Last September, uranium prices reached a 10-year high of around $51.00 a pound. The burst of enthusiasm for the metal was triggered by the July launch of an ETF that holds physical uranium, the Sprott Physical Uranium Trust Fund, which trades over-the-counter in the United States under the symbol SRUUF.
In mid-April, uranium hit a 12-month high of around $65.30 a pound. Unsurprisingly, uranium mining stocks also posted new or close to new annual highs. Since then, uranium prices have declined by about 10% and, again unsurprisingly, uranium miners’ shares have tumbled by 25% or more. The sharp drop in the commodity price was attributed to a drop in Sprott’s purchases and broad market conditions that challenged commodity prices in general.
Nick Lawson, CEO of U.K.-based Ocean Wall and an expert on the uranium market, told S&P Global last week that commodity market challenges “resulted in U.S. funds closing out positions on mining stocks as well as other positions to support margin calls. This could have resulted in a fund selling a large volume of uranium holdings, and [Sprott Physical Uranium Trust] did not have the cash to support the bid.”
Sprott recently completed its $1 billion acquisition of North Shore Global Uranium Mining ETF, which now trades, with no ticker symbol change, as Sprott Uranium Miners ETF (URNM). Sprott also launched the uranium miners ETF in a so-called Ucits version listed in London. Ucits is a regulatory framework that allows for the cross-sale of European mutual funds and ETFs. As its name implies, the URNM ETF holds stocks of uranium mining companies, plus a 9.2% weighted share of Sprott’s own physical uranium fund.
Uranium prices have increased by more than 80% over the past 12 months, even including the recent downturn. But Morningstar analyst Kenneth Lamont warned in a Thursday report at the Financial Times that “[m]uch of flow into these funds is likely to be speculative and may be withdrawn if and when enthusiasm cools.”
In our September look at five uranium mining stocks, we noted that many miners were getting set to reopen idled mines once prices reached the $61.00 level and appeared to be able to hold that price for a while. That day may not be here yet, but we thought now might be a good time to revisit these stocks. To help set the stage, note that the Sprott Physical Uranium Trust (SRUUF) was up about 14% since the end of September 2021, as of Thursday’s close. The firm’s new Sprott URNM ETF closed down about 2.5% on Thursday.
The stock posting the biggest share price improvement since last September is Uranium Energy Corp. (NYSEAMERICAN: UEC). The Corpus Christi, Texas-based firm operates uranium mining projects in the United States, Canada and Paraguay. The company’s market cap is $1.19 billion, and its enterprise value is $1.17 billion. Both have increased by more than 25% since September.
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