It’s Time to Buy the Uranium Mega-Trend

You’ve heard the narrative and the quotes. 

Best supply-demand fundamentals ever. 

Best supply-demand fundamentals ever.

Either the price goes up or the lights go out. 

Check out our latest free research reports for in depth analysis on specific market trends. View Reports

The pivot to clean energy is the most important trend for the next several decades.

All of that sounds great but how will we know when the next leg – the violent-to-the-upside part – of this bull market really kicks off?

I think there’s been a shot across the bow that few people noticed.

On February 21, 2023, EnCore Energy (TSX-V: EU)(NYSE: EU) announced it had secured its fourth uranium sales agreement with the addition of a purchase sales agreement.

The devil is in the details. The agreement was with a Fortune 500-listed United States utility. That’s a big deal because the utilities are the single-largest consumers of uranium in the world and everyone has been waiting for the utilities to get off the sidelines and start deploying capital.  

This agreement is described as supporting EnCore's business strategy to provide a domestic uranium supply commencing at its 100-percent-owned South Texas in situ recovery (ISR) uranium processing plants.

The uranium sales agreement is a multiyear agreement commencing in 2027. It covers firm deliveries of 650,000 pounds of U308, with an option to acquire up to 400,000 pounds U308 under a two-year extended term, if exercised. 

The sales agreement is based on market pricing with a floor price well above the company's current projected costs of production and an inflation-adjusted ceiling price significantly higher than the current uranium spot market pricing, providing the U.S. with assurance of domestic supply along with cost certainty.

It’s interesting that the company – likely at the utility’s request – declined to specify what that floor price is but I will speculate that it is much higher than the current spot price of just over $50/lb.

Check out our premium publications for more trading recommendations and exclusive coverage on the markets. View Publications

I’ll also speculate that this is the first of many utilities stepping in and starting to secure future uranium supply at much higher prices. 

The cost input to the utilities is minimal and supply is more important than price.

These are the best supply-demand fundamentals ever in the uranium space.

Either the price goes up or the lights really do go out. 

And yes, the pivot to clean energy is the most important trend for the next several decades.

I plan on doing with uranium what I’ve done with lithium, position and reap significant profits from the clear mega trend that’s before us.

Gerardo Del Real

Gerardo Del Real
Editor, Daily Profit Cycle