Kazatomprom Update & Uranium Prices: What You Need to Know! - Justin Huhn

The uranium price moved from $50 to $106 in approximately seven months (last year), an absolutely gigantic move that shocked the entire uranium industry, no analysts or industry observers predicted it.

“we had a huge move in the price last year we went from 50 bucks to 106 in like seven months it's an absolutely gigantic price move it is one that nobody in the industry expected uxc Trade Tech none of the analysts none and nobody that had the utility fuel buyer in their ear was telling them hey guys watch out the price is about to double like this was an industry shocking move”

Uranium investment requires diversification and capital protection (basic investing 101) since the sector is volatile and risky; however, even with a minority portfolio allocation, the upside asymmetry is so great that uranium stocks can deliver outsized portfolio performance.

“that's why you don't want to put all of your money into uranium stocks you want to be Diversified you want to take on basic investing 101 Capital protection measures it's a very risky volatile sector there's your there's your disclaimer put money at risk that you're willing to lose with that said if things work out in the way that we believe that they will the up upside is so so great that the stocks hit above their weight you don't have to have all your money in these things to have outsize performance for your across your portfolio with a minority of your portfolio invested in this sector so with with great upside potential comes great volatility and it's hard to get one without the other”

For long-term cyclical commodity investors, trading against emotional reactions (buying when feeling like vomiting, i.e., at market bottoms) is the core skill, requiring conviction that fundamentals have not changed despite price action.

“it's so understanding like like I feel it it doesn't feel good to see red on the screen but if you're fundamentally convicted about something for the long term you have to buy when the when that's bloody that's what you should be doing if you're holding something and wanting to be investing in something for the long term for an expected multi-year bull market for something cyclical and this is the beauty of cyclical investment ments that Commodities are so once they start going and the cycle is in place it usually stays in place for a very long period of time”

Chinese nuclear reactor safety is regulated at international standards with IAEA oversight and inspections, meaning safety risks in China are not higher than Western plants; a past piping issue was properly investigated and resolved by IAEA and French inspectors.

“you also have entities like the iaea which is the international atomic energy agency and and they tend to be sort of a like a watch dog globally for nuclear there's International inspections on nuclear power plants uh the Chinese You know despite the fact that you might assume that their safety regulations might fall short of regulations in the west they're they're not about to just willy-nilly build these things and have accidents all over the place so while there may be certain breakdowns there was a there was gosh what was it like a some leaky piping at one of their reactors about three years ago and the iaea was there the French were there uh assessing the situation they took care of it it wasn't a problem”

The World Nuclear Association Symposium in London is a major industry event where utilities come together from around the world to communicate with traders and producers, and where term contracts are done through direct conversations rather than transactional orders.

“W is a big deal this is not just a catalyst that investors are are clinging to as their last hope this is an industry event this is where utilities come together from around the world and communicate with each other with Traders and with producers it's a very very large event term contracts are done through conversations it's not like you go to Amazon and click buy it now you actually pick up the phone or physically physically go and meet with people and discuss”

The uranium sector's previous bull market (2003-2011, with a spike in between) lasted nearly a decade due to strong underlying demand factors, demonstrating the long duration of commodity bull cycles when demand fundamentals are present.

“we had a big price spike in the previous Market but barring that Spike that was a bull market that went until basically Fukushima we had a lot of pounds get sold in the market during the during the GFC but really the price started recover what in 03 02 and went all the way to 2011 and there was a spike in the middle of that but it was it was almost a 10-year bull market for the commodity so these things last a very very long time especially when the underlying demand factors are there and they are there”

UXC raised their long-term price forecast to $80 and Trading Tech is at $82, indicating that the term price is continuing to climb despite low volumes this year, which is a very good sign for future market direction.

“uxc raised their long-term price to 80 I think trading Tech is at 82 so that ter price just keeps climbing keeps climbing despite the low volumes this year it keeps moving up which very very good sign”

Russia announced plans to build 11 additional reactors domestically and is currently building 18 as exports, while China approved 11 reactor builds in a single day and is on pace to hit its 150 GW target by 2035, demonstrating that nuclear expansion is not just political rhetoric but actual construction.

