Thread by @titanvest

1/ 🚨 Seeing Around Corners: Uranium

#Uranium is becoming a popular topic in investing circles given the recent vertical move in spot prices

Two months ago, @titanvest VAR identified the multi-year secular trend & invested in two leading uranium mining stocks.

How we did it ⤵️

2/ Structural Supply Deficit

LT supply rationalization by the 2 largest uranium producers caused a supply deficit in 2018 (1st time since Fukushima).

The firms committed to production cuts until prices rose above sustainable breakeven levels ($55-$60 / lb vs. ~$30 in July).

3/ Oncoming Demand Spike

Research indicates the vast majority of U.S. utility companies will need to re-sign LT uranium supply contracts over the next 3 yrs to secure this core feedstock for the next decade+.

Once this wave of contract renewals converges w/ constrained supply.

4/ Inflection Point

As we have seen in prior industry cycles, we believe uranium prices will rebound rapidly to LT economically viable levels.

Our view: the imbalance may yield a highly asymmetric R/R opp for both uranium prices and the companies whose CFs are tied to them.

5/ Stock Selection

Once we developed high conviction in the secular within cyclical thematic, we focused on what we believe to be the highest quality names, with CFs tied to spot prices.

Our work indicated what we believe to be the two best positioned players: $NXE and $DNN.

6/ $NXE

We view NXE as a premier global pure uranium exploration company:

✅Highly economic mineral project

✅Industry-leading unit economics

✅High profile strategic investors

= May be best positioned to capitalize on coming secular bull market

ITD Return: +50%

7/ $DNN

✅One of the largest uranium companies

✅Strategic, high-quality assets in the Athabasca Basin (>125MM lbs of uranium supply)

✅One of the industry's lowest cost unit economics

✅Mine Economics: est. +45% IRR at $45 uranium prices ($42.40 today)

ITD Return: +55%

8/ Greater Conviction in LT Thesis

$NXE & $DNN performance largely driven by the launch of Sprott's Physical Uranium Trust

☝️Key signpost we set as a catalyst for improved price discovery

Greater than expected impact on spot prices strengthens our conviction in LT thesis

9/ Cameco ($CCJ)

World’s 2nd largest uranium supplier

✅Strong net cash BS

✅Compelling unit economics

✅We believe to have world-class uranium assets based on our research

10/ Cameco ($CCJ) Continued

Our view: $CCJ will be one of the key suppliers for LT utility contracts

- Reserves: 455MM lbs
- Annual production capacity: 53MM lbs

11/ Sprott Catalyst

Launched mid-August

Has purchased +6MM lbs of physical uranium --> driving spot prices +30% (uranium equities +50-65%)

Further amplifies existing large S/D imbalance

May accelerate timeline for utilities to resign LT contracts (next material catalyst)

12/ Conclusion

We gained exposure to Uranium 2 months ago, generating significant unrealized returns ITD

We believe this is still early innings given:

1) Robust Global Demand

2) Accelerating Structural Supply Deficit, and

3) Highly Attractive Value Proposition

13/ How to Follow

You can follow @titanvest or go to our site titan.com for more research like this.

Big s/o to @virtualclay, @vince_ning, @justin__titan & team for their continued great work - especially @johnb_Titan for leading the charge on this investment