If it’s not coal, then uranium could be the energy commodity in which to invest, Bell Potter said at the Resources Rising Stars Summer Series this week. And Boss Energy could be a key beneficiary of this advice.
Keynote speaker and Bell Potter market analyst Grady Wulff said those who invested in the energy sector before 2022 have been the big winners this year.
She highlighted Whitehaven Coal as one success story. The coal miner’s stock has jumped more than 300 per cent in the past 12 months, from $2.37 in early December 2021 to $9.89 at close on December 1.
Whitehaven enjoyed a record average coal price of $581/t for the September quarter ($514/t for the June quarter). Whitehaven shifted coal at $189/t in the September quarter of 2021.
But Wulff said Bell Potter had recently downgraded Whitehaven from buy to hold.
“The company has four mines under its belt – three open-cut, one underground mine – and Bell Potter recently downgraded the rating from buy to a hold purely because of the September quarter; the company had a 30 per cent decline in production in its Australian open-cut mines because of La Niña weather events,” she said.
“In saying that, though, the company has maintained their FY23 outlook, because they see material uplift coming as La Niña weather events calm down a little bit.”
Wulff said another energy stock, Boss Energy, had timed its run perfectly, with the company set to benefit from rising uranium prices just as it looks to bring its Honeymoon restart project online.
She explained how the Honeymoon had been mothballed since 2013 due to the uranium downturn, but how the situation has changed.
“Fast forward to 2022 or just in the last few years and (the) uranium outlook came back on,” she said. “We’ve seen Japan say they’re turning nuclear power back on, for the decarbonisation movement cannot happen without nuclear power.
“So Boss is progressing towards first production in December 2023, with first sales due in FY24, and sales are expected to double by FY25. This is important to note because the Global Uranium Conference recently said that the outlook for the price of uranium is set to hit $US100 a pound by the end of next year, which is exactly when Boss comes online with first production.”
In August, Japan Prime Minister Fumio Kishida announced Japan would restart seven nuclear reactors by summer 2023 and explore the possibility of building new reactors as the country looks to end its dependence on fossil fuels.
Uranium was trading at $US49.95 per pound on November 30, according to Trading Economics.