Top 5 Uranium Stocks to Consider on Severe Supply Issues
Uranium stocks could regain a healthy glow. According to Cameco President and CEO Tim Gitzel, as quoted by World Nuclear News,“Increasing demand for nuclear means increasing demand for uranium, which brings us to the second factor that is driving our growing optimism - demand for uranium is rising at precisely the same time that supply is becoming less certain. We know that utilities have not been replacing what they consume annually under long-term contracts. This has led to a growing wedge of uncovered uranium requirements.' All could be beneficial for uranium stocks, such as S kyharbour Resources (TSXV: SYH) (OTCQB: SYHBF), Cameco Corporation (TSX: CCO) (NYSE: CCJ), Uranium Energy Corporation (NYSE: UEC), Denison Mines Corp (TSX: DML) (NYSE: DNN), and Energy Fuels (NYSE: UUUU) (TSX: EFR).
In addition, we have to consider that uranium supply is low, with growing demand. In fact, according to The International Atomic Energy Agency's (IAEA) Uranium Production Specialist Dr. Adrienne Hanly, as noted by Stockhead,“uranium fuel inventory levels for US nuclear utilities are at just 16 months of requirements – below recommended 2+ years minimum.”
Look at Skyharbour Resources Ltd. (TSXV: SYH) (OTCQB: SYHBF), For Example
Skyharbour Resources Ltd. announced that it has entered into an Option Agreement with Rio Tinto Exploration Canada Inc., a wholly owned subsidiary of Rio Tinto Limited (“Rio Tinto”), to acquire up to 100% of the Russell Lake Uranium Project (the“Property” or“Project”), which comprises 26 claims covering 73,294 hectares of prospective exploration ground strategically situated between the Company's Moore Uranium project (to the east) and Denison Mines' Wheeler River project (to the west) in the eastern portion of the Athabasca Basin.
Russell Lake Project Location Map:
The Project is a premier, advanced-stage exploration property given its large size, proximity to critical regional infrastructure, and the significant amount of historical exploration carried out on the property, which has identified numerous prospective target areas and several high-grade uranium showings as well as drill hole intercepts. The Property is centrally located between Cameco Corp.'s Key Lake mill to the south and McArthur River mine to the north. Access to the Property is via Highway 914, which services the McArthur River Mine and runs through the western extent of Property along with a high-voltage powerline that energizes the existing mining operations in the eastern portion of the Athabasca Basin.
Jordan Trimble, President and CEO of Skyharbour Resources, stated:
“We are very pleased to have reached an agreement with Rio Tinto to acquire up to a 100% interest in Russell Lake. This is a significant transaction for Skyharbour and involves the acquisition of a premier exploration property adjacent to our Moore project. Uranium properties with the pedigree and prospectivity of Russell Lake are few and far between given the very strategic location, notable historical exploration and findings, as well as the numerous property-wide targets with the potential to generate new discoveries.”
“Additionally, we welcome Rio Tinto as a new strategic shareholder and project partner. We have a shared vision for the exploration of the various prospective target areas that remain to be fully tested on the Property using modern exploration methods and techniques. We look forward to working with Rio Tinto to generate a new meaningful discovery in the years to come.”
- Option to acquire an initial 51% and up to 100% of Rio Tinto's 73,294 ha Russell Lake Uranium Property strategically located in the central core of the Eastern Athabasca Basin of northern Saskatchewan.
- Both Highway 914 servicing McArthur River and a high-voltage power line connected to the provincial power grid run through the Property's western claims.
- Skyharbour, as operator, can earn an initial 51% interest in the Property by paying CAD $508,200 in cash, issuing 3,584,014 common shares to RTEC, and funding CAD $5,717,250 in exploration on the Project, inclusive of a 10% management fee to Skyharbour, over a period of 3 years.
- Skyharbour has a second option to earn an additional 19% interest for a total of 70%, and a further possible option to obtain the remaining 30% interest in the Project for an undivided 100% ownership interest.
