Haywood Advises 'Underweight' Position in Base Metals Stocks, Bullish Long Term


"The underlying supply demand fundamentals for uranium remain strong."

Along with the adjustments Haywood made to its base metals and precious metals assumptions, the analysts introduced a long-term uranium price deck. ""We believe we are the first to publish discrete spot and LT price decks, but believe this is a necessity at a time where the spread between LT and spot uranium prices far exceeds historical averages (currently US$17, vs. historical average spread of ~US$5). We expect others to follow suit as this discrepancy persists."

The analysts noted, "The underlying supply demand fundamentals for uranium remain strong, producers continue to downgrade production forecasts (e.g., Cameco), and new production continues to be delayed owing to technical, geopolitical, and financing issues. Demand growth remains steady, particularly where funded/supplemented by sovereign sources."

Nevertheless, Haywood advised that the market-wide liquidity crisis has led to a sell-off of uranium inventory from funds and a pronounced decrease in the spot price. Haywood's analysis asserts that a "significant discord" between the spot and LT prices remains. "A dichotomy persists where company valuations in the capital markets track closely with the spot price rather than the LT price."

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