G'day folks, welcome to another episode of GeoInvest. I'm Michael, I'm a professional exploration geologist, 10 years experience and a member of the Australian Institute of Geologists as well. This is just going to be a quick episode, I just wanted to briefly discuss the uranium boom and go over roughly why we're seeing a spike in the price at the moment. Perhaps there's a cautionary tale there as well from the past that we can have a bit of a look at and we're going to just go over two different articles which discuss the uranium price boom that we see and then we'll come back later in the week and I'll review a few different exploration companies and producers and or near-term producers as well and look to see if we can find a place for a good investment or whether we think it's even a good time or place to make an investment if that makes sense.
So let's just go over I've got a few different articles we're just going to read through hopefully that will explain why there's so much. hype in uranium at the moment and let's go from there. All right so let's just start off we'll take a look at the uranium spot price so as you can see at the moment today it's $95 per pound uranium is reported in pounds so other commodities gold for examples will be dollars per gram and uranium is dollars per pound when we look at uranium resources or producers or production everything is reported in how many pounds of uranium they're producing or they have in their reserve or anything like that just say just be mindful of that moving forward and when you look around now this chart at the moment that we can see is a five-year chart and you can see five years ago the the spot price was near 25 a pound to currently today 95 a pound so you know it's a four times increase and and it's actually dipped a little bit it was at 105 dollars per pound as well so you can see why there's all the buzz and the hum and i guess the investment boom with spot prices like this a lot of people are looking at investing in uranium exploration companies or near-term producers and i guess you really sort of want to know well what's behind this bubble i shouldn't have called it a bubble because i can't be sure it's a bubble yet but we'll go have a look at something in a moment but you sort of want to know okay why is this sudden massive interest in um in the in uranium and well that's what we'll go over now uh and uh and try and unlock a few things so one thing i just wanted to point out quickly is that when you look at a chart like this truncated to five years you know it looks absolutely amazing um you know wow like let's get into uranium when you go back and you click max uh there are other charts which go further back further than this But if you look back here to 2007, now 2007, this peak in 2007, that is the highest spot price that uranium has ever been at.
It was at $137. So really, you know, $30 per pound more than what it is today, you know, a good 15 or so years later. And if you look at the absolute sharp, dramatic decline of uranium on the on the reverse side of that, that peak right it's just an absolute plummet so this drive and this spike in uranium back in 2007 this was a hundred percent a uranium bubble okay so i guess what we're seeing now if we go through this i'll just explain this chart briefly to you so that you can get the vibe of sort of what's happened but um uranium bubble in 2007 absolute plummet and crash after it when the bubble pops that's normal we see this build up in this peak again we're building back up 2011. Well, what happened in 2011 Fukushima happened.
So, you know, uranium got to $77 a pound, uh, and then Fukushima happened and everyone just went, Oh my God, you know, nuclear disaster and, uh, all the money, everyone, you know, no one wanted to touch uranium and, um, and away we went. So here we are on our way to a globally sustainable green economy with uranium. Fukushima happens and all of a sudden wind and solar, wind and solar, wind and solar, and no one wants to touch uranium. Uranium price falls, falls, falls, falls, falls.
And then gradually ever since about 2020, it starts to increase. And then all of a sudden we have this boom in 2023, which is, I mean, 2021, 2022, 2023. So important. Um, and we get up to where we are now.
So I guess Let's just quickly have a look. There's a Wikipedia article on the uranium bubble of 2007. It's only really brief, but we're just going to go over it just so we can understand some of the basic concepts, I guess, which are behind that bubble and then see if there are any similar parallels today. So according to Wikipedia, you know, people say don't ever quote Wikipedia, but I'll tell you what, it's a generally pretty good 50,000 foot view, right?
So the uranium bubble of 2007 was a period of nearly exponential growth, $135 a pound, like we said before. All right, the upward trend for the price, this is the causes. The upward trend for the price of uranium was already apparent since 2003. That's fine. Okay. A possible direct cause for the bubble is the flooding of the cigar lake mine.
So this is, um, this is a real thing. All right. When you have your global uranium supply being met or the capacity and the growth of that supply is already currently being met and can be met by the existing mines, then, you know, As existing new reactors come online, you can meet that demand. You can just increase.
