Uranium Participation to be bought by Sprott

Uranium Participation Corp. [U-TSX] said Wednesday April 28 that it has signed an agreement with Sprott Asset Management LP, a unit of Sprott Inc. [SII-TSX]. Under the deal, UPC shareholders will become unitholders of the Sprott Physical Uranium Trust, a newly formed entity to be managed by Sprott Asset Management.

UPC shares advanced on the news, rising 3.8% or 19 cents to $5.18 on volume of 232,620. The shares are trading in a 52-week range of $5.83 and $3.93.

UPC is the world’s largest publicly traded investment vehicle, providing investors with an opportunity to gain exposure to the price of uranium, outside of a traditional mining company, through holdings of physical uranium in the form of uranium oxide in concentrates (U₃O₈) and uranium hexafluoride (UF₆).

At the end of March 2021, UPC reported holding 16.3 million pounds of U₃O₈ and 300,000 KgU as UF₆, with a then market value of $665 million.

“Sprott Asset Management currently manages four physical commodity funds with approximately US$12 billion in assets under management,” said John Ciampaglia, CEO of Sprott Asset Management. “We believe our global brand, fund marketing experience, and client base of more than 200,000 investors will improve trading liquidity and grow UPC’s asset base during what we believe is a bull market for physical uranium.”

“All current Sprott Physical Trusts are listed on both the Toronto Stock Exchange and the NYSE Arca and, upon completion of this transaction, one of our primary objectives is to seek a dual listing for the Trust, in order to increase its profile with U.S. and international investors. We are pleased to announce that WMC Energy will act as technical advisor to assist us in the management of the trust,” Ciampaglia said.

Under the plan of arrangement, each UPC common share will be exchanged for one unit of the newly-formed Trust, or at the election of UPC shareholders that are Canadian residents for tax purposes, one exchangeable share of a Canadian subsidiary of the Trust, which will be exchangeable into one unit of the Trust. UPC will become a wholly-owned subsidiary of the Trust.

The Trust will be managed by Sprott Asset Management and WMC Energy, a global commodities merchant with significant experience in the nuclear fuel cycle, will advise and assist with all matters involving physical uranium.

Denison Mines Corp. [DML-TSX; DNN-NYSE American] said Wednesday that as a result of the agreement between UPC and Sprott, a management services agreement between Denison and UPC will be terminated, resulting in Denison receiving $5.3 million.