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Uranium Week: Approval For Uranium Investment Fund

Weekly Reports | Jul 13 2021


As the uranium spot price fell marginally last week, further progress was made to list the first physical uranium fund in both Canada and the US.

-Shareholder approval for creation of uranium investment vehicle
-Bannerman Resources advances project in Namibia
-Uranium spot price falls by less than -1% for the week

By Mark Woodruff

Shareholders of Canadian-listed uranium investor Uranium Participation Corp (UPC) have approved a proposed plan of arrangement to reorganise UPC into the Sprott Asset Management-run investment-fund listed on the Toronto Stock Exchange. UPC is the world’s largest publicly-traded investment vehicle offering exposure to uranium, outside of traditional mining company shares.

In explaining last week’s lack of activity in the spot uranium market, independent consultant TradeTech observed both buyers and sellers were hesitant to commit to transactions immediately before the July 7 vote by UPC shareholders to approve the creation of the Sprott Physical Uranium Trust.

Since confirmation of the vote in favour of the transaction, sellers have slowly inched up offer prices in expectation of future demand from the fund.

Completion of the transaction is expected in the early third quarter of 2021, and if successful, the new Sprott Trust would be the first physical uranium fund listed in the US. It’s thought the listing will enable the raising of new funds for the purchase of physical uranium, placing a strain on existing supply.  

The new trust structure will offer lower annual corporate costs and aligns UPC's business with the world's leading physical commodity investment vehicles.

Company News

In a June 30 quarterly report, ASX-listed Bannerman Resources ((BMN)) noted advances to its Pre-Feasibility Study (PFS) for the 8Mtpa development of its flagship Etango Uranium Project in Namibia. There is a specialist review underway ahead of PFS finalisation and release, expected in early August 2021.

Commenting on the wider uranium market, CEO Brandon Munro noted secondary demand continues to tighten. “This is in anticipation of market events, not the least of which is the creation of the Sprott Physical Uranium Trust and its anticipated listing in the United States and Canada.”

Mr Munro also referenced the impact on the uranium market of a further build in secondary demand from investment funds and other participants. Additionally, the extension by Kazatomprom of supply discipline into 2023, removing -13mlbs from forecast global production for the year, is considered significant.

Cameco, GE Hitachi Nuclear Energy (GEH), and Global Nuclear Fuel-Americas (GNF) have signed a memorandum of understanding to explore several areas of cooperation to advance the commercialisation and deployment of BWRX-300 small modular reactors (SMRs) in Canada and globally.

“Cameco intends to be a go-to fuel supplier for these innovative reactors. We’re looking forward to working with GEH and GNF to see what opportunities might exist around their novel SMR design," said Cameco President and CEO Tim Gitzel.

In production news, Cameco  is planning to restart production at the Cigar Lake uranium mine after it was temporarily suspended and three quarters of the workforce was evacuated on July 1, due to a wildfire in the vicinity.

Uranium pricing

TradeTech's Weekly Uranium Spot Price Indicator is US$32.60/lb down -US$0.10 from last week. The Indicator has risen steadily since late April, gaining an average of 1.3% per week in that time. It has increased almost 8% overall in 2021, averaging a 0.3% weekly gain. 

The average Weekly Spot Price Indicator in 2021 is US$30.23/lb, US$0.52 above the 2020 average.

The spot uranium market was extremely quiet last week, in large part due to the US Independence Day holiday, reports TradeTech.

TradeTech's term price indicators are US$32.40/lb (mid) and US$35.00/lb (long).

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