Kraken Energy, Barrick, Nel ASA - High-yield investments with growth potential

Kraken Energy strengthens US nuclear power with valuable uranium and short supply routes

Uranium is a coveted raw material for the operation of nuclear power plants. The top 5 countries that rely on nuclear energy are, in chronological order, the USA, China, France, Russia and South Korea. The US requires around 18.5 tons of uranium per year (compared to 11 tons per year in China). If one were to replace a nuclear power plant, which generates 10 billion kWh of electricity per year, with modern wind turbines with an annual production of 8 million kWh, around 1,250 wind turbines would be needed to match the output of a nuclear power plant. The amount of usable land saved by not constructing these wind turbines should be clear to every investor.

The US junior explorer and development company Kraken Energy has recognized the enormous demand for uranium in the US. Kraken Energy focuses on high-grade uranium deposits in the US, particularly in Idaho and Utah.

A prime area of its portfolio is the Apex project in the heart of the Colorado Plateau. The location, just 3 miles south of Austin in Lander County, Nevada, has produced nearly 600 million pounds of uranium since its discovery. Kraken Energy is conducting an extensive drilling program there and has had promising results. In the first two holes, the team detected elevated radioactivity at 45.6 ft (13.8 m) and 36.4 ft (11.07 m). In addition, the Company plans to drill ten more holes on this property during 2024.

At its Garfield Hills project, located just 12 km east of Hawthorne, Nevada, Kraken Energy successfully completed its drilling program in early 2023 and is currently planning a Phase II drilling program. Both areas are highly accessible and have solid infrastructure, including water, power, roads and a logistics base.

Nel ASA: Partnerships for hydrogen production and storage in the US

Nel has announced a partnership with Hy Stor Energy for the Mississippi Clean Hydrogen Hub (MCHH) in the US and has received a capacity reservation for more than 1 GW of alkaline electrolysers. The Mississippi Clean Hydrogen Hub (MCHH) will be the largest carbon-free hydrogen production and storage center in the United States. Hy Stor Energy will supply carbon-free hydrogen for green steel and Schneider Electric will provide energy management solutions.

Although shares in Nel ASA rose by around 8% last week, investors were disappointed with the Norwegian company's latest quarterly results. Sales were below analysts' expectations, and the order backlog was disappointing. In the past quarter, the Company achieved sales of 387 million Norwegian kroner (NOK), which was well below the average analyst forecast of NOK 521 million. Although this figure was higher than in the same quarter of the previous year, in which Nel achieved sales of NOK 341 million, the order situation fell short of expectations, with incoming orders of NOK 459 million. The order backlog fell by 13% to around NOK 2.44 billion.

According to a study from the Fuell Cell & Hydrogen Energy Association (FCHEA), the US is already heavily involved in the hydrogen economy, with hundreds of millions of dollars in public and private investment each year. The country leads the way with more than half of the world's fuel cell vehicles, 25,000 fuel cell vehicles for material transportation, more than 8,000 small-scale fuel cell systems in 40 states and more than 550 MW of large-scale fuel cell power plants. But the outlook is mixed. According to a report by Clean Energy Associates, by 2030, there will be a surplus of production capacity for electrolysers, an area in which Nel ASA is also active. The expected capacity could be twice as high as demand.

Barrick shines with quarterly results and announces new joint venture in Jamaica

Geopolitical conflicts and economic uncertainties caused the price of gold to rise by 15% last year. This year, too, it has risen by almost 15%, once again reaching record levels. Gold is and remains a safe haven in the well-diversified portfolios of many investors. Barrick CEO Mark Bristow was proud to announce at the presentation of the first quarterly figures for this year: "Compared to the previous year, net earnings per share for the quarter rose by 143%, while adjusted net earnings per share increased by 36%. At USD 0.19 per share, we exceeded expectations for the quarter. The EBITDA margin increased by 5% to 41%, and operating cash flows remained strong at USD 760 million. The quarterly dividend was maintained at USD 0.10 per share."

Another project joins Barrick's portfolio as part of a joint venture. The Company has entered into an exploration and participation agreement with Geophysx Jamaica Ltd. on certain properties in Jamaica. Geophysx is the leading player in mineral exploration and a license holder in Jamaica. This gives Barrick access to approximately 4,000 sq km of consolidated land positions across the country with favorable geological exposure comparable to the Dominican Republic, where Barrick operates the Pueblo Viejo mine.

Barrick also has the right to earn up to 80% of designated properties jointly with Geophysx after meeting certain expenditure commitments and study delivery milestones. Barrick will act as operator and utilize Geophysx's existing resources such as personnel, knowledge, facilities and equipment.

Geophysx has conducted a nationwide exploration program over the past six years, including early-stage geochemical sampling, geological mapping and airborne geophysical surveys. These data sets acquired to date provide both companies with faster target definition and acceleration in the potential discovery of new resources.

Given the high number of nuclear power plants in the US, Kraken Energy shares appear to be a safe bet. Convincing drilling, well-developed areas in North America and conceivably short supply routes for corresponding customers in their own country. With a little patience, this Company has great potential to become a major uranium producer. The US is not only the leader in the number of active nuclear power plants, it also promotes hydrogen projects with government subsidies. For those who feel more comfortable in a safe haven, Barrick is a good choice. The gold price has risen by around 87% in the last five years and by around 14% in the last 6 months alone. Barrick's first quarterly results are also convincing and the expansion of international cooperation minimizes default risks. Investors should carefully consider whether the future demand for hydrogen will increase as predicted by some institutes or whether nuclear energy is perhaps the more stable alternative.