Guess which ASX uranium stock is up ~70% this week

It has been a stunning week for ASX uranium stock Energy Resources Of Australia Ltd (ASX: ERA).

Since the start of the week, the uranium developer’s shares have risen a whopping 66%.

The gains have been so strong that the company received a speeding ticket from the Australian stock exchange on Tuesday.

The stock exchange operator said:

Is ERA aware of any information concerning it that has not been announced to the market which, if known by some in the market, could explain the recent trading in its securities?

Why is this ASX uranium stock rocketing?

The company responded to the speeding ticket, noting that the uranium spot price has risen materially this month. It said:

ERA notes there has been a significant appreciation of the global U3O8 (Uranium) spot price over the past week with the most recent price reported at $105.75 USD per pound.

This has been driven largely by news that the world’s biggest uranium miner, Kazatomprom, is expecting to fall short of its production targets over the next two years.

This poses a big risk to uranium supply at a time when demand for the nuclear fuel is rebounding strongly due to the decarbonisation of the planet.

What is Energy Resources Of Australia?

Energy Resources of Australia operated the Ranger Mine, Australia’s longest continuous uranium mine, in the Northern Territory until it closed in 2021.

The ASX uranium stock is now focused on the sustainable rehabilitation of former mine assets.

Though, this will come at a significant cost. Last year, the company revealed that it expects the total rehabilitation costs for the Ranger Mine to materially exceed the previous estimated range of $1.6 billion to $2.2 billion.

But with uranium prices tipped to boom for decades to come, judging by recent gains, the market appears confident that it will still deliver a good return for investors.

The post Guess which ASX uranium stock is up ~70% this week appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

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