Yellowcake Rising

Nuclear Resurgence Driving 
Unprecedented Demand for Uranium

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.

Rising energy costs, power shortages, climate change initiatives, and blows to energy security worldwide are driving the narrative for the mass adoption of emission-free nuclear power.

As it stands now, nuclear power is set to work alongside renewables — such as wind, solar, and hydro — to help countries become more energy-independent.

The role nuclear is set to play will be critical not only in moving away from fossil fuels in the crucial fight against climate change but also in ensuring power generation is secure and not something that can be changed at the behest of a few bad actors.

The nuclear revival we’re bearing witness to today is setting up to be historic and has already kicked off a new uranium bull market that could last for years — if not decades.

Existing companies in the energy production sphere are transitioning to nuclear power technologies, and new companies that deal in advanced nuclear technologies are popping up at the same time.

The nuclear industry as a whole is set to thrive as demand for next-generation nuclear reactors and Small Modular Reactors (SMRs) continues to grow, and that growth is translating to increased demand for the one fuel source that powers nuclear fission — uranium.

Over the past few years we've seen investment in uranium miners take off alongside investment in the related technologies.

With nuclear power coming back in favor from Europe to North America to Asia, uranium — which is already in a structural deficit — is going to be one of the most highly sought-after resources on the planet in the coming years.

It’s yet another case study of supply being controlled by nations — such as Russia, Kazakhstan, Uzbekistan, China, and Namibia — that aren’t always on good terms with the rest of the developed world.

That’s why countries like the US, Canada, France and others are looking for safe and secure uranium sources in tier-one mining jurisdictions.

A new nuclear renaissance is a global megatrend that’s set to drive substantial gains for foresighted investors who understand the market dynamics and the powerful tailwinds that are now underway.

This Special Report details those converging forces and the best ways to safely invest in the nuclear energy and uranium sectors.

 

Yellowcake Rising!

The profound double-impact of COVID-19 and Russia’s invasion of Ukraine on the global uranium market, coupled with a renewed acceptance of nuclear as “clean, emission-free, reliable energy” kicked off events that led to the uranium spot-price — and related equities and ETFs — ratcheting higher.

Since 2021, the price of uranium — or “yellowcake” as it is commonly referred — has more than tripled, from below $30 to over $100 per pound.

The world needs ~200 million pounds of uranium annually. But current production is only around 160 million pounds.

Demand continues to increase over the next 10 years, but the existing uranium mines cannot keep up and supply actually falls in the 2030s.

To fix this, countries around the world are throwing billions of dollars at the problem and committing themselves to mine more uranium. In the United States, the government has implemented nuclear and uranium incentives that were made law upon the signing of the Inflation Reduction Act in 2022. That bill had $369 billion in climate provisions that are rolling out now, including:

• Production tax credits for existing nuclear reactors
• Incentives to bring next-generation reactors online
• $700 million to support the domestic supply chain for high-assay low-enriched uranium

In 2024, the Biden administration announced several new steps to bolster the domestic nuclear industry. That includes banning Russian uranium imports and making billions of dollars available to jumpstart new enrichment capacity. You can see the measures being taken here.

Globally, governments are committing to nuclear energy in a big way as well. At the UN climate conference in Dubai in 2023 more than 20 nations, including the United States, France, Japan and the UK, made a significant commitment to triple global nuclear energy generation by 2050.

But for that to be even remotely possible, increased uranium production must start today.

 

A Miniscule Market with
Immense Leverage to Rising Prices

One key aspect of the uranium market that investors need to understand is that it’s incredibly small as compared to most other commodities markets.

Kazakhstan alone produces roughly 45% of global supply. It does this through Kazatomprom, its national uranium company, which listed 25% of its shares on the London Stock Exchange in 2018. 

Those shares have a market capitalization of nearly US$10 billion.

The next largest public pure-play is Cameco (NYSE: CCJ), which produces ~10% of annual global supply and has a market capitalization of around US$20 billion.

In other words, more than half of the world’s uranium production is represented by around US$30 billion in market cap. In contrast, Amazon alone has a market capitalization of around US$1 trillion!

From there, the pure-plays get small very quickly. The “largest” uranium producer in the United States, for example, is Energy Fuels (NASDAQ: UUUU).

