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Uranium Week: Kazatomprom Reports, SPUT Readies For Growth

Weekly Reports | Aug 10 2021

As the uranium spot price fell marginally last week, Kazatomprom released production and sales results, while the the Sprott Physical Uranium Trust achieved a key regulatory milestone in its plan to raise additional funds.

-Kazatomprom reports second quarter production and sales
-The Sprott Physical Uranium Trust seeks funds
-Uranium spot price falls by -1.5% for the week

By Mark Woodruff

Kazakhstan uranium producer Kazatomprom last week reported higher second quarter production and sales and reaffirmed 2021 production guidance.

However, management flagged first half uranium production was below internal expectations and warned “final year-end volumes may fall short, if the wellfield development and supply chain issues continue”.

The uranium miner, with production representing approximately 23% of global primary uranium production in 2020, produced circa 8mlbs U3O8 in the June quarter, 9% more than in the same quarter last year.

The higher production was due to the impact of covid-19 in 2020, which resulted in lower production. First-half production was similar year-over-year.

Meanwhile, uranium sales increased significantly for both the quarter and half-year due to seasonality and differences in the timing of deliveries for 2020 and 2021. Group sales rose 99% to 12.8mlbs in the second quarter.

The higher uranium spot price in 2021 had a positive impact on Kazatomprom’s average realised price compared to 2020. It was up 3% at US$29.60/lb, although the average month-end spot price declined -7% to US$30.85.

Company news

The Sprott Physical Uranium Trust (SPUT) has lodged a shelf prospectus to raise up to US$300m of fresh units. This is a necessary step in establishing an “at-the-market” issuance facility, a cornerstone of SPUT’s distinct approach to raising capital.

This mechanism allows listed entities to raise funds without engaging in a formal equity offering. It’s a process that will allow the trust to incrementally sell shares as and when demand arises, and then execute more frequent, smaller purchases in the spot market.

The “at-the-market” faciility is expected to be operational by the end of August.

Uranium pricing 

TradeTech's Weekly Spot Price Indicator last week fell to US$32.00/lb, a -US$0.50 decrease from the prior week. The Indicator has increased nearly 7% so far in 2021. 

The average Weekly Spot Price Indicator in 2021 is US$30.38/lb, US$0.67 above the 2020 average.

A total of four transactions were recorded for the week, involving just over 975,000lbs U3O8 equivalent.

It was an extremely quiet week, according to TradeTech, due to a lack of firm spot demand. Summer holidays, vacations and uncertainty as to how the newly launched Sprott Physical Uranium Trust may impact the market also contributed to the malaise.

TradeTech's term price indicators are US$33.50/lb (mid) and US$35/lb (long).

For several months now, the trend emerging in the term uranium space has been toward smaller purchases for shorter and nearer-term deliveries.

However, sellers' attitudes seem to have shifted, at least for now, with several willing to compete aggressively for sales if the buyer is a utility, regardless of delivery period or material form, explains TradeTech.

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