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ASX uranium shares are surging today

The Motley Fool logo The Motley Fool 2/06/2021 Kerry Sun
a man wearing a hat: woman and two men in hardhats talking at mine site © Provided by The Motley Fool woman and two men in hardhats talking at mine site

ASX uranium shares are breaking out today, with some of producers and explorers making multi-year highs.

Why is uranium in the hot seat?

Uranium is mainly used as fuel for nuclear power reactors for electricity generation. Nuclear power isn’t exactly a “renewable” source of energy, but it generates near zero emissions. Uranium is expected to play a significant role in the global shift move to lower emissions over the next 30 years.

If you look at the 10-year charts of many ASX uranium shares, it isn’t uncommon for valuations to have declined by more than 90%. This is because the spot price of uranium has tumbled from peaks of US$137/lb in 2007 to lows of US$20/lb, sending many ASX uranium stocks out of business or into hibernation.

There has been recent resurgence in both investor interest in uranium as a green source of energy and an uptick in spot prices to ~US$30/lb.

In a capital raising presentation from Paladin Energy Ltd (ASX: PDN), the company flagged that current primary uranium supply is unable to meet current demand. It highlighted that nuclear power is currently responsible for 10% of global electricity production and the second largest source of global clean energy with almost zero carbon emissions. The company believes the uranium market is in a deficit with an even greater supply shortage to emerge in the medium to long term.

The increasing demand for uranium and uptick in prices could be a catalyst for the resurgence in ASX uranium share prices.

ASX uranium shares on the move

The Deep Yellow Limited (ASX: DYL) share price has surged 13.10% to 95 cents at the time of writing. Its shares previously hit 95 cents on 10 May, which marks an 8-year high for the uranium explorer.

Deep Yellow operates its flagship Tumas Project located in the premier uranium mining jurisdiction of Namibia with a long history of mining. The company currently undergoing its definitive feasibility study to achieve its goal of a 20-year life-of-mine operation.

The Devex Resources Ltd (ASX: DEV) share price is slightly down today but has surged some ~65% in the last five trading sessions. The company completed a $7.97 million capital raising to accelerate its key diversified exploration projects across Australia. This includes its Nabarlek Uranium and Gold-Copper Project in Northern Territory. The update advised that renewed field exploration was going to commence shortly to follow up several new and under-explored uranium prospects.

The Paladin Energy Ltd (ASX: PDN) share price has jumped 14% to an 8-year high of 57 cents at the time of writing. Back in March, the company successfully completed a $192.5 million capital raising to pay back debts and restart its mine production and optimisation.

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