Uranium Surge Revives Old Mines, Sparks Mergers Across Sector

The uranium mining industry is experiencing a notable resurgence. Prices for nuclear fuel soar, prompting the revival of once-forgotten mines.

As governments increasingly reconsider nuclear energy as a solution to growing climate change concerns, the prices have surged, creating opportunities for previously unprofitable mines to fill a growing supply gap.

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Canada, for example, has attracted increased exploration and mining activities. Cameco CCJ is increasing production and extending the life of its Cigar Lake mine. It’s also exploring options to expand production capacity at its McArthur River/Key Lake mine.

Furthermore, Denison Mines DNN has restarted uranium mining operations at its McClean Lake joint venture with Orano Canada Inc.

The Canadian market has also seen a heightened capex activity and a surge in mergers and acquisitions:

NexGen Energy NXE, which owns exploration properties in Saskatchewan, updated its expanded at-the-market equity offering to sell up to $368 million (CA$500 million) of common shares from treasury, reflecting its commitment to advancing the Rook I project, the largest development-stage uranium project in Canada.

• 92 Energy NTELF, an Australian developer of Canadian uranium properties, proposed three-way merger acquisition of ATHA Energy SASKF and Latitude Uranium LURAF.
• IsoEnergy ISENF merged with Consolidated Uranium CURUF, enhancing its portfolio and expanding its exploration activities in the Athabasca Basin in Saskatchewan and Quebec properties.
• IsoEnergy also completed a $23 million private placement deal in February. It intends to utilize the proceeds to explore its Athabasca Basin Portfolio and Quebec properties.
• Fission Uranium Corporation FCUUF announced a $75 million offering, earmarking the proceeds for the exploration and development of its PLS uranium project in the Athabasca Basin in Saskatchewan.

Meanwhile, at least five U.S. producers are restarting operations in states such as Wyoming, Texas, Arizona, and Utah. Production had previously thrived until the aftermath of the 2011 Fukushima nuclear disaster in Japan.

The U.S. resurgence is also politically motivated, as heightened geopolitical uncertainty creates issues securing uranium shipments from Kazakhstan. This former Soviet state is the largest global uranium producer, and it typically exports commodities through Russian ports.

If the U.S. continues on the planned uranium consumption trajectory, the Uranium Producers of America forecasts a need for eight to 10 new mines.

American uranium production bottomed in 2019 at an all-time low of 174,000 pounds. That’s in stark contrast from the peak of 44 million pounds in 1980.

Retail investors in Uranium will keep Sprott Physical Uranium Trust SRUUF on their watchlist as this Toronto-based holding company invests nearly all of its assets in uranium.

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