Uranium Mining Stocks Sink After World's Largest Producer Boosts Production Guidance

Uranium mining stocks plunged on Thursday after the world's largest uranium producer raised its full-year 2024 uranium production guidance.

Kazakhstan's state-owned miner Kazatomprom released an update on operations and trading on Thursday, indicating it now expects to produce between 22.5mln and 23.5mln metric tons of uranium this year, while it previously stated the range of 21mln and 22.5mln tons.

"The Company is increasing its 2024 full-year production guidance on both a 100% and attributable basis as the half-year results show that the production rates with which the mining entities are now progressing will result in higher than initially expected volumes. As was previously disclosed, the Company was able to secure necessary volumes of sulphuric acid required for its 2024 production at minus 20% level relative to Subsoil Use Agreements," Kazatomprom said. 

The upward revision comes after a 5% and 6% rise in second-quarter and half-year output, respectively, the miner noted in the update. It added that sales volumes soared 48% in the second quarter, mainly due to the timing of customer-scheduled deliveries.

Here's a snapshot of the full-year forecast (courtesy of Bloomberg):

• Sees uranium production 22,500 to 23,500 tonnes

• Sees revenue 1.70 trillion tenge to 1.80 trillion tenge

• Sees capital expenditure 250 billion tenge to 270 billion tenge

In response to the guidance boost by the world's largest uranium miner, shares of the Global X Uranium ETF (URA) dropped 7%. The URA's YTD gains stand around 2%, but it is still up 17% on three-year returns.

Bloomberg Intelligence analyst Mohsen Crofts noted that Kazatomprom's "new project pipeline is currently constrained by sulfuric-acid shortages and construction delays." 

In early February, uranium prices jumped to 16-year highs at $106 a pound on dwindling global supplies and rising demand, as the Biden administration kicked off nuclear revitalization trends in the US. Prices have since fallen to about $84.5 a pound. 

As a reminder, nuclear power has been a central ZH theme since early December 2020. Read the note titled "Buy Uranium: Is This The Beginning Of The Next ESG Craze." 

Coupled with the latest powering up America theme, "The Next AI Trade," we again reaffirm nuclear power will be critical for supplying clean, on-demand power to AI data centers, etc... 

Goldman is still a bull on Cameco Corporation. 

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