Uranium Investors Take Profits & Get Ready for Second Wave

Interview with Dustin Garrow, Uranium Market Expert and advisor to Uranium Developers
Recording date: 14th March 2024
Uranium's Bright Future: Supply Constraints Meet Surging Demand
Uranium industry veteran Dustin Garrow shares his optimistic outlook on the sector, as constrained supply struggles to keep pace with accelerating global nuclear energy demand.
The stars are aligning for a new chapter in the uranium story, as industry dynamics undergo a profound shift. Dustin Garrow, a longtime uranium insider, paints a compelling picture of the sector's prospects in a recent interview.
For years, uranium prices languished as abundant stockpiles from the Cold War era saturated the market. But that excess inventory has steadily dwindled. "The era of excess inventory is over," Garrow affirms, referencing a pivotal 2022 UxC announcement.
Spot uranium prices surged to 11-year highs in 2023, briefly topping $106/lb before cooling off. Term contract prices are following suit, albeit more gradually. Garrow expects term prices to eclipse $80/lb soon as utilities lock in long term supply.
What's driving this paradigm shift? In a word, fundamentals. Global nuclear energy generation is poised for robust growth in the coming decades to meet rising zero-carbon electricity demand. More than 50 new reactors are under construction worldwide. Stalwarts like China and India continue ambitious buildouts, while developed economies like Japan restart idled capacity. Emerging nuclear nations from Poland to the Philippines are laying the groundwork for debut reactors.
Garrow is particularly enthused about the outlook for small modular reactors (SMRs). He cites a Wood Mackenzie projection of 22GW of SMR capacity in the pipeline, potentially doubling by 2050. This alone could boost uranium demand by 30%.
The supply side, meanwhile, faces stark challenges in scaling to meet this demand. The low-hanging fruit is being picked as mines on care and maintenance like Langer Heinrich and Honeymoon resume output. But these restarts will add a modest 20-22 million lbs annually at full capacity - well short of the projected supply gap.
Genuinely new mines face lengthy timelines and eye-watering capital needs, often exceeding $1 billion. Major producers like Cameco and Kazatomprom are wary of aggressive expansion, focusing on optimizing tier-one assets. Cameco plans only incremental growth at Cigar Lake and McArthur River. Kazatomprom is contending with wellfield depletion and sulfuric acid shortfalls.
So where will the uranium come from? Garrow believes a swath of aspiring developers will be called upon, reeling off names like Denison, Global Atomic, Deep Yellow, and Bannerman Energy. But he cautions that even if most deliver, more projects must be incentivized soon to avoid a yawning supply deficit. An influx of strategic investment from nuclear utilities or state actors may be needed.
Despite potential speedbumps, the uranium sector's future hasn't looked this bright in decades. The key demand drivers appear structural, not cyclical: the imperative of decarbonization, electrification and energy security.
While uranium equities have pulled back alongside spot prices, strong fundamentals should pave the way for further upside ahead. When the market recognizes the true extent of the supply shortfall, Garrow expects both spot and term contract prices to power higher.
The implications will ripple across the sector. Developers with proven assets should find it easier to secure financing and offtake agreements. Margin expansion should boost producers' bottom lines and fuel organic growth. Explorers making new discoveries could catch the eyes of acquirers. Well-capitalized physical holding companies are positioned to benefit from rising valuations.
The next chapter of the uranium story is unfolding before our eyes. While risks remain, the sector's potential is undeniable. With a constructive long-term approach, uranium investors may be poised to reap the rewards of a market in the midst of a momentous transition. The stars are aligning over uranium - and the future is looking bright.
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[@markjoseph2993]

This is a must watch, in my opinion. Dustin Garrow is one of the more honest voices in the industry. Great time to top-up!

[@phillipwatts7226]

I was speaking to Global Atomic this week the most recent L-T contract price they signed was over $ 80 per pound so it's in the 80's now

[@paulthomson4200]

THANKS DUSTIN AND MATT. I LIKE THE UPDATES THAT CONFIRM OUR NUCLEAR JUNIORS JOURNEY - NOT MUCH ENCOURAGEMENT APPART FROM YOU GUYS AND ONE OR TWO OTHERS = MUCH APPRECIATED. KEEP IT UP TO THE MARK.

[@markkubert8572]

If the Russians stopped providing enrichment to the US, how long does it take to permit and build a new centrifuge plant? And, would it be private or government owned?

[@CRUXInvestor]

10 years at least.

[@ronwitzel3246]

A Laser Enrichment plant could be built in significantly less time if the government expedited licensing

[@TheCoolbreeze45]

@@ronwitzel3246still probably 6y

[@minutemaniii7062]

UUUU stock. Check it out thank me later

[@Henry-gb1vb]

If Katz is having problems securing sulfuric acid for production, why would it not be an issue everywhere else.

[@markkubert8572]

Sulfuric is produced worldwide in massive quantities. But, it isn't easy or cheap to ship to a place like K'stan. So, if their local supply is dedicated towards fertilizer production, then they have limited (affordable) access.

[@michellonneberga2723]

Question about a company: I don't understand why the share price of GoviEx Uranium hasn't been higher for a long time.Other companies don't produce either, but their share price is a lot higher and they seem to have benefited from the rising price of uranium. What do you think?

[@iluvmyuzi]

Coup of niger

[@markkubert8572]

The US public has taken the bizarre view that it can base its economy on non-physical businesses. Forget the industries that used to form the foundation of life: mining/refining, chemicals, agriculture and manufacturing. As time goes on, you lose the skilled workers who understood these businesses and you become a third rate country, incapable of supporting itself. The nuclear energy business is just one example: we mine almost no U, can't enrich it and barely have the skills to build new reactors.

[@reecemccullough4829]

So let me get this straight... You take the world's largest and most successful economy, and then try to argue their financial strategy is wrong? Huh... If anything your point advocates for no physical base lol

[@JasonISF]

​@@reecemccullough4829so the US economy MUST be doing so well as the STOCK market is at ATH right??? This bull market will go on forever!!! 😂 You sound like you are 21 years old.

[@reecemccullough4829]

pretty obvious you didnt comprehend the OP or my response@@JasonISF

[@minutemaniii7062]

UUUU stock. Thank me later.

[@marcmason9474]

So the question on everyones lips, what U stock will make the most money for investors 😂

[@JasonISF]

Elevate Uranium (ASX:EL8). They have the largest land holdings for Uranium in Namibia and also own pounds in the ground in Australia too.

[@minutemaniii7062]

UUUU stock. Thank me later