- The Property has been the subject of significant historical exploration efforts including over 95,000 metres of drilling in over 220 drill holes. This provides the Company with an excellent dataset to direct subsequent exploration on high-priority areas with the potential for near-term discovery of high-grade uranium mineralization.
- Previous exploration work has identified numerous highly prospective target areas, some of which host high-grade uranium mineralization in historical drill holes. Furthermore, there are over 35 kilometres of untested conductors on the Property in magnetic lows, which are indicative of pelitic basement rocks conducive to uranium deposition in the Athabasca Basin.
- The Property has a permitted and functional exploration camp suitable for over forty people, and conveniently located near Highway 914 and within 5 km kilometres of Denison's Phoenix deposit. The Property's claims are in good standing for 2-22 years from banked assessment credits.
- This transaction adds another drill-ready, advanced-stage uranium exploration asset to Skyharbour's project portfolio and offers significant operational and exploration synergies with the adjacent Moore uranium project.
Skyharbour's Uranium Project Map in the Athabasca Basin:
Russell Lake Uranium Project:
The Russell Lake Project is a large, advanced-stage uranium exploration property totalling 73,294 hectares strategically located between Cameco's Key Lake and McArthur River Projects and adjoining Denison's Wheeler River Project to the west and Skyharbour's Moore Uranium Project to the east. Highway 914, which services the McArthur River mine, runs through the western extent of the Property and greatly enhances accessibility. Similarly, a high-voltage powerline situated alongside Highway 914. Skyharbour's acquisition of Russell Lake creates a large, nearly contiguous block of highly prospective uranium claims totalling 108,999 hectares between the Russell Lake and the Moore uranium projects.
There has been a meaningful amount of historical exploration carried out at Russell Lake but with most of it conducted prior to 2010. The Property has been the subject of over 95,000 metres of drilling in over 230 drill holes. The Property's claims are in good standing for 2-22 years with assessment credits built-up from previous programs.
Several notable exploration targets exist on the property including the Grayling Zone, the M-Zone Extension target, the Little Man Lake target, the Christie Lake target, and the Fox Lake Trail target. More than 35 kilometres of largely untested prospective conductors in areas of low magnetic intensity exist on the Property as well.
At the Grayling Zone, drilling of the 2,200 metres long, up to 100 metres thick sub-parallel Grayling conductor intersected an 800 metres long discontinuous zone of basement-hosted uranium mineralization with localized perched and unconformity-hosted associated mineralization along a graphitic thrust fault. Drill hole RL-85-07 intersected 3.45% U3O8 over 0.3 metres at a depth of 363.2 metres and 0.1% U3O8 over 0.5m at a depth of 366.4 metres. This target is prospective for additional high-grade uranium discoveries and is open in several directions.
At the M-Zone Extension target, historical drilling at neighbouring Denison's M-Zone along trend from the Grayling Zone intersected basement hosted uranium of 0.70% U3O8 over 5.8 metres at a depth of 374.0 metres. Like the Grayling Zone, the mineralization is hosted by a graphitic thrust fault. The northeast extension of the M-Zone-Grayling corridor onto the Property has seen limited drilling, but mineralization was intersected in historical drilling, returning 0.7 metres of 0.123% U3O8 at 619.1 metres depth in hole MZE-11-03.
The Little Man Lake Zone target is 500 metres long, 10 to 15 metres thick, 25 to 35 metres wide, and is a zone of prospective geology associated with an unconformity depression. The last drilling in this area was in 1989, prior to modern uranium exploration models, with historical uranium grades ranging from 0.03% up to 0.1% U3O8 at around 300 metres depth.
At the Fox Lake Trail target area, uranium mineralization was intersected in a few historical drill holes. Significant intercepts include 0.0743% U3O8 over 1.0 metres at 525.5 metres depth in hole FLT-08-06, and 0.053% U3O8 over 0.3 metres at 516.9 metres depth in hole FLT-11-14. A prospective quartzite ridge runs through the area along with anomalous geochemistry in faulted basement metasediments. Significant sandstone-hosted sulphides are also found in this area.