Largest is in quotes given it will likely produce less than 500,000 pounds of U₃O₈ this calendar year. Its market cap is around US$1 billion but has mostly been below that for years.

Hence, the uranium world is incredibly small, which is why even slight inflows into the sector can create such stark leverage reflected in the equities.

 

Utilities: A Major Contracting Cycle Underway

The biggest and most important buyers in the uranium space are the utilities. And here’s where it gets really interesting.

For years, the utilities have been able to lock-in uranium supplies at depressed prices.

That has now changed.

The combination of a supply deficit and utilities coming back into the market will create what many experts agree will be the greatest uranium bull market anyone has ever seen.

You see, for utilities, price is secondary to securing supply. That’s because the price they pay for yellowcake makes up a very small portion of the total cost of operating a nuclear reactor.

And for mine start-ups and restarts to be economic, uranium prices need to be north of US$70 per pound. That’s the low-water-mark incentive price to build a new uranium mine in today’s economy.

And that means we’re almost guaranteed to see higher contract prices in the near-term.

That’s why uranium bull markets are so powerful. It’s also why the profits can be so life-changing.

Whether the utilities pay US$75 per pound or US$150 per pound… THEY HAVE TO BUY.

With nuclear power providing some 15% of global baseload clean electricity… either the utilities buy uranium at higher prices… or the lights go out!

The utilities’ last major contracting cycle was in 2010. And when you look at the levels of uncovered reactor requirements starting next year and the year after that... every year, it gets larger and larger.

Not only is the biggest buyer starting to come back into the market… but governments that just years ago vowed to move away from nuclear energy are now realizing that there isn’t a cleaner, safer, more economic option in the world.

 

The World’s Largest Economies
Are Driving Uranium Demand

From North America to Europe to Asia… world leaders are coming to the stark realization that efforts to cool the planet through the attainment of net-zero emissions by 2050 is simply not going to be feasible without carbon-emission-free nuclear energy being an integral part of the global energy mix.

The global climate crisis — caused by the release of harmful fossil fuel emissions into the atmosphere — has reached such a tipping point that countries like Switzerland are now resorting to covering their precious glaciers with blankets during the summer months to slow the rate of ice melt!

They’re also quickly understanding that depending on unstable foreign regimes — like Russia and Kazakhstan — for their energy security is a clear losing bet with truly dire consequences.

Just ask the whole of Europe during the winter months!

You may also recall that Kazakhstan — the world’s largest uranium producer and former soviet republic — erupted into what’s now being dubbed ‘Bloody January’ at the start of 2022. That’s that type of geopolitical chaos that’s leading to increased energy insecurity around the globe, including in the US.

And hence, the writing is on the wall: The United States can no longer afford to rely on countries like Russia and Kazakhstan for its uranium requirements. And it’s not just America that sees the light…

Europe, China, India, South Korea, and even Japan are now fully onboard with a cleaner energy future that will require vast amounts of uranium.

China recently approved the construction of six new reactors across three provinces with plans to build 150 new nuclear reactors over the next 15 years as part of their newly-enhanced decarbonization mandate.

That's more reactors than have been built in the last 35 years!

South Korea — which already gets about a third of its power from its fleet of 26 nuclear reactors — is aiming to build 30 new reactors by 2038.

Even Japan — site of the 2011 Fukushima tsunami calamity — is seeing a dramatic resurgence in favorable sentiment toward nuclear power generation.

Prime Minister Fumio Kishida is pushing hard for a revamp of the country’s nuclear energy program. Twelve of 36 reactors have now been restarted, and 15 more have applied to restart. It has also adopted a plan to extend the lifespan of existing reactors and to build new reactors.

Somewhat surprisingly, the public reaction among Japan’s citizenry has been overwhelmingly receptive to the proposed revamp.

In 2021, a poll showed only 44% in favor of the restarts. More recently, that favorable rating jumped to 53% with young people (age 18 to 39) showing resounding support at a 71% clip.

Key takeaways are the clear positive shift along with the “future direction” of public opinion showing growing support, especially among young people, for nuclear power in Japan.

That same positive narrative is taking hold all across the globe.

In Europe, France’s economy minister has doubled down on the need for a top-to-bottom overhaul of the electricity market saying, “there is no energetic transition without nuclear energy.” The nation has announced plans to construct a new generation of nuclear reactors for the first time in decades.

