Uranium has been all over the news lately due to a sharp rise in its price. The bull run in the commodity was caused by the recently launched Sprott Physical Uranium Trust, which invests in physical uranium as any commodity ETF would.
Uranium is a critical metal in the rapidly realizing decarbonization mega-trend. Although nuclear power has proven itself a prosperous and stable renewable energy source, specific problems have tainted its widespread adoption. For starters, nuclear reactors are prohibitively expensive and very complex to operate; secondly, they pose a potentially considerable safety risk in their present form. Over the past couple of decades, solar adoption grew exceptionally rapidly and outperformed most analyst predictions due to lowering costs, simplicity, safety, etc. The most significant advantage of solar and wind over nuclear is that they can be very decentralized, unlike nuclear, which is so expensive and risky, that it can only be built in certain places and in low numbers. The increase in solar and wind energy adoption sent uranium prices into a trough for the past decade.
However, things are changing now because as climate consciousness grows, governments worldwide make substantial efforts to decarbonize power. While solar and wind energy is more than enough to cover all our energy needs, two main issues entirely depend on them. Firstly, wind and solar can be unreliable, so countries are very cautious about a complete shift towards them. The solution to the first problem brings us to the second, which is the storage of renewable energy during the night or when the weather is unfavourable for energy generation.
The only way to store renewable energy for later use is in batteries. But the problem is that batteries are not very environmentally friendly due to low recyclability and are too costly; current lithium-ion batteries cost north of $100/kWh, which is prohibitively expensive. Experts believe that battery prices need to go down below $5/kWh. Just a few hours of power backup for nighttime or other uses would run trillions of dollars at current prices. Further, there currently isn’t enough battery production capacity to cater to grid energy storage requirements on a global scale. Various supply chain and geopolitical issues arise from the natural resources required to make batteries, especially since battery capacity requirements are already under pressure from the automotive sector, the next-highest pollution source after power.
Canadian Uranium Stocks to Invest In
Like lithium, copper, etc., are critical inputs in the production of batteries, uranium is the essential input of nuclear energy. It is the fuel on which energy plants run, so it is increasingly becoming a desirable investment. However, uranium cannot be bought, sold, or traded physically due to its radioactive nature. Therefore, the only ways to invest in it are through physical holding trusts/ETFs (e.g. Sprotts) or equity in miners/producers. Here are some stocks with excellent exposure to uranium.
Fission Uranium Corporation (TSE: FCU)
Market Capitalization – C$562.9 million
Fission Uranium Corporation is a mining and exploration company whose core product is uranium. The company’s prime asset is the Patterson Lake South deposit in the Athabasca Basin. Further, the company’s asset is the most significant confirmed uranium deposit in the Athabasca region. Since the onset of the pandemic, renewable energy and ancillary stocks have gained hand-over-fist from investor interest in the sector. The stock has been up a mammoth 210% since January 2020.
Fission Uranium has off-take agreements in place for 35% of its annual production. The company has plans to enter production next year with a planned mine life of 7 years and a post-tax NPV of C$702 million with an IRR of 25%. Fission estimate life-of-mine operating costs of C$729 million and per pound operating costs of just C$9.57, making it one of the lowest-cost mines in the world. The current price of uranium is about C$55, highlighting the company’s enormous potential.
Since the company has no operations yet, no meaningful financials are available at this time.
Energy Fuels (TSE: EFR)
Market Capitalization – C$1.229 billion
Energy Fuels is a Canadian miner and producer of uranium and vanadium; the company also expands into rare earth metals, which have great scope and use in electric motors, turbines, etc. The company mainly operates in the US and is the largest Uranium producer there, with an annual capacity of 11.5 million pounds. Energy Fuel’s core asset is the White Mesa Mill in the US, an integrated mining and processing facility with over 8 million pounds a year of capacity. In addition, the company owns the rights to another nine under-development projects.
Energy Fuels has returned 266% for investors over the past 12 months. Due to the poor condition of the Uranium market, the company was forced to turn down production to an absolute minimum during the earlier part of the decade and is now planning to ramp up production. No meaningful operating financials are available at the moment.
Cameco (NYSE: CCJ)
Market Capitalization – $8.938 billion
Cameco is a Canada-headquartered uranium producer that is the second-largest in the world by capacity, with an 18% global market share. The company can produce 53 million pounds of uranium per year, which vary according to market conditions. Further, the company has ownership of nearly 455 million pounds of uranium. The company has eight active uranium operation sites across North America and Europe. In addition, they operate three uranium projects in the same jurisdictions, plus Australia. The company is also a world leader in uranium processing facilities, with nearly 30% of global capacity through their plants located in the US and Canada.
