ASX uranium shares are surging today

These commodity shares are in the hot seat today amid renewed demand for uranium.

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ASX uranium shares are breaking out today, with some of producers and explorers making multi-year highs.

Why is uranium in the hot seat?

Uranium is mainly used as fuel for nuclear power reactors for electricity generation. Nuclear power isn’t exactly a “renewable” source of energy, but it generates near zero emissions. Uranium is expected to play a significant role in the global shift move to lower emissions over the next 30 years.

If you look at the 10-year charts of many ASX uranium shares, it isn’t uncommon for valuations to have declined by more than 90%. This is because the spot price of uranium has tumbled from peaks of US$137/lb in 2007 to lows of US$20/lb, sending many ASX uranium stocks out of business or into hibernation.

There has been recent resurgence in both investor interest in uranium as a green source of energy and an uptick in spot prices to ~US$30/lb.

In a capital raising presentation from Paladin Energy Ltd (ASX: PDN), the company flagged that current primary uranium supply is unable to meet current demand. It highlighted that nuclear power is currently responsible for 10% of global electricity production and the second largest source of global clean energy with almost zero carbon emissions. The company believes the uranium market is in a deficit with an even greater supply shortage to emerge in the medium to long term.

The increasing demand for uranium and uptick in prices could be a catalyst for the resurgence in ASX uranium share prices.

ASX uranium shares on the move

The Deep Yellow Limited (ASX: DYL) share price has surged 13.10% to 95 cents at the time of writing. Its shares previously hit 95 cents on 10 May, which marks an 8-year high for the uranium explorer.

Deep Yellow operates its flagship Tumas Project located in the premier uranium mining jurisdiction of Namibia with a long history of mining. The company currently undergoing its definitive feasibility study to achieve its goal of a 20-year life-of-mine operation.

The Devex Resources Ltd (ASX: DEV) share price is slightly down today but has surged some ~65% in the last five trading sessions. The company completed a $7.97 million capital raising to accelerate its key diversified exploration projects across Australia. This includes its Nabarlek Uranium and Gold-Copper Project in Northern Territory. The update advised that renewed field exploration was going to commence shortly to follow up several new and under-explored uranium prospects.

The Paladin Energy Ltd (ASX: PDN) share price has jumped 14% to an 8-year high of 57 cents at the time of writing. Back in March, the company successfully completed a $192.5 million capital raising to pay back debts and restart its mine production and optimisation.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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