Poland has announced that it has selected Westinghouse Electric as its technology partner for the construction of three US-designed nuclear reactors as the nation seeks to phase out coal. Westinghouse was acquired by industry-leader Cameco [in partnership with Brookfield Renewable Partners] for a staggering US$7.88 billion, with the deal closing in 2023.

In Canada — which currently gets about 15% of its electricity from nuclear — the government announced it will provide C$970 million in financing to develop a grid-scale SMR (Small Modular Reactor) — a new nuclear technology touted as a key part of the country’s plan to reduce carbon emissions.

The project, which is being developed by utility Ontario Power Generation, is a big part of the country’s initiatives to cut carbon emissions by 40%-45% below 2005 levels by 2030 on the way to net-zero emissions (aka, carbon-neutrality) by 2050.

The initial SMR will be situated next to an existing 3,500-megawatt station and will be the first of many similar projects that will eventually go up in other parts of the country.

In other words, strong global tailwinds are forming for the uranium sector at large with the United States showing strong commitment as well.

 

US to Become Major New Uranium Source

Here in the United States, the Biden administration is finally putting its money where its mouth is when it comes to nuclear power generation and the revitalization of the nation’s uranium production sector.

 

US Energy Secretary Jennifer Granholm revealed that the United States is developing a comprehensive uranium strategy focused on becoming self-reliant on domestic sources of yellowcake — following decades of underinvestment in uranium mining — for our own consumption, stating:

“The United States wants to be able to source its own fuel from ourselves, and that's why we are developing a uranium strategy both through the Defense Production Act as I mentioned, as well as seeking an additional large amount by the year end for a more fulsome strategy. We’ve got to develop our own supply chain in order for our existing reactors to continue to function as well.”

In addition to the pending $4.3 billion for the revitalization of America’s domestic uranium sector, the administration has issued a Notice of Intent for the implementation of a $6 billion nuclear credit program to support the operation of reactors across the nation.

The recent advent of SMRs is becoming a key part of the US Department of Energy’s goal of developing safe, clean, and affordable nuclear power options.

The SMRs currently under development in the US represent a variety of sizes, technology options, capabilities, and deployment scenarios.

These advanced reactors — envisioned to vary in size from tens of megawatts up to hundreds of megawatts — can be used for power generation, heat processing, desalination, and other industrial uses.

SMRs offer numerous advantages over their larger and aging counterparts such as relatively small physical footprints, reduced capital investment, ability to be sited in locations not possible for larger nuclear plants, and provisions for incremental power additions.

A groundbreaking project by TerraPower — a privately held nuclear power innovator backed by Bill Gates — has the potential to rewrite the narrative on nuclear energy generation in this country and perhaps the world.

Called Natrium (see below), the plant’s state-of-the-art tech — which has been in design for years and is the result of an ongoing collaboration between TerraPower and GE Hitachi — greatly mitigates the risk of nuclear meltdown.

One thing you’ll notice right away is that Natrium does NOT have that ominous looking containment dome most nuclear reactors are known for.

That’s because Natrium utilizes a highly advanced low-pressure cooling system — which runs 24/7 and uses molten sodium instead of water — enabling the reactor to be shut down in less than a second should any unforeseen issues arise.

It’s also tiny by comparison, requiring a much smaller footprint than the giant nuclear reactors of yesteryear.

In other words, it’s not the proverbial eyesore we typically equate with nuclear power plants of past design.

Oddly enough, Natrium is being constructed in the small town of Kemmerer, Wyoming — a longtime hub for coal.

For that reason alone, you might expect Kemmerer’s townsfolk to be collectively against the arrival of Natrium to their tiny town. Yet, that doesn’t seem to be the case at all.

The locals there understand that nuclear power is the future of clean energy in the United States… and they see the project as a conduit to sustainable, high-paying jobs in an emerging energy-tech that’s going to be around for the next 100-plus years.

They’re also well aware that the burning of coal releases a deadly mix of toxins into the atmosphere — including mercury, lead, sulfur dioxide, and nitrogen oxides — which can lead to a whole host of health problems like heart disease, lung disease, cancer, and neurological problems… not to mention global warming and acid rain.

On the complete opposite side of the spectrum, nuclear energy powered by uranium — which currently accounts for 20% of total US electricity and 50% of America’s clean electricity — does not produce any greenhouse gas emissions or air pollution… just clean, carbon-emission-free power.

