The Sprott Physical Uranium Trust (formerly the Uranium Participation Corporation; ) is a Toronto-based

holding company A holding company is a company whose primary business is holding a controlling interest in the Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share ...

investing nearly all of its assets in

uranium Uranium is a chemical element; it has chemical symbol, symbol U and atomic number 92. It is a silvery-grey metal in the actinide series of the periodic table. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons. Ura ...

, both in the form of

uranium oxide Uranium oxide is an oxide of the element uranium. The metal uranium forms several oxides: * Uranium dioxide or uranium(IV) oxide (UO2, the mineral uraninite or pitchblende) * Diuranium pentoxide or uranium(V) oxide (U2O5) * Uranium trioxide or ...

() or

uranium hexafluoride Uranium hexafluoride, sometimes called hex, is the inorganic compound with the formula . Uranium hexafluoride is a volatile, white solid that is used in enriching uranium for nuclear reactors and nuclear weapons. Preparation Uranium dioxide is co ...

(), with the primary investment objective of achieving

capital appreciation Capital appreciation is an increase in the price or value of assets. It may refer to appreciation of company stocks or bonds held by an investor, an increase in land valuation, or other upward revaluation of fixed assets. Capital appreciation ...

in the value of its uranium holdings.

Structure

The common shares represent an indirect interest in physical uranium owned by the Sprott Physical Uranium Trust. The mission of the corporation is to provide an investment alternative for investors interested in holding uranium. The structure of the corporation allows it to be purely a holding company play on uranium, with no operational details in its consolidated annual filings. Sprott Physical Uranium Trust was incorporated as the Uranium Participation Corporation on March 15, 2005. At least 85% of net proceeds of any equity offering were to be invested in uranium. The Sprott Physical Uranium Trust buys and holds uranium assets and does not actively speculate on short-term prices. UPC was set up by Eric Sprott.FP: "Anatomy of a successful bought deal" (Critchley)
/ref> The Sprott Physical Uranium Trust held a significant stake in Uranium One before the latter was purchased outright by ARMZ Uranium Holding in January 2013 for $1.3 billion. The uranium holdings are physically stored in duly licensed facilities located in Canada, France, and the United States. In July 2021, the Canada-based commodities investment manager Sprott took over the Uranium Participation Corporation. It was renamed to the Sprott Physical Uranium Trust.

Relationship with Denison Mines

Because Uranium Participation does not have a license to purchase and hold uranium directly, the fund buys and holds the commodity through

Denison Mines Denison Mines Corp. is a Canadian uranium exploration, development, and production company. Founded by Stephen B. Roman, and best known for its uranium mining in Blind River and Elliot Lake, it later diversified into coal, potash, and other pro ...

, which it controls for this purpose. Denison Mines is the manager of the corporation and does not have any ownership interest in UPC. Denison and UPC occupy the same suite 402 is a convenience designed to satisfy sleepy government regulators.

Luxembourg subsidiary UPCL

In March 2013, the Cyprus government reached an agreement with the

Eurogroup The Eurogroup is the recognised collective term for the informal meetings of the finance ministers of the eurozone—those member states of the European Union (EU) which have adopted the euro as their official currency. The group has 20 members ...

to receive a €10 billion loan to refinance its public debt and achieve its macroeconomic targets. As a condition of receiving the Eurogroup loan,

Cyprus Cyprus (), officially the Republic of Cyprus, is an island country in the eastern Mediterranean Sea. Situated in West Asia, its cultural identity and geopolitical orientation are overwhelmingly Southeast European. Cyprus is the List of isl ...

’s two major banks, Laiki Bank and

Bank of Cyprus The Bank of Cyprus (BoC; ; ) is a Cypriot financial services company established in 1899 with its headquarters in Strovolos. Bank of Cyprus has been designated as a Significant Institution since the entry into force of European Banking Supervisio ...

were restructured to restore their capital requirements. Uninsured deposits greater than €100,000 were subject to conversions into Bank of Cyprus shares. On February 28, 2013, UPC held approximately €13,000 in Cyprus bank accounts therefore these funds should be fully insured and are not anticipated to be impacted by the bank restructurings. UPC's uranium held by Uranium Participation Cyprus Limited’s

Luxembourg Luxembourg, officially the Grand Duchy of Luxembourg, is a landlocked country in Western Europe. It is bordered by Belgium to the west and north, Germany to the east, and France on the south. Its capital and most populous city, Luxembour ...

branch is also not impacted by the Eurogroup bailout of Cyprus. The substantively enacted future tax rates, in UPC’s various jurisdictions, range from 3.0% to 26.5%. In fiscal 2013, the Corporation incurred current tax recoveries of $13,000 and future tax recoveries of $3,021,000. The combined tax recoveries for the year of $3,034,000 reflected an effective tax rate of approximately 3.1% compared to tax recoveries of $18,997,000 and an effective tax rate of 7.8% in the prior year. The decline in the effective tax rate is primarily a result of an increase in the proportion of deductible temporary differences arising in the year that have not been benefited as deferred tax assets or used to offset tax liabilities, and an increase in the proportion of inventory held by the Luxembourg branch of UPC’s wholly owned subsidiary, Uranium Participation Cyprus Limited, which is taxed at the lowest rate within the Corporation.

References

External links

Official websiteUranium fund activity suggests spot price bottom
{{Webarchive, url=https://web.archive.org/web/20110706145911/http://www.u3o8.biz/s/MarketCommentary.asp?ReportID=289174&_Type=Market-Commentary&_Title=Uranium-fund-activity-suggests-spot-price-bottom , date=2011-07-06 Uranium mining companies of Canada Companies listed on the Toronto Stock Exchange Denison Mines

Structure

Relationship with Denison Mines

Luxembourg subsidiary UPCL

See also

References

External links