Hello
There's been some uranium discussion in here...can't see the place to tag this podcast onto so putting it here.
IMO this is a really good summary and background on what has happened over many years in uranium and nuclear power...and what may unfold (will IMO).
https://www.realvision.com/pod...
Happy to talk uranium here...
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Yeah. Ignited the market today.
Price moves look crazy....BUT imo the commodity hasn't got too far in its squeeze higher yet. Contracting has yet to kick into big gear. Many of the (admittedly very speculative) equities have yet to price in moves.
Add tickers. Let me know if I've missed some and need to add
There's a table half way down posted by someone and it contains many stocks I've not tagged (I do own many in the table myself)
Pow. A crazy end to the week in uranium space as the world's biggest producer NAK Kazatomprom AO (LON:KAP) reports it will not make 2024 production guidance and casts doubt on 2025. So the shortfall in supply gets a little bit larger. Its not that there is a massive shortfall in supply next couple of years (though there is some) but this starts growing from a couple of years and gets very large into late 2020s. Seems a long way away but the upstream to downstream fuel cycle in uranium is about 3 years (so much longer than oil) and the investment cycle to bring on new projects is typically more like a decade (varies a lot obviously and there are brown field sites that can make the leap in 3-5 yrs but green field can be >10yrs). With current mine depletion profiles a lot of greenfield is needed...
So this is the squeeze...high prices can motivate much more rapid action. The price is not high enought to do that yet...or the utilities (the end customers) have not cried wolf yet...they are coming from decades of comfy knowing the market had surpluses and are not geared into market thinking but have a complacency that the supply will materialise). Once the Uts struggle to contract for lbs a few years from now (ie they contract now for it) then the price squeeze should accelerate more. No idea what price could be but its my belief it will surprise most to the upside as in the end if you've got a multi-billion dollar power plant the price to feed it a bit more uranium is relatively inconsequential (particularly relative to hydrocarbon plants where the fuel is majority of operating cost).
HOWEVER...if you are newbie to uranium and attracted by the price action...be aware that its hugely volatile and has eviscerating drawdowns. So commit cautiously and with knowledge that you could face painful drawdown. I'm a HODLer that's been holding through the volatility as I believe its got much more to run.
First half of Feb is interesting time for the market as Cameco (TSE:CCO) will report their full year and give an outlook including early information on production outlook and the dynamics they are seeing in the long term contracting market. I don't know what they're gonna say/guide and I certainly don't know how the market will take it but there is a high chance this will be a significant market moving event either way.
For uranium watchers:
Cameco (TSE:CCO) presenting Q4 and FY 23 at 8am eastern today (1pm here). So could catalyse volatility
https://www.cameco.com/invest/...
Buckle up buttercups
Feb 08 - Cameco Q4 adjusted net income CAD 90 million.
* Q4 EPS CAD 0.18
* Q4 net income CAD 80 million
* Q4 gross profit CAD 133 million
* Q4 basic EPS CAD 0.18
* Q4 revenue CAD 844 million
Its hard to know why prices came down today on the Cameco (TSE:CCO) Q4 &FY23 conference call.
My best guess is that although they missed production by 1.1m lbs after already guiding down in Sept (and overall the miss is more like 3m lbs from start of year guidance - 17m rather than 20m lbs) there was an expectation/hope of bigger miss (more miss means more squeeze on Uranium price). They also stated confidence in meeting guidance for 2024 so no move down there and that only 2m lbs of supply to customers is uncovered by a combo of their production and market purchase activities....but 2m is the best case assuming no production probs (and they seem to be a feature not a bug).
Anyway, it was all too placid for the market and no room for wailing, gnashing nor spiking of prices today. A bit of froth blown off.
I'd been selling a little bit of Cameco late last year (its up about 450% on an average buy basis). I've generally peeled off some along the way, sometimes putting it into smaller uranium names. More recently I'd been directly switching some Cameco and weighting up development companies (including buying some Sprott Junior Uranium Miners ETF (NMQ:URNJ) ) . I also bought a bit more URNJ today on its price pullback.
TBC I'm not particularly bearish Cameco and think it will likely continue to the upside after this current hiatus -> it is the pivotal solution to western uranium needs and a lot of the future happens around it. But I'm just taking a gamble...a bit narrative and finger in the air based...to shift into juniors/developers.
Alongside URNJ ETF i have added to my positions in Nexgen Energy (TSE:NXE) , Denison Mines (TSE:DML) , Global Atomic (TSE:GLO) and Isoenergy (CVE:ISO) . Note all are highly volatile and present considerable risk (I think still to the upside as uranium prices go still higher). And Global Atomic is particularly risky as Niger based...I've got lowest weight in that and assume risk of significant loss due to politics. All these stocks are well weighted in URNJ but my URNJ position is a bit more trigger happy and trading and the others are more volatile HODL.
I reserve the right to change my mind. This is a stressful and volatile area...I believe the move is at most mid stage and probably still a bit earlier than that. Only high prices can bring on the investment in production needed.
Feb 1, 2024
Shares of U.S. uranium companies jump after Kazakhstan's Kazatomprom reports flat uranium
Cameco (TSE:CCO) confession for clarity:
Uranium is a thematic play for me playing a deeply broken capital cycle that needs to correct to point where more uranium is produced. This requires prices to rise to decent incentive price and buyers to show volume at those price. Neither have happened to a significant degree yet. Its arguable that prices for the commodity are high enough...tho I tend to disagree and its the long term contracting not spot that counts. Its in the low $70s at moment and I'd guess that the incentive price for sufficient development/production plans is closer to the spot price and $100. In a deep capital cycle play (ie messed up area healing itself) prices tend to overshoot.
