On Thursday, Uranium Participation Corporation and Sprott Asset Management LP announced the inception of Sprott Physical Uranium Trust. The deal is expected to be effective at 12:01am EST on July 19, 2021.
Sprott currently manages four other funds, with over $13 billion in total assets. These include two closed-end funds, the Sprott Physical Gold Trust (PHYS) and the Sprott Physical Silver Trust (PSLV). The firm also offers two actively managed precious metals mining ETFs: the Sprott Gold Miners ETF (SGDM), which tracks gold majors, and the Sprott Junior Gold Miners ETF (SGDJ), which tracks junior gold miners.
Sprott CEO John Ciampaglia sees an overlap in interest between shareholders interested in precious metals and in uranium. In an interview with Mining Journal, he said: “There is a growing narrative that nuclear power has to be part of the overall strategy to reduce greenhouse gas (GHG) emissions, while providing reliable baseload electricity to an increasingly electrified world. We see more and more governments committing to climate targets and acknowledge that solar and renewable alone won’t help them meet those objectives.”
Uranium mines have been in decline for many years, following a long bear market on the material following the nuclear disaster in Fukushima in 2011. This means supply is currently scarce.
However, as the realities of climate change become more apparent by the day, there’s increased pressure for governments to switch to more sustainable energy sources. Solar and wind currently do not have capacity to handle the energy output required, which means nuclear energy is bound to be critical in the coming years.
Sprott’s Physical Uranium trust will look to provide liquidity for investors through exposure to physical uranium, taking advantage of the material’s scarcity and the strong likelihood of upcoming demand.
Uranium’s price sits at $32.30, up significantly from its pre-COVID crisis price of $23.90 just 16 months ago.
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