Uranium is an essential commodity needed as the world transitions from the use of fossil fuels. Despite this need, the U.S. Securities Exchange Commission (SEC) rejected an application made by the Sprott Physical Uranium Trust that would have allowed the trust to become the first fund to trade on the exchanges in the United States. The SEC stated that a failure to meet listing standards led to this rejection.
A statement released by Sprott indicates challenges, including the nature of the physical uranium market and the trust’s structure. While a failed listing is usually cause for concern, analysts, investors and the fund itself don’t seem too shaken by the denial.
In an email, John Ciampaglia, the investment manager to the trust and the firm’s CEO, stated that the fund had been clear to its investors from the beginning that this would be treated as a new listing by the U.S. Securities and Exchange Commission, which would make it hard to forecast an outcome. He further acknowledged that the uranium market had a range of structural differences in comparison to other commodity markets.
Ciampaglia also added that while the trust would remain an active participant in the evolutionary process, it didn’t intend to pursue a listing on the U.S. stock exchanges in the short term.
The Canadian-listed uranium trust was started in July 2021 and now has $3 billion in assets. When it was launched, uranium was going for about $30. Now, data from Numerco, a nuclear fuel brokerage based in the United Kingdom, shows that the price of the radioactive metal has increased by more than 75% to reach $53.
The Global X Uranium ETF has also gained more than 1.5% this year, after a 48% increase last year. This exchange traded fund is usually used as a proxy for spot uranium prices. It invests in uranium miners and related firms. Another U.S.-listed fund for uranium, the NorthShore Global Uranium Mining ETF, has also jumped by more than 67% since last year.
Segra Capital Management’s portfolio manager Arthur Dwight Hyde believes that the lack of a U.S. listing for the Sprott Uranium Trust won’t be a major hindrance to the trust or the broader uranium market. Hyde explained that given the uranium trust’s success in raising capital these last few months and its liquidity today, he didn’t believe that Sprott’s Canadian listing was a restricting factor for institutional ownership. Segra Capital Management is a hedge fund focused on investing in the nuclear industry.
As nuclear energy regains its lost glory, many investors are likely to show interest in companies such as Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR), which are engaged in mining this green-energy metal.
NOTE TO INVESTORS: The latest news and updates relating to Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) are available in the company’s newsroom at http://ibn.fm/UUUU
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