Is Cameco Stock a Buy Now?

Microsoft started the shot rolling erstwhile past autumn it signed a 20-year powerfulness acquisition statement with Constellation Energy successful which the powerfulness institution would restart its Three Mile Island atomic installation to powerfulness Microsoft's information centers. Alphabet and Amazon, meanwhile, person turned toward tiny modular reactors (SMRs). SMRs are overmuch smaller than accepted atomic reactors and connection much flexibility successful their deployment. There are presently nary SMRs successful the U.S., but some China and Russia person operational SMRs.

This increasing involvement successful atomic powerfulness means determination volition besides beryllium expanding request for uranium. One of the champion ways to play this atomic inclination is with Cameco (NYSE: CCJ).

Despite a coagulated longer-term outlook, uranium prices are really down astir 40% from February 2024 astatine caller prices. Part of this stems from expanding tensions betwixt the U.S. and Canada. Canada is the largest supplier of uranium to the U.S., representing astir 27% of its full proviso successful 2023.

Canada's Cameco, meanwhile, is the world's second-largest uranium miner. Not surprisingly, its banal terms has fallen fixed the unit uranium prices person been seeing. However, it is worthy noting that Cameco sells its uranium done semipermanent contracts astatine pre-negotiated prices. It has commitments to merchantability connected mean 28 cardinal pounds of uranium a twelvemonth implicit the adjacent 5 years. It noted its full publication of concern is for astir 220 cardinal pounds of uranium.

To enactment that successful context, the institution owns portion of 2 Tier-1 uranium mines successful Canada and 1 successful Kazakstan. Its 2 Canadian mines person a combined 43 cardinal pounds a twelvemonth successful capacity, with McArthur River Key Lake (69.8% ownership) astatine 25 cardinal pounds and Cigar Lake (54.5% ownership) astatine 18 cardinal pounds. It besides has a 40% involvement successful the Inkai excavation successful Kazakstan with 10.4 cardinal pounds of capacity, arsenic good arsenic different uranium assets specified arsenic refiners and conversion facilities.

It delivered conscionable nether 34 cardinal pounds of uranium successful 2024 portion producing astir 23.4 cardinal pounds. It is looking to nutrient 18 cardinal pounds astatine each of its McArthur River Key Lake and Cigar Lake mines successful 2025 connected a 100% basis, which means full accumulation careless of its ownership. It is inactive successful discussions with its spouse Kazatomprom connected what its acquisition allocation for 2025 volition beryllium with its Inkai mine. Inkai excavation accumulation has been impacted by ongoing proviso concatenation issues successful Kazakhstan.