Cameco reported $1.8 billion (down 3.37% YoY) revenues and a net loss of $53.17 million (down 171.85% YoY). In Q1’21/Q2’21, the company reported revenues of $290.02 million (down 16.07% YoY)/$359.21 million (down 31.62% YoY), and a net loss of $4.93 million (up 74.36% YoY)/$36.76 million (up 30.65% YoY).
Uranium Royalty Group (TSE.V: URC)
Market Capitalization – C$414.1 million
Unlike most other companies on the list, URC is not a uranium producer or miner. Instead, the company is an investor of sorts in uranium assets and companies. URC aims to make money through royalties from operations on its assets and investments in debt/equity of its miner/producer partners. The company owns royalty options or royalty streams in 15 uranium assets across the US, Canada, and Africa. Of the 15 assets the company owns, production is idled on 3, 1 is in production, and the rest are in various stages of development. The company receives royalties in cash or uranium. URC is up an insane 237x since its IPO listing in 2017.
No meaningful operating financials are available at this moment.
NexGen Energy (TSE: NXE)
Market Capitalization – C$2.78 billion
NexGen Energy is a uranium asset development company. The company owns a uranium deposit in the Athabasca Basin, Saskatchewan. In addition, the company owns mining rights to nearly 20000 hectares of land in the region. The company’s recent feasibility studies showed that its assets had inferred deposits of 239 million pounds of uranium.
The company raised $172 million earlier this year through equity placement to accelerate its production timeline. The company’s projections look very promising, with an after-tax NPV of C$3.47 billion, a payback period of just 0.9 years, and an after-tax IRR of 52.4%, assuming a per pound uranium price of $50. The company has returned 160% to investors over the past 12 months.
Skyharbour Resources (TSX.V: SYH)
Market Capitalization – C$73.2 million
Skyharbour is a developer of uranium and thorium projects in Athabasca, Canada. The company owns the rights to six drill-ready projects that stretch over 240000 hectares. The company has been hibernating for the last five years due to a dull uranium market and is now preparing to get into production. The company also owns gold and other base metals projects in Ontario.
The company recently raised C$585,000 from warrants to fund a feasibility study and accelerate production plans. The company plans to raise money later this year to buy more projects. In addition, Skyharbor aims to partner with experienced miners to ease funding requirements and benefit from their expertise. The company has returned 160% to investors over the past 12 months.
Check out Marc’s Pegasus Resources (PEGA.V) analysis, a uranium pure-play.
Final Thoughts
Issues related to batteries have sparked a renewed interest in nuclear energy as a lot of investment and effort is going into nuclear fusion energy, which solves most of the problems of traditional nuclear plants, like safety, cost, and size. We now see tech titans like Bill Gates and Jeff Bezos investing in such technologies. Further, renewable energy is at the center of President Joe Biden’s political agenda. With countries aiming to cut emissions drastically by the end of the decade, nuclear power is bound to grow in terms of adoption due to technical advancements and rapidly growing electricity demand; uranium is a potential multi-bagger. Further, the last bull run in uranium prices, from 2000-to 2006, saw prices increase by 2000%, and a quick look at uranium prices shows that we are now on the cusp of another bull run.
Also, Check Out:
Canadian Rare Earth Metals Stocks
Canadian Carbon Capture Companies
Best Uranium Stocks Canada
Since I started writing in December about creating an excellent opportunity for uranium, the share prices for uranium have soared. If you don’t do too much, you can trigger a bull market within days, weeks, or even months.
According to Thomson Reuters data, NexGen shares have risen 95% in the past 12 months, overtaking the US uranium market, and other small uranium stocks have risen sharply.
Although Baselode only started trading mid-year, it has grown enormously in the last year and a half and has posted significant gains. ARMZ Uranium Holding, one of Russia’s largest uranium mining companies and the second-largest globally, owns and operates the Kraznokamensk uranium mine. The company’s uranium production comes partly from its uranium mines in Russia, but it also has uranium deposits in China, South Africa, Australia, the United States and Canada. In addition, it manages Canada’s largest and longest continuous uranium producer, with an annual uranium production capacity of 1.5 million tons.
