Petra Capital forecasts sustained strength in uranium market
A new report from boutique Australian institutional stockbroking firm Petra Capital is forecasting continued strength in the uranium market.
The estimated uranium term price for August is up 19% year-to-date, with the final third of the year – typically a strong seasonal period for uranium – still to come.
Petra believes an increase in contract volumes through to year-end will help drive material price increases—initially in the term price, with the spot price to follow.
Kazatomprom impact
Petra’s report highlighted the impact of Kazatomprom’s recent production forecast issues on the short interest in uranium stocks.
“Given the disconnect in equity prices, continued high short interest levels and the demonstrated inability of incumbents to rapidly increase supply, we see an excellent risk/reward to an investment in uranium equities,” the report noted.
The firm also pointed to anticipated US interest rate cuts and a potential increase in contract volumes as having an outsized impact on the approximately $87 billion global uranium sector into year-end.
Local hopes
The report said the state of the current global uranium market is providing tailwinds for a number of listed Australian companies, awarding ‘buy” ratings to Lotus Resources (ASX: LOT), Bannerman Energy (ASX: BMN), Alligator Energy (ASX: AGE), Aura Energy (ASX: AEE) and NexGen Energy (ASX: NXG).
Small Caps has also identified some promising ASX-listed uranium players including Boss Energy (ASX: BOE), Elevate Uranium (ASX: EL8) and Terra Uranium (ASX: T92).
Boss Energy is currently ramping up production activities at its Honeymoon project in South Australia and the Alta Mesa development in the USA, with plans to accelerate exploration at its large, highly prospective acreage at both.
Elevate Uranium recently received promising new results from its Hirabeb uranium prospect in Namibia—the second of the company’s four discoveries in four years, with its Koppies project being the first and more advanced.
Terra Uranium has signed strategic agreements with ATHA Energy for ATHA’s potential acquisition of up to 60% of Terra’s Pasfield Lake project and Terra’s potential acquisition of up to 70% of ATHA’s Spire and Horizon projects.
Advanced projects
Of the companies Petra favours, Lotus recently locked down offtake agreements and an unsecured debt facility, while early works are well underway at cashed-up and debt-free Bannerman’s flagship Etango project.
Alligator’s Samphire in-situ recovery project in South Australia is following the path worn by Boss Energy’s Honeymoon project, with the company’s recent Big Lake discovery highlighting the exploration potential within its holdings and drilling is now underway at its Nabarlek North project in the Northern Territory.
Aura Energy’s Tiris project is fully-permitted with final investment decision expected in 1Q25, while NexGen Energy is targeting 2028 for production at its 29-million-pound Rook 1 project.