'We saw a fundamental supply-demand imbalance' - John Ciampaglia on Sprott Physical Uranium Trust
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(Kitco News) - The Sprott Physical Uranium Trust has exceeded the company's "wildest expectations," said John Ciampaglia, CEO of Sprott Asset Management.
Ciampaglia was interviewed by Kitco correspondent Paul Harris in February at the BMO Global Metals, Mining & Critical Minerals Conference.
According to the fund's fact sheet, the Sprott Physical Uranium Trust invests and holds uranium in the form of U3O8. Sprott says that their trust is the world's largest physical uranium fund. The fund was kicked off in July of 2021.
"We originally got interested in the sector because we just saw a fundamental supply-demand imbalance," said Ciampaglia.
He noted that the industry went through a pretty difficult bear market that lasted from 2011 to the end of 2019.
"Over that period of time we basically closed a lot of the best mines in the world because they weren't economic," said Ciampaglia.
Starting the fund in 2021 has worked out for Sprott. The net asset value of the fund is up 50%.
"I think it's fair to say that it's exceeded our wildest expectations," said Ciampaglia. "We would have never predicted that there would have been a massive change in sentiment around nuclear energy."
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The wind at uranium's back is partly due to energy security concerns and stepped up efforts to reduce carbon emissions and address climate change.
"Energy systems around the world in the last 12 months have had a chaotic ride as Russia has disrupted a number of major energy markets," said Ciampaglia.
While uranium prices are up, they still need to head higher to help exploration companies. Ciampaglia said that companies need prices in the range of $75 to $100 a pound to make the projects feasible. Without the incentive price, developing new mines will be stalled, and the lead time to get to production is long.