Hence, nuclear power… along with renewables such as wind, solar, geothermal, and hydro… is the future of clean energy for our country and for the world.

Best of all, nuclear fission — the process that powers nuclear plants — produces true “baseload” electricity as it is not reliant on variables such as the sun and the wind.

That means it's on all of the time.

The primary issue, really, in terms of the advancement of nuclear power in the United States has centered around negative public sentiment and difficulties with obtaining project approval for new plants.

Yet, due to growing concern over global warming and energy security, sentiment is rapidly shifting in favor of nuclear power… including the rare specter of bipartisan congressional support.

 

Uranium Supply: A Structural Deficit

With any commodity that has seen a stark underinvestment in mining over an extended period of time — 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 annually — yet producing only around 160 million pounds.

That equates to a 40-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.

That’s a staggeringly large deficit and underpins the need for new domestic uranium sources reaching the supply chain.

And then there’s the retail speculator who, until now, hasn’t had a viable vehicle to buy physical uranium with the press of a button or by placing a phone call.

That’s all changing now too…

In 2021, Sprott Inc. launched what amounts to a new uranium ETF by taking over Uranium Participation Corp.

The formation of the Sprott Physical Uranium Trust is a big deal. Sprott's 200,000-plus investors look at this as a way to directly purchase physical pounds without having to take delivery, which Sprott will do for them.

They’ve done it with gold. They’ve done it with silver. And now they’re doing it with yellowcake!

It had an initial investment of over US$1.3 billion and has since grown to over $5 billion. That will likely continue to grow over the coming quarters.

After its formation, the Kazakhs quickly followed suit with their own US$500 million physical uranium fund.

Those two funds combining to tighten an already strained uranium supply market… resulted in the first upward leg of the new uranium bull market.

We also discussed the utilities. They’re starting to enter now.

Historically, it is the utilities that have been the main driver for higher uranium prices.

A new contracting cycle is just now underway with utilities entering the market to secure their next long-term U₃O₈ contracts.

As that cycle has gathered momentum, we saw uranium prices breakthrough $100 per pound at the start of 2024.

We believe the will surpass previous record highs above US$140 per pound during this cycle, and perhaps overshoot to as high as US$200 per pound.

And while that high a price would likely be unsustainable over the longer-term — it won’t matter.

That’s because any surge well above US$100 per pound will send the share prices of select uranium firms much higher… resulting in substantial gains for well-positioned investors.

 

The Smartest & Safest Way to Invest

In terms of investment strategies in the uranium space, we believe that the established players are the best way to get involved at this early stage of the uranium boom.

The large, diversified producers stand to benefit from strong uranium pricing going forward, carry far less risk than the pure exploration plays, and, because of their long-life mining operations, can typically withstand multiple commodity price cycles.

 

Cameco (NYSE: CCJ)(TSX: CCO)

Cameco is one of the largest providers of uranium and nuclear fuel products to the global nuclear power industry.

Cameco’s uranium assets are located on three continents — North America, Asia, and Australia — with operations spanning the nuclear fuel cycle from exploration to fuel manufacturing.

The well-diversified mining firm has interests in tier-one uranium mining and milling operations with licensed capacity to produce more than 30 million pounds of uranium concentrates annually.

The majority of Cameco’s operating experience is in the Athabasca Basin of northern Saskatchewan, Canada — home to the world’s largest, high-grade uranium deposits.

The basin hosts high-grade uranium reserves with ore grades up to 100 times the world average. Cameco’s operations in the basin include the two highest-grade uranium mines on the planet: Cigar Lake and McArthur River/Key Lake.

The company’s production capacity is backed by more than 450 million pounds of proven and probable mineral reserves.

Cameco is also a leading global supplier of uranium refining, conversion, and fuel manufacturing services.

Adding to its diversification, the company [in partnership with Brookfield Renewable Partners] bought Westinghouse Electric — a servicer to nuclear power plants — for $7.88 billion, including debt.

Cameco owns 49% of the joint venture.

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.

As a well-diversified uranium miner with a focus on energizing a clean-air world, Cameco is well-positioned to continue to lead the uranium industry in the coming years as the global nuclear power trend intensifies.

 

Energy Fuels (NYSE: UUUU)(TSX: EFR)

Energy Fuels is America’s leading uranium producer.

