Thread by @BambroughKevin

Today’s #uranium thoughts.

Upc upsides their deal to $70mm and it resulted in a plus $1/lb #uranium price jump as predicted. Will end up being close to $2 from the day before to the day after when it’s done.

I’ve read some commentary from brokerages and investors now reluctantly entering the #uranium space now for the first time this cycle.

I say reluctantly because the commentary is not overly bullish yet, which is great for us long term investors.

So many have missed the boat

For many years #uranium followers have heard the bear case that resulted from the Japanese and others curtailing nuclear plants and reducing demand. But that’s now being more than offset with modern new builds that consume greater amounts per facility

During the bear years people comment on NXE fantastic mine and how it’s gonna over supply the market. True and false. Yes it’s a fantastic mine that is still several years away from start up. But, just consider...

Due to the bear market, lack of long term contracting utilities on the whole have reduced there normal inventories levels by more than 1 year. When you look ahead to when NXE might be starting up production 2025-26 if financed and everything goes well.

And assuming the words nuclear fleet wants to replenish there inventories to appropriately prudent levels the additional consumption required to do so for the industry would now take all of NXE’s production for the next 10 years.

That’s what happens when you have a 10 year bear market. People stop looking at the real facts. Arrogance and complacency flourish in the fuel buyer / utility community. Just like last cycle when CCO told us that it was impossible for the price to rise to $50/lb but 3x’ed instead

The drop in inventory that’s occurred in the last year due to covid shut ins and major mine explorations is huge. It’s the perfect squeeze set up to launch this bull market

Yes there’s some mines that can restart like $pdn who can do 6-7mln lbs a year. But it’s gonna be swallowed up by all the new facilities being built today and commissioned.

Last cycle there was a narrative in the early days that many nuclear facilities were going to be shut down

End of life. I don’t have the exact number but I think 80 percent or more of those ended up refurbishing and or extending operating licenses for another 10-20 years. Same thing is happening now as we see one after another the decision being made to extend life. And guess what?

Every single one of those facilities that extends life currently doesn’t have a long term uranium contract. Look at the amount of contracting that took place in 2005-2007. Those volumes will be eclipsed this cycle because we have major new builds and life extensions

Someone else can take these thoughts and write it up with some charts to better make my point. Sorry but all you get for free from me is a rant.

Upc ATM and NYSE is coming! Gobble gobble squeeze.

Large volumes of contracts won’t be written until the price is nearing $100/lb

It might be 6-8 months. It might be 2 years but we will see a spike to that level and then there will be a meeting of the minds between miners and fuel buyers that allow for the contracting process to commence. Fact is it can’t happen with out the price spike to that level

The mines won’t be financed without it

Final point I think every mine plan will provide to be optimistic in timing to start up. Uranium miners for the most part are going to be back of the bus to all the orders taking place in the iron ore, copper, nickel, etc today. Who knows when capacity will open up

It takes metals to make capacity to mine metals. Once the sector starts a build cycle like this everything proves to be in short supply and delayed. And much more expensive

I’ve said it before but that’s one of the reasons I love $pdn $Palaf with isn’t nearly $1bln in present values infrastructure. Just wait until cost inflation is recognized and then admissions are made by those forecasting capital costs today

They will prove to be 3x from the start as the commodity bull cycle gets to full cycle. $1bln of past sunk costs becomes $3bln of present value and for those not build and financed. $500mm of capex becomes a $1.5bln financing struggle.

Not just uranium but I’m investing in other commodities like copper with the same strategy. $srhi had probably 5-6x its market cap in sunk costs in its producing #copper mine. When the with inflation coming to the mining sector it will prove to be 10-15x its cap

@threadreaderapp unroll

For those that own juniors that have large capex forecasts already I would suggest you try plugging 2x the current capex forecast in your model. Then think about all in cost and financing dilution. Then buy $Palaf and enjoy the 52 week high that’s coming.

$pdn $PALAF has lagged simply because they completed a transformational restructuring. I’m sitting tight with it as my largest position because of that. So many of these other juniors are gonna slap us in the face time and time again due to there need to issue shares and finance

When I have trading profits I prefer to add to $ura and $urnm and basket buy the sector. Gets frustrating when you get wackamoled by premarket finances. Wish we saw more rights offerings with tradable rights. Protect the little guy.