But all of a sudden, when you have a significant uranium mine shut down or downgrade its production, all of a sudden it creates a massive shortfall in uranium supply. So that's when you start to see the price increase. And then as well, if there is a demand for more reactors coming on, combined with a big producer being taken offline, then it's like the perfect storm for increase. So coming up here, we saw, we saw there was, um, there was an expectation for growth and then we had the cigar lake mine come offline as well.
So that pretty much started the bubble, right? And so everything went up, massive investment flooded in, and then it turned out that it wasn't so bad after all and pop away we went, but that's just really that flooding of the cigar lake mine is pretty important because you It's something that we've seen that's happened now as well. Not where we've had a flooding of a mine or anything like that, but we have had one of the world's largest mines downgrade its production, right? And how much it can actually supply. And given some other world geopolitical occurrences, it's sort of pretty important.
So it's worth just recognizing that some of these things have happened before and have contributed to a bubble. And that... there are similar things that are potentially happening today, but because they're similar, it doesn't mean they're the same.
Uh, we've got two little articles here, one from the Motley Fool and, uh, the other one from, um, from StockEd. So those are two, the Motley Fool, if you don't know is, uh, uh, investors forum, right? That's the best way to put it.
They post a lot of articles, um, lots of threads on different companies and things like that. And they have a subscription services where you sign up to it. and you get access to well I'd have to say generally a lot of people talking about what's going on in the space right so it can be quite useful. All right so what's all the hype about with ASX uranium shares?
Right I'll just I'm just going to read through it quickly and then as I see important key things I'll shout them out and we'll read them out so The jump in uranium prices have been fuelled by the aggressive buying from investment firm Sprott Inc. Sprott Inc launched its physical uranium trust Sput in July this year and emerged as the world's largest actively managed uranium fund. According to Bloomberg, Sprott has amassed over 24 million pounds of uranium.
To add some perspective, uranium investment from Yellow Cake PLC reported total spot volume of 2020 of 92.2 million pounds. So Sprott has gone and bought up, what, a quarter of the world's uranium supply, right? So there's a reason why Sprott have suddenly said, okay, we want to get a hold of all this uranium. We want to own it because we know it's going to increase in value, right? All right, Sprott's CEO said, we think uranium is entering a new bull market as the world looks for a mix of clean energy in the new green energy revolution.
If you want a low carbon grid, you can achieve it by spending an enormous amount of money and having a highly inefficient grid, which is inherently unstable, or you can include nuclear as a core part of your power base. We think uranium has been underplayed in the last 15 years. So what he's alluding to here is that... The energy production of uranium compared to solar and wind is just astronomically through the roof orders of magnitude better.
On top of that, uranium nuclear reactors have a lower carbon footprint than what say solar does. All right. So a lot of green technologies have a higher carbon footprint than what a nuclear reactor does on a pound for pound basis, as far as wattage and how much energy you're creating. And then on top of that as well, when you do solar and wind combined and you look at the amount of energy they're actually feeding into the grid, They pretty much only feed into the grid for an average of six hours per day. So if you imagine trying to run your entire civilization off intermittent energy, which is only being put into the grid on six hour spurts, right?
Or on average six hours across the 24 hour period. That's just, it's just not viable, right? It's just not possible.
So you can have those technologies, wind and solar, sure. But what, but a nuclear reactor runs. 24 hours a day, right? So you have green energy being pumped into the system 24 hours a day, and that's going to provide your baseline of energy. And then you can supplement it with these other technologies if you want to, but they generally have a higher carbon footprint and they also consume a lot more minerals in their production.
Okay. So there's a bit of a trade off there. All right so that's what he's talking about there. All right uranium demand has dwindled since Fukushima's nuclear power plant disaster in 2011. Yep we spoke about that. Sprott's asset manager said that demand for from nuclear reactors is expected to increase by a few percentage points per year as new reactors come online.
So we'll cover this in a little bit at the moment, but there is a lot of new reactors which are planned to come online in the near future. I mean, if we just think about Germany, for example, which took all its nuclear reactors offline for political reasons, because it could rely on a combination of solar and wind combined with natural gas from Russia, and now their natural gas supply has been pulled from underneath them. It's just... not guaranteed anymore.
So you need to replace it. So where are we going? Back to nuclear.
All right. Talks about a few companies. We can talk about them later. All right.
