ASX uranium shares have boomed to multi-year highs following a boom in uranium prices.
Uranium spot prices have been in a prolonged bear market, plunging from around US$136/lb in 2008 to below US$30/lb between mid-2016 and early-2020.
It wasn't until last week that uranium prices jumped to a six-year high of US$35/lb, largely thanks to one fund aggressively buying out the physical uranium market, tightening the market.
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"A new bull market" for uranium
The bullish performance of the underlying commodity has helped ASX uranium shares surge in the past few weeks.
The jump in uranium prices has been fueled by the aggressive buying from investment firm, Sprott Inc.
Sprott launched its Physical Uranium Trust (SPUT) in July this year and emerged as the world's largest actively managed uranium fund.
According to Bloomberg, Sprott has amassed over 24 million pounds of uranium.
To add some perspective, uranium investment firm Yellow Cake PLC reported total spot volume for 2020 of 92.2 million pounds.
In a Kitco News interview with Sprott's CEO Peter Grosskopf, he said the fund was a "game-changer" for the uranium market.
"We think uranium is entering a new bull market as the world looks for a mix of clean energy in the new green energy revolution."
"If you want a low carbon grid, you can achieve it by spending an enormous amount of money and having a highly inefficient grid, which is inherently unstable, or you include nuclear as a core part of the power base. We think uranium has been underplayed for the last 15 years," he added.
The recent developments have helped ASX uranium shares jump to multi-year highs. However, it isn't uncommon to see share prices down more than 90% from 2007-2008 highs.
Uranium demand on the rise
Uranium demand has dwindled following Japan's Fukushima nuclear power plant disaster in 2011.
The energy metal has re-entered the spotlight given its 'green' nature and recent global focus on climate change.
Sprott Asset Management CEO John Ciampaglia told Barron's that "Demand from nuclear reactors is expected to increase by a few percentage points per year as new reactors come online."
"There's also strong demand from non-utility buyers, with some uranium developers recently raising equity capital and "parking the proceeds into physical uranium."
This has been the case for ASX uranium shares such as Peninsula Energy Ltd (ASX: PEN), which opted to raise $15 million in May to fund the purchase of 300,000 lb of uranium.
Similarly, Paladin Energy Ltd (ASX: PDN) raised $192.5 million in March to strengthen its balance sheet in preparation for the restart of its uranium operations.
In the case of recently listed 92 Energy Ltd (ASX: 92E), the company became the first pure-play uranium company to list on the ASX in more than a decade.
Any other notable ASX uranium shares?
Paladin Energy is the largest ASX-listed uranium player with a market capitalisation of $2.1 billion.
Besides Paladin, there are a number of early-to-late stage explorers including Boss Energy Ltd (ASX: BOE), Deep Yellow Limited (ASX: DYL), Vimy Resources Ltd (ASX: VMY) and Energy Resources of Australia Limited (ASX: ERA).
