The Month in U Inventory: SPUT Discount at a 15-Month High as Inventory Grows

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Given very rangebound trade during the month of July, the spot uranium price ended the month +1.5% higher, settling at $86.50 per lb (Numerco). The spot price was tightly rangebound between $84.88-$86.50 per lb during the period while the long term price reached $94 per lb, representing an increase of nearly +10% YTD. Term pricing has been supported by stronger year on year 1H/2026 contracting (32.5M lbs vs 27.0M lbs). The Sprott Physical Uranium Trust (U-U, U.UN) added 250,000 lbs of uranium to inventory during the month, thus bringing its total in inventory to just under 81.7M 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).

Earlier in July, Australia finalized a uranium export deal with India. The recently signed deal finalizes a long delayed civil nuclear pact initially signed in 2014. The now finalized administrative arrangement allows for Australian uranium to be exported to India at a commercial scale. At this point, a framework mechanism has been agreed upon by both parties paving the way for commercial agreements to be signed by private sector players from both countries. India has ambitious plans to install 100 gigawatts of nuclear power by 2047. Recall that this past March, Canada's Cameco (CCO, CCJ) entered a long-term agreement to supply uranium ore concentrate to India's Department of Atomic Energy (DAE), for use in the country's fleet of nuclear reactors. The agreement will see Cameco supply nearly 22M lbs of uranium ore concentrate (U3O8) to the DAE between 2027-2035 on market-related price terms, with a total contract value estimated at about $1.9B (or C$2.6B).

Sticking with Cameco, last week the company reported its Q2/2026 results which were highlighted by adjusted EBITDA of C$391M. The figure was below expectations as weaker results from the uranium and the fuel services divisions were somewhat offset by stronger contributions by Westinghouse. Headwinds during the quarter included higher uranium cost of sales (likely from higher market purchases and production disruptions) as well as lower contributions from Inkai. That said, attributable uranium production amounted to 3.9M lbs with 2.3M lbs from McArthur River and 1.6M lbs from Cigar Lake.

Denison Mines (DML, DNN) earlier in the month announced that it has commenced site preparation and infrastructure construction at its flagship Phoenix ISR uranium mine, situated in Saskatchewan's Athabasca Basin in Canada. The Phoenix asset is engineered to extract 56.7M lbs of U3O8 over a 10-year lifespan, with commercial production targeted for mid-2028.

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

The Iran war compounded by the recent AI driven market downturn has reversed earlier P/NAV premium valuations (seen earlier this year) to steep discounts with the Trust reaching a -12.3% discount to end the month of July. Given that the spot uranium price had a slight gain on the month, the discount has widened considerably from just one month ago. 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. The last time the discount was this pronounced was in May, 2025. Over the month of July, the Trust’s uranium inventory increased from 81.447M lbs to 81.697M lbs (+250,000 lbs) as the total number of units outstanding accordingly was maintained at 344.156M. The current 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 -9.0% to the current -12.3% discount with the Trust now trading at a 0.88x P/NAVPU relative to its intrinsic value of $29.11. Note that following a slight valuation premium in September 2023, the valuation discount has largely been maintained, apart from a brief period this January. The current -12.3% discount ranks near the -15.0% discount last seen in February 2023. Note that a premium of +9% was achieved before the 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 -12.3% discount to NAVPU is relative to +26% premium in September 2021 and -18.1% discount from July 2022. YTD shares in U.UN have declined by -4.8%

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

Valuation: Given the most recent spot U3O8 quote at $86.50 per lb (or £64.01 per lb), YCA is trading at 0.87x P/NAVPU, or at a -13.4% discount given the current 1.0x NAVPU intrinsic value of £633.10. 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 -7.5%. 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). Kazatomprom has maintained its FY/2026 production guidance of 28,250 tU (mid-point).