Myriad Uranium - Uranium prices are exploding! What is the outlook for Nel ASA and RWE?

Myriad Uranium – US needs more uranium

Due to geopolitical tensions, the US urgently needs alternatives for its uranium supply. The government has also recognized this and wants to take uranium production and the manufacture of reactor fuel back into its own hands. In 2022, the Americans were only able to produce 2.1 million pounds of uranium themselves and had to import an additional 40 million pounds. The global shortfall in uranium production this year is estimated at 42 million pounds. This is where Myriad Uranium could play an important role. The Company has a 75% option on the Copper Mountain Uranium Project in Wyoming, where 65 million pounds of uranium oxide (U3O8) have been identified to date.

The Company has access to historical exploration data from Union Pacific, which invested approximately CAD 117 million in the property in the 1970s. Wyoming is an industry hot spot, accounting for 69% of US uranium production. On November 27, the first drilling campaign on the property was completed. A total of 34 drill holes were completed, with 165 intercepts of over 200ppm equivalent uranium oxide (eU3O8). The peak value was 8,060ppm. In addition to the Canning deposit, there are six other historic deposits that promise further potential. Uranium mineralization has also been found below the Hard Deck deposit, which is also promising.

The project would attract even more attention if the US government were to promote domestic uranium production. Uranium prices have risen from USD 30 to over USD 100 per pound in recent years and are currently at USD 70. Myriad is planning further extensive drilling programs to confirm and ideally expand the historical resource estimates. To finance this, a private placement was completed on December 13, raising approximately CAD 3 million. Investors paid CAD 0.40 per share and received a half warrant with a strike price of CAD 0.55. Currently, it is possible to get in at a lower price, as the stock is trading at CAD 0.385, giving a low market capitalization of around CAD 20 million.

Nel ASA – Hydrogen turnaround

Nel ASA, a pioneer in hydrogen technology, has had a turbulent 2024. The share price fell by more than 58%, mainly due to regulatory uncertainty and sluggish orders. Analysts were quick to downgrade the stock while the Company tried to find a floor at NOK 2.80. Despite the share price losses, the situation is not entirely bleak: Nel is sticking to its vision of a green hydrogen future – even if market conditions remain challenging in the short term.

The fuel station division was spun off this year. Although Nel faced significant challenges, progress was still made in Q3 2024. Revenues rose 21% to NOK 366 million, driven largely by a strong 54% growth in the alkaline division. However, there are downsides: negative EBITDA was again a whopping NOK -90 million. However, Nel's strategy fits in with this – partnerships and production expansions are expected to help reduce costs as the Company focuses on long-term success.

Looking ahead, Nel is focusing on its core competence: electrolysers and new technologies such as AEM electrolysers. To become more economically stable, the Company is planning drastic cuts in expenditure – capital expenditure is to be reduced by half in 2025. The Company remains optimistic in the long term. A well-filled project pipeline could soon lead to major orders, while profitability is coming into focus in the medium term, thanks to economies of scale. The share price at the end of the year was NOK 2.846, close to the year's low of NOK 2.753.

RWE – Fully committed to renewable energies

RWE is now fully committed to green energy and has set ambitious goals for itself with its 'Growing Green' strategy. Between 2024 and 2030, the Company plans to invest a whopping EUR 55 billion in climate-friendly technologies – including onshore and offshore wind farms, solar projects, green hydrogen and battery storage. The latter, in particular, is crucial for the success of renewable energies. The Company has set itself the ambitious goal of doubling its renewable energy capacity to more than 65 gigawatts by 2030.

The investments will be allocated as follows: 40% of the funds will be invested in onshore wind power and solar plants. The rest will go to offshore wind farms and new technologies. RWE is particularly ambitious when it comes to offshore expansion: capacity is to grow from the current 3.3 gigawatts (GW) to a whopping 10 GW in 2030. The Company also wants to be a major player in batteries and hydrogen – capacities of 6 GW (batteries) and 2 GW (electrolysers) are planned here by 2030. Large-scale projects such as 'Sofia' in the UK or 'Thor' in Denmark underline the Essen-based company's focus on wind power in areas where this technology can be successfully used.

However, there are stumbling blocks in the Green Offensive. Issues in the US, falling energy prices, and uncertainties surrounding the coal phase-out have impacted the Company in 2024. The share price fell by more than 30% - a significant setback for shareholders. Nevertheless, RWE is fighting back: a share buyback program worth EUR 1.5 billion aims to reassure investors. At the same time, experts believe the Company is well-positioned for the long term. Analysts project price targets of up to EUR 50 for the stock. Recently, company insiders also bought shares, which is considered a positive signal. Currently, after window dressing in December, the stock stands at EUR 28.58.

The energy sector is undergoing a period of change. Myriad Uranium could play an important role in the supply of uranium thanks to geopolitical tensions and possible subsidies from the US government due to its promising project in Wyoming. Nel ASA focuses on electrolysers and a green hydrogen future. Cost reductions are currently planned to bridge the time until new major orders. RWE is focusing strongly on renewable energies with its 'Growing Green' strategy, planning massive investments in wind power, solar, batteries and hydrogen, but remains under pressure due to market uncertainties.