Isotope Co. Discovers Uranium-Helium Breakthrough Potential

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ASP Isotopes Inc. (ASPI:NASDAQ) has been through at least transformative developments this month, according to Canaccord Genuity Capital Markets Analyst George Gianarikas in an updated research note on May 22.

The "game changers" included fulfilling its memorandum of understanding (MOU) with TerraPower by signing a concrete agreement to provide high-assay low-enriched uranium (HALEU) to the Bill Gates-backed reactor firm for a duration of 10 years, and the acquisition of helium firm Renergen, which the analyst said took his firm by surprise.

"Frankly, we didn't see this one coming," wrote Gianarikas, who rates the stock a Buy with a US$11 per share price target. "This acquisition changes the profile of ASP as it attempts to scale up its post-QLE spin enterprise. Management appears to be attempting to create a global supplier of critical materials by now entering the market for liquid helium. Bold. Not without risk, but there appears to be much upside if the company can execute on its plan with US$300M in EBITDA guidance ex-HALEU."

The pivotal TerraPower agreement is likely to add more than US$100 million in annual EBITDA over the coming decade, according to Canaccord's analysis.

A New Uranium Enrichment Facility

According to the company, it has entered into several definitive agreements with TerraPower "related to financing support for the construction of a new uranium enrichment facility capable of producing High Assay Low-Enriched Uranium (HALEU), and the future supply of HALEU to TerraPower, as a customer." This announcement advances the previously shared discussions regarding a term sheet between the two companies which envisioned the potential development of a HALEU enrichment facility and a supply arrangement for HALEU to TerraPower, Gianarikas wrote.

The agreements involve a term loan to facilitate the construction of a uranium enrichment plant located in Pelindaba, South Africa. Management indicated that the company is "in discussions with several financial institutions to secure additional funding for the construction of this HALEU production facility, and all such additional funding for this facility is expected to be non-dilutive to ASPI shareholders and QLE convertible noteholders."

Provided that all necessary permits and licenses for uranium enrichment in South Africa are obtained, the facility is designed to produce approximately 15 metric tons of HALEU annually, with initial production anticipated in 2027.

Besides the loan agreement, ASP Isotopes and TerraPower have finalized two HALEU supply agreements — a core supply agreement and a long-term supply agreement — for enriched uranium expected to come from the South African facility. The 8-K filing states that “the initial core supply agreement is intended to support the required supply of the first fuel cores for the initial loading of TerraPower’s Natrium project in Wyoming. The long-term supply agreement is a 10-year supply agreement of up to a total of 150 metric tons of HALEU, commencing in 2028 through the end of 2037.” Consequently, we expect the initial core supply to begin in 2027, with long-term core replacements and additional supply anticipated from the long-term agreement.

The analyst noted Canaccord was "quite positive" on the TerraPower announcement.

"Management still has to deliver, but the agreement is both validating and creates the potential for a material profit contribution later in the decade. And, assuming execution, there could be incremental agreements similar to this one. In terms of Renergen, we see the transaction as bold and potentially highly profitable. Both transactions require managerial execution, but the team has performed well to date and is taking steps to create a global leader in critical materials. We are also mindful of the additional debt required to achieve the company's goals, which could reach close to ~$1B by the end of the decade."

Semiconductor Market to Exceed US$1 Trillion

ASPI's cutting-edge technology builds upon two decades of research and development to enrich isotopes with various atomic masses, the company noted in its investor presentation. Its objective is to harness innovative techniques to become a vital supplier of enriched isotopes for several multi-billion-dollar markets, including medical, semiconductors, and nuclear energy.

There is a significant opportunity to emerge as one of the few producers in the currently undersupplied global market for medical isotopes, which is projected to grow from US$5.1 billion in 2022 to US$11.4 billion by 2032, reflecting a compound annual growth rate (CAGR) of 8.8%. This growth will be propelled by an increasing incidence of cancer, a demand for personalized medicine, and advancements in diagnostic imaging technologies.

The worldwide semiconductor market is expected to exceed US$1 trillion by 2030. ASPI said it has formed a contract with a major semiconductor firm to deliver substantial quantities of Silicon-28 through 2030 and beyond, facilitating the significant performance enhancements associated with the adoption of Silicon-28 Nanowires.

ASPI's subsidiary, Quantum Leap Energy, aims to capitalize on the multi-billion-dollar potential within the nuclear energy sector by utilizing our Quantum Enrichment technology on uranium to create the crucial fuels needed for next-generation nuclear power facilities.

Helium Prices on Stead Upward Trend

Helium prices have been on a steady upward trend, according to the analyst. Constraints in the supply chain and geopolitical factors have exerted considerable pressure on the helium market, resulting in significant price increases in recent years. An analysis from Crux Investor indicates that helium prices have surged more than sevenfold since 2006, rising from approximately $60 per thousand standard cubic feet (mscf) to about $425 mscf in 2023. The analysis highlights that “major economies including the United States, European Union, and China have designated helium as a critical material due to supply shortage risks.” Moreover, the US Geological Survey's Mineral Commodity Survey reveals that the United States utilized around 59 million cubic meters of helium in 2023, extracting about 19 million from its reserves and leaving only about 52 million cubic meters in its stockpile, which the government subsequently sold in 2024.

The global helium supply is both delicate and concentrated. Helium exists naturally and cannot be synthesized artificially. Currently, the two primary sources of helium are nuclear fusion reactions within stars and radioactive decay of certain elements in the Earth's crust.

The limited availability of this elemental resource has resulted in a fragmented global supply chain reliant on natural occurrences. As per BBC reports, the US contributes roughly 46% of the world’s helium supply, followed by Qatar at about 38% and Algeria at approximately 5%. The uneven distribution of helium globally, along with the element's accumulation in the atmosphere—due to factors like fossil fuel extraction and atmospheric leakage—has led to recurrent shortages, with four notable instances occurring in the past two decades.

Ownership and Share Structure

According to Refinitiv, about 21% of the company is held by insiders and management, including Chairman and Chief Executive Officer Paul Mann with 9.58%. About 6% is held by strategic entities, and 44% by institutions. The rest is retail.

Other top shareholders include AK Jensen Investment Management with 6.17%, AWM Investment Co. with 5.91%, Sergey Vasnetsov with 5.03%, and BlackRock Institutional Trust Co. with 4.95%.

Its market cap is US$593.29 million with 76.36 million shares outstanding. It trades in a 52-week range of US$1.86 and US$10.08.