Uranium supply tightness and underinvestment drive bullish market outlook

Uranium doesn’t often grab headlines, but behind the scenes, a bull market is quietly building.

According to Citi, the conditions are in place for a sustained rally, with prices forecast to hit $100 per pound by 2026.

That would mark a return to levels not seen since the mid-2000s, when the last major uranium boom was underway. This time, the drivers are different, and, Citi argues, less widely appreciated by the market.

The bank’s latest commodities note sets out a bullish thesis. Supply remains tight, thanks to years of underinvestment in mining.

On the other side of the ledger, demand is strengthening; not only from China, which is aggressively expanding its nuclear fleet, but also from a new generation of smaller nuclear technologies and a subtle shift in the fuel cycle itself.

“Demand from China, small modular reactors, and enrichers is underappreciated,” the analysts write. The cumulative effect could be significant.

Small modular reactors (SMRs), long touted as the next frontier for nuclear energy, are now moving closer to commercial deployment.

Citi estimates that SMRs could account for as much as 20% of total uranium demand by 2040. While that still leaves time, the market tends to move in anticipation of structural shifts, and early signs of scale-up could accelerate buying.

Then there’s the role of enrichers. In the nuclear fuel cycle, enrichers extract usable uranium from mined material.

When enrichment is expensive, as it is now, with record prices for separative work units (SWU), operators use more raw uranium, a process known as overfeeding.

Citi expects this trend to continue, leading to further buying pressure for U₃O₈, the industry’s benchmark form of uranium oxide.

Add in the possibility of production shortfalls, and the bank sees a market skewed to the upside. “The bullish risk skew for uranium prices is significant,” they conclude.

Companies to watch in the uranium space

Nearing uranium production at its Dasa Project in Niger is Global Atomic Corporation (TSX:GLO), with a Feasibility Study projecting total production of 68.1 million pounds of U₃O₈ over a 23.75-year mine life. In a Q2 update, the company said that pre-development work continues at the site, with earthworks and civil works underway and new worker accommodations and support facilities almost completed.

Standard Uranium Ltd (TSX-V:STND, OTCQB:STTDF) is focused on advancing uranium targets in the prolific Athabasca Basin, in Saskatchewan, Canada, with its flagship Davidson River Project located in the southwest part of the basin. The company is kicking off a drill program at the project this month after generating several high-priority targets with ExoSphere Multiphysics surveys.

Cosa Resources (CSE:COSA, OTCQB:COSAF) is also focused on exploring and developing underexplored uranium projects in the Athabasca Basin region, with its portfolio of 100%-owned and joint venture (JV) projects spanning 237,000 hectares. The company is currently focused on advancing drilling at the Murphy Lake North JV, a 70/30 JV between Cosa and Denison Mines.

Nearby, Pure Point Uranium (TSXV: PTU, OTCQB: PTUUF) is advancing its Athabasca Basin projects via JVs with major players such as Cameco, Orano, Foran Mining and IsoEnergy. A recent highlight was initial assay results from the Nova Discovery at its Dorado JV with IsoEnergy, which returned high-grade uranium mineralization with grades up to 5.4% U₃O₈ over 0.3 meters within a broader 1 meter interval grading 2.2% U₃O.

Another firm with exposure to the Athabasca Basin is Fortune Bay Corp (TSX-V:FOR, OTCQB:FTBYF), a gold exploration and development company that holds an optioned uranium portfolio in the basin. Partner-funded drilling is underway at The Woods Projects and set to kick off in mid-September at the Murmac Project.  

Also with a presence in the Athabasca Basin is Baselode Energy Corp (TSX-V:FIND, OTCQB:BSENF), soon to be known as Geiger Energy following its acquisition of Forum Energy Metals. The company is advancing several high-potential uranium projects, including Hook in Saskatchewan and Aberdeen in Nunavut.

In another consolidation move for the sector, GoviEx Uranium Inc (TSX-V:GXU, OTCQB:GVXXF) intends to change its name to Atomic Eagle following a reverse takeover of Tombador Iron. The company will continue to focus on the exploration and development of the Muntanga uranium project in Zambia.

Within the United States, Uranium American Resources Inc. (OTC:UARI) is working to acquire three uranium and vanadium assets in the western part of the country. These include the open-pit Marysvale asset, the Sky project, and 19 smaller historic mines along the Colorado–Utah border, known collectively as State Line. 

In Wyoming, Myriad Uranium (CSE: M, OTCQB: MYRUF, FSE: C3Q) holds an earnable 75% interest in the Copper Mountain uranium project, which hosts several known uranium deposits and past-producing mines, including the Arrowhead Mine that produced 500,000 pounds of U₃O₈.

Taking a different approach to the uranium space is Mega Uranium (TSX:MGA), a diversified uranium investment company focused on acquiring and managing a portfolio of uranium assets, primarily in Australia and Canada. A highlight in its portfolio is the Maureen Project in Northern Queensland, Australia, under option to Consolidated Uranium.