PRISM Emerging Clean Energy Index Highlights: Uranium Companies Outshine as Solar Demand Dips in 2023
The clean energy sector has experienced a tumultuous year, with the solar industry facing a potential downturn in installation demand. Yet, amid the turbulence, not all is grim within the realm of sustainable energy. A shining beacon of resilience has been the nuclear energy segment, largely propelled by the enduring need for uranium as nuclear fuel. In 2023, uranium companies have notably outperformed their clean energy counterparts.
The demand for uranium, a critical component in nuclear reactors, is on an upward trajectory. Industry experts forecast a 28% increase by 2030, with expectations of it nearly doubling by 2040. This growth is driven by global efforts to enhance nuclear power capacities in the pursuit of achieving zero-carbon goals. These insights are drawn from a World Nuclear Association report released in early September, as reported by Reuters. Currently, the world is powered by approximately 440 nuclear reactors across 32 countries, which contribute 10% to the global electricity supply. The nuclear sector is gaining momentum, with an increasing number of reactors slated to become operational.
Despite the rise in demand, the uranium market faces a substantial annual deficit. Mining operations are unable to bridge the 50 million pound gap between the mined uranium supply and the quantity required to fuel nuclear power plants. According to Mike Kozak, a metals and mining specialist at Cantor Fitzgerald, “The nuclear reactors globally use about 185 million pounds [of uranium] per year, and that’s going up each year, but the mines can only supply about 135 million pounds.”
In light of these dynamics, our PRISM Emerging Clean Energy Index has spotlighted four uranium stocks worth watching:
- Energy Fuels Inc. (NYSE MKT: UUUU | TSX: EFR): This US-based leader in uranium production stands at the forefront of supplying the essential fuel for carbon-neutral nuclear energy. Energy Fuels is also involved in the production and sale of vanadium, and rare earth elements. The company is expected to report its Q3 2023 earnings this week and will report on projections made last quarter regarding sales of an additional 180,000 pounds of uranium at an expected sales price of $54 – $58 per pound, which was expected to result in an estimated 46 – 50% gross margin. Uranium prices surged to a 12-year high during the quarter.
- enCore Energy Corp. (NYSE American: EU): A key player in the uranium sector, enCore Energy Corp. is strategically positioned to capitalize on the growing demand for nuclear energy. enCore engages in the acquisition, exploration, and development of uranium resource properties in the United States. The company holds assets in Texas, Wyoming, South Dakota and New Mexico. This week, enCore reported strong Q3 results with global collections of $465 million, portfolio purchases of $231 million including $179 million in the US and GAAP EPS of $0.79.
- GoviEx Uranium Inc. (TSXV: GXU) (OTCQX: GVXXF): GoviEx Uranium Inc. is making significant strides in the exploration and development of its uranium assets. GoviEx engages in the acquisition, exploration, and development of uranium properties in Africa. With a substantial resource inventory, GoviEx’s main objective is to become a major uranium supplier by exploring and developing its key projects: the Madaouela Project in Niger and the Muntanga Project in Zambia, both of which are forecast to be in production in this uranium cycle. As of November 2, 2023, GoviEx has a market capitalization of $116.22 million on a float of 726,391 shares outstanding. Its annual EPS is $-0.02.
- NexGen Energy Ltd (NYSE: NXE): As a rapidly emerging uranium company, NexGen Energy Ltd is focused on developing its portfolio of uranium projects. The company is focused on the evaluation and development of uranium properties in Canada, where it holds assets in the Athabasca Basin of Saskatchewan. NexGen’s share price has risen 40% this year and 6 out of 6 Zacks analysts give the company a Buy rating.