Since I started posting on uranium last year, a lot has happened in the sector and we have seen equities increase multiples across the board. There have been plenty of catalysts that have spurred on this move, including reactor life extensions, COVID mine disruptions, new reactor buildouts, capital flows, shut down of supply and several more. A new catalyst has entered this market in recent weeks however and has had an immediate positive effect on the sector. This catalyst was Sprott taking over uranium participation corporation and converting it into the Sprott uranium trust. After everything was said and done, they implemented their USD $300 million ATM and went to work putting in a front curve bid for physical uranium (an oversimplification to be fair, but I want to keep this post short and to the point as to not stray too far off of the main point).
And putting in a bid they did, surprising perhaps even the most bullish expectations, as they went on to add approximately 2,7 million pounds of uranium in just 2 weeks and they are showing no signs of stopping at this point. To give you all some context, that 2,7 million pounds is roughly equivalent to the annual fuel needs of 6 standard 1GW reactors. There was already a firm supply/demand gap in place that formed that basis for this uranium bull thesis and Sprott will widen this gap even further in the months ahead. This will likely accelerate if they can acquire a NYSE listing in Q1 or Q2 of next year, opening the door to additional capital that wants to participate in this bull market via a liquid and well managed vehicle, causing the purchasing of additional pounds in the process.
This trust is an absolute game changer for the sector, as it provides the market with something it has not really seen in this magnitude before, with a consistent bidder in the uranium spot market that can really ramp up the price of physical uranium. Equities will follow this rise and there is no saying what this trust could achieve for the sector once it gets fully up and going. There is also still plenty of time for it to achieve that ramp up, as the price of uranium still needs to rise by roughly another 80% at least to incentivize enough new production for some form of breakeven across the market. However, that break even appears to not be enough to fix the current and upcoming supply/demand gap and an overshoot in price is looking more likely by the day given prevailing circumstances.
There are a lot of moving parts to this vehicle and I have been working hard to put the puzzle together and this post is merely a short summarized version of that work, but I can firmly say that this is the catalyst that has the potential to supercharge what was already a very compelling investment case. I will be watching the developments closely and the coming 2-4 years have never looked as bullish for this sector in my opinion. Should you have any questions regarding this development or uranium in general, please let me know below or via a message and I will be glad to help out. Thank you for reading, please always make sure to do your own due diligence as well and I hope you all have a good and healthy rest of your day.
Submitted September 02, 2021 at 08:55AM by 3STmotivation https://ift.tt/3n0yp3R
