Mike Fagan,
Editor
March 24, 2022
Many investors are wondering if they’ve missed out on the current uranium upswing with many uranium exploration and development stocks already doubling in value over the last six or so months.
The short answer is… absolutely not!
The bottom line is that countries around the world — including the United States — are quickly realizing that relying on rogue nations for one’s energy needs is a losing bet.
Obviously, Russia’s invasion of Ukraine is hastening that realization in terms of oil and natural gas imports to a multitude of European nations.
The same is happening in the global uranium space.
We just saw Germany reverse course on its prior intent to move away from nuclear energy. The Belgium government is similarly taking measures to extend the lives of its two newest nuclear reactors by up to 10 years in light of Russia’s aggression. And China has announced plans to build 150 new nuclear reactors over the next 15 years.
Hence, it’s clear that reliable, baseload, carbon-emission-free nuclear energy — powered by uranium — will play an ever-increasing role in the decarbonization of our planet for the foreseeable future.
And that undeniable reality is placing increased demand on uranium, or U3O8, while supply remains constrained.
Over the next ten years, the world will need more than 200 million pounds of uranium annually. But there is only about 150 million pounds per year globally with all-in sustaining costs (AISC) below US$50 per pound — and 20% or more of that has been knocked offline because of COVID-related disruptions.
Most people don’t realize that the United States used to produce all the uranium it needed. That was back in the 1960s through the 1980s. At our peak, we produced over 40 million pounds annually.
Today, that figure has plummeted to less than 1 million pounds per annum… so basically zilch.
We’ve instead opted for a precarious reliance on nations like Kazakhstan and Uzbekistan — both former soviet republics — along with Russia, for a substantial portion of our uranium requirements.
Of course, Kazakhstan, the world’s largest uranium producer, erupted into what’s now being dubbed ‘Bloody January’ to start the new year… and we’re all watching Putin’s war in absolute horror.
The writing’s on the wall: We can no longer afford to rely on countries of that ilk for our uranium requirements. And, to that end, we’re beginning to see signs of a sustainable return to the days when we produced all the U3O8 we needed from American soil.
In fact, just last week, senators from multiple states introduced a bill to ban American imports of Russian uranium to punish Moscow for its invasion of Ukraine. That bill comes as the Biden administration weighs sanctions on Russian nuclear power company Rosatom — a major supplier of fuel and technology to power nuclear plants around the globe.
Senator John Barrasso from Wyoming, who introduced the bill, said, “Banning Russian uranium imports will further defund Russia’s war machine, help revive American uranium production, and increase our national security.”
Fellow Wyoming senator Cynthia Lummis added, “It is absolutely imperative that we cut off all Russian imports, including uranium. Every dollar we send to Russia is a dollar used to continue to attack innocent people in Ukraine. Wyoming has more than enough uranium to fill this gap, and we can mine it in a more environmentally friendly and safe way.”
From a resource speculator’s viewpoint, a key takeaway here is reviving American production. And if you’ve been watching the uranium space lately, then you know that the price of uranium has risen sharply this year — reaching an 11-year high above US$60 per pound earlier this month.
And that’s an important price threshold as it marks the minimum requirement for economically viable North American production. It also means we could see much higher uranium prices in the coming months and years — possibly as high as US$200/lb as US production takes off.
Those lucky enough, or astute enough, to have been properly positioned during the previous uranium boom — pre-Fukushima 2012 — know just how fast and how high small-cap uranium equities can rise in the right market environment.
It’s all repeating now… including the recent and highly successful launch of the Sprott Physical Uranium Trust right here in the USA.
So no… you haven’t missed the boat on investing in uranium stocks.
In fact, just the opposite is true. It’s still early, early days in the current uranium bull market… and we have one small-cap uranium explorer that’s positioning to corner the US market.
Timing is everything in the junior resource space… and the time to position in uranium is now.
Mike Fagan
Editor, Daily Profit Cycle