected to rise another 23% by 2030.

Existing mines face mounting challenges with grades declining. Top producer Kazatomprom cut 20% of production through 2023. Flooding halted Cameco's Cigar Lake mine. Several operations face political headwinds. On the demand side, the energy crisis and focus on energy security are spurring more support for nuclear. Japan plans to restart reactors. Nuclear growth targets are increasing in China and elsewhere in Asia. Europe's power crisis highlights the risks of relying on gas. Yet new mines will take years to develop. Market analyst Fraser McLoud of SHA Partners observed, “There’s very little downside risk, it’s all upside risk based on potential everywhere for supply destruction.”

The Lagging Spot Price

Today's rising spot price may appear to signal a balanced market, but experts see it as a lagging indicator with more upside ahead. Uranium prices tend to move in cycles, overshooting to the downside during surplus, and then rebounding higher in deficit markets. The lows reached nearly $18 per pound exceeding the true cost of production for most mines.

Now the spot price has rebounded 150% from recent lows to $76, but remains well below the ~$95 breakeven for new projects. Justin Chan of HCWB predicted uranium could reach $100 in 2024. With thin inventory cushions, any supply shocks could spike prices rapidly higher as utilities scramble to lock in contracts.

Buy Now

Munro also cautioned about reading too much into the spot price, commenting, "There is so much inbuilt resistance amongst market participants in this sector that if they're printing $76, it's a lagging indicator that clearly it's going to go higher." Many analysts see $80-$90+ as likely in coming years, if not months, on the way toward incentivizing new production.

Developers Face Financing Hurdles

Junior developers applauded the improving market, but still face challenges getting projects financed and built. With buoyant sentiment, speculation is increasing around which companies may reach production first. However, very few are shovel-ready to immediately benefit from higher prices.

Boss Energy appears best positioned to restart the Honeymoon mine in Australia in late 2023. Lotus Resources aims to refurbish Kayelekera in Malawi in 2025. In the US, the Dewey-Burdock and Reno Creek projects could come online around 2025-26. Among other candidates, Peninsula Energy is permitting a low-cost ISR expansion in the US, while Bannerman Energy awaits a development decision on Etango in Namibia.

But projects require major capital. Bannerman’s CEO Munro noted, “We’ve got two restarts that are coming up really soon...but beyond that, yeah there's a lot of people who are saying ‘Don’t worry...you'll see those greenfields projects come rushing into the market.’ There’s nothing to be seen, it’s crickets.”

While development timelines remain uncertain, Husab stands out as one of the few major mines built in recent decades, with ramp-up only completed in 2021. Most forecast a widening supply-demand gap opening up later in the decade before new projects can be financed and built. That suggests the risk of sharp future price spikes remains elevated.

Bannerman Energy offers exposure to a large, advanced uranium project

• Flagship Etango project could be a low-cost open pit uranium mine producing 7-10 million lbs per year
• One of the world’s largest undeveloped uranium deposits with ore for 20+ year mine life
• Located in mining-friendly Namibia, a top uranium jurisdiction
• Robust project economics at $55/lb uranium suggest strong margins at current prices
• Completed feasibility study and pilot plant test work de-risk the project
• Debt financing is expected to fund 70-80% of the initial capex requirement
• Current focus is securing off-take agreements with utilities at suitable pricing
• The management team has a track record of funding and developing projects
• Recent capital raise boosted cash position to advance development
• With all permits in place, Bannerman is poised to make a Final Investment Decision when market conditions signal

The uranium market appears positioned for further gains with the spot price settling above the $75 level in a transition toward a seller's market. However, new mine supply will take time to respond to the growing deficit, keeping supplies tight amid rising demand. Juniors like Bannerman Energy with advanced assets stand ready to help close the widening gap when prices reach profitable levels, but financing and constructing new capacity remains challenging. With limited projects ready to move forward, the onus falls on existing producers to boost output if possible. However, with elevated risks of supply shortfalls, the uranium market likely faces continued volatility in the transition period ahead.

Uranium companies that make the grade:

American Lithium

American Lithium is developing large-scale lithium projects in Nevada and Peru as well as one of the world's biggest uranium projects, with the goal of playing a major role in the transition to sustainable energy. The company's assets are the advanced-stage TLC lithium project in Nevada and the Falchanilithium project in Peru, which have robust preliminary economic assessments. American Lithium also owns the Macusani uranium project in Peru, which has seen significant historical development. With assets at various stages of feasibility and feasibility studies, American Lithium is positioned to be a major player in lithium and uranium mining.

Bannerman Energy

Bannerman Energy is an Australian uranium development company focused on advancing its flagship 3.5Mlb pa open pit uranium project in Namibia, a major global uranium producer. Bannerman is currently working on Front End Engineering and Design (FEED) and financing for the Namibia project. The company also holds a significant 41.8% stake in Namibia Critical Metals, developer of the large-scale Lofdal heavy rare earths project in Namibia, one of only a few heavy rare earth deposits outside China.

Energy Fuels

Energy Fuels is the largest uranium and advanced rare earth element producer in the United States. The company has significant uranium production capacity and long-term sales contracts with U.S. nuclear utilities that it expects to fulfil starting in 2023-2024. Energy Fuels is also quickly moving to establish a domestic rare earth element supply chain, with plans to produce high-value separated REE oxides by late 2023 or early 2024. The company additionally produces vanadium when conditions warrant, recycles materials to recover uranium, vanadium and medical isotopes, and is advancing capabilities for medical isotope production. Overall, Energy Fuels is a major U.S. producer of strategic minerals like uranium and rare earth elements that are critical for energy, technology, and medical applications.

Global Atomic

Global Atomic Corporation is a publicly traded company with two main divisions - a Uranium Division that is developing the large, high-grade Dasa uranium project in Niger, which is now fully permitted with excavation underway, and a Base Metals Division that holds a 49%stake in a zinc production joint venture in Turkey operated by Befesa. The joint venture recycles Electric Arc Furnace Dust to produce zinc oxide concentrate sold to zinc smelters globally. Global Atomic’s unique combination of uranium production and cash-flowing zinc operations positions it well for growth.

Latitude Uranium

Latitude Uranium is focused on advancing its flagship high-grade Angilak uranium project in Nunavut, which hosts a 43.3Mlb inferred resource open for expansion, as well as exploring its large land position in the uranium-prospective Central MineralBelt in Labrador. With a well-funded $12M exploration program planned in 2023,an experienced management team, and development potential at Angilak along with exploration upside at the CMB projects, Latitude Uranium is positioned as an emerging uranium exploration and development company in Canada.

Ur-Energy

Ur-Energy is a U.S. uranium mining company well positioned to benefit from rising uranium prices driven by growing demand for nuclear power. Within-situ recovery operations in Wyoming, Ur-Energy has been producing from its Lost Creek facility since 2013 and can now effectively double its licensed annual production capacity to 2 million pounds with its permitted Shirley Basin project. With over $70 million in cash, Ur-Energy is funded to ramp up low-cost production from its Wyoming hub as it restarts wellfield construction. The company utilizes mining methods with a light environmental footprint and is advancing next-generation technologies to further reduce costs. If uranium prices continue strengthening, Ur-Energy offers leverage as an experienced producer with scalable, permitted projects in a rising uranium market.