MacroVoices #558 Mike Alkin: Uranium at a Crossroads

Cameco

• Mike Alkin · Sachem Cove PartnersBullish

  Cameco trades at about 8-9x EBITDA after its Westinghouse stake, undervaluing the dominant Western uranium producer.

  Alkin compares Cameco's valuation at the 2022 Westinghouse investment, when the uranium contract price was around $49 a pound and Cameco traded at about 31 times EBITDA, with today's contract prices, which are around $98-99 or higher. Depending on how Westinghouse is valued, he estimates Cameco now trades at about 8-9 times EBITDA. He calls that 'stupid' for the Western world's dominant producer, which he says has no close rival. He acknowledges Cameco has occasional quarterly hiccups, but argues the market overreacts to headline misses from small delays, and that Cameco's refusal to update quarterly guidance adds noise. He says the equities have pulled back to valuations seen four or five years ago, when uranium's outlook was much less certain.

  “if you put a reasonable assumption on it, Cameco's trading at like eight or nine times EBITDA. I mean, that's stupid in my view for the world's... The Western world's dominant uranium producer.”at 15:30

• Mike Alkin · Sachem Cove PartnersBullish

  Cameco disclosed triple-digit uranium contract pricing on its call, which official price reporting misses.

  Alkin says Cameco's tough quarter was noise. The real takeaway from the call was that Cameco said it had triple-digit uranium pricing, which is not reflected in published price reporting. Because the reported price tracks low offers rather than where deals clear, investors missed a signal that supports the uranium price and, by extension, the earnings power of producers like Cameco.

  “But you asked earlier, Cameco had a tough quarter, but people missed in the fact that Cameco told you they had triple digit pricing, and that's not being price reported, and they said that on the conference call.”at 40:08

Sprott Physical Uranium Trust

• Patrick Ceresna · Big Picture TradingBullish

  Sprott's uranium trust trades at a deep NAV discount; a narrowing to 10% would lift units toward $28.35.

  Ceresna argues uranium trust units are being sold with the broader AI trade, creating a chance to buy physical exposure at a deep discount to net asset value. Using a $26.60 reference price, full NAV convergence (about $31.50) is ambitious because the trust often trades at a discount. He proposes a January 2027 $25/$28 Canadian bull call spread costing about $1.60 net, with breakeven at $26.60 and max profit of $1.40 if the price reaches $28 or higher. He does not need uranium to rise; narrowing the discount or higher uranium prices could work, while the maximum loss is the $1.60 premium.

  “The more practical question is whether today's deep discount could narrow to something closer to five to 10%. At an unchanged 31.5 net asset value, even a 10% discount would imply a unit price near $28.35.”at 55:24

VanEck Semiconductor ETF

Across the shows: 10 speakers in other episodes, 2 bullish and 10 bearish calls, past 30 days

• Patrick Ceresna · Big Picture TradingBearish

  Semiconductor ETF SMH is down about 30% as money rotates from the AI trade into consumer staples.

  Ceresna says the broader selloff has been almost entirely centered on the AI story in semiconductors, with the SMH down roughly 30% from peak to trough. Money has been rotating out of AI names into consumer staples. He asks whether that sector rotation continues and whether the sell-off broadens, which makes the chip complex the main source of current market weakness.

  “For instance, the semiconductor ETF, the SMH, is down roughly 30% from peak to trough during this period.”at 59:01

Nuclear energy

• Mike Alkin · Sachem Cove Partners

  Economically viable uranium supply cannot meet reactor fleet demand, creating a structural deficit that supports higher prices.

  The thesis is simple: there is not enough economically viable uranium to supply the existing fleet of about 440 operating reactors (a little over 420 producing electricity) plus a pipeline of about 80 new reactors, and the growth beyond that. Mine supply has fallen short of promises, and the few new big projects coming online do not close the gap. Alkin puts the structural deficit at roughly 15-25% or more of demand 'for as far as the eye can see', and says there is not enough economically viable mine supply above ground at current prices to feed future buying. He has run this view through his fund for about ten years, with uranium rising from about $17-19 a pound to over $100 now.

  “There is not enough economically viable uranium to satisfy the world's existing reactor fleet of 440 operating reactors of which a little over 420 are actually producing electricity, and the pipeline of 80 new reactors coming online”at 4:26

• Mike Alkin · Sachem Cove Partners

  Uranium demand is driven by reactor growth, not AI, and would stay in structural deficit without data centers.

