"We think an ATM would be a cost effective way to raise capital on a smaller, yet more frequent basis. ‘A market will not develop and attract new participants unless the participants understand the marketplace and pricing'Īn ATM mechanism would allow SPUT to continuously raise funds without telegraphing a future uranium purchase, as has happened with some of the bought deal financings undertaken by uranium juniors. "We find investors in precious metals are often interested in uranium and so we hope to similarly bring this new uranium trust to our global client base. I am not suggesting uranium is the same size market, but it illustrates the power of using ATM's when an investment theme comes into favour," said Ciampaglia. "We have been able to raise over $4 billion in our precious metals funds with ATM offerings over the past 18 months.
Sprott has successfully harnessed the at-the-market (ATM) financing mechanism in its other currently listed commodity ETFs as a cost effective way to raise capital to meet demand in the marketplace in real time. This is absolutely critical as a market will not develop and attract new participants unless the participants understand the marketplace and pricing," said Ciampaglia.Ĭiampaglia is loathe to pronounce on what the impact the entrance of SPUT will have on uranium pricing, although he notes that it has increased about $2/lb since the company announced the UPC deal earlier this year, with the caveat that uranium companies have also been buying in the spot market. "We hope to enhance price discovery in the uranium market and this vehicle has the potential to act as a de-facto pricing reference for industry participants and investors. Ciampaglia believes this step is necessary for U 3O 8 to become of greater interest to the investment community. Sprott's SPUT is expected to provide a more constant source of buying demand and, with its aim to provide daily reporting rather than the monthly reporting UPC maintained, it hopes to provide greater price transparency to the uranium market. Recent months have seen uranium juniors raise funds to purchase physical uranium at low market prices for varied motives. Industry commentators have suggested that Sprott's market participation has the potential to transform uranium from a sleepy commodity whose consumers dip into an opaque spot market to supplement their long-term contracts, to a more liquid, transparent and easily investable sector for investors who want exposure to a commodity expected to face increasing demand.
WMC, which includes former employees from Canadian uranium producer Cameco, who will be a key source of advice as the market expects to enter a new cycle of long-term contracting by nuclear utilities. Sprott is working with WMC Energy as technical advisor to support management of the SPUT. "Exchange-traded investment fund structures have become one of the most popular in the world, with over $5 trillion in assets" said Ciampaglia.
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