Deep Dive #5: Q2 Base-Case Supply Model
Q2 2025 GRR Base-Case Supply Model
Every quarter, we will issue our ‘Base-Case’ supply model through 2040. The base-case is designed to give our most realistic estimated forward view of supply factoring in every piece of data we have today. While we do not expect enormous changes on any quarterly update, the intention is having the most up to date supply views.
The model is broken down into two main parts:
Primary Mining Supply
Secondary Supply
The purpose of any Deep Dive Model will be to stay focused on the data as much as possible. As you will see, we do provide some basic comments on major jurisdictions and projects, but any significant analysis or commentary will be discussed in future Deep Dives like our first one on Kazakhstan Supply, which can be accessed here.
We fully recognize that subscribers might disagree when a project is set to come online or the production rate per year. We are very open and want to hear about your views as we hope healthy debate creates an environment where we can all get smarter and fill in potential blind spots.
At Golden Rock, we believe that the basis of understanding a commodity market begins with its primary and secondary supply analysis. This due diligence forms the foundation of our views and helps us understand how and where new supply-side events fit into the market. By conducting this analysis, we also learn about the companies that operate in the industry which help us understand potential investment opportunities.
One of the benefits of uranium is that there is not an endless list of mines scattered across the world unlike some other commodities. As a result, while it still takes a lot of heavy lifting to build an accurate picture of supply, once complete, we can closely monitor the market for changes.
Like any commodity, uranium supply analysis is part science and part art. We hope that our history in the industry will help readers increase their level of knowledge and as a result, the art to their supply analysis.
As our readers should be aware by now, we feel strongly that the investment thesis around uranium has been, currently is and will remain a supply led story until further notice. Simply put, there is not enough supply and we do not see a scenario anytime in the near future where there will be enough supply to meet reactor consumption, let alone cover an inventory re-stocking cycle by utilities, strategic inventory builds or financial entity demand.
Do not get us wrong, a market always needs a relevant amount of demand or consumption for the math to work. And we are seeing increasing demand in a variety of ways including uprates, life extensions, new builds, re-starts(!), policy U-turns, and a switch from enrichment underfeeding to overfeeding in the West. So, demand is an important aspect of the nuclear market, but it is supply that remains very fragile. The contract price of uranium will be driven by the supply capacity constraints that exist today and for years into the future.
Earlier, we talked about the science and art of the supply-side. The science is past and current production. We know what mines produced as there is a plethora of industry resources one can use or manually go through public mining company reports. This is the easy part.
However, the future involves art, for both producing assets and developmental ones. This is where research becomes much more nuanced as one needs to lay out all the relevant information with a realistic lens of what could be. Where is the asset? Does the country back uranium mining? Are their local or regional considerations? How large is the resource? Can it get permitted? How long does the process usually take? What are the capital requirements? What are cash and all-in sustaining costs? Can the company get the skilled labor required? Is the management team truly capable of delivering? As a result, the number of variables to bring a project from paper to production is lengthy and arduous, even for relatively simple mines.
The first item we need to lay out is just our ‘Price Deck’ through 2040. We recognize it very difficult to accurately predict prices, let alone a decade in advance. The purpose of this exercise is not to try and predict the future, but incorporate our supply/demand views and build a directional view of where we think prices might go, thereby trying to build an accurate supply stack in the future. Said differently, we are really attempting to understand which projects could be advanced to a mine under the proper price regime.
We care most about our Price Deck on a rolling three to four year forward-basis as this is the period where brownfield and greenfield decisions will be made.
Below is our Q2 2025 Price Deck.