“Russia same Russia has a lot of conversion enrichment not a lot of uranium this mine number six they've been developing for 10 years every two years they come out and say it's gonna be two more years they don't have a lot of domestic uranium production their best projects by far are their JVS in Kazakhstan they are the biggest joint venture partner in Kazakhstan so Russia with an announced over like two weeks ago they announced they're going to be building 11 reactors domestically in Russia in addition to the 18 that they're building as exports right now China had 11 reactor approvals in a single day about 10 days ago and they are on Pace right now currently on Pace to actually hit that 150 gigawatts by 2035 so that's not just wishful thinking they're actually doing it and that's it's huge it's huge on the demand side to see that happening”

Term contracting volume year-to-date was 42.5 million pounds with approximately 10 million pounds signed in the last two weeks (prior to the August conversation), while annual utility demand is 180-200 million pounds, leaving a significant contracting need to be completed in the final months of the year.

“term Contracting volume year to date 42.5 million pounds so there was about 10 million pounds signed in the last two weeks that's a good sign so we're getting there we're getting there okay yeah it's coming in all right yeah good yeah and you know if they got to do um 180 or 200 by the end of the year there should be some serious volume coming in I would imagine for sure”

The primary catalyst for the next leg up in uranium prices and equities will be the resumption of replacement-rate term contracting cycles, which must happen because utilities have limited alternative levers to pull and will be forced back into the term market to cover future fuel needs.

“the main event hasn't even happened yet which is the resumption of a termy a replacement rate term Contracting cycle and last year we had a decent volume in the term Market um this year has been very very quiet for reasons I can get into but uh it will resume it has to resume because there's only so many levers the utilities can pull and once you understand what those levers are you know that they will be forced back into the turn Market that's already starting it's very active currently we're going to see more pound sign in the turn Market in the coming weeks and months that in our estimation is going to kick off another leg up in terms of the price for for uranium and the equity should follow”

An increasing percentage of Kazatomprom's attributable production (already more than 50% on an attributable basis) will be sold to China, and China is consuming more and more uranium due to announced reactor building programs, meaning Western uranium markets will face tighter supply availability even as aggregate global production grows.

“more and more I think the other thing that this that this uh this update really made more clear than ever not only in the prioritization of sulfuric acid and the increasing production out of Chinese and Russian projects but more and more pounds are going to be sold to China so more than half a Kazam PR on an attributable basis of their production is already being sold to China so China is going to continue consume more and more and more of a percentage of the uranium out of Kazakhstan”

Contracts signed in the 2022-2024 seller's market no longer have flex provisions, so as deliveries shift from old buyer-favorable contracts to new seller-favorable contracts, utilities lose the ability to increase volumes at locked-in prices.

“and then sitting on that slight buffer that they were able to build build through those two means and levers that they were able to pull they were able to step back during a historic price move in the in the market and to see where it's settling out so all of that is to say Flex Provisions will only last for so long it's a it's a buyer Market uh it's a buyer Market element we are now in a sellers market so and we have been in a sellers market for the past two years the contracts that are being signed 2023 2022 2024 and now going into the future largely don't have Flex provisions so those are going to slowly roll off”

Utilities stepping back from market contracting during a 2x price move, while maintaining an $80 low (vs. $50 previous low), demonstrates that an undersupplied market exists and is understood by market participants, as demand didn't crater but utilities simply exercised maximum patience before re-engaging.

“so with that said where it settled out is 80 bucks where was it last year 50 so an incredibly incredible L higher with minimal demand is a very very important tell so when demand almost disappears and the price doesn't crash back down to where it was that means you have an undersupplied market and that means you have a market that understands that under Supply and the players in the market the Traders the uh the analyst to some extent the price reporters showing 8082 term that's where these deals are get getting done even if they're low volume utilities are paying this price”

When high-quality resource equities undergo 30-40% drawdowns during liquidity crises (as opposed to buying distressed micro-caps at multi-year lows), that creates the most attractive risk-reward opportunity for conviction investors, as quality stocks get 'thrown out like the baby with the bath water' during indiscriminate selling.