The well-diversified firm is also a producer of vanadium and is an emerging player in the commercial rare earth metals business where it is working to reestablish a fully integrated US supply chain.

The company boasts more uranium production capacity, licensed uranium mines and processing facilities, and in-ground uranium resources than any other US producer:

• White Mesa Mill, Utah: only uranium and vanadium mill in the United States.
• Pinyon Plain Mine, Arizona: licensed and substantially developed high-grade uranium mine; ore to be processed at the White Mesa Mill.
• Alta Mesa Mine, Texas: 4.6 million lbs U₃O₈ produced to-date with significant resources plus exploration potential.
• Nichols Ranch Mine: 1.2 million lbs U₃O₈ produced to-date with 34 licensed wellfields providing long-term production profile.

Energy Fuels offers uranium purchasers — such as the major US utilities — a reliable, low-cost source of US-mined U₃O₈ with an excellent track record of on-time, on-budget uranium deliveries and production.

The company entered into three long-term uranium sales contracts for a base quantity of 3.0 million lbs of total U₃O₈ deliveries over the 8 years starting in 2023; up to a total of 4.2 million lbs if all options are exercised.

Energy Fuels has also submitted a bid to the US Department of Energy (DOE) to supply US-mined uranium to the DOE for the new US Uranium Reserve.

The DOE expects to purchase up to 1 million lbs U₃O₈ inventory from up to four qualified US uranium producers, of which Energy Fuels believes it meets all of the requirements for direct participation.

The company has been focused on processing stockpiled ores for its recent uranium production and anticipates being in production at one or more of its uranium mines soon.

With solid diversification and multiple long-term contracts with US nuclear utilities under its belt, Energy Fuels is well-positioned to lead America’s resurgent uranium exploration and production sector.

 

Sector ETFs & Trusts

For investors seeking broad exposure to the uranium industry without having to select specific stocks — a uranium-focused ETF (Exchange Traded Fund) or Trust may be the perfect vehicle.

In a rising uranium market like we have today, and which we expect to continue in the coming years, we like the Global X Uranium ETF (NYSE: URA) at current prices.

The ETF — which has been around for more than a decade — is a targeted play on uranium mining and the production of nuclear components, including those in extraction, refining, exploration, and the manufacturing of equipment for the uranium and nuclear industries.

As an alternative to selecting individual equities in the uranium space for investment, URA offers investors efficient access to a basket of companies involved in the uranium industry in a single trade.

Cameco is currently the largest single holding at approximately 25%.

We also like the Sprott Physical Uranium Trust (OTC: SRUUF)(TSX: U.U) at current price levels.

What you’re getting with Sprott is a group of highly experienced commodity fund managers with over $10 billion in physical commodity funds.

The Sprott Physical Uranium Trust — the largest and only physical uranium fund currently in the marketplace — invests and holds substantially all of its assets in uranium in the form of U₃O₈.

As the world’s largest physical uranium fund, the trust provides a secure and convenient exchange-traded investment alternative for investors interested in holding physical uranium.

The trust currently holds just over 65 million lbs U₃O₈ for a total net asset value of around $5 billion.

 

In Summary…

A worldwide nuclear energy renaissance is underway.

As it stands today, there are some 60 nuclear reactors under construction across the globe with over 100 more in the advanced planning stages.

Combine that with the more than 300 proposed plants and 400-plus reactors already in operation — and it’s impossible to ignore an emissions-free nuclear-powered future fueled by uranium.

To that end, a widening supply gap is expected in the global uranium sector over the next several years as major economies turn to clean-burning nuclear power to combat climate change and to reduce energy insecurity in the face of rising geopolitical turmoil.

That imbalance is expected to keep upward pricing pressure on the metal, resulting in a robust investment climate for select uranium miners going forward.

In this Special Report, we covered two distinct ways to participate: uranium producers (Cameco and Energy Fuels) and sector ETFs/Trusts (Global X Uranium ETF and Sprott Physical Uranium Trust).

In terms of specific stocks, and in addition to Cameco and Energy Fuels, those taking a long-term value approach by establishing positions in select, well-diversified uranium-focused miners with solid projects in safe mining jurisdictions should be well-rewarded over the longer-term.

For individual recommendations from our in-house resource expert, check out our latest premium uranium stock research here.

 

— Daily Profit Cycle Research