The market may be a sea of red today, but that is nothing compared to what is happening in the uranium industry.
For example, here's the state of play for a number of ASX uranium shares this morning:
- Bannerman Energy Ltd (ASX: BMN) shares are down 11% to $2.66.
- Boss Energy Ltd (ASX: BOE) shares have dropped 11% to $3.24.
- Deep Yellow Limited (ASX: DYL) shares have sunk 16% to $1.09.
- Nexgen Energy (ASX: NXG) shares are down 14% to $8.98.
- Paladin Energy Ltd (ASX: PDN) shares have crashed 11% to $10.33.
Why are ASX uranium shares being crushed?
Investors have been scrambling to the exits today following the release of an announcement from the world's largest uranium miner, Kazatomprom.
As a reminder, last year Kazatomprom downgraded its medium term production guidance due to challenges securing sulphuric acid.
It is a key reagent in Kazatomprom's in-situ leach operations. However, it is also used heavily for fertiliser production. And growing demand from the agricultural sector, as well as supply chain disruptions and geopolitical uncertainty, have led to shortages in recent years.
This guidance downgrade came at a time when a large number of governments announced their intention to embrace nuclear energy again to help achieve their decarbonisation goals.
As you might expect, this sent uranium prices soaring, giving ASX uranium shares a huge boost.
What did it announce?
Unfortunately, the news out of Kazatomprom hasn't been as favourable for uranium investors today.
Overnight, Kazatomprom released its half year results and revealed that it is lifting its uranium production guidance for 2024. It said:
The Company is increasing its 2024 full year production guidance on both a 100% and attributable basis as the half year results show that the production rates with which the mining entities are now progressing will result in a higher than initially expected volumes. As was previously disclosed the Company was able to secure necessary volumes of sulphuric acid required for its 2024 production at minus 20% level relative to Subsoil Use Agreements.
It is now guiding to U3O8 production volume (100% basis) of 22,500 tonnes to 23,500 tonnes in FY 2024. This is up from its previous guidance of 21,000 tonnes to 22,500 tonnes.
Management also revealed that it may provide a further update on its 2025 plans in the near future. It adds:
Should there be any adjustments to the 2025 production plans, these are expected to be announced in the report of the Company's financial results for the first half of 2024 later this month.
This has sparked fears that uranium prices may not remain at lofty levels for as long as hoped and could mean lower profits for ASX uranium shares than consensus estimates currently imply.