  Alkin argues that the uranium case rests on nuclear reactor fleet growth, which has risen from about a half percent a year when the trade started to roughly 4-5% now. He says none of that depends on data centers, AI growth or which AI models prove profitable. If a data center never opened, he argues, the structural uranium deficit would still exist. He treats the AI link as a sentiment problem created by investors, not a fundamental driver.

  “when this trade first started, it was a nuclear was maybe a half percent grower, and now it's a four to 5% grower. None of that has anything to do with data centers, artificial intelligence... If a data center didn't open, there is still a massive structural deficit in uranium.”at 4:40

• Mike Alkin · Sachem Cove Partners

  Reported uranium spot prices understate true contract prices, because price reporters use the lowest offer.

  Alkin says the price widely reported for uranium is not where contracts are actually trading. Cameco said on its call that it is signing contracts in triple digits, yet reporters price the market at the lowest offer they hear about. He calls the commodity-fungibility rationale for this 'absurd', and argues it hides how tight the market is, particularly for Western buyers.

  “The price that's reported in many instances is not where the price is trading... Cameco said it on the conference call. They're getting triple digits.”at 13:16

• Mike Alkin · Sachem Cove Partners

  Uranium production is concentrated in the East while consumption is in the West, creating geopolitical supply risk.

  Alkin argues that the geopolitical risk in uranium is large. About 70% of supply is produced in the East, while about 70% is consumed in the West. Western deficits are not matched by surplus in the East, which mainly feeds Russian, Chinese and Indian programs. He treats this as one reason prices should reflect scarcity.

  “When you look at where the uranium is produced and where the uranium is consumed, 70% of it is produced in the East, and yet 70% is consumed in the West.”at 13:55

• Mike Alkin · Sachem Cove Partners

  Utilities are contracting only about half their needs, so they must rebuy inventory at high prices, implying a multi-year deficit.

  Alkin says utilities are contracting a little over half their needs, with long-term contracts making up about 75-85% of purchases. Because uranium has no substitute, they still need supply security, but they buy at peaks and under-contract when prices are low. Fifteen years of destocking means they will have to rebuild inventories, which he expects at demand levels of 250-270 (annual demand, same units) over time. Many of the pounds needed through 2040 must come from mines that do not yet exist. Around 400-500 million pounds of the billion-plus pounds of reported inventory is mobile, and the rest is locked in re-enrichment, deleted tails or sovereign funds. He says higher prices are needed to pull this supply forward, so the deficit is structural.

  “So if you're looking at demands in the 200, [210], [220], [230], well you're gonna have to be buying at 250, 260, and 270 to fill your coffers back up.”at 33:41

• Mike Alkin · Sachem Cove Partners

  Uranium mining costs are rising sharply and mines keep missing targets, which squeezes supply and supports prices.

  Alkin argues that uranium mining has become much harder and more expensive. Industry cost estimates have risen from a weighted average of $24 a pound in 2019 to $38 in 2025. Kazakhstan's state-owned Kazatomprom, the world's largest producer at about 41% of supply, has costs of $38.45 a pound, against the roughly $13-14 it projected in its prospectus. Adjusting for a weaker tenge, he estimates costs of over $55. Project after project has missed its supply targets, with prices 80-200% above forecasts and production targets 50-70% lower. He says the cost curve 'needs a reset'. Around 25% of world supply went offline in 2017-18 because mines became uneconomic, and he expects more of that as contracts roll off, which is what makes the supply shortfall structural.

  “they were showing the weighted average cost of production across the industry was $24 a pound. And then it was $27 in 2021. They put it out every two years. And then it was $30 in 2023, and then it was $38 in 2025.”at 34:59

• Mike Alkin · Sachem Cove Partners

  Uranium's contract price is up about 4x while utilities have bought only half their needs.

  Alkin argues the market already signals a structural shortage: contract uranium prices are up about four times while utilities have bought only about half of what they need. Utility requests for proposals used to draw 7 to 12 or more bids and now draw very few, so the market has become a seller's market and large miners refuse to sell at these prices. Some smaller operators buy only every four to seven years and are not in the market regularly. He also notes that spot prices are reported daily while contracts are reported monthly, and that the price reporting reflects the lowest offer rather than where deals actually clear, so the true price picture is understated.

  “So right now, the market is telling us, and you don't have to believe me, the price of uranium in the contract market is up four x when they've only been buying half of what they need. That to me says a lot.”at 37:48

• Mike Alkin · Sachem Cove Partners

  Conversion and enrichment prices have surged far more than uranium, so the uranium price must catch up.

