Uranium Miners Monthly Report | September

26 September 2022

Uranium ETF Monthly Report: Key Takeaways

Uranium, in terms of spot price and especially in relation to uranium equities, had a standout performance for the month of August. Uranium’s strength provided a notable divergence from the weak performance of the broader markets. Equity, bond and the broad commodity markets posted negative performance for August, a month that was characterized by rising interest rates, persistently high inflation and low market depth and trading liquidity. These macro factors were further evidenced by Chair Jerome Powell’s comments at the Federal Reserve’s (the Fed) 2022 Economic Policy Symposium held in Jackson Hole, Wyoming. Powell stated that the Fed would continue to raise interest rates and hold them at a higher level until inflation was brought under control. [1]

The U3O8 uranium spot price rose from $48.59 to $52.83 per pound in August, an 8.73% increase.[2] In response, uranium equities climbed even higher, with the Sprott Uranium Miners UCITS ETF gaining 11.88% for the month. The positive returns experienced by uranium mining equities reflected the increased acceptance among global governments of nuclear’s dual role in helping the energy transition away from dependence on fossil fuels and developing better energy security.[3] Further, we believe the uranium market’s outperformance due to its unique micro factors despite overarching negative macro factors continues to highlight the low correlation and diversification benefit potential of uranium equities.

Positive news headlines about the growing acceptance of nuclear power were abundant in August. Uranium equities had a very strong positive reaction to Japanese Prime Minister Fumio Kishida’s announcement on August 24 that Japan wants to restart seven more nuclear reactors by next summer, will explore the development and construction of innovative next generation reactors and will consider extending the life of existing nuclear reactors.[4] Prime Minister Kishida further noted that “Nuclear power and renewables are essential to proceed with a green transformation” and that “Russia’s invasion changed the global energy situation”. Market participants had been patiently waiting for Japan to announce the restart of additional nuclear power plants to address its long-term energy needs. [5]

South Korea was among the other countries who expressed greater commitment to nuclear energy in August. The South Korean government noted on August 30 that it planned to increase its percentage of total energy creation from nuclear to near 33% from a previous mid-term plan of 25%.[6] In California, U.S., the nuclear power plant Diablo Canyon extension of life proposed by Governor Gavin Newsom has passed, representing a turnaround from the Governor’s previous stance to close the plant.[7] In addition, the Inflation Reduction Act in the U.S passed in August and will give existing nuclear power plants $15/MWh generated conditional on shortfalls in their revenues from other sources.[8] While this would not be triggered at current wholesale prices, it is likely to help keep the fleet online if prices were to revert to lower levels.

Faced with the prospects of energy shortages and rocketing energy costs, many governments are turning to nuclear energy to provide reliable, affordable base load energy. The energy crisis that many countries are facing provides the political will to galvanize public support for nuclear energy.

Cameco and Kazatomprom, the fund’s two largest holdings as of month end are the largest uranium producers and had a divergence in performance over the month. Cameco outperformed the broader uranium market as its existing contracts with Japanese utilities benefitted from the aforementioned news out of Japan. Kazatomprom had positive performance over the month but underperformed other uranium miners. This underperformance is likely attributable to increased risk from supply-chain challenges. [9]

Number three position in the ETF, the Sprott Physical Uranium Trust (SPUT), holds approximately 57.6 million pounds of physical U3O8 uranium as of month end. Since August 2021, SPUT has been an active participant in the uranium spot market helping to enhance liquidity and price discovery. SPUT purchased approximately 450,000 lbs. of U3O8 uranium in August.[10] Physical uranium appreciated over the month with this performance mostly attributable to the last few trading days of the month when volume increased.[11] SPUT’s NAV performance performed in line with the spot uranium price.

Uranium Energy Corp. (UEC) announced in August that it had finalized the acquisition of UEX Corporation.[12] This concludes a bidding war between Denison Mines and UEC for the company. Per the press release, this will create the largest diversified American focused uranium company.

Please remember that all performance figures are showing net data. Past performance is not indicative of future performance.


Macro Outlook

August’s standout performance for uranium and uranium miners was a welcome exception in what has been a tough summer for most other asset classes. We believe, however, that the recent performance of uranium miners does not reflect the strong uranium market fundamentals. Year to date as of August 31, U3O8, conversion and enriched uranium prices have all significantly appreciated for both short- and long-term purchase contracts, but by contrast, the performance of uranium miners remains in the single digits. We believe that the current demand for conversion and enrichment coupled with a shift away from Russian suppliers support an increase in the U3O8 uranium spot price which may bolster the uranium miners.

Over the summer we saw numerous endorsements of nuclear energy from governments around the world. In addition, other positive news continues to increase confidence including the inclusion of nuclear energy in the EU taxonomy, Germany’s rethinking of planned plant closures, the U.S. Department of Energy’s announcement to buy $4.3 billion in enriched uranium from domestic producers and the G7’s statement on reducing reliance on nuclear goods from Russia.[13] We believe these developments are likely to bolster greater investment in nuclear energy, uranium and uranium miners.

Looking beyond the significant positive short-term performance, we believe the uranium bull market still has a long way to run. Over the long term, increased demand coupled with an uncertain uranium supply are supportive of a sustained bull market. For investors, uranium miners have historically exhibited low/moderate correlation to many major asset classes, providing portfolio diversification potential.

We continue to believe that uranium miners are well positioned to take share within the energy sector as energy security and decarbonization take center stage globally. With the number of nuclear reactors planned to increase by 35%, governments are signaling the need to embrace the reliable, efficient, clean and safe energy produced by nuclear to meet ambitious decarbonization goals.[14] At the same time, a uranium supply deficit remains entrenched and uranium miners may be the beneficiaries of increased investment to bring the market back into balance.

Please remember that when you invest in ETFs, your capital is at risk.

Sprott Global Uranium Miners UCITS ETF (URNM) Performance Table (As of 31.08.22)








Sprott Global Uranium Miners UCITS ETF (URNM)







North Shore Sprott Uranium Miners Index








Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/08/2022 Performance before inception is based on back-tested data. Backtesting is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such a strategy would have been. Back-tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs, your capital is at risk.

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