How to Invest in the Best Uranium Mining Stocks


Nuclear energy is having a resurgence lately, thanks to advanced nuclear technologies and an increased investor interest in clean energy sources. Nuclear power is not strictly renewable – it uses uranium as its fuel – but it is certainly green. Currently, nuclear power provides about 10% of the world’s electricity, and 18% of electricity in OECD countries. While the bulls believe technology will increase nuclear capacity, the bears point to a dismal growth forecast. The International Atomic Energy Agency expects nuclear capacity to grow by 82% over the coming 30 years – a meager 2% compound annual growth rate (CAGR).

For those who are bullish on the growth of nuclear energy, there aren’t many pure-play nuclear energy stocks out there. An alternative approach might be a pick-and-shovel play on nuclear energy – uranium stocks – since existing power plants will need fuel indefinitely. In this article, we’ll look at the uranium investment opportunity in an attempt to find “the best uranium mining stocks” which (according to our research) a lot of investors are looking for. A majority of the findings in this piece came from the World Nuclear Association’s rich research database.

What is Uranium and How Is It Used?

Uranium is one of the heaviest of the naturally occurring elements with a density 18.7 times that of water. Like other elements, uranium occurs in several slightly different forms known as ‘isotopes’. These isotopes differ from each other in the number of neutrons (uncharged particles) in the atomic nucleus. Natural uranium in the Earth’s crust is a mixture largely of two isotopes: uranium-238 (U-238), accounting for 99.3% and uranium-235 (U-235), about 0.7%. Uranium-235 is the secret sauce because, under certain conditions, it can readily be split, yielding a lot of energy. This process is called fission. Most reactors require uranium to be ‘enriched,’ a process that increases the proportion of U-235 from 0.7% to 3-5% in the fuel.

The nucleus of the U-235 atom comprises 92 protons and 143 neutrons. When the nucleus of a U-235 atom captures a moving neutron, it splits in two and releases energy as heat. It also throws off two or three additional neutrons in the process. If enough of these expelled neutrons cause the nuclei of other U-235 atoms to split, a chain reaction starts. When this happens over and over, a very large amount of heat is produced from a relatively small amount of uranium. The heat is then used to make steam that turns turbines to produce electricity in a nuclear reactor.

Diagram of a chain reaction. Credit:

Uranium is used almost entirely for electricity generation in nuclear power plants. Other uses include nuclear submarines and nuclear weapons for the military, and some medical isotopes in healthcare. Depleted uranium is uranium that has much less U-235 than natural uranium, hence it is considerably less radioactive. It is a dense metal that can be used as ballast for ships and counterweights for aircraft. It is also used in ammunition and armor.

Uranium Mining and Production

Uranium is mined using several methods:

  • In-situ leaching (57% of global output)
  • Conventional underground or open-pit mining (43% of global output).

The first method involves pumping a leaching solution down into drill holes in the uranium ore deposit where it dissolves the ore minerals. The uranium-rich fluid is then pumped back to the surface and processed to extract the uranium compounds from the solution. In conventional mining, ores are processed by grinding them to a uniform particle size and then extracting the uranium through chemical leaching. The milling process yields a dry powder consisting of natural uranium called ‘yellowcake,’ which is sold on the uranium market as U3O8.

Steps of uranium mining and production. Credit:

Globally, Kazakhstan produces the largest share of uranium from mines (42% of supply in 2019), followed by Canada (13%) and Australia (12%).

Uranium price and markets

Uranium is a commodity traded on the New York Mercantile Exchange in standard contracts of 250 pounds of U3O8. Most trade is via 3-15 year term contracts with producers selling directly to utilities. In 2000, primary market participants – utilities and producers – accounted for 95% of the spot market. That share decreased to two-thirds by 2005 and one-third by 2011 and it has remained at 30-40% since. The rest of the trading volume comes from traders and financiers who provide greater liquidity and efficiency to the uranium market.

Mineral price fluctuations are related to demand and perceptions of scarcity. The price cannot stay below the cost of production for long periods, nor will it remain at very high levels for longer than it takes for new producers to enter the market and increase supply, consequently decreasing prices.

Uranium spot and long-term prices. Credit:

Around 440 reactors across the globe require 67,500 tons of uranium (tU) from mines each year. This includes initial fuel cores for new reactors coming online. Capacity is growing slowly, and existing reactors are being run more productively, which has resulted in a drop in the demand for uranium. From 1970 to 1990, there was a 25% reduction in uranium demand per kWh output in Europe due to such improvements, and that trend continues to this day.

The cost structure of nuclear power generation is one of high capital expenditures and low fuel costs. Because of this, the demand for uranium fuel is much more predictable than the demand for other mineral commodities. Once reactors are built, it is very cost-effective to keep them running at high capacity and for utilities to make any adjustments to load trends by cutting back on fossil fuel use. Demand forecasts for uranium depend largely on installed and operable capacity, regardless of economic fluctuations. According to the World Nuclear Association, the ten-year demand outlook for uranium shows a 26% increase over the period 2020-30. That’s a CAGR of 2.3% per annum, a growth rate that’s about as unimpressive as the growth of nuclear energy as a whole.

