What are the uranium stocks to watch in 2020? Analysts at Raymond James recently listed three they have on their radar right now.
Click here to read the previous uranium stocks to watch article.
Mine shutdowns and slowdowns at various sites across the world have caused a lift in the U3O8 spot price — it’s currently sitting at US$32.75 per pound, up from below US$25 at the start of the year.
In a recent note, analysts at Raymond James increased their price forecast for the energy material, saying that they now expect it to range from US$30 to US$33 this year; they see that level increasing to US$40 to US$42 in 2021. The market watchers cited the shutdown of the Cigar Lake mine, which accounts for over 10 percent of primary production, as one reason for the increase.
Read on to learn about uranium stocks to watch in the current price environment from analysts at Raymond James. All stats were current as of April 27, 2020.
1. Uranium Participation (TSX:U,OTC Pink:URPTF)
Current share price: C$4.92; US$3.53
Uranium Participation is unique in that it invests the bulk of its assets into acquiring physical uranium. Its intent is to act as an investment vehicle that offers exposure to the price of uranium without the risks associated with mining or exploring for uranium. On occasion the company lends uranium to third parties, but it does not speculate on the market.
The company last estimated its net asset value on April 6, saying that it stands at C$696.3 million. Uranium Participation also said that after the completion of various transactions, it expects to hold a total of 16,263,372 pounds of U3O8 and 400,000 kilograms of uranium as UF6.
2. Cameco (TSX:CCO,NYSE:CCJ)
Current share price: C$14.24; US$10.17
Major uranium miner Cameco has operations at various stages across North America, Asia and Australia, and is licensed to produce to more than 53 million pounds of uranium concentrates annually. It also has 461 million pounds of proven and probable mineral reserves, and offers uranium refining, conversion and fuel manufacturing services.
Despite its large output capacity, Cameco has not been operating at full steam for quite some time. It indefinitely shuttered the McArthur River mine and Key Lake mill in 2018 due to difficult uranium market conditions, and more recently temporarily closed the Cigar Lake mine due to COVID-19. All of those assets are located in Saskatchewan; Cigar Lake is 50.025 percent owned by Cameco.
The Cigar Lake closure was first announced on March 23 and was set to last for four weeks. It was extended on April 13 for an indeterminate period. Cameco also withdrew its outlook for 2020 at the time, with more details to come on the release of its Q1 results. As mentioned, Cigar Lake’s shutdown contributed to Raymond James’ increased uranium price outlook for the year.
3. NexGen Energy (TSX:NXE,NYSEAMERICAN:NXE)
Current share price: C$1.94; US$1.39
Exploration and development company NexGen Energy is focused on projects in Saskatchewan’s Athabasca Basin. Its main property in the uranium hotspot is Rook I, which hosts a number of discoveries, including Arrow and South Arrow. NexGen also holds a 53.3 percent interest in exploration-stage IsoEnergy (TSXV:ISO,OTCQX:ISENF).
It’s been a quiet year so far for NexGen, which said on March 25 that it would suspend yet-to-commence work programs associated with a feasibility study and environmental assessment for Rook I. Previously announced work programs that are already in progress are continuing where it is possible to do so in compliance with health guidelines.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: IsoEnergy is a client of the Investing News Network. This article is not paid-for content.