The Month in U Inventory: Further SPUT Inventory Additions in May

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Given very rangebound trade during the month of May, the spot uranium price ended the month -1.2% lower, settling at $85.13 per lb (Numerco). The spot price was tightly rangebound between $86.50-$84.50 per lb during the period. The Sprott Physical Uranium Trust (U-U, U.UN) added 199,000 lbs of uranium to inventory during the month, thus bringing its total in inventory to just under 81.5M lbs. The current inventory figure represents a notable ~4.4x increase to the 18.3M lbs held nearly four years ago when the Trust was launched, post Uranium Participation Corp. acquisition. No inventory additions were noted from Yellowcake PLC (YCA).  

On the corporate front, Cameco (CCJ, CCO) announced on May 27 that full production activities were resumed at the Key Lake mill and McArthur River mine. This announcement came following a halt in production activities on May 10 due to the impact of flooding in northern Saskatchewan. Specifically, due to the flood waters, the Smoothstone Bridge which is on the primary route used to transport supplies to the McArthur River and Key Lake sites, partially collapsed. Though there were fears that FY/2026 production would be impacted, the delivery of critical materials needed for production has been able to resume. Consolidated FY/2026 production remains unchanged between 19.5M-21.5M lbs U3O8 (Cameco’s share). Last week Kazatomprom (KAP) reported its Q1/2026 financials which highlighted production of 6,144tU (100%) representing a marked +9% increase y/y. Despite a +34% y/y increase in the average monthly spot price, sales declined by 40% y/y due to the timing of scheduled deliveries. FY/2026 production guidance (mid-point 28,250 tU, 100%) remains unchanged. Of note as well is that last week, EuroChem Karatau put into production one of the largest sulfuric acid plants in the world (annual Phase 1 design capacity of 840,000 tonnes). Located in the Zhambyl region of Kazakhstan, Once all three Phases are in operation sometime in 2027, annual output is expected to top 1.0M tonnes. Half of the annual sulfuric acid output is expected to be supplied to Kazatomprom. Eurochem Karatau is a subsidiary of Russian EuroChem.

Additionally last week, Peninsula Energy (PENMF) held its official ribbon cutting ceremony to inaugurate CPP Phase 2. As part of the work completed, re-coating of the ion exchange (IX) and elution tanks were completed, providing for full capacity of the IX and elution circuits. Though FY/2026 production guidance remains between 400,000-500,000 lbs, the CPP’s installed capacity amounts to 2.0M lbs per year. On May 26, American Uranium Ltd. (AMU) reported strong infill drilling results at its Lo Herma Project, located in Wyoming. With 11 of 18 holes (of 55 in total) intersecting mineralisation above the cut-off (best hole gt being 1.06 over 5.8m at 0.056% eU3O8), things bode well for an updated MRE and scoping study by Q3/2026. That said, with both companies in the midst of rights issues, performance has lagged this year with Peninsula -25% YTD and American Uranium posting performance of -36% YTD.

Sprott Physical Uranium Trust (U.UN-T, U.U-T): 2-Yr Performance:

The March Iran war market downturn quickly reversed earlier P/NAV premium valuations to steep discounts with the Trust reaching a -8% discount in March. The discount has since narrowed to -3.3% however. Recall that the Trust was at par to NAV at the start of March (pre-war) and even reached a premium of +9% in late January. Over the month of May, the Trust’s uranium inventory increased from 81.248M lbs to 81.447M lbs (+199,000 lbs) as the total number of units outstanding accordingly increased from 344.145M to the current 344.156M. The inventory figure represents a notable 4.4x increase to the 18.3M lbs held ~four years ago when the Trust was launched, post Uranium Participation Corp. acquisition.

Valuation: Given current pricing and FX, SPUT's discount to NAV increased from last months discount of -1.0% to the current -3.3% discount with the Trust now trading at a 0.97x P/NAVPU relative to its intrinsic value of $28.18. Note that following a slight valuation premium in September 2023, the valuation discount has largely been maintained, apart from a brief period this past fall. The current -0.6% discount ranks well above the near -15.0% discount last seen in February 2023. Note that a premium of +9% was achieved before the commodities sell-off at the onset of the Iran war. Given our LT $100/lb price objective for the spot and a constant CAD/USD exchange rate, our 0.95x NAVPU valuation of $32.00 (rounded) per unit is being maintained. For further context, the current -3.3% discount to NAVPU is relative to +26% premium in September 2021 and -18.1% discount from July 2022. YTD shares in U.UN have advanced by a modest +1.6%. The corresponding sensitivities to FX and the spot price are below:

Yellow Cake PLC (YCA-L): 2-Yr Performance:

Valuation: Given the most recent spot U3O8 quote at $85.13 per lb (or £63.00 per lb), YCA is trading at 0.92x P/NAVPU, or at a -8.2% discount given the current 1.0x NAVPU intrinsic value of £619.90. Given our LT $100/lb price objective for the spot and a constant GBP/USD foreign exchange rate, our 0.80x NAVPU valuation of £710 (rounded) is maintained. As per YTD performance, shares of the Yellow Cake have declined by -3.9%. The corresponding sensitivities to FX and the spot price are below:

Recall that under the Kazatomprom Framework Agreement (KFA), Yellow Cake maintains the option to purchase up to $100M of U3O8 each year for a period of nine years, starting from the company's IPO in 2018. That said, it is our view that geo-politics will continue to weigh on Kazakh sourced uranium, and in general on all companies with exposure to Kazakhstan, (despite current transport routes which completely bypass Russia). Given that Kazatomprom has maintained its FY/2026 production guidance of 28,250 tU (mid-point), the announced EuroChem acid plant production start is very material. In light of the globally constrained sulfuric acid production environment, it is believed that half of EuroChem's acid production will go to Kazatomprom, specifically earmarked for uranium production.