  Conversion services sat near $4 per kilogram for years because the business was unprofitable and the fuel cycle was neglected. When one country put out a conversion tender and nobody bid, the price jumped to over $60. Enrichment rose from roughly $30 to $200-plus and fabrication is also up sharply, while uranium itself is up about four times but more quietly. Alkin argues the product always catches up to the service moves, because services are worthless without enough uranium product, so the uranium price has to rise to incentivize supply.

  “Those have had huge... $4 to 60, 30 to 200 plus.”at 39:13

• Erik Townsend · MacroVoices

  Mass-produced advanced reactors could pull uranium demand forward before the 2040s if data centers buy behind-the-meter power.

  Townsend argues that advanced reactor makers such as Oklo plan factory mass production of about 100 reactors a year, and that Oklo promises deliveries in 2029. Even if the real timeline is 2030 or 2031, that is roughly halfway through the time a new AP1000 would take to build after being approved. If these reactors arrive sooner than the next conventional plant and data centers and other users buy behind-the-meter power, uranium demand could come earlier than the commonly assumed 2040s. He calls this the 'light water leapfrog' and admits it is speculative.

  “What if this light water leapfrog, I'm calling it, meaning that the generation four technology actually hits the scene, and it won't hit the grid because the cost of it initially will be too high.”at 43:04

• Mike Alkin · Sachem Cove Partners

  Uranium price must readjust once replacement-level contracting begins, potentially toward the roughly $200 seen in 2007.

  In the last cycle, spot uranium hit $137 in 2007 while the market was in surplus, which equals roughly $200 in today's dollars. Today the supply-demand balance shows large deficits, so Alkin argues that once utilities contract at replacement-rate levels, prices will have to readjust. He says he is not publicly forecasting a specific price, and that where it goes is uncertain, but the logic points to much higher levels than the spot price of about $92.

  “And so when you start getting to contracting replacement rate levels, that's when price is going to have to readjust.”at 46:04

• Mike Alkin · Sachem Cove Partners

  Uneconomic uranium mines need higher prices to restart, and small projects face costs that limit supply response.

  Alkin says that if the deficit materializes, the supply response would come from stockpiles, depleted tails, shuttered projects and shallow low-grade mines, including some in Africa. These are uneconomic at current prices, so they would need to be paid up to restart. Scale matters: smaller projects are getting hammered by cost inflation. So supply can't respond quickly at today's prices, and producers would need a much higher price to bring marginal supply on.

  “One of the things you're seeing right now is scale is everything. And, you know, these smaller projects are really hard.”at 46:53

• Mike Alkin · Sachem Cove Partners

  Hyperscalers building data centers will have to secure uranium fuel or pay sharply higher prices.

  Alkin hopes hyperscalers are recognizing that signing power purchase agreements is not enough. If new reactors and data-center power plans come to fruition, the companies must also work out how they will get fuel. He warns that if they assume fuel will simply be available, they will end up paying through the nose, since the market is short of supply and the fuel buyers have historically been slow to recognize shortages.

  “I would hope the hyperscalers... you better figure out how you're gonna get fuel for it, because I hope you're not just assuming that's that, because if that's the case, [you're going to] pay through the nose for it.”at 49:15

• Erik Townsend · MacroVoices

  Nuclear stocks are bundled with AI, so an AI capex bust could cause a sharp wipeout in them.

  Townsend cites a claim that Chuck Schumer may make AI and data centers a political enemy if Democrats win. He argues that nuclear stocks are grouped with AI in investors' minds, so an AI capex bust could hit nuclear names hard even though, on fundamentals, the link does not make sense. He flags that this would be a potential wipeout for the sector and asks how investors can add convexity to survive the drop.

  “the reality is that nuclear stuff is basketed with AI, and if there's an AI CapEx bust, ... we're going to see a wipeout potentially.”at 50:04

• Mike Alkin · Sachem Cove Partners

  Government-backed new reactor programs could lift uranium sharply, with talk of 10 to 20 reactors by 2030.

  Alkin points to large programs tied to executive orders that could lead a utility to sign on to build a new reactor. Such a move would likely not be a single reactor but several, with talk of up to 10 to 20 reactors starting by 2030. Although the supply and demand effect takes years because a new reactor takes years to come online, he thinks the market is ignoring this policy momentum and that it could send the uranium trade sharply higher. He acknowledges he does not know whether it will happen.

  “If that happens, you probably see this thing go off to the races because it likely wouldn't just be one, it would be multiple, and there's talks of up to 10 to 20 reactors that wanna be started by 2030.”at 52:01

Market sentiment, positioning & volatility

• Mike Alkin · Sachem Cove Partners

  Uranium equities are unfairly lumped into AI baskets, so flows, not fundamentals, are driving their selloff.

