The Paladin Energy Ltd (ASX: PDN) share price is breaking out to 9-year highs as uranium prices continue to skyrocket.
In morning trade, the Paladin Energy share price was up 5.37% to $1.08. However, it has since partially retreated and at the time of writing is $1.03. That’s still a gain of 0.49% on the previous close.
Uranium bull market in full throttle
Uranium spot prices rose sharply overnight to fresh 9-year highs of US$48/lb according to S&P Global Platts.
This is likely the main catalyst behind the sudden re-rate of the Paladin Energy share price.
Skyrocketing uranium prices have been driven by the Sprott Physical Uranium Trust, the world’s largest actively managed uranium fund that invests in physical uranium.
The fund has been aggressively buying physical uranium off the spot market. This is not only tightening supply in what is typically an illiquid market, but is also sparking investor interest in the energy metal.
Sprott continues to shake up the uranium industry. S&P Global reported that the trust received approval for an “expanded equity sales program that will allow the fund to acquire up to $1 billion in additional uranium in the coming months”.
S&P Global quoted Paul Goranson, CEO of uranium development company enCore Energy, who said:
[Sprott] isn’t going to sell uranium. This is what they do with all their commodities, hold them. The only difference is, uranium is a much smaller market. They’re going to take all the cheap material off the market and sequester it for a very long time.
The report also highlighted other sources driving uranium demand and possibly the Paladin Energy share price.
Demand is also coming from sources other than Sprott, with a variety of financial investors and uranium producers seeking to acquire material during what some market participants see as a supply crunch. Uranium Royalty Corp, another Canadian company, announced Sept. 15 that it had added 300,000 lb of uranium to its holdings recently. Last month URC announced its own ATM program for $40 million, although only some of that amount is earmarked for physical uranium purchases.
Paladin Energy share price snapshot
The Paladin Energy share price has gained 111% in the past month and is up 320% year-to-date.
It is also up 580% over the past 12 months.