Proactive Investors - With the uranium price hitting a 12-year high recently, uranium stock prices have also caught fire of late, but Sprott Asset Management CEO John Ciampaglia thinks this uranium bull market has much more room to run.
"Uranium stocks are finally starting to outperform the commodity price... and some of their operating leverage is starting to play out here," Ciampaglia told Proactive in a recent interview.
He noted that historical uranium cycles tend to go six to eight years due to the large capital expenditures involved with those type of projects.
"This cycle to us feels more like a supply story than a demand story and because of that supply issue, we think this particular bull market will last several more years," Ciampaglia added.
'Ultimate supply deficit looming'
Sprott Asset's CEO, though, said the world needs incentive pricing to stimulate more production and to deal with "this ultimate supply deficit that we think is looming".
More uranium is needed to fuel all the power plants are under construction and that are planned to be built over the coming years, he believes, noting that Poland just announced for the first time it will be building nuclear power stations.
"It's part of a broader trend where people are focused on energy forms that provide reliable baseload power with low greenhouse gases and I think, more importantly, energy security in a world that has become much more geopolitically entangled."
He believes the nuclear revival has been a key driver of the uranium price rising from US$48 a pound at the beginning of the year to about $70 recently.
Ciampaglia cautioned that uranium mining companies still need to find the right deposits in the right jurisdictions, but sees capital coming back into the sector, which is leading to expanded production and several mines resuming operations after being on care and maintenance for years.
He has also witnessed more investor interest in financing companies building new uranium mines as they see a clear path to fulfilling future expected demand.