  Alkin says that uranium miners and junior miners have been drawn into AI and data center trades. Some junior miners brought this on themselves by pitching links to AI at presentations, and banks then put nuclear into AI momentum baskets. Clients buy those baskets, so flows overwhelm fundamentals. When AI capex fears rise, rate moves, project delays and Democratic threats to data centers all hit these baskets, and uranium gets sold along with them. He concedes the market is irrational for now and that managers have to work around it, but the underlying thesis is unchanged.

  “And where do you get lumped in? You get lumped in at the banks. When the Goldmans and the Morgans and everyone else puts these baskets together... facts be damned, it becomes flows.”at 6:13

US stock market outlook

• Patrick Ceresna · Big Picture Trading

  The recent rally is only a bounce; there is no evidence a new bull market has resumed.

  Ceresna says the S&P 500 fell about 7% peak to trough and has rallied to around 7,700, retesting its 50-day average and approaching a 61.8% retracement. The Nasdaq fell closer to 16%, and its bounce has been weaker, not even testing the 50-day average, so the market remains structurally in sell mode. Breadth is still strong, with about 71% of stocks above their 50-day averages, because the sell-off has been concentrated in the AI and semiconductor story. The key question is whether the broader market joins the sell-off or stays resilient.

  “Even though the rally felt very real over the last few days, there's no evidence that a new bull market has resumed.”at 58:38

US inflation

• Patrick Ceresna · Big Picture Trading

  October CPI came in hotter than expected, adding pressure on bonds and the broader market.

  Ceresna says the CPI rose 0.4% month over month and core rose 0.3%, both hotter than expected. He argues this is where the pressure on the whole market will likely come from. Rates markets began pricing the possibility of a 50 basis point move, bonds broke down, and yields rose, which he sees as a headwind for risk assets.

  “So inflation came in hotter than expected this week, 40 basis points on the CPI month over month and 30 basis points on core.”at 1:00:11

US dollar

• Patrick Ceresna · Big Picture Trading

  The dollar broke out to the upside against almost every major currency, tightening financial conditions.

  Ceresna says the US dollar broke decisively to the upside against almost every cross currency, including the euro, pound, Aussie, Canadian dollar and even the yen, which broke a one-month trading range. He reads this as part of a clear intermarket response to hot inflation and rising rates, and he sees a strengthening dollar as a factor that could weigh on risk assets.

  “At the same time, a decisive breakout in the US dollar to the upside, and what's notable is that it was against almost every cross currency.”at 1:01:04

US rates & the Fed

• Patrick Ceresna · Big Picture Trading

  A hawkish Fed and tightening rates market are a headwind that could disrupt risk assets.

  Ceresna cites Waller's message that a December tightening, possibly even a 50 basis point hike, may be warranted if inflation stays hot, and notes that markets are pricing that risk. Combined with a bond sell-off and a dollar that keeps strengthening, he says tighter financial conditions could act as a disruptor to risk assets. He calls it a clear headwind setting up for markets.

  “now the question is, is a hawkish and tight fed and a rates market that is once again tightening conditions and a dollar that continues to strengthen going to behave as a disruptor to risk assets?”at 1:01:30

Oil & fuels

• Patrick Ceresna · Big Picture Trading

  Oil's risk premium is vulnerable to re-escalation because global inventories are depleted with little buffer.

  Ceresna says WTI fell from about $105 to the mid-$80s after the election, wiping out close to $20 of risk premium on peace optimism. He questions whether that de-escalation is warranted. He says the backdrop still features very depleted global inventories with very little buffer, so if the Middle East situation re-escalates, oil could resume rising. That would feed into inflation and make the Fed more hawkish, making oil a key driver of risk assets.

  “Now, we're still in a backdrop of very depleted global inventories. There's very little buffer left in there.”at 1:02:16

Gold & precious metals

• Patrick Ceresna · Big Picture Trading

  Gold's downtrend persists; a breakdown from here could send it toward $3,600.

  Ceresna says gold's rebound faded after the hot CPI print and dollar breakout pushed rates higher, with gold fading from a test of its 50-day average. The primary trend is still down, with lower highs and lower lows, and almost all rallies are met with selling. The prevailing downtrend of almost a year is still intact, so he advises respecting it. A breakdown could push gold toward $3,600, but he expects gold to become cheap enough to set up a major buying opportunity and a trend reversal at some point.

  “Look, the primary trend is still down. Lower highs, lower lows, almost all rallies are met with selling.”at 1:03:18