Best Uranium Stocks in Canada

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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. Solar adoption has grown exceptionally rapidly over the past couple of decades 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 low numbers. The increase in solar and wind energy adoption sent uranium prices into a trough for the past decade.

However, things are changing because as climate consciousness grows, governments worldwide make substantial efforts to decarbonize power, and even the best energy providers in Canada can’t keep up. 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: storing renewable energy at night or when the weather is unfavourable for energy generation.

The only way to store renewable energy for later use is in batteries. However, 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. 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 from solid-state battery stocks 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, due to its radioactive nature, uranium cannot be bought, sold, or traded physically. 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. Also, check out TSX Lithium Stocks.

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, making it one of the Canadian Rare Earth Metals Stocks. 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. Also check out Canadian Carbon Capture Companies.

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.

Denison Mines Corp. (TSX: DML)

Denison Mines Corp., trading under the symbol DML on the TSX, presents a compelling investment opportunity in the uranium sector. As a company primarily focused on exploring and developing uranium assets, Denison Mines is well-positioned to capitalize on the growing global demand for nuclear energy. The company’s flagship project, the Wheeler River Uranium Project in Saskatchewan, Canada, is one of the most promising high-grade uranium developments. Denison’s strategic focus on uranium-rich areas, combined with its experienced management team and strong project pipeline, makes it an attractive option for investors looking to diversify into the uranium market, poised for growth amid the global shift towards cleaner energy sources.

Why Invest in Uranium Mining Stocks in Canada?

For several reasons, investing in uranium stocks in Canada presents a unique and potentially lucrative opportunity. Here’s an overview of why the Canadian uranium industry is an attractive investment:

  1. Global Leadership in Uranium Production: Canada is one of the world’s largest uranium producers, with high-grade uranium mines, primarily in Saskatchewan. This leadership position provides Canadian uranium companies with a significant advantage in the global market.

  2. Growing Demand for Nuclear Energy: As the world seeks cleaner energy sources to combat climate change, nuclear energy is gaining renewed interest. Uranium, as a critical fuel for nuclear reactors, is poised to see increased demand. This trend can benefit companies involved in uranium mining and exploration.

  3. Supply Constraints: The global uranium market has experienced supply constraints due to production cuts and the depletion of existing mines. Canadian uranium stocks could benefit from these dynamics, as reduced supply can lead to higher uranium prices.

  4. Advanced Technology and Expertise: Canadian uranium mining companies are known for their technological advancements and expertise in mining, which can lead to more efficient and environmentally friendly extraction processes.

  5. Strategic Reserves and Long-term Contracts: Many nuclear power plants require long-term supply contracts for uranium, providing a stable and predictable demand for the mineral. Additionally, countries are building strategic reserves of uranium, further bolstering demand.

  6. Diversification Benefits: Investing in uranium stocks offers diversification for investors’ portfolios, as the uranium market often has different dynamics than other commodities and stock market sectors.

  7. Environmental, Social, and Governance (ESG) Factors: With an increasing focus on ESG factors, uranium mining companies in Canada are often at the forefront of implementing environmentally responsible mining practices and engaging positively with local communities.

  8. Potential for Speculative Gains: The uranium market can be quite volatile, offering the potential for speculative gains. Investors looking for high-risk, high-reward opportunities might find Canadian uranium stocks appealing.

Canada’s leadership in uranium production, the growing global demand for nuclear energy, and the potential for speculative gains make Canadian uranium stocks an intriguing option for investors. However, it’s important to note that investing in commodities like uranium can be risky and requires thorough research and consideration of market trends and individual risk tolerance.

Final Thoughts

Issues related to batteries have sparked a renewed interest in nuclear energy. 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 central to 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 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.