Nuclear Comeback
The need for electricity is constantly growing, driven by the proliferation of things like AI data centers and changes in our consumption, such as the electrification of transportation (EVs), HVAC solutions (heat pumps), and more—many of which are meant to fight carbon emissions.
While renewables are helping, they are not enough yet, largely because their production is intermittent, and utility-scale energy storage is not mature enough yet to compensate.
This has triggered a renaissance of nuclear power, which is the only other scalable low-carbon energy source. It also has the advantage of producing power very predictably, no matter the weather conditions. This is especially true with fourth-generation nuclear power plants and SMRs (Small Modular Reactors), which promise a better safety profile.
The rebound in enthusiasm for nuclear energy is triggering not only a boost in innovative designs and new companies pushing the boundary of how efficient and safe nuclear power plants can be. It is also creating the conditions for an explosion in uranium demand.
Uranium Becoming A “Hot” Commodity
Since the end of the Cold War, uranium has been a rather uninteresting commodity. This is because, with the end of the Soviet Union, a large portion of both the Eastern and Western nuclear arsenals of tens of thousands of bombs were dismantled, creating a parallel source of uranium besides the freshly mined one.
It has now been depleted, just when China is building its own nuclear arsenal, and tensions between the West and Russia & Iran are reaching a boiling point. It suddenly makes uranium a strategic resource again.
The US banned the import of Russian uranium in May 2024 (but authorized temporary exemptions), Niger (the world’s 7th largest producer) revoked the license of a major uranium mine belonging to the French company Orano after a pro-Russian coup in the country, and in November 2024, Russia announced it would stop exporting uranium to the USA entirely.
This why we published the guide “Investing In Uranium – Powering A Zero Carbon Future“, showing all the way to get exposure to this sector, as well as a dedicated article on the West’s largest uranium miner, Cameco.
Financializing Uranium
Uranium Funds
The renewal in uranium importance for energy policy, strategic security, and economic importance for entire countries like Canada has not been missed by finance professionals. They created dedicated investment funds holding physical uranium in storage to speculate on rising uranium prices.
The largest is the Sprott Physical Uranium Trust (SRUUF -1.03%), holding 66.2 million pounds of uranium. It has rather low fees, with a Management Expense Ratio of 0.60%.
Another large physical uranium fund is Yellow Cake, traded in London under the ticker YCA.L, whose name comes from the low-grade uranium ore used to create nuclear fuel. Total operation costs are aimed so to stay below 1%. Yellow Cake has a long-term partnership with Kazatomprom (the National Kazakh uranium miner) to provide it with uranium. Storage is done in facilities in Canada (Cameco) and France (Orano).
Zuri Invest is a Swiss asset management firm that created the Uranium Actively Managed Certificate (AMC). AMCs are accessible to qualified, institutional, and professional investors through their bank, offering costs benefit from a low-cost structure.
Kazatoprom created ANU Energy in 2021, a privately held physical uranium investment fund financed by the Kazakhstan National Bank and sovereign wealth fund.
Uranium Token
A key issue with uranium is how tightly regulated it is, for the obvious reasons of its potential in making nuclear bombs and the dangers of the material in itself.
This means that uranium is a rather complicated commodity to trade, and most of the physical uranium funds rely on mining companies or uranium refiners to hold the inventory for them.
The limited pool of buyers also creates a very opaque market. Utility companies operating nuclear power plants often contract uranium fuel directly from the miners or refiners through private contracts at undisclosed prices. As such, the “spot” price is rarely representative of the real transactions.
In the past few years, this has severely harmed price discovery and made any speculation on uranium prices rather complex.
“The bidding for this contract [private negotiations] can last days, weeks or even months, and is subject to inconsistent, objective pricing based on a number of opaque factors. With $U, the price the token trades at is how much an institution pays per ounce of uranium.”
Ryan Gorman – Head of strategy at Uranium3o8.
Luckily, technology is not only progressing in nuclear power but also in available finance tools, with blockchain tokens a radical revolution, as illustrated by Bitcoin passing for the first time the $100,000 threshold bar.
In order to create more transparency and liquidity, the publicly-listed Canadian exploration and development mining company Madison Metals has created the Uranium3o8 tokens.
