(Bloomberg) -- Uranium-focused investors in North America are piling into shares of miners of the nuclear-reactor fuel after the world’s largest producer, Kazatomprom, released guidance that fell short of market expectations.
Shares of North American miners surged Friday after Kazakhstan’s state-owned uranium miner said overnight that it would produce 25,000 tons to 26,500 tons of uranium next year. Analysts say that’s higher than 2024 levels, but notably below agreements that require it to produce within a specified range for the year.
Cameco Corp.’s shares jumped as much as 6.8% in in Toronto, while NexGen Energy Ltd. surged more than 11% at one point. Denison Mines Corp. jumped as much as 16%.
“This brings the entire production curve guidance down for several years,” Segra Capital Management founder Adam Rodman said Friday, calling the outlook a “miss” and saying he’ll buy North American uranium miners as a result. Segra Capital already owns Vancouver-based startup NexGen and other miners.
Rodman said that “most importantly,” Kazatomprom’s guidance was so low that he expects the miner will need to apply for regulatory permission to downgrade its production for the year at several key sites. The lower output guidance came amid project delays and a lack of sulfuric acid needed to pump the metal from the ground.
Its production guidance suggests a 7.1 million pound “ramp up” for the company, but it will still leave the uranium market in a deficit, said BMO Capital Markets analyst Alexander Pearce.
This week also brought a development on the demand side that bodes well for the stocks, as China approved 11 new nuclear reactors, a a record amount of permits.
“Demand numbers keep going up and supply numbers keep coming down,” Segra’s Rodman said.
(Updates shares, adds Chinese demand rising in final paragraph.)
©2024 Bloomberg L.P.