Uranium

Which ASX uranium stock offers the best value?

Wed 17 Jan 24, 9:41am (AEDT)
A hard-rock nugget of uranium ore is juxtaposed against a black background
Source: iStock

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Key Points

  • Australian uranium resources are valued much higher than those in other countries, even in early stages
  • Namibia, despite abundant resources, is perceived as higher risk and miners trade at a discount relative to Australian peers
  • Boss Energy, despite its seemingly expensive price tag, has consistently outperformed

We're only half way through January and most uranium stocks are already up at least 25% year-to-date as prices for the commodity top US$100 a pound for the first time in 16 years.

At its simplest form, investing in mining is all about who has the biggest resource with the best grades and the ability to extract it at the lowest cost.

In this series, we’ll be looking at which uranium explorers, developers and producers offer the best value for money based on two simple metrics:

  1. Market Capitalisation

  2. Mineral Resource

Which Uranium Stock Offers the Best Value

The below table puts into perspective how much investors are paying for a pound of uranium based on the company's latest mineral resource and market capitalisation.


Ticker

Company

Mkt Cap

Projects

Status

Mlb U3O8

A $/lb U308

BOE

Boss Energy

$2.08bn

Australia

Construction

71.6

$29.05

AGE

Alligator Energy

$303m

Australia

Scoping Study

24

$12.63

PDN

Paladin Energy

$3.59bn

Australia, Canada and Namibia

Construction

455.8

$7.88

AEE

Aurora Energy

$171.5m

Mauritania

DFS

58.9

$2.91

DYL

Deep Yellow

$1.02bn

Australia and Namibia

DFS

402.3

$2.55

BMN

Bannerman

$515.1m

Namibia

DFS

206.8

$2.49

PEN

Peninsula Energy

$132m

US

Construction

53.8

$2.46

LOT

Lotus Resources

$551.8m

Malawi

DFS

241.5

$2.28

EL8

Elevate Uranium

$175.8m

Namibia and Australia

Explorer

142.5

$1.23

1AE

Aurora Energy Metals

$26.3m

US

Explorer

50.7

$0.52

Data as at Tuesday, 16 January 2024.

You should also note the following points:

  • The data is calculated on a 100% ownership basis. When adjusted for partial ownership such as Paladin Energy (owns 75% of Langer Heinrich) and Bannerman (owns 95% of Entago Uranium Project) should have A $/lb U308 adjusted to $8.69 and $2.62 respectively

  • The data is based off the resource contained within the company's 2023 Annual Report. Alligator, Lotus and Elevate incorporate the latest mineral resource upgrade/acquisition.

  • The data does not take into consideration other factors that may influence project economics such as geographic location, project status, uranium grades etc. which means the data is a good starting point for comparisons but does not capture the full picture

The first thing you'll notice is that an Australian resource is worth at least 2-3 times more than resources from Namibia, Canada and the US – Even if the project is in a relatively early stage such as Alligator Energy's Samphire Uranium Project.

Namibia is considered politically stable with a government that actively encourages foreign investment but the market often perceives the entire region as high risk. This discounting is consistent across other miners from sectors such as gold and lithium.

Peninsula Energy is the only ex-Australia name that's in construction phase. The company successfully raised $50 million last year to fund continuing construction works to restart its Lance Project in Wyoming. What's interesting is that almost 10% of the company's shares are shorted.

Namibia has one of the richest uranium mineral reserves in the world and the third-largest producer of uranium in 2022. But most ASX-listed players with Namibian projects are still working through key studies and further exploration. What happens when a project hits construction phase like Paladin Energy? Could we see:

  • A substantial re-rate as the company begins to put things together

  • No change as the markets continue to perceive projects in the region as high risk as well as substantial project financing risks (e.g. dilution from capital raise, debt etc.)

A question that might stand out is whether or not having a 'cheap' resource results in greater share price upside.

Let's take a look (I've left the order of stocks from highest to lowest A $/lb U308).


Ticker

Company

1-Month

1-Year

BOE

Boss Energy

46.0%

132.5%

AGE

Alligator Energy

34.4%

86.9%

PDN

Paladin Energy

37.0%

63.9%

AEE

Aurora Energy

9.2%

-11.7%

DYL

Deep Yellow

55.7%

86.8%

BMN

Bannerman

39.1%

85.5%

PEN

Peninsula Energy

30.0%

-18.7%

LOT

Lotus Resources

21.8%

39.5%

EL8

Elevate Uranium

23.6%

27.9%

1AE

Aurora Energy Metals

97.4%

-6.3%

Data as at Tuesday, 16 January 2024.

The answer: Not really.

The best performing uranium stocks in the past month are: Aurora (+97.4%), Deep Yellow (+55.7%) and Boss Energy (+46.0%).

While the best performing names in the past year are: Boss Energy (+132.5%), Alligator Energy (+86.9%) and Deep Yellow (+86.8%).

Leadership Status

Most uranium stocks were rangebound between September 2021 and May 2023. Interestingly, Boss Energy was the first name to break above the longstanding trading range.

BOE vs All
Boss Energy vs. other uranium stocks (Source: TradingView)

Despite Boss Energy's seemingly expensive price tag (relative to other uranium stocks) – Its outperformance has only continued to widen.

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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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