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Uranium stocks in new lease of half-life
Weekend Australian, Australia  by Richard Hemming
05 Jun 2021
Business News - Page 31 - 367 words - ID 1452909984 - Photo: Yes - Type: News Item - Size: 190.00cm2

It's unusual to see a stock climb 10 per cent in one day in the absence of a material announcement.

On Thursday, shares in the Australian uranium developer Paladin Energy climbed 19 per cent and a couple of weeks ago they rose 10 per cent on a day.

The stock is up threefold in the past six months, and has a market capitalisation tracking towards $2 billion. Yet it doesn't produce anything! What's going on with uranium and more importantly have you missed the boat? If big money is anything to go by, specialist funds are jumping in.

Canadian-based commodity fund manager Sprott has created a fund that owns physical uranium on the outlook for uranium demand due to it being a clean energy source that isn't intermittent (like wind and solar).

Investors are salivating at the role nuclear will play in the shift away from fossil fuels to attain mid-century zero emission targets.

For now, the spot price for uranium remains reasonably flat. Uranium stocks are taking off on the back of the possibility of an inflection point in 202425, where demand is likely to exceed supply. Why?

Older reactors in the US that were previously scheduled for closure are likely to have life extensions.

China is significantly increasing its nuclear capacity, projected to rise from 50GWe (gigawatts electric power) to 70GWe by the end of 2025.

New nuclear technology is enabling countries and industries that have never before made use of it, due to much smaller plants.

In common with Paladin, Boss Energy is getting prepared so that when this inflection point occurs it can fast-track the restart of production.

Elsewhere, Bannerman Resources is starting from scratch, but has heavy hitters at management and board level that have been involved in other projects like Rio Tinto's Rossing uranium mine in Namibia.

Then there is Canadian giant Cameco, which is actually operating. It's the world's best known uranium company and has mothballed some of its production. The miner is known to be highly disciplined. In its latest presentation, Cameco talks about not reopening more production until prices rise further.

Richard Hemming is an independent analyst who edits the small caps publication Under The Radar.

r.hemming@undertheradarreport.com.au

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