The exploration and development company is a leading uranium resource with more than 2.5 million hectares, including the Crownpoint and Hosta Butte uranium deposits. Uranium Energy also controls several other uranium mines in the United States and Canada and a uranium mine in South Africa.
In Wyoming, Uranium Energy controls the Reno Creek Project, considered the second-largest ISR uranium project in the United States. IsoEnergy, as mentioned earlier, has a long history of exploring areas that contain some of the world’s leading sources of uranium, such as uranium mines in Canada and South Africa.
In 2017, it produced 7,520 tonnes of uranium, representing 1.5% of its total production. Production for 2019 represents an increase of 1% over the company’s expected uranium fuel demand for 2019.
If RBC Capital Markets is right, uranium prices will soar in the years ahead, and uranium stocks should be a good bet to take with you. With $55-60 for uranium, you could get a return of more than 50% per year over the next five years.
In the meantime, I can tell you how to play the market the most accessible way: an ETF. Even if you are unsure which uranium stocks are right for you, owning the ETF will allow you to be deeply involved in the uranium industry. The only problem is that we have uranium and gold, silver, and other precious metals.
Cameco is a solid investment opportunity for patient investors who bet that nuclear power plant operators will strengthen their structures better against the wrath of Mother Nature, believing that higher prices of uranium spot prices will lead to increased electricity demand.
Anyone considering uranium stocks for 2017 can look at the list above and consider emerging uranium companies. Still, a more exciting option may be exploring uranium ETFs, which include a basket of companies from all sectors of the uranium industry. Several uranium ETFs are in the US and tagged in our ETF database. So which uranium shares should you buy now and why?
Public companies in Canada, including uranium producers, uranium mining companies, and uranium exploration and production companies, have their profiles on www.sedar.com, where they make critical regulatory statements.
Canada is the world’s second-largest country for uranium production. It is home to the world’s largest publicly traded uranium company, Cameco Corp. (NYSE: COO), one of the largest global suppliers of uranium. In addition, India is a significant source of low-cost uranium. Superior continues to operate as a uranium company through its uranium exploration and production operations in the United States, Canada and the United Kingdom. It also owns Cigar Lake, one of the world’s leading uranium mines, where uranium content is 100 times higher than the global average.
The GLJ report mentions that the greenhouse gas balance of nuclear energy also makes uranium stocks appear positive for ESG investors. The company has been exploring uranium in the United States for more than 20 years, most recently at the Woolgar Uranium Mine in Alberta, Canada. After the change in uranium legislation in that state, Strategic said it would resume uranium exploration, claiming that “Woolgar has the potential to discover significant uranium deposits.
The Investing News Network has listed the best uranium stocks in the United States, Canada and the United States over the past two years. Read on to learn from Raymond James analysts about the current price environment in which uranium stocks are being watched. All five uranium stocks on the TSX and TSZV have a price-to-earnings ratio of 1.5, the highest of any uranium company in Canada.
The investor presentation of Uranium Resources (URRE) in May 2012 follows. All five uranium stocks on the TSX and TSZV have a price-to-earnings ratio of 1.5, the highest of any uranium company in Canada.
Sources
- https://etfdb.com/etfs/industry/uranium/
- https://www.horizonsetfs.com/news/Press-Release/Horizons-ETFs-Launches-Canada%E2%80%99s-First-Uranium-ETF
- https://herostocks.ca/top-uranium-stocks-of-2019-on-the-tsx-and-tsxv/
- https://www.valuethemarkets.com/2021/01/25/perfect-conditions-for-uranium-to-shine/
- https://katusaresearch.com/prepare-profit-series-part-2-clear-path-much-greater-uranium-demand/
- https://financhill.com/blog/investing/best-uranium-stocks-to-buy
- http://www.wallstreetresearcher.com/Mining/Uranium%20Update.html
- https://weissratings.com/articles/why-uranium-could-be-2020-s-big-trend-in-energy
- https://www.mining-technology.com/features/feature-the-10-biggest-uranium-mines-in-the-world/
- https://smallcaps.com.au/uranium-stocks-asx-ultimate-guide/
- https://www.northernminer.com/news/top-ten-u-s-based-mid-tier-to-junior-companies-excluding-coal-and-precious-metals/1003809029/
- https://www.investingdaily.com/45738/best-uranium-stocks-to-buy-now/
- https://www.theglobeandmail.com/investing/markets/inside-the-market/market-news/article-premarket-brexit-and-china-tensions-weigh-on-global-shares/
- https://resourceworld.com/new-uranium-bull-market-underway/
