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Wednesday, December 6, 2023

John Ciampaglia: Uranium Story "Incredibly Bullish," Balance of Power Shifting

The uranium story remains “incredibly bullish,” but macro factors are weighing on the sector.

“Right now I think uranium is kind of caught in the backdrop of a very bullish scenario in terms of the fundamentals,” John Ciampaglia, CEO of Sprott Asset Management, told the Investing News Network. “But the backdrop it’s being caught in is banking failures in the US, everyone still waiting for some kind of a pivot or a pause with Federal Reserve policy.”

This scenario has frustrated investors who continue to watch positive developments in the industry without necessarily seeing company share prices respond. It’s also dampened activity for the Sprott Physical Uranium Trust (TSX:U.UN).

Even so, Ciampaglia pointed to the resilience of the uranium spot price compared to other commodities. He also noted that companies mining the material are now able to exercise more control when selling to utilities.

“I think utilities are finally starting to figure out that the prospects for uranium look much more bullish, and the prospects for nuclear energy remain much more bullish than the situation two years ago,” Ciampaglia said. At that time, low prices and abundant supply meant the balance of power was skewed to utilities. But now market dynamics are changing.

“I think the utilities understand that the producers are partners, and that they have to pay fair prices based on today’s realities,” he added, explaining that this is why miners like Cameco (TSX:CCO,NYSE:CCJ) are able to be selective in the deals they sign.

“Obviously the world has changed dramatically in the last two years — the energy transition is a real secular driver in terms of driving countries and economies to net zero. We think nuclear energy plays a big part in that transition. Governments have clearly shifted their preference back to nuclear energy after basically ignoring it for a very long time,” Ciampaglia said.

Watch the interview above for more of his thoughts on uranium supply, demand and prices.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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