Uranium Week: Hopes For Additional Uranium Demand

Weekly Reports | Jul 27 2021

As the uranium spot price rose marginally last week, buyers and sellers were hopeful the listing of the Sprott Physical Uranium Trust would introduce additional demand into the spot uranium market.

-Sprott Physical Uranium Trust listed in Canada
-Utilities looking to incorporate ESG-compliant uranium suppliers
-BHP Group reports uranium production
-Uranium spot price rises by less than 1% for the week

By Mark Woodruff

On July 19, Uranium Participation Corporation (UPC) was formerly restructured as Sprott Physical Uranium Trust (SPUT) and relisted on the Toronto stock exchange with a net asset value of US$497.8m, based on uranium holdings of 18.2mlbs.

This drew significant interest from both buyers and sellers in the uranium market, due to the possibility the Trust could introduce additional demand into the spot uranium market, explains industry consultant TradeTech.

Importantly, this arrangement is a requirement for fund listings on the New York stock exchange, a move planned by Sprott Asset Management that would open SPUT to a wider market. In particular, a US listing would gain the attention of US investors who wish to invest under US regulations or limit exposure to the Canadian dollar.

The asset manager points out SPUT will increase the frequency of its reporting, and will publish its net asset value on a daily basis. The link to follow the NAV is https://sprott.com/investment-strategies/physical-commodity-funds/uranium/  The tickers to follow the trust's share price on the Toronto exchange are U.U in US dollars and U.UN in Canadian dollars.

One of the key developments of this transaction is SPUT’s future ability to utilise an at-the-market facility. This is a mechanism that allows listed entities to raise funds without engaging in a formal equity offering. It is a process that will allow the trust to incrementally sell shares as and when demand arises, points out TradeTech.

Although Sprott’s client base is dominated by institutional investors, it hopes SPUT will provide an attractive route for retail investors to get involved. 

The investment manager currently has an established position within the commodity markets with four physical funds covering precious metals, and particularly “Bullion Trusts” for gold, silver, platinum and palladium.

Company news 

ASX-listed BHP Group ((BHP)) reported uranium production of 1.35mlbs for its fourth quarter ended June 30, down -26% from the previous quarter and -40% below output in the same quarter a year ago.

For the full year ended June 30, production totalled 7.2mlbs, which was down -11% compared to FY20.

Sales for FY21 totalled 7.81mlbs, down -14% compared to FY20. The company produces uranium as a by-product at its Olympic Dam operation in South Australia.

Uranium pricing

TradeTech Weekly Spot Price Indicator rose US20c to US$32.50/lb last week.

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