Up 26% in a month, is the Paladin Energy share price on the comeback trail?

The Paladin Energy Ltd (ASX: PDN) share price has gained 26.2% this past month as it makes a steep recovery from being down 20.53% year to date.

Shares in the uranium miner were trading 3.25% lower at 75 cents apiece at the close on Friday. But from a wider viewpoint, the Paladin Energy share price is outperforming the S&P/ASX 200 Energy Index (ASX: XEJ), up just 5.80% over the past month.

Let’s find out what might be driving the recent rally.

Paladin restarts the Langer Henrich uranium mine

One major development stands out amid the Paladin Energy share price climb over the past month.

In July, my Foolish colleague Bernd Struben reported that Paladin would restart uranium production in its Langer Henrich mine, located off Africa’s southwest coast in Namibia.

Paladin’s profile on the Langer Henrich mine states it was placed under maintenance in May 2018 due to “unfavourable market conditions”. Cameco reported that uranium fetched a $22.73 spot price at the time. Today, the heavy metal sells for $47.75, representing a 47.60% increase.

Paladin confirmed that its restart plan coincided with a more favourable backdrop for the uranium market.

The miner expects to realise first production volumes from Langer Henrich in the first quarter of 2024.

Global demand for uranium increases

As governments look toward cleaner energy sources to reach emission targets, it’s possible that nuclear energy, and by extension, uranium, could enter into an unprecedented supercycle in the power generation industry.

In July, the European Union did not object to including nuclear power generation as a sustainable economic activity. 

And according to energy, mining, and commodities expert Ben Cleary, this trend is also seen in other countries. Cleary said:

The American government are very supportive of nuclear generation. So is China. 

So uranium has a really strong governmental backing as a baseload energy source given it produces lower carbon emissions versus other fossil fuels going forward.

The development of nuclear energy as a power source is also being spurred through the research of nuclear fusion technology.

Investment specialist Michael Collins wrote in Livewire today that nuclear fusion prevented the risk of disasters such as nuclear meltdown. The second benefit is that no harmful waste is produced from its activities.

The difference between nuclear fission and fusion is how power is generated. Nuclear fission is the process of splitting an atom, while nuclear fusion is the process of combining atoms. Fusion is approximately four times more powerful than fission and is more expensive to research.

No nuclear power plants currently use fusion to generate power as the technology is still being developed. The consensus varies when it will be commercially available, but one BBC estimate puts it in the 20-year ballpark.

Paladin Energy share price snapshot

The Paladin Energy share price is down 21.5% year to date. That’s significantly below the broader market’s performance as the S&P/ASX 200 (ASX: XJO) has fallen 7.41% over the same period.

Paladin’s market capitalisation is $2.2 billion at the current share price. 

The post Up 26% in a month, is the Paladin Energy share price on the comeback trail? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• The ASX shares with 30% to 50% upside: fundie
• Why did the Paladin Energy share price rocket 28% in July?
• Here are the top 10 ASX 200 shares today
• Paladin Energy share price lights up on uranium project restart
• Here are the top 10 ASX shares today

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/6gEOImV