Uranium Royalty Corp – A pure play on Uranium

A First mover pure-play uranium royalty exposure.

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Uranium Royalty Corp. operates as a pure-play uranium royalty company. It acquires, accumulates, and manages a portfolio of geographically diversified uranium interests. 

With the Uranium gaining acceptance from the public, good levels of the spot price of this commodity and the need of the world to move away from coal production to generate electricity, this company can benefit from the upside potential of the cash flows of the strategic mines without incurring in their operation.

To highlight:

  • First mover pure-play uranium royalty exposure.
  • Royalty portfolio covering array of development projects in key jurisdictions with the right partners.
  • Team with extensive uranium industry experience, knowledge and access.
  • Nuclear energy gaining broader acceptance in a carbon-constrained world.
  • $1.5B for a Strategic Uranium Reserve over 10 years for U.S. domestic uranium and conversion ($75M in Appropriations expected for fiscal 2022).
  • Market Fundamentals continue to improve with a growing deficit between primary production and reactor requirements.

 

Before going into detail about this company, it is important to highlight some of the benefits of nuclear energy that has Uranium as its underlying commodity.

ENERGY DENSITY

Nuclear energy’s incredible efficiency and powerful nature come from uranium’s high energy density.⁠ It is the most energy dense and efficient fuel source. As the image above illustrates, the energy contained in 1 uranium pellet of the size of a coin can be compared to 120 gallons of oil (545lt), a Ton of Coal or 17.000 ft3 of Natural Gas (481 m3). The differences are very considerable.

LOW LAND FOOTPRINT

In addition to being a highly densified material, the second advantage that nuclear energy has lies in the amount of space required compared to other alternatives. In the case of the current most popular renewables such as solar or wind energy, we are talking that the space required is more than 100 times and 450 times of that required by a nuclear plant. Although the prices of photovoltaic cells have fallen significantly in price, at the moment what makes their implementation more expensive compared to nuclear energy is the amount of land that must be purchased. Undoubtedly, nuclear energy is an ideal complement to these two alternatives that have been consolidating in the market.

LOW WASTE

Due to the energy density properties explained above, the amount of waste with this method is relatively low. All the used fuel produced by the u.s nuclear industry in the past 60 years would fit on a football field with a depth of <10 meters.  But at the end of the day, yes, nuclear waste is a dangerous by-product of nuclear power plants, and it takes extreme care and advanced technology to handle it properly. On the other side, as with all technologies, R&D allow a deeper understanding of things and continuous improvement in processes.

MORE ACCEPTANCE

Nuclear power has always been controversial. But as can be seen in the image above, due to the awareness of diversifying the cleanest energies and a greater knowledge of the contribution of nuclear energy, at this time there is a greater acceptance of this type of methodology.

With Bi-Partisan Support for Nuclear Energy and the First Time in 48 years that Democratic Party Platform Supports Nuclear Energy, the outlook seems to be more positive relative to other times. The U.S. Senate has passed a Bipartisan infrastructure bill that provides a $6B nuclear credit program for qualifying nuclear plants with priority given to reactors using uranium produced in the United States. This is fundamental for anyone considering positioning in this sector.

MACRO CONDITIONS

  • Bi-Partisan Support for Nuclear Energy
  • The U.S. has set a goal to reach 100% carbon pollution-free electricity by 2035
  • World’s Largest Nuclear Reactor Fleet Over Reliance on Imports Prompts National Security Concerns – No U.S. Production
  • DOC Amends Russian Suspension Agreement to Limit and Reduce Imports from Russia – up to 75% Compared to Prior RSA
  • Demand for energy will only increase over the next decades
  • Prices for Uranium at a 9 year high starting to make attractive exploration

Risk is at the forefront of every company’s decision-making, especially for mining companies that operate large-scale mines in various jurisdictions. While producing precious metals naturally carries a variety of risks, there is another way to get exposure to precious metals production with much lower risk: royalty companies.

As an investor, you have different vehicles to get exposure to Uranium as an underlying assets. From physical funds, ETFs and operating mines companies, each one of these has some pros and cons in their business model and what they offer to the investor. Here we focus on royalty companies, which provide up-front capital to miners in exchange for royalties on future mine production, providing a steady stream of revenue and precious metal exposure with far less risk attached to the company.

ROYALTY COMPANIES

These companies provide capital in exchange for a royalty or stream on a mine. Along with competitively priced capital for mine developers, the lifetime royalties or streams received in return ensure royalty companies are invested in a mine’s lifelong success. Also, these companies can diversify geographically or inside of a country more easily than they way a miner operating company can do without incurring in elevated administrative or operational costs. It is a relatively more simple business model that can take advantage of the success of a given mine.

URANIUM ROYALTY CORP

UROY (as trader in the Nasdaq), is the first company to apply the successful royalty and streaming business model exclusively to the uranium sector. With C$102M Cash, Securities, and Physical Holdings, the company provides a Strong balance sheet, which positions it to capitalize on accretive uranium royalty and streaming acquisition opportunities.

Through its approximately 4.6% stake in London-listed Yellow Cake plc, UROY (URC in Canada) holds interests in physical uranium, acquired at cyclical lows Large & Diversified Royalty Portfolio.

The portfolio of the company includes interests on 16 development, advanced, permitted and past-producing uranium projects in multiple jurisdictions, including royalties on the world class McArthur River and Cigar Lake mines.

Also, the management has considerable expertise and the board possess decades of uranium industry experience, including senior executive and advisory roles to prominent companies and governments in the sector. All of these allows Uranium Royalty Corp to be well suited to provide capital to the uranium sector in exchange of strategic alliances.

Despite having a global diversified portfolio, one important strategic partnership is through its approximately 4.6% stake in London-listed Yellow Cake plc where UROY holds interests in physical uranium, acquired at cyclical lows.

UROY (URC) has the option to acquire up to US$31.25M (US$2.5M – US$10M per year) of uranium between Jan 2019 – Jan 2028. Also, the company has an option to participate in any and all future uranium royalty and stream transactions Yellow Cake pursues on a 50:50 basis. UROY and Yellow Cake also plan to collaborate on future opportunities involving physical uranium. Finally, in the event URC exceeds 10% ownership, URC has the right to nominate one director to the Yellow Cake Board, currently have observer rights.

To date UROY’s strategy has been primarily focused on acquiring existing royalties and it is expected that the next wave of acquisitions are focus on new royalties, streams, additional physical uranium, and other uranium interests.

Being UROY the the First and Only Pure Play Uranium Royalty Company, the company well positioned for every gain in the underlying prices for this commodity or in the scenario that the Bi-partisan acceptance of nuclear is taken into account for the path into a diversified zero-carbon future.

 

This post was conducted on behalf of Uranium Royalty Corp, and was funded by Gold Standard Media LLC and/or affiliates. For our full disclaimer, please visit

https://www.goldstandardir.com/uranium-royalty-disclaimer-125/

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