New directive should provide boost for uranium sector, Cantor Fitzgerald believes

Broker Cantor Fitzgerald has flagged up a development that it thinks might give a lift to the uranium sector.

The US Department of Energy (DOE) has released a Secretarial Determination that notably reduces the maximum amount of uranium that can be transferred to contractors for clean-up services at the Portsmouth Gaseous Diffusion Plant in Ohio.

On April 26, US Secretary of Energy Rick Perry ordered that the total amount of uranium transfers per year from 1,600 metric tons of uranium (MTU) to 1,200 MTU. 

“The development is positive to the uranium sector as it reduces the amount of uranium that was being dispersed into the market by the US DOE,” explained Cantor Fitzgerald.

“The 2M lbs U3O8 equivalent for the remainder of 2017 and 3.1M lbs U3O8 equivalent for 2018, are notably less than the 5.5M lbs U3O8 [triuranium octoxide] equivalent that was occurring in prior years. This is effectively an annual cut of 2.4M lbs from the market for the next two years, which is about half of the annual amount cut by Kazatomprom when it announced production reductions earlier this year of about 5.2M lbs U3O8,” the broker added.

KazAtomProm is the national atomic company of the Republic of Kazakhstan. Combined, the Kazakh and US DOE cuts amount to 7.6mln lbs of U3O8 equivalent, which is 4.8% of our forecast production at the beginning of 2017.

“That announcement spurred a rally in the uranium spot price from US$20.25/lb to a peak of US$26.00/lb, or by 28%. We believe this announcement should provide a boost to the sector,” the broker declared.

Cantor is generally bullish on the sector, and has buy recommendations for the likes of NexGen Energy, Cameco Corp, Uranium Participation, Denison Mines, Fission Uranium, Energy Fuels, Uranium Energy, Ur Energy and Azarga Uranium.

Story by ProactiveInvestors