Uranium Roundtable Keynote + Firesides
Sprott Physical Uranium Trust (U.UN-T, Not Covered)
John Ciampaglia, President and CEO of Sprott Uranium Trust
NexGen Energy (NXE-T, NXG-A - BUY - C$9.91, C$12.00 Price Target)
Monica Kras, VP Corporate Development and IR
Denison Mines (DML-T, DNN-N – BUY, C$2.75, C$3.75 Price Target)
Dave Cates, President and CEO of Denison Mines
Cameco (CCO-T, CCJ-N – BUY, C$74.29, C$91.00 Price Target)
Rachelle Girard, Chief Corporate Officer
Uranium Energy (UEC-N – BUY, US$7.08, US$10.00 Price Target)
Katherine Arblaster, VP of Sustainability
Macro - The overall tone from the sessions remained very bullish despite a recent pullback in spot uranium pricing. Cameco's Rachelle Girard noted that some of the recent weakness in spot pricing is being driven by uncertainty in the downstream conversion and enrichment caused by the U.S.-Russian uranium ban. She expects that once utilities better understand their downstream services procurement needs, they will be back in the market to secure the necessary primary uranium. Ultimately, uranium procurement may be delayed but can't be deferred indefinitely with current procurement levels trending below replacement rates.
In the interim, Cameco expects to remain disciplined with no plans to expand production capacity until the demand signals are firmly in place.
John Ciampaglia also weighed in on the recent market activity, noting that term pricing has remained very resilient, (hasn't declined in 20-months), despite the spot weakness. He believes the Kazakhstan's state sovereign fund ANU Energy liquidated its 2.0mmlb physical uranium position in the last quarter of 2024, leading to choppy downwards pressure on pricing. That selling pressure is now believed to be complete. John also made the argument for how undervalued uranium is at the moment, with spot prices of $74/lb currently trading at the same levels prior to the Fukushima disaster in 2011, despite inflationary pressures over that period, combined with the threat of potential tariffs by the Trump administration. On the nuclear momentum in the U.S., Sprott sees Secretary of Energy nominee Chris Wright as a nuclear bull, and that reshoring the U.S. nuclear supply chain will be paramount under the incoming administration.
Inkai JV (Cameco/Kazatamprom) production suspension – Rachelle Girard noted that the temporary suspension of Inkai came as a surprise to Cameco and that they only found out on December 31st. In Cameco's view, the suspension was done out of an abundance of caution to ensure compliance with regulatory requirements and the company expects the necessary filings to be made in the next couple of weeks followed by a restart, noting Kazatomprom does not expect the temporary suspension to impact production.
Rook I (NexGen) – Management highlighted expressions of interest for debt financing for the project of close to $1.5bln, adding that the ~C$2.2bln estimated capital requirement for the build would be covered by this amount when combined with current liquidity (cash and physical uranium holdings). The company plans to await CNSC approval for the project before finalizing project financing and will layer in additional offtakes (beyond the 5mmlbs U3O8 already agreed to) to satisfy lending requirements. With respect to future offtakes, management highlighted the company will employ a VWAP pricing model to minimize exposure to shorter-term pricing distortions in the spot market.
Wheeler River (Denison) – Management is also looking at credit options for financing, although the gap between currently available sources (~C$375mm as of Q3/24 including physical uranium holdings) and the estimated capex requirement (~C$420mm) is very manageable. The company highlighted that the reduction of its physical uranium holdings will be a focus in the earlier parts of its financing strategy, noting conversations with future customers (utilities). With respect to offtake, management is looking to match contracts to production; however, various pricing mechanisms remain under evaluation.
Permitting continuing to advance - NexGen and Denison have submitted final EIS documents to the CNSC in Q4/24. Denison's EIS for Wheeler River was accepted by the CNSC on December 24th, 2024, while NexGen is waiting to hear back from the CNSC on the final EIS for Arrow in the next couple of weeks. The next step following the acceptance of the EIS is the scheduling of a hearing by the CNSC to approve the EA and mining license. Neither company was willing to commit to a timeline, but Monica Kras noted she believes the scheduling of a hearing will happen soon.
Both companies noted significantly improved financing appetite from lenders versus a few years ago.
UEC expecting first drummed yellowcake in the next few weeks – Katherine Arblaster from UEC highlighted that they are shipping solution from Christensen Ranch to the Irigaray Central Processing Facility (CPF) and anticipate producing drummed yellowcake in the
next few weeks. The company plans to build up its inventory and work on its sales plan.
In addition, the company plans to add more mining units to increase production. Beyond Wyoming, the company has started construction of the satellite plant at Burke Hollow, to restart production at the Hobson CPF.