4 ASX stocks expected to benefit as the US aims to improve domestic uranium production: SUP, RIO, THR, GTI

  • Jun 28, 2020 AEST
  • Team Kalkine
4 ASX stocks expected to benefit as the US aims to improve domestic uranium production: SUP, RIO, THR, GTI

Summary

  • Australia plays a substantial role in the production of Uranium with low-cost resources and houses many explorer companies focused on Uranium production.
  • Many of Uranium explorers such as Superior Lake Resources, Thor Mining, GTI Resources, and Rio Tinto have uranium investments in the USA
  • The USA promoting domestic uranium production has opened up opportunities for these ASX explorers
  • United States is planning more nuclear reactors, which are under construction.

Australia is known as one of the leaders in Uranium production space and possesses low-cost uranium resources. Australia produces almost one third of world total uranium production. Since 1954, Australia has been mining uranium and currently, there are three mines operational. However, country is planning more mines in the future. In the year 2019, Australia produced around 7798 tonnes of U3O8 (Uranium). Australia’s Uranium accounted for 20% of the uranium requirement of US in 2018 and provided huge opportunities to many Australian explorers.

Do Read: What’s driving Uranium Prices?

However, US President Donald Trump recently announced to increase domestic uranium production as well as to reduce import. The announcement provided a surge in interest in reviving old mines. This is likely to provide benefit for those ASX-listed explorers having investment in the US.

Source (U.S. Energy Information Administration)

Nuclear energy accounts for around 10% of the global power supply, with the US generating around 20% of its power from nuclear energy. A total of 53 new nuclear reactors are under construction globally, with a further 100 reactors planned, and more than 300 additional reactors proposed in order to meet the increased requirement for a stable baseload power supply. On that backdrop, let us look at four ASX-listed companies, which are expected to be benefit from the announcement made by Donald Trump:

Superior Lake Resources Limited

Superior Lake Resources Limited (ASX:SUP) is engaged in the exploration of mineral prospects. Recently, the company announced that it has secured three-month exclusive right to conduct due diligence on Premier Uranium LLC’s USA uranium assets by paying A$200,000.  This exclusivity agreement follows the similar agreement over Aurora Uranium Project in Oregon, USA. The company added that the Uranium sector continues to demonstrate signs of recovery amid positive developments, including the US Government’s classification of uranium as a commodity of strategic importance.

In the past 12 months, the USA Government has showcased a strong desire to reinvigorate the domestic uranium industry to decrease its dependence on imported uranium and challenging the expansion of nuclear power development by Russian and Chinese companies.

At the close of trading session on 26th June 2020, the stock of SUP settled flat at $0.125 per share. The stock of SUP has delivered returns of 135.85% and 108.33% during the period of one month and three months to shareholders.

Rio Tinto Limited

Rio Tinto Limited (ASX:RIO) is in the exploration, development, production and processing and marketing of minerals and metals. FY2019 has proved as a strong year with the significant cash flow with decent balance sheet strength. The company has paid US$11.9 billion cash returns to shareholders with US$1.6 billion in the form of share buybacks and US$10.3 billion as dividends.

Do Read: How these Iron ore stocks are bucking the trend?

The company announced its support for the plans of Energy Resources of Australia for a renounceable entitlement offer to raise an amount of $324 million for the rehabilitation of the Ranger Project Area in Australia during 2019. The company produced 2,640,000 lbs of uranium concentrate in 2019 and produced 676,00 lbs of uranium concentrate in Q1 FY20.

At the close of trading session on 26th June 2020, the stock of RIO settled at $98.990 per share with a rise of 1.988% against its previous closing price. The stock of RIO has delivered returns of 5.53% and 12.32% during the period of one month and three months to shareholders.

Thor Mining Plc

Thor Mining Plc (ASX:THR) is a resources company, which 100% of the advanced Molyhil tungsten project in the Northern Territory of Australia. Recently, the company has acquired 100% of the shares in American Vanadium Pty Ltd having interests in uranium and vanadium focussed projects in Colorado and Utah in the USA. THR has wrapped up the field component of due diligence for the acquisition of American Vanadium Pty Ltd.

THR has raised A$700,000 through the placement and A$130,000 via the conditional placement to Metal Tiger PLC. The company experienced strong support from new institutional and sophisticated investors in a heavily oversubscribed placement. Funds raised would be used for the exploration activities at the uranium and vanadium projects subject to the acquisition of American Vanadium Pty Ltd.

At the close of trading session on 26th June 2020, the stock of THR settled the day flat at $0.05. The stock of THR has delivered returns of -21.43% and 83.33% during the period of one month and three months to shareholders.

GTI Resources Limited

GTI Resources Limited (ASX:GTR) is involved into exploration of mineral tenements in Utah (United States) and Western Australia. Recently, the company announced that it has received positive results from its recently completed sampling program conducted on outcrop and underground workings at the prospective Rats Nest project, which returned high-grade assay values up to 0.87% U3O8 and 1.07% V2O5.

The company added that these results confirm prospectivity for high-grade uranium and vanadium in multiple GTI properties in Henry Mountains region of Utah. The company is experiencing a decent strength on its potential to capitalise on potential & proximity to operating infrastructure by increasing positive uranium market fundamentals and US government focus on nuclear energy.

At the close of trading session on 26th June 2020, the stock of GTI settled at $0.026 per share with a rise of 4% against its previous closing price. The stock of GTI has delivered returns of 550% and 188.89% during the period of three months and six months to shareholders.

 


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