ASX uranium shares are surging across the board this week, as uranium spot prices lift to 6-year highs of US$34.25/lb.
The largest of the ASX uranium shares, Paladin Energy Ltd (ASX: PDN) has rallied 56% over the past week to an 8-year high of 78 cents.
Explorers including Deep Yellow Limited (ASX: DYL), Boss Energy Ltd (ASX: BOE), Energy Resources of Australia Limited (ASX: ERA) and Peninsula Energy Ltd (ASX: PEN) have also experienced a flurry of buying activity, surging between 20% and 40% this week.
The newest of all ASX uranium shares, 92 Energy Ltd (ASX: 92E) is another big winner, surging 104% this week to 51 cents. The uranium explorer was successfully listed on the ASX on 15 April at a listing price of 20 cents.
Uranium prices lift to 6-year highs
Uranium prices have been in a prolonged bear market after spot prices peaked at about US$135/lb in June 2007.
Between early 2016 and March 2020, it lingered below US$30/lb, rendering many producers unprofitable and discouraging new exploration projects. This explains why many ASX uranium shares are still down more than 90% from 2007 highs.
It wasn't until after the initial March COVID-19 sell-off in 2020 that uranium spot prices managed to climb above US$30/lb. This week, prices touched US$35/lb for the first time in six years.
To add some perspective, Paladin Energy recently announced plans to restart its "globally significant" Langer Heinrich mine. The company estimates that it will cost approximately US$81 million to restart operations, with life of mine production cash costs of US$27/lb. In addition to freight and logistics of US$0.95/lb and sustaining capex of US$2.90/lb.
Encouragingly, Paladin Energy believes there is an emerging "structural supply deficit with growing demand". The company's March equity raising presentation stated the "current primary uranium supply [is] unable to meet current demand".
