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Uranium: The train is leaving the station

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I hope you had a great week! Our small community is growing fast and I can’t express how grateful I am to share my thoughts with each and every one of you.

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In this week’s installment of the Road out of Serfdom, we will discuss a question that I get asked all the time. How long do we need to wait to see the real bull market begin? As if the last 6 months were not interesting enough already.


That being said, I think it is important that investor have a mental map of what the next 2 to 5 years in uranium equities in order to pace themselves along the way and take full advantage of this bull market. Therefore, I will explain the next 2-5 years into the following catalysts:

  1. Uranium Strategic reserves from the Department of Energy in the USA

  2. Sprott acquisition of the UPC

  3. Utilities Long-term contracting

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Step 1-Strategic Reserves

In 2020, the government approved for the year 2021, the fiscal year ends in September in the USA, to purchase 75 million USD worth of uranium. The congress is also working towards a 10 years strategic resource of anywhere between 150million USD per year to 300 million USD per year. The idea behind this initiative is that the current prices are too low to incentivize the production of uranium in the USA. Without going into the political details of why this is important for the Biden administration, this reserve was already in place in the 70s-80s which lead to the USA being the #1 producer, developer, and consumer of uranium in the world. This position has significantly been weakened since 2012 given the abundance of uranium, Fukushima, the growth of nuclear in China, and the uneconomic nature of the deposits, at current prices, of uranium in the USA. Speaking to Paul Goranson and Mark Chalmers, which are both of the opinions that the RFP (request for proposal or bid) will set the price of the contract for this year between 60$ to 70$ per lbs. The government will want to focus on Uranium owned and produced in the USA. A quick calculation will drive you to the conclusion that the government will ask to contract for delivery between 1 million lbs to 1.25 million lbs. Which company can currently deliver this? Energy Fuels has around 700,000 lbs of uranium, UEC has 550,000 uranium with their recent purchase but will increase to 2.1 million lbs by December 2022, Ur-Energy has about 280,000 lbs, Peninsula has about 20,000 lbs. Cameco (oftentimes forgotten but Cameco has 3 ISR pants on C&M in the USA), Encore, Azarga, Virginia resources, and Anfield, Western, and Laramide do not hold any such assets but could all, to a certain degree, get back into production or advance their projects into production. Concerning UEC, given that they purchased their inventory on the spot market and we do not know the origin of that uranium, I would not be so sure that they can sell it to the government as I expect there will be very strict guidelines such as American produced uranium by an American producer or a company owning American assets. If that is the case, then Energy Fuel and Ur-Energy will be the first beneficiary. Depending on when the delivery needs to be, this can open up the door to near-term producers to get back into production. I hate to have to rely on a government to begin the cycle of long-term contracting but that will definitely help as it will dry out any leftover US inventory and entice new production.

Step 2- The New Sprott Market ** Spot Market*\*

The recent acquisition of UPC from Sprott will allow the retail market to buy physical uranium. Let’s recap what will happen. UPC used to be this fund created to have exposure to uranium prices through the physical holding of uranium. It used to be that the manager of the fund, Denison up until Sprott took over, would issue share for cash to purchase physical uranium when the premium to net asset value was about 20%. First, Sprott will have this new vehicle listed on the NYSE allowing for greater liquidity from the biggest financial market in the world. Second, Sprott’s management has a track record of successfully managing and marketing the physical Silver Trust, PSLV, and the Gold Physical Trust PHYS, to their +200,000 customers. Third, Sprott will issue shares every time the net assets value is at a premium to shares to buy more physical uranium. They will also do the reverse when the NAV is at a discount. This effect will put a lot more pressure on the spot market and entice, even more, utilities to contract. While Step 1 is a 6 to 18 months process, step number 2 will begin having an effect on the spot market in the next 3 to 6 months and ongoing after that. For an in-depth explanation of the subject, I suggest Justin’s interview with Jake. For an understanding of what happened in the last bull market when UPC launched the prospectus, I suggest the following thread which puts everything in context.

Step 3-Utilities Contracting long term

In my first post in January about uranium, I said that the key to unlocking value for the sector was the utilities contracting long-term. This is still the case today. The US utilities and the Western European utilities have been missing in action in the last couple of years as shown from this slide ( thanks to Mike Alkin from Sachem cover partner)


Once the government and Sprott legally corner the market of physical uranium, it will be GAME OVER for the utilities. They will need to go back to the negotiation table with producers. Sadly for utilities, they should have done that in the last 2 years and have not which means that producers such as Cameco and KAP will only contract part of their supply at long-term price and will allow part of the supply to be priced at the spot market to fully take advantage of the future increase in price. I expect this to begin in Q1 2022. Why then? Sprott’s listing on the US exchange will take some time to implement. Second, KAP, Cameco, and Yellow Cake still need to buy on the spot market roughly 15 million lbs this year which should finally, dry out any real secondary supply available. Remember, there is no incentive for fuel buyers to sign contracts now because there is supply available.

The keys to understanding that this market has shifted will come from someone like Cameco announcing that McArthur river or their US assets are brought back online. Everyone in the industry is always listening to their conference calls quarterly because it gives as much information as to where the total market for uranium is headed. I suggest listening, at least, to the Q&A part of their lastest conference call where a participant was asking Cameco if the Japanese utilities were still selling in the spot market uranium. The answer was interesting as the Japanese refused to sell to Cameco because they knew that the price was is going to increase in the future.

