The world’s largest uranium miner, Kazakhstan’s state-owned Kazatomprom, is preparing to ramp up reserves for production as demand is expected to increase as European countries move their supply chains away from Russia.
Russia, through its state-owned nuclear power company, Rosatom, dominates the nuclear supply chain. It is the major supplier of enriched uranium to Europe’s power plants, and even the US recently recognized the importance of shifting supply chains away from Russia. In a recent Senate hearing:
“almost none of the fuel needed to power America’s nuclear fleet today comes from domestic producers, while U.S. nuclear utilities purchase nearly half of the uranium they consume from state-owned entities (SEO) in Russia, Kazakhstan, and Uzbekistan.”
“We estimate that there is more than $1 billion in annual U.S. dollar purchases of nuclear fuel flowing to ROSATOM,” said Scott Melbye, president of the association and Executive Vice President at Uranium Energy Corp.
Rosatom is not under Western sanctions, although many analysts say eventual sanctions on the Russian company will be a key catalyst in higher uranium prices. And we are beginning to see this shift in uranium sourcing from Russia to Kazakhstan.
Kazatomprom CEO Yerzhan Mukanov said geopolitical uncertainties and sanctions are “reshaping flows of the nuclear fuel, prompting some power producers to build inventories.” He said nuclear plants in Eastern Europe are seeking contracts from 2025, ditching reliance on Russia. “We are preparing our reserves for production, so we will be able to respond to market requests,” Mukanov said in an interview in Astana.
In 2022, President Biden signed the Inflation Reduction Act last year to pave the way for nuclear energy to decarbonize power grids, which includes a big push to increase US mining and processing of uranium to ensure energy security.
Russia’s dominance over the global uranium market may weaken as the West diversifies its enriched uranium sourcing. As nuclear power emerges as a crucial component in decarbonizing power grids, offering on-demand electricity, the demand for uranium is anticipated to soar.
I recently did a rundown of a potential bottoming in uranium. For new followers and readers, for weeks I have warned of a reversal pattern in uranium and an overall drop in energy. Our downside targets have been met, and uranium is beginning to consolidate. This means a potential reversal could be in the cards, but there are still some triggers required.
I use the Global X Uranium ETF (URA) and the Sprott Physical Uranium Trust (U.UN) as my proxies for the uranium price. The technicals tell me where prices could be going. Now we all understand the long term bullish fundamental case for uranium and nuclear energy, but the technicals on both of these charts are currently showing a downtrend. This provides an opportunity for long term uranium bulls to acquire, or initiate new uranium positions, at good prices.
A positive for uranium bulls is that both URA and U.UN are now developing a range… just like many uranium stocks. But as mentioned earlier, both remain in a downtrend with lower highs and lower lows. For URA, a close above $21.50 gets us out of the downtrend. A close above $20.30 would add some fuel to the idea that we can get back above $21.50. For U.UN, a close back above $16.50 is what gets us out of the current downtrend, with a close above the $15.80 zone increasing the probabilities of a trend reversal.
The move on URA at time of writing is looking incredibly bullish. We could be breaking above that $20.30 zone very soon.
Let us now take a look at what happened with Athabasca based miners this week.
F3 Uranium (FUU.V)
F3 Uranium this week entered into a letter of intent (LOI) with SKRR Exploration whereby SKRR and F3 will negotiate and settle the terms of a definitive option agreement that will provide SKRR with an option to acquire up to a 70% interest in F3’s right, title and interest in and to the mineral claims compromising the mineral exploration project known as the “Clearwater West Project”, located in Saskatchewan.
The Clearwater West Project is located ~20km outside the edge and in the south-west area of the Athabasca Basin, which is poised to become the next area for the development of major uranium mines in Saskatchewan. It is 13km south of Fission Uranium’s Triple R deposit, located 7 km outside the basin edge on its PLS Property, where a Feasibility Study was recently completed, and 17 km south of NexGen’s Arrow uranium deposit. The Clearwater West property is comprised of 3 contiguous mineral claims totaling 11,786 hectares which are immediately south and adjacent to Fission Uranium’s PLS property. F3 cautions that past results or discoveries on proximal lands are not necessarily indicative of the results that may be achieved on the Clearwater West Project.
Dev Randhawa, CEO of F3, commented:
“We are excited to work with Sherman Dahl and his hard-working team. F3 has 16 uranium projects in the Athabasca Basin and working with groups like SKRR will allow F3 to advance exploration and unlock potential value for our company and shareholders. F3 will be the operator during the earn-in period, having assembled the team responsible for three major uranium discoveries in the Athabasca Basin, the J Zone at Waterbury Lake (which was sold to Denison Mines), Fission Uranium’s Triple R deposit and most recently F3’s JR Zone at PLN. Through this LOI, F3 will receive cash and operator fees (up to $700,000), 7% ownership in our partner pre-financing and up to $5.4M in work expenditures to advance exploration on the Clearwater West Property.”
Under the terms of the LOI, SKRR may acquire up to a 70% interest in the Clearwater West Project by making certain staged cash payments and share payments of common shares in the capital of SKRR to F3 and by incurring expenditures over a 3-year period on the Clearwater West Project.
The stock remains in its range between support around $0.30 and resistance around $0.48. A break of the range will give us direction however, it should be noted the stock is in an uptrend with the major breakout and move beginning at the end of 2022. With the prevailing uptrend, it is more likely that traders would be buying on the dip.
Denison Mines (DNN)
Denison Mines announced it has successfully completed an internal conceptual mining study examining the potential application of the In-Situ Recovery (“ISR”) mining method at the Company’s 25.17% owned Midwest project.
The Concept Study was prepared by Denison during 2022 and was formally issued to the Midwest Joint Venture (“MWJV”) in early 2023. Based on the positive results of the Concept Study, the MWJV has now provided Denison with approval to complete additional ISR-related evaluation work for Midwest in 2023.
Midwest is located approximately 25 kilometres, by existing roads, from the 22.5% Denison owned McClean Lake uranium mill, and is a joint venture owned by Denison (25.17%) and Orano Canada Inc. (“Orano Canada”) (74.83%).
David Cates, Denison’s President & CEO, commented, “Since the completion of the Wheeler River Pre-Feasibility Study in 2018, Denison has invested in the development of a highly skilled and motivated Saskatoon-based technical team that has demonstrated industry leadership in the evaluation of the application of the ISR mining method to high-grade uranium deposits in the Athabasca Basin.
“We are encouraged by the results of the Midwest Concept Study, and we are pleased to continue the further evaluation of the potential application of the ISR mining method to Midwest, with the support of our partner Orano.“
Evaluation activities planned for Midwest during 2023 include the collection of deposit-specific information and the completion of select preliminary engineering studies to support the further evaluation and de-risking of the key criteria required to further assess the potential application of the ISR mining method, which may result in the preparation of a Preliminary Economic Assessment to support the development, if warranted, of future field tests.
A very similar technical structure and set up we see with URA and U.UN. For traders and investors, there are a lot of positive confluences here. Firstly, we are close to a major support zone highlighted in blue. We even have major wicks respecting this zone and showing that there are buyers stepping in.
We also have the major psychological zone of $1.00 being tested. Generally an area where you will see buyers step in. Finally, the stock is consolidating in a range just like uranium, and a double bottom breakout might be in play with a close above $1.10.
