May 6, 2025: The structural uranium supply shortfall isn't going away

✅ [Free] Monthly Uranium Newsletter: https://mailchi.mp/1d9bda86ced8/newsletter

1. Uranium carry trade returns
2. Australia rejects nuclear
3. Gitzel: Supply risk outweighs demand risk
4. Junior stay lean as uranium swings
5. Energy Fuels provides Pinyon Plain production update

Sponsored by Purepoint Uranium Group Inc. (TSXV: PTU | OTCQB: PTUUF)
https://purepoint.ca/

Transcript

This week on Uranium Spotlight, the carry trade returns, Australia rejects nuclear, Cameco’s CEO weighs in and junior uranium companies stay lean.

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Uranium Carry Trade Returns

Uranium spot prices ended the week at $69.10, up from $66.85, a reminder that the floor beneath this market is strengthening. One factor contributing to this resilience? The return of the uranium carry trade—and for uranium equity investors, that matters.

Over the last few months, we’ve seen a significant uptick in carry trading—where intermediaries lock in cheap spot material today and sell it forward at a premium. This only works when the market is in contango, and right now, the long-term uranium price still sits $10 to $15 above spot, offering a strong margin for those trades.

In the post-Fukushima decade, carry trades kept spot and term prices tightly linked. But between 2020 and 2024, with rising interest rates and dwindling inventories, the carry trade virtually disappeared. That gap left producers dominating the long-term market. Now, intermediaries are back. Nearly 4 million pounds of U₃O₈ have already been sold through carry trades this year—20% of all term volume so far—and that number could double by year-end.

This resurgence boosts spot market demand, helps stabilize prices, and reintroduces forward price transparency—all critical signals for uranium investors. But it also creates mid-term competition for producers, potentially delaying some utility contracting.

Still, a more dynamic term market—where today’s prices better reflect tomorrow’s expectations—is a net positive for the sector.

Will it last? That depends on inventory availability, interest rates, and balance sheet strength. But for now, the carry trade is back—and it's shaping the market again.

If you haven't already, be sure to subscribe to Uranium Spotlight Podcast - available on your favourite podcast platform or on Purepoint Uranium's YouTube channel!

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Australia Rejects Nuclear

Australia won’t be going nuclear—at least not anytime soon. The recently re-elected Labor government under Anthony Albanese shows no signs of lifting the country’s long-standing ban on nuclear energy. And when it comes to uranium mining, they don’t appear keen on expanding that either.

For many in the nuclear sector, Saturday’s election result was a serious disappointment. No new domestic reactors, no expanded uranium production—it’s a setback not just for Australia, but for global markets. Fewer supply sources mean more pressure on reactor developers overseas to secure fuel, tightening an already fragile supply chain.

Meanwhile, Australia’s aging coal plants may be forced to operate longer than intended, despite the availability of cleaner alternatives. That risks compounding environmental concerns, limiting infrastructure investment, and even increasing grid instability if older power stations are shut down without replacements.

From a supply perspective, this decision reverberates far beyond Australia’s borders. The Liberal-National coalition, led by Peter Dutton, had pledged to boost uranium output by lifting bans in six of Australia’s eight states and scaling up mining in the two where it's already legal. With that now off the table, the global uranium market—already under strain—faces yet another supply-side setback.

Australia holds the world’s largest known uranium reserves. Yet mining remains prohibited in most of the country. And recent public sentiment isn’t helping: opposition to nuclear energy in Australia has risen from 51% in 2023 to 59% in 2024, according to recent polls.

Much of this resistance stems from outdated perceptions. For many Australians, uranium mining is still conflated with nuclear accidents and reactor risks—despite major advances in nuclear safety and regulation worldwide.

But it’s worth remembering: nuclear energy provides zero-carbon baseload power. It’s also essential to the production of isotopes used in life-saving cancer treatments. In that sense, nuclear power serves as a global public good.

The real challenge now—for investors and policymakers alike—isn’t just recognizing nuclear’s value. It’s figuring out how the world is going to secure enough uranium to power the growing fleet of reactors. And that’s becoming a much harder question to answer.

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Gitzel: Supply Risk Outweighs Demand Risk

Cameco CEO Tim Gitzel recently weighed in on the uranium market, pointing to both the challenges and the long-term opportunity that investors should be watching closely.

