Sashi Davies reckons the uranium market is poised for a breakout that will carry it beyond previous highs. Exciting times ahead for the space, she says.
Davies is an internationally acclaimed nuclear power/uranium expert who has been immersed in the industry for more than 35 years on the physics side of things, as well as the production side of things, including stints at the Rossing and Husab mines in Namibia.
When she talks publicly about the outlook for an industry noted for its opaqueness, the market sits up and takes notice.
So look out for a wave of hits on the Resources Rising Stars website (view here) where a market rundown by Davies – a special adviser to Boss since 2017 - has just been posted.
“My background is very much nuclear and uranium sales,” Davies says of the only industry she has known since leaving university.
“I talk to market participants, whether they be sellers, buyers, intermediaries, and that gives me a pretty good picture of what is going on.
“Today I think we are where we were at the beginning of the big move like back in the early 2000s (spot uranium prices peaked at $US140/lb in 2007). It has the same feel to it.
“Everyone knows that there is something happening. But because there is some structural change, as well as market movement, it is hard to tell how quickly and when it is going to move.
“Looking at demand, the uncertainty now is how much more demand are we going to have in the near term, as well as how far out it will go.
“On the supply side, it is a case of are we actually going to be able to bring production on quickly enough to meet that gap.
“And if you look at inventory, I have never seen so much inventory sucked out of the market as I have seen in the last 3-5 years.
“Over the next 12 months, it is a market where there are several catalysts, and if just one of those changes, I think the price could go above its last high.
She said more sanctions being imposed on Russia, or utilities having to withdraw from contracts with the rogue state earlier than they anticipate, could be catalysts for a market upswing.
And then there is the increase in policy backing around the world for nuclear power’s role in the global decarbonisation push. “The only way to achieve that (decarbonisation) is to have baseload nuclear,” Davies said.
Boss’ boss Duncan Craib first met Davies when they were both with then Husab mine owner, the ASX-listed Extract Resources, which was taken over by China General Nuclear in 2012 for $2.2 billion.
Craib too has just posted a video on the Resources Rising Stars website (view here).
It is an update on progress at Boss’ $113 million redevelopment of the Honeymoon uranium project in South Australia, with first production due in the fourth quarter of next year.
Craib says there is no point being in the uranium game unless a company is ready to capture the coming upswing.
Honeymoon fits the bill on that score which is why Boss, trading at $2.44, has been well supported all year in response to the uranium price edging up to around the $US50/lb mark.
Placed on care and maintenance in 2014, Honeymoon is being returned with some processing technology tweaks and a better understanding of the in-situ recovery of uranium from low-impact wells.
Craib recently squired two plane loads of analysts to Honeymoon to witness the progress on its return to production.
They came away impressed. Macquarie has a $3.30 price target on the stock while Canaccord has a $3.22 price target.
Bell Potter has a $3.51 valuation on the stock and made the comment that Boss represents an “opportunity to gain exposure to a fully permitted project, currently on care and maintenance, in a tier 1 jurisdiction, with a comparatively short lead time to first production”.
“In addition to this, we believe there is resource expansion upside in the current portfolio, with drilling currently underway,” Bell Potter said.
None of the Boss reports used heroic uranium price assumptions (Canaccord was $US75.40/lb in 2024, and Bell Potter was all of $US54/lb in the same year) in reaching their well-above market price targets.
It goes without saying that Boss’ leverage to a take-off in uranium prices to say a $US100/lb price, is extreme.
The lithium stocks have regained some but not all of the lost ground recently in response to some off-beam commentary from desk-bound analysts at Goldman Sachs and Credit Suisse.
So there could well be some added piquancy from the lithium contingent at the Resources Rising Stars “Summer Series” on Tuesday in Sydney and Melbourne on Thursday.
Leading the real-world assessment of where the lithium market is at, and where it is going, will be Pilbara Minerals (PLS) boss Dale Henderson.
Pilbara’s most recent auction on its BMX platform attracted a record price for spodumene concentrate. That alone probably sets the tone of Henderson’s presentation on where things are at for the company, and the lithium market.
Ken Brinsden, Pilbara’s former boss, is also presenting in his new gig as chairman of Patriot Battery Metals, the hotter-than-hot Canadian lithium explorer which is coming to the ASX in mid-December after a small capital raise.
Continuing the Pilbara theme, the up and coming battery metals explorer with an interesting lithium find in the Pilbara (the region), Trek Metals (TKM), is also presenting.
It is led by the same trio that first put Pilbara (the company) on the map with the discovery of the world-class Pilgangoora lithium deposit – geologists Neil Biddle and John Young, and accountant Tony Leibowitz.
It was mining engineer Brinsden that brought home its development to make Pilbara the $15 billion company it is today.