Uranium: From North Korea with Love
The Alchemist Issue 25 - Uranium: Asian insatiable demand for uranium, inaction by America, fears over enrichment capability, and public concern over proliferation are as much issues faced by the uranium sector as they are topics related to last month’s nuclear weapons test by North Korea.
The continued malaise of uranium equities appears to be in marked defiance of broadly supportive demand and supply fundamentals. Much of this depressed performance is due to the low and languishing uranium spot and contract price, which reflects the current flat demand in the market with slightly fewer reactors operational now than before Fukushima. However, uranium equities valuations appear unresponsive to positive developments over the last six months. Despite the resurrection of China’s grand expansion plans for its nuclear reactor fleet and the election of a pro-nuclear government in Japan, uranium equities currently stand at 25-40% of their pre-Fukushima valuations.
This extended issue of The Alchemist seeks to provide an update on the current state of play for uranium. We will address concerns that investors may have over demand growth and importantly we will delve into the impact of reactor shutdowns. This issue will also examine the current discrepancy between current market valuations and recent transactions in the sector to reveal the key characteristics of projects which can stand out against the pack as the uranium renaissance regathers momentum.