Sprott uranium buying hits milestone but spot price falls

[Ben Graham]

It’s retail therapy this quarter for the Sprott Physical Uranium Trust (TSX: U.U for USD; U.UN for CAD) which this week bought 250,000 lb. of uranium oxide (U₃O₈) as part of its strongest start to the fund since it was formed in 2021, though the spot uranium price fell from a two-year high.

The buy – part of Sprott’s second-highest quarterly transaction in four years – raises its first quarter uranium purchases to 3.65 million lb. and its total inventory to 78.4 million lb. after it bought 500,000 lb. last week. Sprott’s energy metal holdings now have a total value of $7.28 billion.

However, the purchase comes as the spot price fell almost 10% near the end of last week from $101.55, its highest price in two years, to $91.80 per lb. on Wednesday. The world’s top producing company, Kazatomprom (LSE: KAP), forecast a 9% output increase this year which is higher than expected, BMO Capital Markets analyst Helen Amos said in a note on Wednesday.

Kazatomprom forecast

The Kazakhstan state uranium miner expects production of 71.5 to 75.4 million lb. this year compared to last year, mostly from ramp up at the Budenovskoye joint venture in southern Kazakhstan which Kazatomprom holds with Russia.

As the spot price reached its recent high on Jan. 29, SaskPower and the government of Saskatchewan – where most of Canada’s uranium exploration and mining takes place – had just said they would evaluate building large reactors in the province.

Though Saskatchewan’s Athabasca Basin is Canada’s top uranium producing region, the province has no nuclear power generation or processing. The evaluation would happen alongside SaskPower’s planned small modular reactor project.   

Sprott shares were flat at C$29.79 apiece on Wednesday morning in Toronto, valuing the company at C$9.2 billion ($6.7 billion).