In an interview with The Northern Miner, Gitzel highlighted a staggering supply gap: around 70% of utility uranium requirements through 2045 remain uncovered—that's roughly 3.2 billion pounds. More than 1.3 billion pounds of that has no known source of primary production today.

He stressed that “full-cycle demand is durable and stronger than ever,” but warned that the real risk lies on the supply side. Even with long-term uranium prices holding near decade highs, utilities aren’t locking in enough long-term contracts to support the brownfield expansions—or the new production capacity—needed to meet that demand.

Turning to recent political noise, Gitzel dismissed Donald Trump’s tariff threats as exactly that—noise. Speaking to the Canadian Press, he urged investors to stay focused on the bigger picture: a strong and growing long-term demand for uranium. That said, he acknowledged that “those distractions have created new and unexpected risks that must be carefully monitored.”

Currently, Canadian uranium remains untaxed under the USMCA trade agreement signed during Trump’s first term. But as Gitzel put it, “we know that a lot can change overnight.”

The U.S. is also conducting a national security review of uranium imports—again. Gitzel noted that Cameco has been preparing for this scenario since 2019, when a similar review was launched under the previous Trump administration. Cameco has already taken steps to protect itself, reviewing contract terms and delivery schedules to avoid potential disruptions.

As negotiations continue and policies evolve, Gitzel made two things clear:

“There’s no substitute for uranium in a nuclear fuel bundle, and there’s no elasticity to the demand for nuclear fuel. You need it to run your reactors and power your economy—regardless of tariffs or higher cost.”

He added bluntly:

“You can run, but you can’t hide. People need uranium to make this whole thing work. You can defer and wait and hope for better times—but they have to come to the market.”

In other words, Gitzel is reminding investors: don’t get spooked by headlines. The uranium investment thesis remains strong—and the structural supply shortfall isn’t going away.

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Juniors Stay Lean as Uranium Swings

Another recent article in The Northern Miner highlighted how junior uranium companies are navigating the latest bout of price volatility. In 2022, the sector attracted $166 million in equity financing. That jumped to $285 million in 2023, as uranium prices surged past $100 per pound. But in 2024, financing fell back to $164 million—largely in response to prices pulling back to the $60–$65 range, where they sit today.

Companies quoted in the piece, including Purepoint, emphasized the importance of staying lean during these swings. Others are turning to quick capital through LIFE offerings—private placements that can be done without a prospectus, limited to friends, family, and close contacts.

But here’s the bigger takeaway for investors: falling prices and tighter capital mean fewer exploration programs, delayed development, and ultimately, fewer new mines coming online. That tightening supply response is likely to reinforce upward pressure on prices over the medium term.

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Energy Fuels Provides Pinyon Plain Production Update

Energy Fuels has just reported a record-breaking month at its Pinyon Plain uranium mine in Arizona—producing 151,400 pounds of U₃O₈ in April alone from 4,600 tons of ore. For context, the U.S. nuclear fleet consumes about 45 million pounds of uranium annually, so this single month of production from one mine represents roughly 0.3% of total U.S. demand. Not game-changing—but a strong signal of domestic production momentum.

What’s more notable is the ore grade. April’s mined ore averaged 1.64% U₃O₈—remarkably high by U.S. standards—and Energy Fuels believes the actual grades could surpass what they had modeled in their 2023 pre-feasibility study. That could mean more pounds recovered and lower costs per pound.

Underground drilling in the nearby Juniper Zone returned some eye-catching numbers. Intercepts as high as 20% U₃O₈ over narrow widths were reported, with several holes showing 5 to 7% grades over meaningful intervals. For U.S. uranium mining, these are grades typically seen in the Athabasca Basin, not Arizona.

Energy Fuels plans to update its technical report later this year, potentially increasing reserves and reducing per-pound economics. CEO Mark Chalmers, a veteran of nearly five decades in uranium, called these intercepts “unprecedented in the modern era of U.S. mining.”

The ore is trucked to their White Mesa Mill in Utah—the only conventional uranium mill currently operating in the U.S.—to be turned into yellowcake for nuclear fuel.

All told, this is a meaningful step toward reestablishing a reliable U.S. uranium supply chain.