The belief is that utilities are becoming “uncovered”; with spot prices so low, they have resisted locking themselves into long-term contracts. This could leave them scrabbling for supply at the end of the decade, giving producers the upper hand on prices.

It’s a view shared by analysts at Cantor Fitzgerald, who predicted this year that a “violent increase” in uranium prices was on the way.

Cantor predicts that up to 80pc of the uranium market could be uncovered by 2025. Moreover, it believes demand will outstrip supply, saying: “The low-price environment has choked off exploration activity for uranium and we are at the point where there are not enough uranium projects in the pipeline that can adequately meet the coming demand.”

Peter Reeve, executive chairman of Aura Energy, describes the spot price as an “irrelevance”.

“I don’t believe the supply side is what’s hitting the spot price. It’s more just speculators playing that part of the market,” he says. 

Aura, which like Berkeley is listed in Australia, joined Aim in September, with a view to progressing uranium projects in Mauritania and Sweden.

Reeve also believes a “demand avalanche” is coming. Uranium is a relatively common metal, found in rocks and even seawater. Locating it in the right concentrations can be difficult, however. 

As Reeve says: “It’s not found near London or Paris. It’s all in very curious locations. That doesn’t make it easy to get at or develop.”

David Fuller's view

What goes around, comes around. The world needs nuclear power but serious accidents are understandably terrifying, as we know from: 1) Three Mile Island March 28 1979, 2) Chernobyl April 26 1986, and 3) Fukushima Daiichi March 11 2011.  These incidents have left deadly, very long-term contamination in their nearby surrounding regions. 

From an investment perspective, it takes approximately five to ten years before the nuclear industry starts to recover from accidents of this scale.  Interestingly, a recovery in the industrial resources sector began earlier this year in response to supply cutbacks.  It has yet to affect the Uranium Spot 3^rd month NYME futures contract, quoted in USD, but this is currently oversold relative to its declining 200-day (40-week) MA.  However, the World Uranium Total Return Index, quoted in EUR, shows the clearest evidence of recovery since the peak in 2011.  Mining shares are usually a leading indicator for spot metal prices, but currency differentials are also an important factor in the recent performances of the two instruments above. 

Here is a PDF of The Telegraph’s article.

Uranium will be discussed at Markets Now on Monday