I also fully expect that Ur-Energy/Encore/Energy Fuels will come to market in the next 6 months to announce the following news: They have purchased either Peninsula Energy, Azarga, Laramide, Western or Anfield. There will be a full consolidation in the US landscape given too many companies and too few of them have the possibility to mine or bring their assets to life. There is also an excess of General and Administrative expenses that can be streamlined by consolidating positions. For the same reasons, I fully expect consolidation in the African landscape. Goviex, Global Atomic, Deep Yellow, Marenica, Bannerman, Paladin, and the Chinese ( CGN & CNNC )have big positions there. I personally expect Marenica to be taken over by one of the bigger guys given their land package, positioning next to all the bigger guys, and the fact that it is still, but probably not for long, relatively cheap. Let’s not forget that Orano will probably be eyeing the likes of Goviex and Global atomic. I also fully expect that this would only happen when step 1 or step 2 has happened giving companies more flexibility otherwise this would mean that they would issue a lot more shares than needed in the future.

Other things to keep in perspective

  1. In the last bull market, the number of companies increased 10 fold from beginning to end. The multiplication of companies trying to profit from the incoming bull market will also be a great indicator. Be especially astute to the name-changing game. Many companies as a great way to increase their public profile will try to include uranium in their company name.. When a company whose assets are primarily other precious metals and decided to “reposition” their core focus, that you get you thinking.

  2. The total market cap of pure-play uranium companies reached close to 500 million last time around.. We are sitting at a fraction of that today

  3. Merger and Acquisition are also a great indicator of where we are in a cycle. When companies pay mostly out cash to take over companies, we are usually early in the bull market. Examples of those are the CGN buying the right to assets of Kazatomprom and the UEX and JCU debacle. They both offered mostly cash to fund the operations. When we begin to see an all-share transaction, we will be sitting well into the bull market if not the late innings. The reasoning behind that is that companies’ shares have run up so much that it is a way to lock in those profits by swapping it for an asset.

  4. In the last couple of weeks, a lot of random people have messaged me about which crypto I hold.. When the barber asks you, which uranium stock you hold, it will be critical to sell stock and bank your profits. There will be signs before that but that would be the ultimate one.

My uranium timeline

  1. Until January 2022, investors will keep front running the spot price of Uranium to position themselves.

  2. In the same timeline, The US government will have, hopefully, purchased the first tranche of the strategic reserve.

  3. 2022 will be the year that utilities begin contracting back long term. This will accelerate our thesis. Paladin, Boss, Lotus, Cameco, Ur-Energy, Energy Fuel, Encore energy will bring back mines online from their care and maintenance status. The time needed and the ramping up will take between 12-18 months and will require significant sums of money. From all companies listed above, think usually above 50 million in Capex.

  4. At this point, the price will be firmly above 50$/lbs and oscillating toward 60$ to 70$per lbs

  5. 2023, the year we will begin to see mines that were in care and maintenance change to production status. If you marry that with the forecasted deficit in the markets, even if price increases, there will not be a way to increase production. Everything will be in the works to get there but it takes time. At this point, a lot of consolidation will have to happen. In my mind, the price of uranium has the most possible overshoot potential in 2023-2024. If the spot price can go above 140$/lbs, I suspect that is when it happens

  6. 2023-2024, that is when the irrational exuberance behavior will come into play. Expect a lot of the tell signs I mentioned above to be witnessed around that timeline.

What happens after? I still think that the price of uranium will be above 50$ for the foreseeable future because other big projects will still need the 70$/lbs to be profitable. By 2028, cigar lake, Cameco’s flagship mine will be depleted. By 2028, a lot of the new reactors being commissioned or built will come online as you can see from the below chart.


I think this market can still be a raging bull market for much longer after 2024 but I prefer to stay focus on the next 2 years. Obviously, this is my mental map. I share this with you as a way to illustrate some of the key features of the next 24 months. Remember that in the last bull market, retraces of 30% to 50% were very common. If you want to hold a 10 bagger, making ten folds your initial investment, you need to be prepared to stay in the market when these corrections happen. You also need to plan your exit at some point. Wouldn’t it be sad to have come across this life-changing opportunity and have nothing to show for in 2025? That sure keeps me up at night.

The portfolio

If you follow me for some time, you know that I did a private placement with Western Uranium in February. The terms and conditions were as such. Four months locked period, then shares are free-floating. I also had the option to purchase the exact same number of shares within 2 years at a 50% premium to the initial share purchase. As you can see from the recent share appreciation, I will exercise that right soon. This will increase the portfolio return significantly. I also just did, last week, another private placement, this time with Anfield Energy, another uranium company with the same conditions.


Upcoming company interviews

I have scheduled a call with Troilus Gold for May 24th and Arianne phosphate for June 22nd. They are both massively interesting, in my opinion, and will fun to attend! Reach out if you are interested to listen in or ask questions. If you can’t make it, I am happy to take questions ahead of time!

Leave a comment

thanks again for reading and I always welcome comments!



if you want the article with the slides and pictures:


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