Top ASX Uranium Stocks: Investing Opportunities 2023

Team Veye | 18-Aug-2023 uranium stocks asx

Uranium Introduction

Global sentiment towards nuclear energy is rapidly evolving. With world fast waking up to nuclear power, uranium is becoming central to the clean energy transition. While there is growing support for nuclear power industry, in some countries this also qualifies for green investment label.

Uranium demand is increasing because climate emergency has increased awareness of nuclear power’s benefits. Zero-net emissions by 2050 is difficult to be achieved without nuclear. Moreover, it is the only long-term viable source of low carbon emission baseload power.

Uranium’s outstanding dynamics are its immediate and long-term drivers. With increasing demand there is going to be a supply deficit even if idled mines return.

Australia's known uranium resources are the world's largest – almost one-third of the world total. Australia uses no nuclear power, but with high reliance on coal any likely carbon constraints on electricity generation will make it a strong possibility.

Australia has a significant infrastructure to support any future nuclear power program. As well as the Australian Nuclear Science & Technology Organisation (ANSTO), which owns and runs the modern 20 MWt Opal research reactor, there is a world-ranking safeguards set-up – the Australian Safeguards & Non-proliferation Office (ASNO), the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) and a well-developed uranium mining industry.

However, in contrast to most G20 countries, the only real driver for nuclear power in Australia is reduction of CO2 emissions, or costs arising from that. Apart from that, Australia's huge coal resources and significant natural gas underwrite energy security and provide low-cost power. (Many other countries have cost of electricity and energy security as major factors.)

Download your free ASX Mining Report Now

Radioactive Waste - Domestic

While Australia has no nuclear power producing electricity, it does have well-developed usage of radioisotopes in medicine, research and industry. Many of these isotopes are produced in the research reactor at Lucas Heights, near Sydney, then used at hospitals, industrial sites and laboratories around the country.

What are ASX Uranium Stocks? 

There are Australian companies listed in the Australian stock exchange are called ASX uranium shares, where traders buy and sell these ASX shares. There are large cap to mid-cap and small level companies proactively participate in the exploration and mining activities in Australia. Some good uranium companies that are ASX uranium shares are as follows:

Paladin Energy Limited (ASX: PDN)
Deep Yellow Limited (ASX: DYL)
Boss Energy Limited (ASX: BOE)
Laramide resources Limited (ASX: LAM)
Core Lithium Limited (ASX: CXO)
Energy Resources of Australia Limited(ASX:ERA)

Investing in ASX Uranium Shares

Most of the countries actively pursuing decarbonisation is driving the demand growth for nuclear energy. Recognised as a green source of energy in the EU, it is second largest source of global clean energy with almost zero carbon emissions.
Global reactor fleet is set to grow significantly. Currently with 436 operating reactors worldwide
59reactors under construction in 15 countries

Pros and Cons of Investing in Uranium Shares 

There is a notable advantage specific to Australian investors, who can gain exposure to uranium commodity prices by investing in ASX uranium shares. Undoubtedly, there is a rare opportunity in ASX uranium stocks. Big miners such as Paladin Energy Limited (ASX: PDN) may provide stability, but there are also medium-sized commodity ASX shares and small uranium shares that attract the minds of investors. Australia is considered the home of the world's largest share of uranium resources and is a prominent supplier in the global uranium market.

It is important to note that commodity markets tend to be cyclical; prices rise and fall during the cycle overall. The fluctuations in mineral prices relate to demand and supply.

Neither the prices can persist below the cost of production nor remain at very high levels for a longer duration than it takes for new producers to enter the market and create more supply.

Top ASX Uranium Stocks to Watch: Biggest Companies in 2023.

With concerns over climate change mounting, nuclear power could soon emerge as a widely accepted form of clean energy. Here are some of the top ASX-listed uranium stocks to watch:

Paladin Energy Limited (ASX: PDN)

Paladin Energy Limited (ASX: PDN) has a market cap of $2.34 billion and current market price of $0.785(as of 15 August 2023), is an Australian company primarily focused on uranium mining and exploration. Its key asset is the Langer Heinrich Mine in Namibia, where uranium is produced and sold. The company also has exploration projects in Australia, Canada, and holds significant interests in the Michelin and Manyingee uranium projects.

