ASX uranium shares are surging on Monday as spot prices boom to above US$40/lb for the first time in 8-years.
ASX uranium shares deliver double-digit gains across the board
The largest ASX-listed uranium player, Paladin Energy Ltd (ASX: PDN) is up 15% to 98 cents. Paladin owns the “globally significant” Langer Heinrich Mine in Namibia and is currently working towards restarting its operations.
Deep Yellow Limited (ASX: DYL) is another Namibian based player focused on progressing its prospective Tumas project. The Deep Yellow share price is currently 25.65% higher to an 8-year high of $1.20.
Peninsula Energy Ltd (ASX: PEN) made a strategic move to raise $15 million in May to purchase 300,000 pounds of uranium at US$31.35/lb. In addition to holding physical uranium, the company is looking to fast-track its US-based Lance Uranium project into production. At the time of writing, the Peninsula share price is up 25% to 27.5 cents.
Why is the uranium sector suddenly booming?
In the world of S&P Global, “A Canadian investment fund almost singlehandedly launched uranium spot prices into orbit with a buying spree that has put the nuclear power industry on alert.”
The fund that S&P Global is referring to is Sprott Inc and its Physical Uranium Trust (SPUT).
SPUT is the world’s largest actively managed uranium fund focused on providing investors with exposure to physical uranium.
According to S&P Global, the fund’s thesis is quite simple, “If they were given funding, they would purchase material out of a spot market that was flooded with excess supply following the 2011 nuclear disaster at Fukushima Daiichi in Japan.”
SPUT’s aggressive move to buy uranium off the spot market has driven a sudden re-rate for both uranium spot prices and ASX uranium shares.
But Sprott says that this is just the beginning.
In an interview with Kitco News, Sprott director Rick Rule said:
Sprott is going to make an application to list that trust on the New York stock exchange, where the overwhelming majority of the volume that [investors] enjoy in their precious metals trusts occurs. If that happens in terms of inflows into the trust, if the material is available to buy in the spot market quote, then you ain’t see nothing yet.