Here’s why the Deep Yellow (ASX:DYL) share price is up 50% this month

Here comes the confetti! Deep Yellow shares are breaking out to multi-year highs this month.

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A woman throws her hands in the air in celebration as confetti floats down around her, standing in front of a deep yellow wall.

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The Deep Yellow Limited (ASX: DYL) share price joins the growing list of booming ASX uranium shares, surging 53.8% in September. This marks an 8-year high of $1.215.

Deep Yellow is a uranium explorer operating out of Namibia. Its growth strategy is to “establish a multi-platform, 5-10 million lb per annum, low-cost, tier one uranium producer.”

What’s so special about this uranium company?

Deep Yellow has been kicking goals at its flagship Tumas Project. The miner is expecting to complete a definitive feasibility study in the second half of 2022.

The company has described the Tumas Project as “similar to Langer Heinrich deposit and very well understood by the Deep Yellow team.”

Langer Heinrich is owned by the largest ASX-listed uranium player, Paladin Energy Ltd (ASX: PDN).

Deep Yellow has discovered multiple deposits in recent months, with successful drilling announcements in July and August.

Over the past four years of exploration, Deep Yellow has increased the Tumas mineral resource fourfold.

Even then, the company says that only 60% of its 125km highly prospective palaeochannel system has been tested. And thus, “significant growth upside remains.”

What’s driving the Deep Yellow share price?

Uranium spot prices are up more than 60% since mid-July, marking 7-year highs of $42.50 last week.

The sudden spike in uranium prices has largely been driven by Sprott Inc and its Physical Uranium Trust (SPUT).

Sprott has been aggressively buying physical uranium off the spot market. This has driven tightness in supply and renewed investor interest in the energy metal.

According to Bloomberg, the fund has amassed over 24 million lb by 8 September.

The relentless buying action picked up on Wednesday, with the fund adding another 1.25 million lbs.

The sudden uptick in uranium prices has translated to a significant re-rate for the Deep Yellow share price and broader uranium sector.

Deep Yellow share price snapshot

Deep Yellow shares are rising again in early morning trade, up 2.06% to $1.24.

The uranium miner has a market capitalisation of $402.47 million with 331 million shares on issue.

Should you invest $1,000 in Deep Yellow right now?

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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