“I kept thinking during those few days when when things were really really getting hurt I mean across asset classes but uranium got particularly hurt it just kept thinking back back to the co the co crash and you know when you have for me when you have great liquidity you have sellers selling everything in an unbiased manner when you have that's when the really good quality stuff gets thrown out like the baby with the bath water and that's that's where where I think uh the opportunity lies I don't think buying the tiny caps that are that are at multi-year lows during the crash is necessarily the smartest thing it might be highly spec maybe will pay off better in the long run but when the really high quality stuff that's been outperforming for the last two years goes on a 30 to 40% sale that's that's where I start to salivate”

Kaz Atom Prom's joint venture projects are being prioritized by sulfuric acid and other supply chain elements toward Eastern (Chinese and Russian) projects rather than Western (Cameco, French, Japanese) projects, indicating geopolitical bifurcation in supply allocation.

“the Russian and Chinese joint ventures are flatter or up in production so there's being a prioritization of sulfuric acid and potentially of other elements whether that's supply chain uh materials or whether that's skilled labor or drill rigs whatever they're being prioritized to the East and this should be a major major signal to the West”

U.S. reactor construction timelines between project permitting and completion depend on industry coordination and learning: Vogtle units 3 and 4 show that unit 4 was built years faster and cheaper than unit 3 due to worker and contractor continuity, suggesting U.S. reactors could be completed in under 8 years with good coordination (vs. China's 5-6 year pace).

“it really depends on how how well we get our act together so for example going back to vogle in Georgia the most recent plant that was built between units three and four unit 4 uh got constructed years faster and a much much cheaper so there was so much learned even between reactors 3 and four that if we have a lot of the same workers and contractors coming together to for these new builds and the and the industry can really work together to make it happen it should happen significantly faster and cheaper than bogal with that said you know the Chinese are building so many right now they really have it down um they're building them in five to six years so the US is probably not going to hit that Mark but I think if we could come in under let's say eight years would be a very very good sign if that were to happen”

Cigar Lake phase one production phases out around 2028, after which the mine moves into phase two that will be more difficult and costly to produce, likely reducing output to around 18 million pounds per year—a production cliff for one of the world's major uranium mines.

“you have Cigar phase one phasing out about 2028 they're going to go into phase two which our estimation is going to be a little bit more difficult a little bit more costly to produce and maybe maybe they'll be able to continue on 18 million pounds a year that's their plan I don't know”

One utility bought 13-15 fuel reloads of Chinese enrichment with a significant tariff as backup for the Russian ban threat, representing less than 1 million pounds of total US annual demand, showing Chinese enrichment cannot be a meaningful replacement.

“one utility bought a little bit of Chinese enrichment with a big fat tariff on it they did that to shore up because why the legislation just passed the house in November so they said shoot I'm going to make sure I you know I'm covered um so anybody that's talking this enrichment ban doesn't matter they're still just going to buy it from China look what happened last year last year was a single utility that bought 13 to 15 reloads you know how much uranium that is less than a million pounds all right so this is not a flooding of Chinese enrichment in the United States”

The uranium supply-demand model shows supply is expected to respond and balance in 2029 primarily from Rook One (2.8-2.9 million pounds annually for 5 years, then declining), Phoenix, Dosa, Kazakhstan expansion, and USEC expansion, but even with all these projects coming online in best-case scenarios, supply will only briefly match demand before deficits resume.

“so according to Cantor which in my estimation over the years their supply and demand modeling has been um it's been more bullish it seems like they're making more assumptions on the demand side than the industry is generally so whether or not they are and I haven't seen the data that they are specifically using for this and whether or not they're including SMR demand uh for example if they're assuming that all us reactors are going to get life extended for example these are the sort of things that skew the demand of The Upside so this graphic actually more closely represents the upper case coming from W's fuel report”

Kazatomprom's revised guidance signals that the 'bare thesis'—that Kazakhstan can simply open the taps to flood the market and kill the bull case—is definitively dead, which is the most important takeaway from their announcement for both uranium investors and the fundamental supply-demand picture.

