Two #uranium thoughts on my mind:

(1) I’m no trader, but I think it’s fair to characterize a uranium equity’s value as the sum of:

(a) value of asset(s) at current U price
(b) value of contract book & permits
(c) mgmt knowledge/experience
(d) an option on higher uranium prices

Very few developers have much value in categories (a) and (b), and (c) can be noteworthy but de minimus in some cases.

It begs the question: if a uranium equity currently has a market cap in the hundreds of millions, how is the market valuing this “uranium option?”

This uranium option feels like a probability distribution. The chance that uranium hits $40/lb, $50/lb, $70/lb, etc. confers speculative value on the developer’s assets at those prices. The market cap of many of these companies feel entirely composed of this type of speculation.

Anyway - a sustained price increase to the incentive price for a good number of uranium developers isn’t guaranteed...but it does appear to be heavily priced in to many equities in the space. It’s an important question to ask - “where is this valuation coming from?”

(2) Switching gears, the #uranium space is notoriously opaque, but enough info is available publicly for retail investors to have some idea about what’s going on under the hood.

That information is distinct from *why* the current market trends prevail.

The proposition presented to retail investors is that uranium end users are stupid for not filling their proverbial wheelbarrows full of cheap supply today, that prices must go up (and will do so violently), and that there will be much weeping and gnashing of teeth when they do.

And yet - those imaginary wheelbarrows remain mostly empty.

It’s lazy to assume that the end users are all incorrect or that there isn’t a cogent strategy here.

It isn’t in the interest of any end user to share their thinking on this...which is why you haven’t heard it.

I hate to glorify an architect of the war in Iraq, but Rummy really had it right with “known unknowns and unknown unknowns.” When folks publicly offer their uranium opinions, I pay attention to their taxonomy of what they do and do not know. This space is ruled by known unknowns.

We can interrogate the opposite position: “what can happen in this space to keep uranium prices on a suborbital trajectory?”

We can try to imagine our unknown unknowns: “what could they know that I don’t?”

Both of those questions deserve a lot of thought.

With a sufficiently long view (and for those invested in the space, a portfolio to match), you can say a lot about this space with moderate certainty. But take it from Master Skywalker - this is not going to go the way you think (for most of us, anyway).