The Month in U Inventory: Inventory Additions as Spot Surpasses $80/lb

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The spot uranium price ended the month of September +9.2% higher, settling at $83.00 per lb (Numerco). For context, the spot price has advanced +13.7% YTD and +32.0% from the March 13, 2025 low of the year. That said, the spot price range during the month was between $75.50-$84.00 per lb. Of note was that over the past month, the Trust added just over 3.4M lbs of uranium inventory bringing its total to just over 72.0M lbs. The current inventory figure represents a notable 3.9x increase to the 18.3M lbs held just four years ago when the Trust was launched, post Uranium Participation Corp. acquisition. We also note that the 4.3M units traded yesterday represent a one year+ high, far surpassing the average daily volume of ~1.1M units.

Elsewhere on the corporate front, on September 29, Energy Fuels (UUUU) announced its intention to offer $600M aggregate principal amount of convertible senior 0.75% notes due 2031 (up from an initially planned $550M) in a private placement. Among others (including a capped call option applicable to the aforementioned convertible bonds), the funding will be used for development expenditures at the White Mesa mill, for project financing at the Donald heavy mineral sands and REE project in Australia and for general corporate needs. The notes will be convertible into cash, common shares of Energy Fuels or a combination of both, at Energy Fuels' election. The initial conversion rate is 49.1672 common shares per $1,000 principal amount of notes. This equates to an initial conversion price of approximately $20.34 per common share, which represents a conversion premium of approximately 32.5% to the last reported sale price on the NYSE American on September 30. Note that this offering follows Denison Mines’ (DNN) upsized $345M convertible notes offering (annual coupon of 4.25%) which closed in mid-August.

Elsewhere on the corporate front, as announced in early September, Uranium Energy Corp (UEC) announced ambitious plans to establish the United States Uranium Refining & Conversion Corp. (UR&C), a wholly-owned subsidiary looking to develop a state-of-the-art US uranium refining & conversion facility. Though timing and full details have yet to be disclosed, if successful, the establishment of UR&C will position UEC as the only vertically integrated US company with capabilities for uranium mining, refining, processing and conversion. With UR&C, UEC hopes to establish itself as an all in one solution to provide uranium hexafluoride (UF6), the feedstock needed to produce low enriched uranium (LEU) and high-assay low-enriched uranium (HALEU). Specifically, UEC is aiming to build one of the largest domestic UF6 conversion facilities with a design capacity of approximately 10,000 MtU. This would equate to more than half of the US' current demand per year. Recall that the Trump administration's recent policy initiative calls for a 4x expansion of US nuclear capacity. The goal is to reach 400 Gw by 2050 while also reducing reliance on foreign uranium (and derivative) imports. 

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

Over the month of September, the Trust’s uranium inventory went from 68.6M lbs to 72.0M lbs as the total number of units outstanding accordingly went from 284.8M to 298.8M. This represents a notable 3.9x increase to the 18.3M lbs held just four years ago when the Trust was launched, post Uranium Participation Corp. acquisition.

Valuation: Given current pricing and FX, SPUT's discount to NAV flipped from last months discount to the current +0.7% premium with the Trust now trading at a 1.01x P/NAVPU relative to its intrinsic value of $27.63. Note that following a slight valuation premium in September 2023, the valuation discount has largely been maintained, until the last few days. The current +0.7% premium ranks well above the near -15.0% discount last seen in February 2023. Given our LT $80/lb price objective for the spot and a constant CAD/USD exchange rate, our 0.95x NAVPU valuation of $25.70 (rounded) per unit is being maintained. For further context, the current +0.7% premium 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 +11.9%. For the time being, we are maintaining our $80 per lb LT uranium price deck. 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 $83.00 per lb (or £61.42 per lb), YCA is trading at 0.92x P/NAVPU, or at a -7.8% discount given the current 1.0x NAVPU intrinsic value of £619.74. Though Yellow Cake normally trades at a larger discount to intrinsic value relative to SPUT (justifiably reflecting the smaller size, liquidity and larger perceived delivery risk associated with Kazakh sourced uranium), we feel that the current relative discount to NAV is being heavily influenced between the ever-present Russia/US geopolitical unease reflecting uncertainty over future sanctions on possible uranium supply from Russia and availability from Kazakhstan. Far from wanting to miss out on the action, last week Yellow Cake plc announced a proposed $125M financing for the purchase of 1.33M lbs under the purchase agreement with Kazatomprom. Given our LT $80/lb price objective for the spot and a constant GBP/USD foreign exchange rate, our 0.80x NAVPU valuation of £583 (rounded) is maintained. As per YTD performance, shares of the Yellow Cake (YCA.L) have advanced by +14.2%. 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). Recall that as announced earlier this summer, Kazatomprom reduced its FY/2026 production guidance going from the initially estimated 85M lbs U3O8 (100%) to approximately 77M lbs (100%), the decline largely reflecting adjustments from the Budenovskoye production area. This guidance revision came amid the current environment in which construction and the procurement of the needed production materials (notably sufficient levels of sulfuric acid) remains challenging. Management has stated however that sulfuric acid supplies are expected to be stable for 2026. Though Kazakh production has chronically been subject to sulfuric acid shortages, earlier in May, Kazatomprom announced that it had secured a ~$220M line of credit with the Development Bank of Kazakhstan and Taiqonyr Qyshqyl Zauyty to finance the construction of a 800,000 tonne per year sulfuric acid plant.