“the bare thesis from all the way back when I was looking at this sector For the First Time The Bare thesis is is and was Kazakhstan can just open the Taps bull market over so what happened on Friday was a very big signal to the market that is not going to happen that's the big takeaway yes they will be able to marginally increase their production yes anyone who has built supply and demand modeling is modeling for an increase in production out of Kazakhstan no surprise they're going to continue to be able to produce a little bit more a little bit more a little bit more they're swimming in cash they got to put that cash somewhere whether it's a special dividend or they put it in the ground or maybe both but they've got to they need to spend that cash and they're going to do it so they will increase production don't be afraid but they're telling the market they just can't do it quickly and it's not going to happen as soon as everybody was expecting and that's very important for investors and utilities”

The primary value of Uranium Insider membership is conviction-building during drawdowns, keeping members from capitulating during volatility while they wait for the multi-year bull market thesis to play out.

“what we hear most from our members is that when the sector inevitably rallies which it does couple times a year usually at least even if it's a short-term rally but I think we're on the cusp of a longer term much much larger rally is uh people Thanking us for keeping them in so adding to their conviction and keeping them from capitulating because when you see your portfolio declining in value during these pullbacks it's not an easy feeling and it's not an easy feeling for the most tried and true and weathered investors right but it's very very difficult to trade against your your gut instincts and your emotions”

A single set of waivers for Russian uranium enrichment has been approved (for Centrus on behalf of multiple utilities), but the process has become harder as utilities must now prove to the DOE they didn't purchase alternative enrichment and 100% need the Russian material, making future waivers less likely to be issued 'willy-nilly'.

“there's been a single set of waivers approved so far that was granted to centrus as the domestic enricher on behalf of multiple utilities so centrus was basically the broker and the the the waivers that were that were granted a few utilities were able to make the case to the doe that these deliveries were Paramount to their operations um so there is some clarity that has been improving around this process but the process is ongoing one thing that is now happening for the process that us utilities are having to prove is not only not only there needs for that enriched Uranium on the time frame of whatever future delivery they're trying to get a waiver for but they have to now additionally prove to the doe that they didn't buy enrichment from another entity to cover the potential of that enrichment being cut off from Russia so they have to actually show their order book to the doe and prove that they 100% need this material”

Global Atomic's Dosa project is the highest-grade uranium deposit in Africa and will become a mine, though political uncertainty in Niger (coup government, French unable to export uranium via aircraft) creates financing challenges until export viability is proven.

“I think it's gonna happen yeah yeah dos is going to be a mine it's going to be a mine highest GD deposit in all of Africa um how it becomes a mine is a bigger question so there's still there's still concerns in the country because the French have still not been able to export uranium they were trying to get approval to export it uh by aircraft and the country is not responding to that request so they've been unable to ship material across the border via traditional means um so soina effectively is is kind of halted excuse me sare it's kind of halted the production has continued on and off since the coup but they've been unable to actually export the material now that's the French and the Nigerians don't seem to be in favor of the French at the moment for possibly obvious reasons but um the country expressed support written support that made it Ultra clear for Global Atomic and the Dosa project”

A US uranium producer reported that a single utility approached him at a DC conference and indicated he could have sold the next 10 years of his production to that one utility at prices with mid-80s floors and 120-130 ceilings, showing intense utility demand at current and forward price levels.

“we spoke with a rep from a US uranium producer recently who was at a one-day conference in DC last month and he had us utilities approach him and he said that he could have sold the next 10 years of his production to one utility if he wanted to he didn't choose to do it in fact he didn't sell any that day but at these current prices mid 80s floors ceilings at 120 130 could have sold every pound that he could produce in the next 10 years at that price so the interest is there”

US utilities pulled forward record amounts of Russian uranium in 2024 before the ban took effect by requesting early delivery of material under legacy contracts signed at $40-60 per pound instead of buying at current $80 prices.