At this point you may be asking yourself, why would I ever invest in uranium stocks when the demand for uranium is growing at such a slow pace? Good question. We have no idea why thousands of investors search every month for terms like “best uranium stocks” or “where can I buy uranium stocks.” For whatever reason, there’s a strong interest in the uranium investment thesis. We hate to disappoint you, but the “best uranium mining stocks” just aren’t all that great.

Investing in Uranium Mining Stocks

In the 1990s, the uranium production industry went through a consolidation period, but has diversified since then thanks to Kazakhstan’s multinational ownership structure. The country built strategic links with Russia, Japan, and China, and involved Canadian and French companies in its uranium mining projects and other aspects of the fuel cycle. Over half of uranium production is from state-owned companies around the world, some of which prioritize a secure supply of their own over the needs of the market. In 2019, the top 10 companies by production contributed more than 85% of the world’s uranium production.

Top uranium producers in the world. Credit:

At first glance, this list provides a rich opportunity set of uranium producers. The reality is that many of these companies aren’t providing the sort of pure-play exposure investors are looking for, with some not even being publicly traded – like Orano and General Atomics.

Representing the Australians are BHP and Rio Tinto, the two largest mining companies in the world that derive a very small fraction of their revenues from uranium (BHP doesn’t even break out uranium revenue, and Rio Tinto’s 2020 sales revenue from uranium was less than 0.7% of total revenues). CNNC, Navoi Mining, ARMZ Uranium Holding, Uranium One, Sopamin, and VostGOK are all state-owned (by China, Uzbekistan, Russia, Niger, and Ukraine respectively). Energy Asia isn’t a listed company either, and is partly owned by Kazatomprom. This narrows our investment opportunity set to only three uranium mining companies.

Kazatomprom (0ZQ.F)

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Kazatomprom (0ZQ.F) is the largest global producer of natural uranium with priority access to one of the world’s largest uranium reserves. Its core operations include uranium mining, production of uranium products, prospecting and exploration, and production of rare mineral products. In 2020, the uranium segment accounted for 89% of the Group’s consolidated revenues. The company’s primary listing is on the Frankfurt Stock Exchange with a market cap of $9.43 billion.

Kazatomprom’s consolidated revenue was KZT 587,457 million (about $1.37 billion) in 2020, an increase of 17% compared to the previous year. According to the company’s annual report, revenue growth was driven by an increase in the spot price for U3O8, the weakening of KZT against USD, and a small 2% increase in sales volume compared to 2019. That growth comes as a surprise when you consider that Kazatomprom’s actual uranium production volume decreased by 15% in 2020.

If the company’s financial success comes down to market dynamics and exchange rate fluctuation, as opposed to real uranium production, it doesn’t seem like the most sound investment opportunity. Add to that the political risk of investing in a partly state-owned enterprise of a non-democratic country, coupled with the volatile KZT-USD exchange rate risk, and there are enough red flags to say that this probably isn’t the best uranium stock out there.

CGN Mining Co. (1164.HK)

Next up is CGN Mining Co. (1164.HK), a $550 million uranium producer listed on the Hong Kong Stock Exchange and registered in the Cayman Islands. The company posted $370 million in revenues for the year 2020 with a net profit of $20 million. That’s according to their 2020 annual report which is a convoluted document that heavily relies on management commentary, and doesn’t break out segments or projects in its financials. The publicly available information isn’t enough to make an informed investment decision, so investors are best served to avoid this stock entirely.

Cameco Corporation (CCJ)

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Last but not least is Cameco (CCJ), the third-largest uranium producer in the world which is listed on the NYSE with a market cap of $7.46 billion. The Canadian company is a pure-play uranium producer with two segments – Uranium and Fuel Services. According to Cameco’s 2020 annual report, the firm’s revenues have been stagnating since 2019, and expected deliveries for 2021 are showing a continuing decline, some of which can be attributed to the you know what.

Cameco’s uranium delivery volumes. Credit: Cameco annual report 2020

Production at Cigar Lake mine, the largest uranium mine in the world owned jointly by Cameco and Orano, was suspended twice thanks to The Rona. Notwithstanding the interim difficulties of the pandemic, Cameco appears to be unable to match even the minuscule 2.3% annual growth expected in the global uranium sector.

Cameco financial highlights for 2020. Credit: Cameco

That being said, of the uranium stocks we’ve discussed today, we’d have to say that Cameco is the best uranium stock out there for those investors who find the uranium mining thesis compelling.

Other Uranium Mining Stocks

It should be clear by now that we don’t find uranium to be an attractive investment thesis. The companies we’ve looked at today constitute 95% of uranium production, which leaves 5% we haven’t looked at. Be very wary of anyone trying to pitch some uranium mining stock that’s not on the above list. For some reason we can’t understand, the amount of stock promotion scams that involve mining companies far exceeds any other type. It goes without saying that only a fool would invest in penny stocks, and the same goes for any “junior mining company” garbage you see being pitched out there.


There are many reasons to avoid the “uranium mining stocks” investment thesis. Low growth, increasing efficiencies in nuclear power plants, and scarce investment opportunities make the physical uranium thesis unattractive. Other renewable energy alternatives such as wind energy present a much brighter growth opportunity. The only argument for uranium is that it can provide some diversification to clean energy portfolios with its dependably low growth that reduces volatility.

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