Uranium Unleashed: How Mining Stocks Fuel the Nuclear Comeback

there are some really interesting options for investors to participate in the nuclear investing universe and so we're spending a lot of time talking about how clients can get access to not only the fiscal markets but Equity exposure as well yeah and for us that's one of those spots that's been a uh kind of theme throughout the year that we've really seen there's a couple different ways to play nuclear energy and for us we focus on those Pure Play Miners And when we describe Pure Play we're talking about those companies as you know uh have at least half of their revenue or assets or dedicated to uranium so that's uh a place where we think that there's a real opportunity as we head into 2025 if you were to look at uh this past year uh the uranium miners have underperformed and that's been in the face of a very strong fundamentals and we've seen you know as we talked about AI even from a a geopolitical standpoint where we've seen Russia announced that they're going to stop sending in Rich uranium to the United States uh we see the ongoing issues with the coup and Niger all of these things are impacting the um the global uranium markets and we think what we're going to see is a crowding in of funding uh in many Western countries uh as they look to bring those Supply chains uh back to you know United States Australia Canada places uh that are friendly you know to the United States and as we go through um uh 2025 we think that there's going to to be um the potential for a catchup trade on the minor side Steve could you tell us a little bit about some of the investor profiles that are interested in this style of the market yeah so we're seeing a lot more interest as it relates to uranium uh if you were just to look a few years ago uh as it relates to nuclear Investments um it's just a couple billion dollars or so invested now if you start looking at the fisical side and the equity side uh we're up around that 10 billion 11 billion range so a lot of activity from investors has coming into the space uh what we generally hear is um the way investors look at it one of two ways one if they're uh invested in broader based type indexes think like the S&P 500 Russell 2000 uh they're very much underweight their uranium or nuclear exposure uh so those are investors that could potentially benefit from some increased diversification um and you know as they start looking at their oil and gas or traditional energy exposure again that's an area that their portfolio tends to be underweight uh the second type of investor is interested in the potential volatility of this growing industry uh and might elect to put it into their growth sleeve and so we're starting to see a lot of investors consider that as a way to kind of add Alpha uh to more of a traditional portfolio it does sit alongside things like gold and regular equities uh and that's um something that we think investors are starting to gravitate to our Focus traditionally has been on minors and I'd say the key reason for that is once you start looking at the investment opportunity um we tend to favor the Upstream side of the supply chain so that would be the miners those those miners that have their revenue and assets tied directly to uranium once you start moving Downstream to things like utilities or architecture or construction type firms uh they start to lose uh in many cases a a good portion of their exposure to the nuclear industry or uranium industry I think the greatest parallel I could draw to that would be if you were to look at the Copper industry it's a great example if you look at the 10 largest copper binders uh only four of those are actually predominant copper miners or publicly traded uh similar thing in the the uranium space where once you start moving Downstream you start to dilute your exposure by staying Upstream uh we think that the miners are are well positioned to benefit from the increase in nuclear energy and on top of that uh we have this huge supply and demand Gap that's expected going out through 2040 and actually out as far as you know all projections go where we could have a cumulative 1.1 billion pound def deficit uh in uranium so what that tells us is that um miners are likely to be incentivized to increase production uh so they have to start bringing more material out of the ground but in order to do that we need higher prices so we're at this point in time where we have this overall overhanging Supply deficit going out for the next you know two decades or so uh but at the same time prices aren't quite high enough to incentivize The increased production so we think as that um starts to move its way through the market that the miners are going to stand a benefit Steve could you talk a little bit about the supply demand dynamics of the new nuclear market and how it's Unique versus some of the other Commodities uh uranium Market is a very interesting one and it's you know it's one of those things where we've had nuclear energy now for decades um but at the same time it's been underinvested in for so long so we came out of the Cold War we had where we had this period of a this large secondary supply of uranium that was able to feed the market we're now at a point where that's pretty much been exhausted uh and we have to increase production the primary production as we call it uh and with that uh to get new permits and go through the permitting process and go from Greenfield project where we discover uranium to getting it to production and and starting to have any meaningful output can take a decade or longer um so I think what we need from a uh a policy standpoint not in just in the United States but we see this in in every mining jurisdiction is we need to have uh policy makers understand that we need to get more uranium out of the ground now if we're going to rely on nuclear energy down the road and um as we look at government policies we just came out of the cop 29 conference last month we're now up to 31 countries that have signed on to Triple nuclear energy capacity out through 2050 um so we see the governments moving in that way of increasing their Reliance on on uranium and nuclear energy we just need the policy to come alongside that so we can boost that Supply so that's another reason why we like the miners uh as that it's another way we expect to see the investment get crowded in uh and we think the miners will be well positioned to take advantage of that and given that there's a new Administration that will be in place in Washington in January are there any shortterm projections of what we'll see in the uranium market so I think one of the thing that's different than we've had in years past uh and and it was very evident over the last 12 to 18 months is that Democrats have now gotten much more nuclear friendly we've seen things like the advance act and inflation reduction act which have now incentivized domestic production of uranium uh it's also providing some uh Financial incentives to nuclear reactors to stay operating longer uh traditionally that was a republican issue so the fact that that both parties are on board with that we think now that uh the new Trump Administration is coming in uh we don't expect to see a change in course as it relates to nuclear energy or uranium for our viewers that are just tuning in part of the American Energy Supply today already in nuclear yeah we're actually the largest uh producer of nuclear energy in the world um might be surprising to some because we did have a long period of time where we've just built a few reactors right so uh when we look at where a lot of the the current demand is coming a lot of that is coming from China uh they're not the largest uh nuclear power yet they they're looking to get there they're adding somewhere in the neighborhood of you know 8 to 10 permits a year to build new reactors uh so a very aggressive way for them to build out their energy profile and you know there there's two two reasons for that one so given the population of of China um and technological advances that we see in the west it's it's a very uh potent energy source uh it has that high base load power meaning that you know it doesn't worry about intermittency that we see with wind and solar and and hydro and and other forms of cleaner energy and the other aspect is it is a very clean form of energy and because of that it's starting to be favored by governments to meet Net Zero uh decarbonization goals so it really does kind of hit on both of those fronts are there any major pitfalls to the uranium industry or things that investors should be worried about I'd say probably the biggest thing would be volatility it is a relatively small industry and still an emerging industry uh even though it's been around for decades uh so getting comfortable with some volatility uh because of that uh we do have two uh ETFs that we provide one provides an all cap exposure so the large uranium miners mid and small caps as well as a physical uranium component and then we that ticker is urm and then we have ticker urj which is just focused on the junior junior uranium mining space which is typically those exploration type companies and development companies uh we tend to tell investors if you're new to the space &m might make more sense it's a little less volatile uh it does provide some exposure to the spot Market which is a little little less volatile and then as well as the the larger miners in the space and when you're seeing advisers or end investors use nuclear energy as part of their portfolios where does it fit uh a main place that we see is in a gross sleeve um so if they're looking to add a little volatility or or potential a little Alpha to their portfolio can fit well there or also alongside traditional Investments as part of the energy exposure or just as a way to diversify an overall portfolio Steve that was great I really enjoyed having this conversation with you and we look forward to doing it again soon it's always great to catch up with you John you always have great insights from the field