The Deep Yellow Ltd (ASX: DYL) share price has been deep in the green recently, up 37% in August alone.
But it wasn't the only ASX uranium share enjoying significant support.
Paladin Energy Ltd (ASX: PDN) shares went up 15%, and Boss Energy Ltd (ASX: BOE) shares rose 19% over the month.
So, what's going on here?
Well, according to fund provider BetaShares, there are six trends driving ASX uranium shares higher.
Let's review.
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6 trends driving ASX uranium shares higher
Uranium contracting at a decade-high
There was higher demand for long-term uranium supply contracts in the first half of 2023. BetaShares says the world's largest public uranium company Cameco Corp (NYSE: CCJ) reckons 2023 will be the biggest year of contracting in more than a decade, based on the current run-rate.
Potential disruptions to supply
As we all know, not many Western nations want to trade with Russia these days. According to the World Nuclear Organisation, the former Soviet republic Kazakhstan, on the Russian border, is the world's largest uranium producer. In 2022, it accounted for 43% of global uranium mining production. Russia itself accounts for 5% of production. And a coup just occurred in Niger, which accounts for 4% of production.
Project delays
Uranium looks to be an emerging area of global mining as the world seeks greener energy sources. There hasn't been huge demand for it before, so many uranium assets haven't been fully developed yet. Building a mine is a complicated business and delays obviously impact the global supply chain. Take the woes of Peninsula Energy Ltd (ASX: PEN) as an example. The ASX uranium share crashed 25% last week after the miner announced a more than 12-month delay with its Lance mine in Wyoming in the United States.
Global uranium inventories depleting
BetaShares points out that secondary supplies of uranium are running out, and new supplies from mines will have to fill that void. Secondary supplies include utilities' inventories and reprocessed spent fuel.
Decarbonisation
Perceptions of ASX uranium shares are possibly shifting in light of the AUKUS defence deal and the need to develop green energy sources in this era of global decarbonisation. Nuclear energy is reliable and CO2-free and it will likely have a strong place in the energy mix of the future.
57 nuclear reactors under construction
According to the International Atomic Energy Agency, there are about 440 reactors in operation globally and 57 under construction, predominately in China (21 reactors) and India (eight reactors). Seven of those 57 are expected to be completed this year, and another 11 in 2024. BetaShares points out that other reactors have increased their capacities and extended their lifespans. All of this will likely add up to more demand for uranium and an increase in the uranium price.
Uranium among the few commodities to rise
The Australian Department of Resources predicts uranium will be one of the few commodities to rise in price over the next five years.
As we previously reported in May, the department was expecting an FY23 average price of US$51 per pound. It projects an average price of US$67 per pound by FY28.
Uranium is currently trading for US$58.50 per pound, up 18% year over year.
What's boosting the Deep Yellow share price?
Deep Yellow was the leader among the larger ASX uranium shares in terms of share price growth last month.
It looks like the completion of a 656-hole, 36,647-metre drilling program at the Mulga Rock Project in Western Australia may have given the ASX uranium share some extra momentum.
Deep Yellow says it now expects to commence a revised definitive feasibility study in Q2 CY24.
It says there is "potential both to increase the available uranium resource and extend the current 15-year life of mine".
Deep Yellow CEO John Borshoff reckons the company is "the best uranium junior globally," because it has mines in different jurisdictions, which is convenient for off-takers, and its mines have other minerals.
He said:
An exciting part of the Mulga Rock MRE upgrade will be gaining a better understanding of the critical minerals' component of the Project, which includes metals such as copper, nickel, cobalt, zinc, and rare earths, particularly neodymium and praseodymium.
If it is feasible for us to recover these critical minerals, in parallel with the uranium, it presents a strong opportunity to materially enhance Project value.
In terms of uranium, he said: "Over the past five years, we have successfully delivered on our vision to establish a Tier-1 uranium platform and the next five years is focused on execution to production."
Which ASX uranium shares should you buy?
Here at The Fool, we always recommend a fundamental analysis of any ASX shares you're considering buying for your portfolio.
But just for fun, let's do a quick canvas of the experts to see what they think of the ASX uranium shares we've mentioned above.
According to the Westpac trading platform:
- Six out of six analysts covering Paladin Energy shares rate them a strong buy
- Two out of two analysts covering Deep Yellow shares rate them a strong buy
- Three out of three analysts covering Peninsula Energy shares rate them a strong buy
- Three out of six analysts covering Boss Energy shares rate them a strong buy, and three say hold.
The Deep Yellow share price closed at 96 cents on Tuesday, down 2%.
Among the other ASX uranium shares, Peninsula Energy shares fell 4.4%, Paladin Energy shares lost 1.93%, and Boss Energy shares rose 0.26% today.
The S&P/ASX All Ordinaries Index (ASX: XAO) closed down 0.12%.
