Volatility has accompanied the Paladin Energy Ltd (ASX: PDN) share price trading today. The uranium producer's shares sprinted to a 5-year high of 40 cents on open. After pulling back to 38.5 cents, the Paladin share price has since regained its high of 40 cents, up 6.76%.
There's no news from the company, so what's cooking in the uranium sector for this stock to be getting so hot?
Image source: Getty Images
Uranium gaining appeal in climate fight
With US President Joe Biden now in the Oval Office, action already is being taken on new climate policies. President Biden was quick to re-join the Paris Agreement and stop the $9 billion Keystone XL oil pipeline project.
However, the fact is the population needs energy, and at a growing pace in demand. The Biden administration is planning to address this with its $2 trillion… Yes, TRILLION… climate plan. Nuclear power is included in this plan, and Biden has called for the development of small modular reactors.
Nuclear energy was once an exciting and growing sector. In 1996, 'atomic' energy reportedly supplied 17.6% of the world's electricity. By 2015, that number had fallen to a paltry 10.8% – demand ravaged by disasters and contamination concerns.
However, with the evolution of nuclear energy technology over the years, the benefits are beginning to balance the risks once more.
Where is Paladin Energy situated?
Paladin Energy is a uranium producer that holds multiple tenements across Australia, Canada, and Namibia. Paladin owns a 75% stake in the Langer Heinrich uranium mine in Namibia, which is currently being restarted. The mine originally launched production in 2007 before being shut down in 2018 due to low uranium prices.
It is expected that Paladin will need to spend US$81 million to restart operations at Langer Heinrich. Once reopened, the company anticipates a 17-year mine life for the site.
Currently, Paladin holds leases over an estimated 203 million tonnes of uranium mineral resources. These tenements are scattered between Manyingee (Australia), Michelin (Canada) and Mount Isa (Australia).
Paladin Energy share price heating up
As uranium is revisited as an alternative energy resource, supply and demand concerns have increased the radioactive rock's price.
Latest Red Book projects that #uranium demand will continue to rise in the next several decades with increasing electricity demand and a growing need for clean air electricity generation 👉 https://t.co/nBSqMyA7KW pic.twitter.com/Djt9TAF8lf
OECD NEA ⚛️ Nuclear Energy Agency (@OECD_NEA) January 29, 2021
Hence, the Paladin Energy share price has taken a ride on the upside of its own. Shares have increased by nearly 300% in the last 12 months, minting an exceptional return. The company's share price hit a 52-week low of 3.8 cents on 23 March 2020, which equates to more than 10X today's current price of 40 cents.
