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Uranium Execs Predict Imminent Price Spike as Supply Gap Widens

Recording date: 16th November 2023 A recent uranium conference provided an upbeat outlook on market fundamentals and future growth potential in the sector. Industry executives conveyed confidence that the transition to a supply deficit will continue lifting uranium prices higher in the years ahead. However, they cautioned that bringing new mines online to meet rising demand will prove challenging. After years of oversupply pushed prices to unsustainably low levels, the tide is now turning. Top producer Kazakhstan plans to cut 20% of production through 2023. Meanwhile, demand keeps expanding as Japan restarts reactors and new units are built worldwide. This mounting supply-demand imbalance will require prices over $60 per pound to incentivize new mine projects. Spot prices around $75 today still appear muted compared to where they need to head to ensure adequate investment in new capacity. Prices could spike far higher in the coming years if supply tightens too quickly before new projects are developed. Mine restarts will help stabilize production, with Boss Energy's Honeymoon project in Australia targeting 2023 and Lotus Resources' Kayelekera mine in Malawi aiming for 2025. But greenfield projects require more time and capital. Presenters emphasized that today's spot price understates strengthening uranium fundamentals. It serves as a lagging indicator of where the market is heading. Many analysts see prices marching higher into the $80s and $90s in the next 12-18 months. This will better reflect the cost of replacing reserves and developing new mines. Market experts expects uranium could hit $100 per pound when today's thin inventories leave less cushion against potential supply shocks. For investors, the current opportunity lies in securing shares of companies with assets that can deliver uranium into a high-priced market within the next several years. Near-term producers will capture the most upside. CEOs at the conference expressed confidence that capital markets will fund new projects once prices reach adequate levels. But developers need to avoid prematurely overpaying for assets today based on unfounded hype about a potential uranium bull market ahead. In summary, the uranium market has clearly flipped into deficit conditions that will worsen until prices rise enough to bring new supply online. Investors should target companies with advanced, de-risked assets in reliable mining jurisdictions that can achieve production within a few years when uranium demand is forecast to substantially exceed primary mine supplies. The sector offers leverage to an inevitable recovery, but projects take time to permit and finance. With curtailed exploration, discoveries peak production just as existing mines enter depletion. This sets the stage for greater volatility ahead, increasing the value of deposits that can be built to prevent projected shortfalls from becoming reality. Bannerman Energy Bannerman Energy is an Australian uranium development company focused on advancing its flagship 3.5Mlb pa open pit uranium project in Namibia, a major global uranium producer. Bannerman is currently working on Front End Engineering and Design (FEED) and financing for the Namibia project. The company also holds a significant 41.8% stake in Namibia Critical Metals, developer of the large-scale Lofdal heavy rare earths project in Namibia, one of only a few heavy rare earth deposits outside China. — Learn more: https://cruxinvestor.com/commodities/... Sign up for Crux Investor: https://cruxinvestor.com