“what they have done is contract deliveries for enriched uranium that were for this year or 2025 2026 they elected to request to have that material shipped to them sooner so they pulled forward a lot of that material from Russia so last year we had record amount of russan uranium come into the us and that is not because they did a bunch of new business buying spy up but because they had Legacy contracts with the Russians that they decided to pull that material forward and get it while they could before maybe it was blocked from some means or another”

The Russian uranium enrichment ban creates structural complications for utilities and traders beyond just U.S. utilities: European utilities with fuel fabrication contracts in France and deliveries of Russian uranium to the U.S. for fabrication and re-export to Europe face shipment complications, adding friction to markets that historically operated as 'a well oiled machine'.

“there are European utilities that have fuel fabrication contracts with France in the United States and have contracted deliveries of Russian uranium to the United States to be fabricated here and sent back to Europe and those shipments are being Complicated by this legislation even though it's not affecting a US utility at all just the material just the single ship can that can carry this stuff it's this this is all throwing sand in the gears of what five years ago was a well oiled machine where the utilities can get whatever they wanted from wherever they wanted”

Taiwan's shutdown of its last reactor, combined with inability to source sufficient electricity for data center expansion, demonstrates the practical energy constraint of nuclear phase-out policies ('stick in spokes' self-sabotage).

“Taiwan uh interestingly enough shut down uh their last reactor and then like like a week after that news came out they basically said that they had to turn turn down prospects for building a data center because they didn't have enough electricity and I posted that on X and I said insert you know uh stick in spokes meme is like like the guy in a bike that shoves this the stick into his own wheel and then Falls over”

When sentiment is extremely negative and RSI for uranium ETFs and large-cap stocks falls below 30, combined with SPRU trading at 15%+ discount to NAV, historical pattern shows this either marks the precise pullback low or is followed by a low only 3-5% deeper, providing a quantifiable buy signal.

“every single time that sput has traded at a greater than 15% discount to nav and you have a couple of other things extremely bad sentiment that's expressed across the various channels and uh daily RSI for the ETFs and the and the large cap stocks in the space falling below 30 every single time that has either marked the low of that pullback like precisely or we had one more low following that that was maybe 3 to 5% lower so low enough for me”

The uranium equities basket (URE and UME) measured against spot uranium price shows equities are historically cheap relative to the commodity—not quite as cheap as the COVID crash but near the beginning of the 2020 bull market, yet this occurred with uranium at $80 per pound (versus $26 for URE), representing significant underperformance.

“if you measure the equities let's say Ur andm as a basket of equities against the spot price the equities are historically cheap they are uh not as cheap as the covid crash but almost and they're basically back to levels that right towards the beginning of the bull market in my opinion December 2020 which in one way is very frustrating I mean I don't think anybody would have expected we'd be at Ur 26 with $80 uranium so the underperformance is palpable”

The WNA (World Nuclear Association) Fuel Report, issued every two years, provides the most authoritative supply-demand modeling based on consensus from a dozen industry professionals (both demand and supply side experts), though individual organizations like Cantor may be more bullish on demand assumptions than the WNA's reference case.

“the w puts out a fuel report every two years they put one out last year and they do a lower case a reference case and an upper case the reference cases in their estimation in the W by the way when they put out this report they have um you know a dozen industry Professionals in the investing site and the new nuclear side that work together both in the demand camp and the supply Camp so it's not just the W themselves you actually have industry folks coming together and coming to some form of consensus on where they see supply and demand going out in the future so it's it's a very very well done report”

Huneault acted aggressively on the August 2024 liquidity crisis opportunity by purchasing multiple uranium equities and options on Friday and Monday of that crash, demonstrating that when markets create extreme discounts, conviction investors should capitalize on them.

“as a fundamental investor especially for this particular thesis I'm long-term bullish and nothing has changed that for me so when when the markets give me extreme discounts I usually act on that opportunity and I did I got relatively aggressive longer into multiple uranium equities and opportunities in uh on the option side of things and I that was Friday and Monday of that liquidity crash so I put my money where my mouth is”