Miners and analysts think uranium bull market is still in its infancy

Boss Energy’s Duncan Craib thinks a uranium price breakout is still on the way after responding to sceptics with a strong December quarter.

Boss is counting its cash as Honeymoon ramps up. Pic: Getty Images

• Uranium stocks have been volatile over the past year as spot prices have failed to live up to market hype

• But strong quarterly result from new producer Boss Energy has brought back yellowcake love

• Boss MD Duncan Craib still thinks higher prices are on their way

Uranium has been one of the most volatile sectors of the ASX resources market in the past two years as prices surged past US$100/lb – levels not seen since 2007 – before receding in an epic pullback across 2024.

That's left some in the space nervous about commissioning new developments in an inflationary environment, with costs on studies dating back years barely worth the paper they're printed on.

Deep Yellow (ASX:DYL) warned prices were not high enough to incentivise new production in December as it delayed FID on its Tumas mine in Namibia to the first quarter of 2025.

Thus far those companies who have fired up or made substantive plans to enter the market have retooled older operations, where millions in capital had already been sunk to smooth a pathway back to production – Boss Energy (ASX:BOE) at Honeymoon in South Australia, Paladin Energy's (ASX:PDN) Langer Heinrich in Namibia, Peninsula Energy's (ASX:PEN) Lance in Wyoming, USA, and, by Q3 2025, Lotus Resources' (ASX:LOT) Kayelekera in Malawi.

The industry was knocked by two factors over the weekend: First was a stronger than expected fourth quarter result and 2025 production guidance from Kazatomprom, the State-backed Kazakh producer which counts as the world's largest.

Canaccord's Alex Bedwany set his expectations at the bottom end of its 25,000-26,500t guidance range having previously priced in a guidance cut, lifting the broker's price target on the LSE-listed stock from US$54 to US$56. But even with the upgrade and ignoring the potential for slower than expected ramp ups elsewhere, the broker still thinks a market deficit will come in at a significant 5% of demand in 2025.

"For this reason we maintain conviction in our long-term uranium thesis, evidenced by the continued rise in the term price (~US$80/lb per UxC)," Bedwany said in a note overnight.

The second factor was the revelation DeepSeek, a Chinese rival to Open AI's ChatGPT, had produced a generative AI model cheaper and with substantially lower energy requirements than US proponents, previously a tailwind for uranium and nuclear power demand projections.

But a strong showing in its second quarter as a producer from Boss Energy, one the ASX's two uranium bellwethers, reversed the trend on Wednesday.

Speed to market

Boss drummed 137,084lb of yellowcake in the December quarter at Honeymoon, up 53% QoQ and a figure it says puts the company on track to produce 850,000lb in FY25. That is the first part of a staged ramp up to a maximum rate of 2.45Mlbpa from FY27.

Having declared commercial production on January 1 this year, costs for the second half are expected to clock in at $37-41/lb (US$23-25/lb), around 35% above estimates from a 2021 feasibility study at the top end of the range.

At sales prices in the December quarter (200,000lb at US$77.50/lb), Boss is likely to enjoy a decent margin even after higher cost structure is accounted for.

That study was compiled as the uranium market was coming off post-Fukushima lows of under US$30/lb and term prices derived from contract negotiations between miners and utilities are now sitting at decade long highs. While new miners will be keen to see prices rise further before committing, Craib says those with conviction in the market's future will reap the rewards of acting early.

Having reached FID on Honeymoon in a far weaker market, it later doubled down by acquiring 30% of the Alta Mesa project in south Texas, which has shipped 35,181lb to Boss and will hit nameplate of 1.5Mlbpa next year (Boss share 450,000lb).

"Anything north of here is really just added to our profits," Craib said on the uranium price.

"We actually announced our final investment decision when the uranium price was quite low so I would have thought other development projects, if they really do believe in the price going up, they should commit.

"Once you do FID it's then a couple of years to actually construct your plant. You don't want to miss the roast, so to speak."

Caught short

Boss is the most heavily shorted stock on the ASX with close to 20% of its shares held short on Jan 22, followed next on ~15% by peer Paladin, with Deep Yellow also in the top 10 with over 10% of its stock held by investors who will benefit when the price goes down.

That's typically viewed as a negative indicator, but can also act as a springboard when good news hits because it induces covering – the buying of long positions to hedge the potential losses short sellers may cop if they end up on the wrong side of the trade.

Craib cautioned against thinking the shorters were getting bearish on uranium and nuclear energy, having rotated out of lithium stocks with prices of the battery metal unlikely to drop further.

"To my mind shorts are not gambling or punting, it is real investing, really no different to long positions," he said.

"I don't know who the shorters are, why it's occurring of if they're really short with their portfolio management strategies.

"These guys could be betting that the world GDP is going to fall 1% lower than expectations this year, which may cause less energy demand, reduce the number of nuclear plants being built ... it's all hypothetical.

"All we know at Boss is that we need to focus on the job at hand and continue to deliver positive results."

Spot prices, according to Numerco, dropped to US$68/lb on Tuesday, their first dip below US$70/lb since October 2023. But Craib remains confident uranium prices are heading higher from here.

"I think the decline in the spot price has affected sentiment towards uranium equities," Craib said, adding that term prices are more relevant for its operations.

"At the same time, there's a lot of uncertainty, I think in the world, particularly with recent US elections.

"And then you've got sanctions with Russia or tariffs being imposed with Canada. There has been a lot of volatility and perhaps some of the flow of funds may have moved from uranium ETFs into other parts of the market.

"It's really hard to tell. Longer term though, we're all confident in the industry that higher prices are needed to bring on new supply, that (the) incentive price has to increase."

Market goes nuclear

One day on from the DeepSeek sell-off, Boss' positive result flowed through to the rest of the yellowcake market.

While Boss rose 5.6% after an initial surge, developer Bannerman Energy (ASX:BMN) climbed close to 10% on reasonable volumes, while Deep Yellow (ASX:DYL) lifted 6.9%.

Elevate Uranium (ASX:EL8), which owns the Koppies project in Namibia, was 10.2% higher, while Peninsula gained 2.3% and Paladin lifted 1.3%.

Lotus rose close to 6% after announcing a contract to sell 800,000lb of Kayelekera uranium to US utility PSEG Nuclear LLC from 2026 to 2029. Together with existing deals, LOT has so far contracted 2.3-2.6Mlb from 2026 to 2032.

Marmota (ASX:MEU), which owns the Saffron deposit near Honeymoon, and fellow Boss neighbour Orpheus Uranium (ASX:ORP) also rose.

Koba Resources (ASX:KOB) traded down but also has exploration prospects in the vicinity of Boss' Jasons satellite deposit.

Craib said while it didn't have expansion studies under way, Boss had retained optionality to increase the size of its processing facility from its planned six IX columns (so far two are installed, with a third in commissioning).

That would depend on market conditions, the viability of satellites like Jasons and Gould's Dam or any successful discoveries made by nearby juniors.

"I hope they do find more uranium," Craib said.

"We're focused on some of the high priority targets that we already own ... but certainly we encourage those who are around us to do the exploration."

At Stockhead, we tell it like it is. While Koba Resources is a Stockhead advertiser, it did not sponsor this article.

Originally published as Miners and analysts think uranium bull market is still in its infancy