Its hard to argue that Cameco is cheap. It complex and somewhat priced richly. I've tended to hold on to it as the only big cap stock available. Interested institutions need to go there. I'm probably going to keep holding some for those thematic flow reasons.
Tricky area so DYOR obvs. The cycle is so bust in uranium that really none of the companies look good on any sort of current financial metric...with the exception of NAK Kazatomprom AO (LON:KAP) where you take considerable geopolitical risk
Re Cameco (TSE:CCO) ...since end of last year I have rotated some money out of Cameco and into other uranium exposure. After reading fully and reflecting on their Q4 and fy23 results I decided to exit Cameco. On average I suspect it will go up from here but I think the risk-reward is better elsewhere in a mix of developers and physical uranium. So I took from Cameco and added to:
Yellow Cake (LON:YCA) - I think that the physical has same or better upside and less downside (I also hold Sprott Physical Uranium Trust (TSE:U.UN) )
Denison Mines (TSE:DML)
Nexgen Energy (TSE:NXE)
Global Atomic (TSE:GLO)
Isoenergy (CVE:ISO)
These were all holdings I already had and so weighting up. Overall I've taken a little money off the table too so not replaced whole Cameco position. This isn't as I think the theme is over (my guess is mid game at most) but as Cameco had done very well for me (since 2019ish when I first took a position and particularly weighted up during 2020 puke) and its considering that stock in isolation. Plus uranium moves had taken my exposure over 30% overall in my portfolio. If there's some pullback from here I may deploys the c.4% of Cameco realisation back into some positions.
The scenario where Cameco leads the pack again in 2024 is one where uranium price is flat to down. Cameco have a negative cash flow effect from any commodity price increase from here given their need to buy uranium to supply contracts and that pinch is exacerbated by any further delays in upping production. A 50% move in the commodity (i'm not forecasting but see that as plausible) will impact Cameco short term fundamentals. Investors may not care as the chase uranium and Cameco is the biggest most liquid but marginally it should feed through to more upside beta to the more purely exposed.
Additionally I swapped my Sprott Uranium Miners ETF (PCQ:URNM) for Sprott Junior Uranium Miners ETF (NMQ:URNJ) so as take out the exposure to physical uranium, Cameco and NAK Kazatomprom AO (LON:KAP) that makes up 40-50% of URNM
Note: All the stocks in the sector and ETFs carry a large amount of risk and volatility. If you invest expect 30% pullbacks as normal
Any thoughts on the latest pullback in Uranium equities? I hold Geiger Counter (LON:GCL) and its come down from 65p to 52p and still on a large discount...
I'm a HODLer here. Always expect some viscous downside volatility tho...its a feature of an area that is coming from a deep capital cycle hole. Incentive and clearing prices for increased uranium production are not really visible at this point. As supply is severely compromised by a combo of the industry cycle (run rate supply is below run rate use by large margin and large existing mines deplete in coming years)and now geopolitical (Russia) PLUS environmental factors (doubling nuke by 2050 I think is a global agree enviro target)
My belief is that we are middle innings area. Don't know exactly where. Probably a bit earlier than middle is my real view...but trying not to be overly bullish. I believe the commodity price is going to move well above current $95lb...less than 50% would be a surprise, more than 200% would also be a surprise (but less so than not making 50%).
Uranium equities haven't really seen leverage to the commodity price rise. IMO that is visibility on how and when production comes in is quite hard for many and where it is they've run into trouble on execution (which pushes up the commodity price and should come back into equity prices).
Overall, IMO the only way that equity prices don't go up from here is if we decide to move away from nuke. Otherwise, the world needs many mining companies to get on with new production....and the buyers will need to pay up to get the lbs that are available.
BUT expect volatility. Not an easy hold
Chance of some fairly juicy volatility in uranium today/this week. Nexgen Energy (TSE:NXE) have had an intervention from Canadian regulators re their tailing/waste plans instructing them to pause the whole licensing process.
Really hard to predict the impact immediately. A problem with Nexgen is huge issue for uranium market, particularly Western markets as all modelling of the sector supply has them kicking in up to 30m lbs pa late 2020s, early 2030s. Given that current global production is c.160m lbs (I think) and NAK Kazatomprom AO (LON:KAP) and Cameco (TSE:CCO) are having trouble ramping up targeted production increases and there is a lack of other new greenfield developments this logically should play uranium term prices (and so spot) as a real jolt to the upside. Nexgen lbs are needed to replace depletion elsewhere, particularly Cameco
However, short term moves in uranium stuff is near impossible to predict as such a small and speculative market due to lack of significant institutional involvement.
Net net, I'd speculative that its also mid term positive for Nexgen as it increases the value and necessity of getting their large resource to markets
Yeah. Hard to be certain why beyond new quarter etc…let’s see what unfolds. I remain very positive but accept/expect significant volatility along way
I believe Goldman's issued a buy recommendation on Cameco (NYQ:CCJ) .
The sentiment seems to have carried over to Geiger Counter (LON:GCL) and Yellow Cake (LON:YCA) this morning.
Also saw a talk by a Uranium expert who said the recent drop in the spot price was mainly due to various companies year ends, they were shifting some inventory. He expected the spot to recover over the next few weeks. Let's see if he's right.
Yes. Saw the GS note later in day...I do think the Nexgen Energy (TSE:NXE) news I reference below is potentially very significant as any significant delay to their project has massive ramifications for supply-demand and accentuates the capital cycle imbalance that has driven the sector to date
