Sprott adds again to physical uranium trust holdings

[Redator]

The world’s largest holder of physical uranium keeps expanding its war chest.

The Sprott Physical Uranium Trust (TSX: U.U for USD; U.UN for CAD) now holds about 72.4 million lb. of uranium, according to its website. That’s after buying 400,000 lb. of uranium oxide (U₃O₈) Wednesday, BMO Capital Markets analysts Helen Amos and George Heppel said Thursday in a note.

“In our view, the increasing activity of financial players and the focus of utilities and governments on uranium supply security will continue supporting the improving uranium demand fundamentals,” the BMO analysts wrote.

Sprott bought more than 2.3 million lb. of U₃O₈ in the third quarter, BMO reported late last month. That was the highest amount since the first quarter of 2023.

The trust now has a net asset value of about $6 billion. It’s run by Toronto-based Sprott Asset Management, which oversees total assets of more than $40 billion.

Spot gains

Spot uranium rose 1.4% to $83.10 Thursday morning, Trading Economics data show, one of the heavy metal’s highest levels in a year. That boosted uranium’s gain to about 14% since the start of the year.

US dollar-denominated units of the Sprott Physical Uranium Trust fell 1.4% to $19.82 in Toronto Stock Exchange trading Thursday morning. They have traded between $12.65 and $20.60 in the past year.

Separately, US second-quarter production of U₃O₈ jumped 41% to 437,238 lb. compared with the same period a year ago, the US Energy Information Administration (EIA) said Wednesday in a quarterly report posted on its website. Five US facilities produced uranium – three in Wyoming and one each in Texas and Utah.

The production of U₃O₈ is the first step in the nuclear fuel production process. It precedes the conversion of U₃O₈ into uranium hexafluoride (UF₆) to enable uranium enrichment, fuel pellet fabrication and fuel assembly fabrication.

Production tailwinds

US uranium concentrate production reached 677,000 lb. last year, EIA data show, while the country purchased about 50 million pounds. Shipments from countries such as Canada, Kazakhstan and Australia have dwarfed US output since the 1990s, though domestic output has been rising in recent years.

But despite domestic production tailwinds, US nuclear reactors could soon face supply issues, BMO says. Another EIA report shows maximum uranium deliveries between 2025 and 2034 under existing contracts would total 234 million lb. of U₃O₈. This would leave unfilled uranium market requirements of 184 million lb. for the same period, BMO says.

Energy Secretary Chris Wright said last month the federal government was considering increasing its strategic uranium reserve to lessen reliance on Russian supplies and bolster confidence in nuclear power’s long-term potential,

Russian imports account for about a quarter of the enriched uranium needed by the 94 US nuclear reactors that produce about a fifth of the country’s electricity.