The recent deal between Constellation Energy and Microsoft, the largest power-purchasing agreement in history, has sent shockwaves through the uranium market. This deal, focused on providing sustainable energy for data centers, relies on restarting the Three Mile Island Unit 1 nuclear reactor, a project that has fueled a surge in uranium stock prices. As nuclear power makes a comeback, two companies stand out as potential beneficiaries of this trend: Uranium Royalty and Denison Mines.
Uranium Royalty: A Low-Risk Investment
Uranium Royalty, true to its name, focuses on acquiring royalty interests in uranium assets across the globe. Instead of directly mining and processing uranium, the company earns royalties from its portfolio of assets. This unique approach allows Uranium Royalty to profit from the growth of the nuclear industry without bearing the significant costs and risks associated with mining operations.
Their diverse portfolio includes stakes in various projects, ranging from exploration ventures like the Rio Tinto-owned Russell Lake project to the Energy Fuels Inc. owned Whirlwind project. Uranium Royalty also owns a considerable amount of physical uranium, adding another layer to its revenue generation strategy.
Denison Mines: A Uranium Powerhouse in the Making
Denison Mines, a Toronto-based exploration and development company, holds a majority interest in the Wheeler River Project, situated in the Athabasca Basin of Saskatchewan, Canada. This vast project spans over 300,000 hectares and includes the Gryphon and Phoenix deposits. While the Wheeler River Project isn’t yet producing uranium, the Phoenix deposit is progressing through the permitting process for In-Situ Recovery (ISR). This deposit boasts an impressive 10-year mining life and a resource base of over 56 million tons of uranium. The anticipated approval in 2025, combined with favorable uranium prices, makes Phoenix a potentially lucrative asset.
The Gryphon deposit, while still in the earlier stages of development, is another promising asset. With a mine life of 6.5 years and substantial uranium resources, Gryphon holds significant potential for future production. Denison also generates revenue through its 22.5% stake in the McClean Lake uranium mill, which processes ore from the Cigar Lake mine. This strategic partnership provides Denison with a consistent revenue stream.
Conclusion
The renewed interest in nuclear power is creating a favorable landscape for uranium-focused companies. Uranium Royalty, with its low-risk royalty model, and Denison Mines, with its promising exploration and development projects, are well-positioned to capitalize on this growth. As the world seeks clean energy solutions, uranium will likely play a crucial role, making these companies attractive options for investors looking to benefit from the nuclear power surge.
