Sprott (TSX:U-UN) Buys up Bulk Uranium, Sending Prices to the Moon

Physical uranium ore.

The price of uranium jumped to the highest it has ever been since 2015 since the investment firm Sprott has been purchasing huge amounts of physical uranium, dominating the market. 

Earlier this year Sprott launched its physical uranium trust and according to a Twitter post from the company, the trust has reached one billion in assets as of September 7, 2021. At the beginning of August, Sprott put out a press release announcing the trust was launching its “At the market” Equity program. 

John Ciampaglia, CEO of Sprott Asset Management said he is pleased to launch the new program and “Our goal is to increase the scale and liquidity of the Trust through regular purchases of physical uranium on the open market. We believe the ATM Program is the most cost-effective and shareholder-friendly method to raise the capital necessary to achieve this objective while also creating long-term value for our unitholders.” 

Sprott has accumulated over 24 million pounds of uranium. According to their website and social media posts, they would sometimes buy up to 500,000 pounds in a single day. 

To show how much uranium Sprott is actually buying, the total uranium volume for 2020 was 92.2 million pounds, according to uranium investor Yellow Cake Plc. That is over a quarter of the total volume purchased by Sprott. 

According to their website, Sprott’s goal is to “provide a secure, convenient and exchange-traded investment alternative for investors interested in holding uranium.”

The company has created a key list of benefits to investing in Uranium:

  1. World’s Largest Physical Uranium Investment Fund – The largest and only publicly-listed physical uranium fund currently in the marketplace. 
  2. Experienced Commodity Fund Manager & Uranium Technical Advisor – Sprott Asset Management LP serves as the Trust’s manager and is backed by more than four decades of physical commodity investment experience. WMC Energy B.V., the Trust’s technical advisor, is an independent company focused on the low carbon energy sector. 
  3. Convenient Way to Own Physical Uranium – Trust units are exchange-traded and easy to buy, own and sell with an At-the-Market (ATM) program. 
  4. Transparent Daily Reporting of Net Asset Value (NAV) and Holdings – Added transparency of assets and daily posting of the net asset value. 
  5. Low Fees – Annual management fee of 0.35% per annum, plus operating expenses.

According to analysts at Raymond James Financial Inc, Uranium prices must rise further to spur the restart of production to meet uncovered utility demand after 2023. Reports by BMO Capital Markets and Morgan Stanley predict a rally in prices over the next few years to the $50 level by 2024.

Sprott was founded in 1981 by Eric Sprott, an early champion of precious metals investing. Today, the Company serves over 200,000 global clients and has approximately $18.6 billion in assets under management as of June 30, 2021.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

By Matthew Evanoff

I cover the mining industry and the best mining stocks around the world. I write about industry news, individual companies, projects, management, and profiles on industry leaders.

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