Cameco, Energy Fuels and Paladin fuelled by uranium rush

Rising global energy insecurity has prompted an increasing number of countries that were opposed to nuclear power to rethink their stance. This has boosted the price of uranium, and in turn shares for uranium miners Cameco, Energy Fuels and Paladin.

Governments across the globe are reconsidering nuclear power in the wake of low energy security, in turn boosting to the share prices of uranium miners like Cameco [CCJ.TO], Energy Fuels [EFR.TO] and Paladin [PDN.AX]. In the last month (through 25 October), Energy Fuels and Paladin have seen their stock shoot up 30.4% and 4.4%, respectively, while Cameco has dipped 2.8%.

Year-to-date, however, Energy Fuels and Paladin shares have mostly sat in the red, as rising costs and weaker markets have dragged them down. Shares in Energy Fuels are up a marginal 2%, while Paladin is down 6.2%. In comparison, Cameco shares have risen 12.6% this year.

Japan recently expedited plans to restart its reactors and is considering the construction of new plants for the first time since 2011. Meanwhile, Germany and California are having similar conversations.

Similar to the trend seen across uranium stocks’ performance, the Global X Uranium ETF [URA] has fallen 9.6% since the beginning of the year but has rallied 6.5% in the past month. While the fund, which has considerable positions in Cameco, Energy Fuels and Paladin, has declined this year, it has still outperformed the S&P 500 this year, which has fallen 19.5%.

Recent research carried out by HANetf estimated that 92% of fund managers will increase exposure to clean energy solutions over the next 12 months with 88% reporting they had recently invested in nuclear energy or uranium focused funds.

Cameco expands its nuclear power exposure

Cameco, this best-performing stock out of the group this year, has recently announced an equity-backed deal to buy US nuclear power company Westinghouse Electric. The company is joining forces with Brookfield Renewable Partners [BEP] to secure the deal and increase its nuclear power position.

Cameco will acquire 49% of the company for $2.2bn with Brookfield Renewable Partners buying the other 51% for $2.3bn. The buy-out of Westinghouse, which makes technology used in roughly half of the world’s reactors, highlights how the nuclear power industry has seen a small revival since the invasion of Ukraine earlier in the year.

It was not all good news for the Cameco share price when the deal was announced. The company announced that it was helping to finance the deal through a $650m stock sale which raised investors’ fears of value dilution. The share price slumped 13% after the stock sale was announced and it has fallen 21.5% from its September highs – wiping out many of the gains made earlier in the year.

Energy Fuels boosted by new US contracts

The Energy Fuels share price has performed in the middle of the pack this year. Though the stock has sat in the red for much of the year, a recent rally means they’re now up 2.1% year-to-date. The company reported a net loss of $18.1m for the second quarter of 2022, 67.6% up from its loss of $10.8m in the second quarter of 2021.

The company noted that the rise in losses was primarily down to a non-cash decrease in the value of the company’s investments. The announcement on 9 August was followed by a 4% drop in the company’s share price, which it recovered two weeks later.

While Energy Fuels has not performed incredibly this year, the share price has recently shown signs of recovery, climbing 12.6% in the last month. Alongside its second quarter results, the company announced that it had entered into three long-term contracts with US nuclear entities. The contracts will see Energy Fuels deliver 4.2m pounds of uranium between 2023 and 2030 at what CEO Mark Chalmers referred to as ‘attractive pricing’.

Paladin shares double after announcing mine reopening

The Paladin share price has seen the weakest performance this year and currently sits 6.25% in the red for the year so far. However, shares have rallied 33% since July after the company announced it was planning to reopen its headline Langer Heinrich mine.

The company closed the mine back in 2018 when low uranium prices were making it economically unfeasible to keep open. Work has been started to get the mine, of which it owns 75%, back up and running with it targeting to start production at the beginning of 2024. Rising inflationary pressures mean that it is estimated to cost between $87m and $118m to reopen the mine. As of 30 September, however, the company seems to have the means with unrestricted cash of $163.4m.

Alongside reopening the Langer Heinrich mine, Paladin is also managing a significant exploration portfolio. Over the summer, it conducted an exploration field program at its Michelin site in Canada. The group is hoping to carry out exploration drilling on the site in 2024.