The company’s main aim is to return Langer Heinrich Mine (LHM) to production. The project continues on track to commence its first production in Q1 CY2024. It is also remaining on a budget (~US$118M). The project making steady progress and has been approximately 60% completed. With over 1,000 personnel on site, the contractor workforce is at an expected peak. Paladin had no corporate debt as of 30 June 2023, with cash at the bank at US$126.2 million, thus signifying sufficient available liquidity.
The company had six offtake contracts worth approximately 18Mlb. This is 48% of the estimated production to CY2030. With shipping companies and conversion facilities ahead of Paladin’s return to production, its marketing continues to progress through commercial negotiations.

Deep Yellow Limited (ASX: DYL)

Deep Yellow Limited (ASX: DYL) has a market cap of $670.69 million, and a current market price of $0.885(As of 15 August 2023) is successfully progressing a dual-pillar growth strategy to establish a globally diversified, Tier-1 uranium company to produce 10+Mlb p.a. The Company’s portfolio contains the largest uranium resource base of any ASX-listed company and its projects provide geographic and development diversity. Deep Yellow is the only ASX company with two advanced projects – flagship Tumas, Namibia (Final Investment Decision expected in 1H/CY24) and Mulga Rock, Western Australia (advancing through revised DFS), both located in Tier-1 uranium jurisdictions. Deep Yellow is well-positioned for further growth through development of its highly prospective exploration portfolio – Alligator River, Northern Territory and Omahola, Namibia with ongoing M&A focused on high-quality assets should opportunities arise that best fit the Company’s strategy.

Boss Energy Limited (ASX: BOE)

Boss Energy Limited (ASX: BOE) has a market cap of $1.20 billion and a current market price of $3.39 (As of August 15, 2023). It is a mineral exploration company with a focus on the Honeymoon Uranium Project in South Australia.

On June 30, 2023, Boss Energy Limited held cash and cash equivalents of $89 million, which excludes an environmental bond of $8.9 million. Cash balances are being managed with a term deposit programme to take advantage of the higher interest rate environment. The Company also holds inventory of 1.25 million lbs., which has a current spot market value of $106 million. Combined with cash, the company has current assets of $195 million, no long-term debt obligations, and a remaining estimated Capex spend of $68.8 million, leaving it better positioned to transform Honeymoon into production.

Uranium demand has been growing, but there is a supply deficit. There should be adequate supply, and the timing depends on uranium price signals and investor debt funding. The price is moving upwards in response to this pressure, but the longer it takes to start development of the early-stage mines, the more potential there is for an extended overshoot.

Download your free ASX Small Cap Report Now

Frequently Asked Questions (FAQ)

Is there a uranium ETF in Australia?

Global X Uranium ETF (ATOM)  offers investors access to a broad range of companies involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries.
How is Uranium traded?
Uranium does not trade on an open market. Buyers and sellers primarily negotiate long-term contracts privately. 
Prices can be ascertained through independent market brokeres like UxC and EvoMarkets.

What is the outlook for uranium stocks?

Globally, governments are realising that nuclear energy has a vital role to play in the long run. With the importance of decarbonisation and electrification coming to the fore, and both requiring carbon free nuclear energy to achieve stated goals, uranium stocks are gaining significance.

How do different countries view the importance of uranium?

Many countries are taking remedial steps in view of growing utility of nuclear power.
South Korea curbed its plans for renewables in favour of nuclear energy.
Belgium extended the life of two reactors by 10 years reversing its earlier plans to completely phase out nuclear by 2026.
Late last year, Japan, reversing its nuclear phase out plan after the Fukushima crisis in 2011, adopted a new policy to promote greater use of nuclear energy. It seeks to maximize the use of existing nuclear reactors by restarting as many of them as possible. 

What is the outlook for uranium?

The macro outlook for uranium and nuclear power remains positive because of Nuclear’s role in energy security since renewables fall back on intermittency and low capacity, requiring base load energy resources to offset. The resource could be nuclear power plants or coal and natural gas. Since the nuclear power has the highest base load capacity, utilities seek out base load reliability of nuclear power to avoid supply chain disruptions.
 

Disclaimer

Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.

veye logo

Grab Your Free Report On 5 ASX Dividend Stocks To Buy In 2024

(+61)