And then this next one is from Stockhead. Uh, so what's important here. All right. As a baseload, low carbon energy source, nuclear will be critical for hitting net zero emissions.
90% of governments have committed to zero emissions. That's easy to say, but how do you get there? To have a low carbon footprint, okay, the standout performer in zero carbon technologies is nuclear. That low carbon footprint is for 24 hours per day production.
Whereas the carbon footprint for wind and solar, which is higher than nuclear, is only six hours per day. There we go. That's the reason nuclear is such a laid-out misere.
U.S., U.K., E.U., Japan, Korea, Middle East and China are all saying we need more nuclear. Alright, the European war has highlighted the need for energy security which nuclear provides. We're therefore seeing a return to nuclear power in the key market of Europe. Of course, right, because you depend on Russia and now that's not dependable anymore. The largest single uranium market the US has just received support under the Inflation Protection Act, which grants $30 billion in tax credits to support the long-term continued operation of the US reactor fleet.
The biggest growth market is China, which sees nuclear power as a critical pillar in its decarbonization and energy security strategy. China is building 10 large reactors a year for the next 15 years. 150 new nuclear reactors in China. which we'll see it become the largest single market despite having very little domestic uranium production.
So it doesn't produce any uranium, but it needs it. All right. All right.
If we take a look at this chart as well, this is a cool chart. So this blue line here is the uranium supply from existing mines, right? This tiny little green bit is mines under development, right? Because there hasn't been much interest in uranium at all for the last, you know, 15 years because of Fukushima, people haven't been building new uranium mines at all, right?
Now there is a percentage of mines like Honeymoon in Australia, for example, or Paladins mine, which can be restarted now that the prices are better and so forth. So they have been dormant, they've been mothballed, they can be fired back up again. But when you look at that on top of the existing supply and the new, like it still just doesn't cut it. So the expected growth is this black line and then all the red is the shortfall between.
all the uranium that we currently have all the uranium we're expecting to be coming online and all the uranium we're expect that we're going to need for a green economy right so that pretty much sums up and explains why um why we're seeing the the surge in uranium as well i do want to say as well that um i think it's the world's largest uranium supplier in kazakhstan kazakhstan just dramatically reduced their production output as well, right? And their reporting of how much they're going to produce. So that's played into this a lot. This is a lot like, what's it called?
When the Cigar Lake mine flooded, you know, it's the same sort of environment where you have all of a sudden, you have demand, you know, projected growth for the demand for nuclear reactors. You see geopolitical situations where all of a sudden your energy supply and a global model of energy supply is no longer reliable as well gets taken off the market and then and then on top of that your biggest producer downgrades how much it can produce well this all sort of culminates in a bit of a spike and a bit of a boom. So we're going to come back I'll bring out another video later on in the week I'm going to go over a few different companies I'm going to go over Paladina Energy.
I'm going to talk about have a look at Alligator Energy as well and then also Boss Energy so both Boss and Paladin are older existing Uranium mines which are coming back online and just starting production now and then Alligator Energy are still an explorer in the resource phase as well. So we're going to go through a few of these in detail in the follow-up video for this but I just wanted to basically go over what's happening with Uranium at the moment. why it's happening and so forth. But I just want to as well be, I just want to go back to 2007 and say that we do have quite a few similarities with the increased demand, the producer going offline, right? Helping to create this bubble.
Now there is a massive amount of reactors scheduled to come online, right? And we do have the geopolitical problems with Russia and Europe and the change in the gas supply. A lot of countries are realizing now they need to be more insular with the energy supply.
We can't rely on a global model. The Red Sea and the Black Sea are both sort of off limits at the moment. And Nord Stream Pipeline got blown up. the world's pretty volatile, right?
So we really need to make sure that we can secure our own things. Europe has, um, has energy supply and Australia does. Canada does.
Uh, us does has uranium supply. So there are good safe countries that you want to deal with. So yeah, hopefully that gets your brain thinking a little bit about uranium and, um, perhaps why we are where we are now.
I actually expect, I wouldn't be surprised if what we see is we see this uranium peak and boom come off a little bit. uh come off come back down and then ramp up again that's sort of what i expect to see um but we'll come back in the next episode and we'll have a look at some companies and uh we'll go from there so that's it folks thanks for watching and um if there's any companies you specifically want me to review their projects uh leave a comment and we'll have a look thanks bye