Each Uranium3o8 token from the 20 million total supply directly corresponds to one pound of third-party verified and audited uranium assets, 1:1.
The idea is that this will create a much more visible and easy-to-monitor market for uranium transactions.
“The project has already received interest for up to $10m of physical settlement order from a compliant and licensed uranium broker, with delivery to a compliant, licensed enricher in Europe.”
Duane Parnham – Madison Metals CEO
This is not the first time commodities are getting “tokenized”. For example, Tether’s platform Hadron is used to trade oil barrels and to invest in agriculture commodities through Agrotoken with Adecoagro. Or the gold refinery SEMPSA JP offering gold-backed tokens.
In each case, the promise of quasi-instant settlement, the immutability of the blockchain ledger, and a lower administrative and IT burden make for an attractive option to replace outdated commodity trading platforms.
Asset management firm 21.co forecasted that the market for tokenized assets could mushroom to $10 trillion by the end of the decade.
How It Works
The token’s link to its underlying asset is structured as a forward sales offtake agreement. So, the uranium backing is based on some uranium already extracted and purified, with the majority still in the ground.
So the token’s uranium backing will come from Madison Metals’ Namibian mines, which are not in production yet and its partnerships with other industry players.
No Easy Nuclear Deliveries
Of course, with nuclear, safety protocols need to be a little more strict than with soybean or gold bars. Buyers of the token must still pass a “strict compliance protocol” managed by Madison Metals.
Demanding physical delivery of the uranium fuel is also something possible but requires even further scrutiny.
There is also a minimum volume for such delivery of 20,000 U tokens, limiting the option to serious actors like utility companies or nuclear startups, which in any case already have the proper authorization to handle uranium.
Overall, this is rather positive, as a uranium token less regulated than that would likely come in the cross-hair of not only financial regulators, but also environmental agencies and homeland security rather quickly.
Madison Metals
Madison Metals Inc. (MMTLF -1.02%)
Meanwhile, the world of uranium mining is dominated by a few giants like Kazakh Kazatomprom and Canadian Cameco (CCJ +2.19%), there are plenty of smaller companies looking to capitalize on undeveloped uranium deposits, or so-called “junior miners”.
The Madison Metals mine project in Namibia called Khan (Madison West) and Cobra (Madison North) is located close to the Rössing Uranium Mine, producing uranium since 1976 and currently owned by China National Uranium Corporation Limited after sale of Rio Tinto 68.2% interest in 2019.
Source: Madison Metals
It is worth remarking that Namibia is the 2nd largest uranium-producing country globally.
This indicates that Madison’s uranium deposits are likely of high quality as well, confirming the measured high-grade uranium mineralization of up to 8.47% U3O8 at the surface. Six drillholes have since confirmed the presence of uranium mineralization in viable quantities below ground as well.
Source: Madison Metals
The technical team is experienced in Namibia, having worked there before for the French national nuclear company Areva.
Recently, Madison Metals seems to be aiming to expand in strategic minerals in general, with the acquisition of one of Canada’s largest undeveloped antinomy projects in Ontario’s Hemlo gold camp.
Antimony has recently tripled in price following an embargo of antimony exports by China, due to its dual use in military technology, in retaliation for similar sanctions on China’s chip industry. You can learn more about antimony and its investing potential in our report “Chinese Restrictions on Antimony Exports Highlight The Strategic Importance of this Metalloid”.
“Expanding our portfolio to include this high-impact, high-grade project complements our existing uranium assets and positions us as a first mover in the space.”
Duane Parnham – Madison Metals CEO
With an excellent geological profile and new projects in antimony, Madison Metals is well positioned to benefit from a durable rise in uranium and antimony prices, and even actively taking a role in improving uranium pricing practices with the Uranium3o8 token.
The blockchain token could also help bring the spotlight on the company, as other uranium juniors like NexGen (NXE +1.02%) or Denison Mines (DNN +4%) are more often discussed by investors.
However, one thing investors will need to be aware of is that Madison Metals’ stock price performance has been relatively poor so far. This is partly due to the expensive costs of developing a new mine and decreasing cash assets.
This is not an uncommon issue for junior miners and can lead to losses for their shareholders. So caution is advised for any investors who are inexperienced in the sector.
