Mike Fagan,
Editor
Oct. 13, 2022
With markets and asset classes across-the-board continuing to crater… it can be pretty easy to miss the very few market bright spots out there.
Uranium is absolutely one of them!
After a decade-long bear market post-Fukushima, uranium is back in the spotlight as being integral to a cleaner energy future for our planet.
Leaders around the world… who, let’s face it, rarely agree on anything... are finally coming to the realization that achieving carbon neutrality is simply not possible without nuclear.
Nuclear energy is an essential and reliable zero-carbon technology that directly displaces fossil fuels and supports the growth of renewables by providing critical baseload to our grids.
That’s why we’ve been seeing the price of uranium tick upward over the last few years from US$25 per pound to currently right around US$50 per pound… with plenty of runway left.
The positive headlines are everywhere you look. Just recently, we’ve seen at least ten developed countries make a complete reversal on their views of nuclear power from sheepishly negative to energetically positive.
I won’t go into all of them right now… but it all has to do with a concerted global focus on decarbonization and energy security.
Perhaps the most poignant example, Russia’s invasion of Ukraine has seen Putin unleash an unrelenting weaponization of fossil fuels against his peaceful neighbors.
His wanton aggression and “war of choice” have plunged the European continent into its worst energy crisis in more than half a century.
As a result, we’re now having to deal with negative headlines like this one:
“Two subsea pipelines — Nord Stream 1 and 2 — connecting Russia to Germany are at the center of international intrigue after a series of blasts caused what might be the single largest release of methane in history.”
The two largest detected explosions — measuring 2.3 and 2.1 on the Richter scale — triggered massive gas leaks at four locations: two in Denmark’s exclusive economic zone and two in Sweden’s exclusive economic zone.
The signature of the gas bubbling to the surface of the Baltic Sea — in what amounts to an environmental crime of historic magnitude — can literally be seen from space.
The general consensus is sabotage with most fingers pointing directly at the Kremlin — and for obvious reasons.
With zero controls on Putin and no end to the war in sight, the need for nuclear power has never been more apparent as energy insecurity is now reaching a fever pitch across the European continent with winter looming in the background.
France’s economy minister recently doubled down on the need for a top-to-bottom overhaul of the electricity market saying, “there is no energetic transition without nuclear energy.”
Germany has also done a complete about-face with regard to nuclear… admitting that nuclear power needs to be a part of the country’s energy mix going forward.
Major economies around the world — including China, India, and the UK — are building or have announced plans to construct new nuclear plants.
Even Japan is planning on restarting up to 17 of its reactors by summer 2023 with additional plans to build new next-generation nuclear plants.
The same is true in the United States, which is constructing next-generation reactors and already gets about half its clean energy from nuclear.
We’re also seeing a major consolidation in the uranium space, including industry-leader Cameco’s [in partnership with Brookfield Renewable Partners] US$7.9B acquisition of Westinghouse Electric earlier this week.
The landmark acquisition makes a lot of sense: Cameco sits at the front-end of the nuclear cycle with a focus on uranium mining and conversion while Westinghouse produces and supplies nuclear fuel to nearly half of the light-water nuclear reactors around the world.
Naturally, with any commodity that’s suffered through a prolonged bear market — and where there’s been stark underinvestment in mining — you have to start looking at supply and demand.
With uranium, what we arrive at is a market that’s consuming close to 200 million pounds of uranium annually — yet producing only around 135 million pounds.
That equates to a 65-million-pound structural deficit this year… which, when compounded over the next seven or eight years to the end of the current decade, balloons to a jaw-dropping 400 million-plus pounds.
Those are staggeringly large numbers… and they underpin the need for new uranium sources reaching the supply chain through — you guessed it — boots-on-the-ground exploration and mining!
And that means the best-positioned uranium exploration and development companies — especially those in Tier-One mining jurisdictions such as the US and Canada — are poised to deliver outsized returns in the months and years ahead.
We’ve identified an under-the-radar uranium firm that’s amassed an industry-leading pipeline of exploration and development-stage projects across the western United States with combined resources of nearly 100 million pounds of U3O8.
In fact, our own Gerardo Del Real of Junior Resource Monthly has been chronicling this company’s impressive ascension ever since its Q1 2022 acquisition of one of his other uranium stock winners.
Again, with so few bright spots in the market these days, foresighted investors are turning their attention to the junior uranium space. These are the small, nimble companies that explore for and develop the world’s next uranium mines.
With uranium prices having nowhere to go but up… you’ll want to learn about this timely clean-energy opportunity.
Mike Fagan
Editor, Daily Profit Cycle