The listing of Sprott Physical Uranium Trust on the Toronto Stock Exchange this week could prove to be a game changer for the global market.
The world’s largest physical uranium investment fund – formed by Sprott Asset Management after it took over uranium asset investment manager Uranium Participation Corporation (UPC) – is set to provide investors for exposure to uranium with an easy, liquid option to park their money into.
It is expected to spur demand for physical uranium and potentially have a knock-on effect of boosting the metal’s price.
The fund – a wholly-owned subsidiary of precious metals and real assets investment company Sprott Inc – purchased 100,000 pounds of uranium compound on its first day of trade.
UPC invests all of its assets in uranium oxide in concentrates and uranium hexafluoride, and aims to achieve an appreciation in the value of its holdings through increases in the uranium price.
Its business model is based on giving investors exposure to the uranium price without the resource or project risk associated with investing in a traditional mining company.
In April, UPC announced it had entered into an agreement with Sprott to “modernise its business structure” and pursue a North American stock market listing.
Sprott’s trust structure was believed to offer lower annual corporate costs, increased trading liquidity, and improved access to capital for its shareholders.
The proposal also aligned with business dealings between UPC and some of the world’s leading physical commodity investment vehicles.
The UPC transaction was approved earlier this month, adding about US$600 million (A$820 million) to Sprott’s total assets under management and providing the company with an important strategic foothold in the clean energy metals space.
Sprott currently manages four other funds with over US$13 billion (A$17 billion) in total assets, including the Sprott Physical Gold Trust and the Sprott Physical Silver Trust closed-end funds.
The Sprott Physical Uranium Trust will look to provide liquidity for investors through exposure to physical uranium.
It will take advantage of the material’s scarcity in a bear market triggered by the 2011 Fukushima nuclear disaster, and the strong likelihood of upcoming demand.