92 Energy believes uranium bull market is just getting started

92 Energy (ASX: 92E) managing director Siobhan Lancaster believes the stars are aligning for uranium.

“I think we’re just at the beginning of this bull market,” she told the Resources Rising Stars Summer Series in Brisbane today.

“The price outlook for uranium has never been better. Political support for nuclear has never been better.”

Uranium was the best-performing commodity of 2023 and has so far kept pulses racing in 2024 when it cracked US$100 per pound in January.

The uranium spot price is already trading at a 17-year high and could still have much further to run.

Ms Lancaster said demand was strong due to years of underinvestment in the uranium market, which has led to a supply deficit.

“Utilities have to buy uranium,” she said. “It’s one of the most inelastic curves you’ll ever see when there’s a lack of supply.”

On the supply side, there have been issues in Niger due to a coup last year.

Meanwhile, Kazakhstan’s Kazatomprom – which accounts for 42% of global uranium output  – and Canadian giant Cameco have also warned of weaker-than-forecast output.

“Both of these major suppliers have pretty much sold out of uranium for the next few years,” Ms Lancaster said.

Corporate consolidation

In December, 92E announced a three-way merger with Canada’s ATHA Energy Corporation (CSE: SASK) and Latitude Uranium (CSE: LUR).

The scrip deal will make the combined entity, which will be listed in Canada, the largest landholder in Saskatchewan’s Athabasca Basin, home to Cameco’s world-class Cigar Lake and McArthur River mines.

The merged group will hold the 43.3 million pound Angilak project in Nunavut and the 14Mlb CMB project in Labrador, as well as 92E’s emerging Gemini discovery in the Athabasca Basin.

Ms Lancaster said the enlarged company would be an aggressive explorer.

“We believe this vehicle will provide maximum torque on exploration,” she said.

Investor ‘sweet spot’

With a market capitalisation of just A$60m, Ms Lancaster believes 92E is in the “investor sweet spot”.

The implied transaction price is A$0.77 per share, while 92E shares were trading at A$0.575 on the ASX this morning.

“So there’s still that arbitrage opportunity as the merger progresses,” Ms Lancaster said.

Ms Lancaster said the highly-leveraged merged company would have cash of more than CAD$65m (approximately A$74m) upon closure of the deal, which is expected in April.

“That CAD$65m cash is king in this market,” she said.