Uranium Week: Sprott Adds Uranium Equities ETF

Weekly Reports | Nov 09 2021

As the spot uranium price climbed just over 1% last week, Sprott Asset Management may add further impetus to equities after acquiring a pure-play uranium ETF.

-Sprott Asset Management acquires uranium ETF URNM
-COP26 highlights main advantage of small modular reactors 
-Kazatomprom lowers production guidance 
-Uranium spot price rises just over 1% for the week

 

By Mark Woodruff

In additional significant news for uranium equity investors, Sprott Asset Management has announced an agreement to acquire the US-listed North Shore Global Uranium Mining ETF (code:URNM), which will be re-badged as the Sprott Uranium Miners ETF. 

Settlement is expected to occur in the first quarter of 2022.

According to Brandon Munro, Managing Director and Chief Executive Officer of ASX-listed Bannerman Energy ((BNM)) “Acquiring a pure-play uranium ETF provides Sprott with a one two punch to broaden their appeal to generalist investors attracted to the uranium space. The broader marketing channel that Sprott can deliver will benefit the uranium companies within the Index. It should also dovetail neatly into the proposed 2022 listing of Sprott Physical Uranium Trust on the New York Stock Exchange.”

John Ciampaglia, CEO of Sprott Asset Management said "URNM is the only US-listed pure play uranium equities ETF and we look forward to providing investors with two compelling options to invest in the sector." The second being the Sprott Physical Uranium Trust.

Small modular reactors 

In an event titled ‘The Role of Nuclear Energy in a Net-Zero Future’, held last week at the COP26 Net Zero Summit, participants discussed innovations in technologies.

Front and centre in the discussions were small nuclear power reactors, also known as small modular reactors (SMRs).

Research released last week from Morgan Stanley’s Utilities Research team suggests that successful commercialisation of SMRs would provide multiple benefits over traditional nuclear reactors. The largest benefit, it would seem, in a period of climate urgency, is the relatively lower lead times for construction.

Modular units are built in one location and can be shipped by rail or road and assembled on site, meaning that commissioning can follow a very predictable program of roughly four years, according to the broker.

This compares to the full lead time for wind and solar projects of around six and four years, respectively, and as much as 10-15 years for traditional nuclear facilities, points out Morgan Stanley.

As the head of customer business for Roll Royce SMR Sophie McFarlane-Smith noted at the climate conference in Glasgow “The innovations we need to bring forward first are those innovations that allow nuclear power to be used in more locations, in more countries, by more users around the world and we need that fast".

Company news

Kazakhstan’s state-controlled uranium producer Kazatomprom, the world's largest producer of uranium, has reported uranium production (100% basis) for the third quarter -0.3% lower than the output during the second quarter this year, though 18% above the same period last year. Meanwhile, group sales volumes were down -61% compared to the same quarter last year.

The company continues to target an ongoing inventory level of around six to seven months of annual attributable production, though this could be lower in 2021 and 2022 due to covid-related production losses. As a result, several transactions to purchase material in the spot market were completed in the third quarter.

Total 2021 production expectations have decreased due to delays in exploration and wellfield development, linked to pandemic-related supply chain issues. On a 100% basis, Kazatomprom now expects to produce around 56.4-57.2mlbs, down from 58.5-59.3mlbs.

Uranium pricing

TradeTech's Weekly Spot Price Indicator ended last week at US$43.50/lb, up US$0.50/lb from the previous week.

The spot price is up 43% since the beginning of the year and 45% year-on-year. The average Weekly Spot Price in 2021 is US$33.51/lb, US$3.80/lb above the 2020 average.

There were around 1.8mlbs U3O8 traded last week, compared to 1.5mlbs in the prior week. Buyers included investors, traders, and financial entities, while traders continued to dominate as sellers. 

TradeTech's term price indicators are US$43.75/lb (mid) and US$45/lb (long). 

Utility buyers in the mid-and long-term uranium markets continue to see lower offers than other types of buyers, points out TradeTech. Many utilities are receiving offers equivalent to prices near the spot uranium price.

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