The Christie Lake target area contains basement-hosted uranium mineralization with historical drill results returning 0.17% U3O8 over 0.4 metres at 436.4 metres depth in hole CL-10-03. A prospective clay altered basement fault system runs throughout this area.
In addition to the aforementioned target areas, there are more than 35 kilometres of untested conductors on the Property underlain by rocks of low magnetic intensity, suggestive of prospective graphitic meta-pelitic basement rocks. The Project has seen limited exploration in the previous twelve years, so minimal modern exploration techniques and methods have been used to expand existing zones of mineralization as well as to make new discoveries.
There is a fully permitted exploration camp on the Project suitable for over forty people located on the highway and within 5 kilometres of Denison's Phoenix deposit. Skyharbour is planning an initial phase of exploration and drilling at the Project with details forthcoming.
Other related developments from around the markets include:
Cameco Corporation announced that Senior Vice-President and Chief Financial Officer, Grant Isaac, will be speaking at the BofA Global Metals, Mining & Steel Conference being held Monday, May 16 to Thursday, May 19, 2022. The fireside chat will occur on Wednesday, May 18, at 11:20 a.m. Eastern and will be available by audiocast on cameco.com.
Uranium Energy Corporation reported that it has now secured an additional 400,000 pounds of U.S. warehoused uranium , expanding its physical uranium program to 5 million pounds U3O8, with delivery dates out to December 2025 at a volume weighted average price of ~$38 per pound. UEC's physical uranium program represents an unrealized gain of over $125 million based on the current spot price published by TradeTech on April 19, 2022, at $63.25 per pound U3O8. Amir Adnani, President and CEO stated:“A year ago, UEC launched a physical uranium portfolio with 500,000 pounds purchased at a uranium cost basis of less than $30 per pound. The Company has grown the size of our inventory over ten-fold to 5 million pounds by making well-timed purchases near cycle lows that allow us to maintain a low-cost portfolio of ~$38/lb with spot uranium now trading at over $63/lb. At a time of heightened geopolitical uncertainty, UEC has the benefit of secure U.S. warehoused physical inventories. We have also staged our deliveries to receive uranium as far out as December 2025, providing a low-cost stream of physical uranium as we enter this uranium bull market that shows a major structural supply deficit exceeding 215 million pounds by 2026.”
Denison Mines Corporation 's CEO David Cates said,“Our results from the first quarter of 2022 reflect further improvements in the uranium market, as well as an active start to the year for the Company's Wheeler River and McClean Lake projects. The spot price of U3O8 increased by nearly 40% during the first quarter, reflecting the relative scarcity of discretionary uranium holdings available to the spot market amidst an environment of significant geopolitical uncertainty, which drove a substantial increase in the value of Denison's physical uranium holdings and the Company's earnings per share of $0.05. Denison remains committed to holding its physical uranium position for the long-term as both a means to enhance our shareholders' exposure to the uranium market and a tool for the future financing of the development of the Wheeler River project. At the end of the first quarter, Denison's physical uranium holdings had a market value of approximately $181 million, representing ~60% of Denison's share of the initial capital costs estimated for the Wheeler River project in the Pre-Feasibility Study.”
Energy Fuels Inc. reported its financial results for the quarter ended March 31, 2022. 'Energy Fuels continues to benefit from increases in the prices for all of the critical elements and materials we produce. Though volatile, uranium prices have continued to exhibit strength and resilience, which we expect to continue as Russia's invasion in Ukraine continues. As a result of Russia's aggression, we believe domestic and global nuclear utilities are reducing ties with the Russian state-owned nuclear company. We also believe U.S. uranium and nuclear fuel suppliers may be seeing increased interest from U.S. utilities as a result of the $6 billion civil nuclear credit program, which prioritizes reactors that purchase nuclear fuel and uranium from U.S. suppliers, which would include Energy Fuels.” said President and CEO, Mark S. Chalmers.
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