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Uranium Stocks Soar After the Launch of Another Physical Uranium Fund by the World’s Largest Producer

The rising commodities tide means that uranium…

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This article was originally published by Zero Hedge

Uranium Stocks Soar After World’s Largest Producer Announces Launch Of Physical Uranium Fund

The rising commodities tide means that uranium prices have also been creeping higher, and after sliding in late September after surging above $50/lb, U3O8 is now back in the upper-$40…

…. with Numerco quoting the bid/ask of 45/47 this morning….

… a number which however could rise sharply higher as a result of the day’s big news which has sent the uranium sector sharply higher with names such as CCJ up over 6% on the day.

We are referring to the surprise news out of Kazakhstan, where the world’s largest producer and seller of natural uranium, Kazatomprom, responsible for providing some 40% of global primary uranium, today announced that it has taken a page out of the Sprott Physical Uranium Trust (which back in September we dubbed “a bitcoin-like opportunity in uranium“), will participate in a physical uranium fund, ANU Energy OEIC Ltd. (“ANU Energy” or “the Fund”), established on the Astana International Financial Centre (AIFC).

According to the press release, the Fund will hold physical uranium as a long-term investment with its initial purchases financed through the founders’ round investment totaling US$50 million, sourced from Kazatomprom at 48.5%, National Investment Corporation of the National Bank of Kazakhstan (NIC) at 48.5%, and Genchi Global Limited (the Fund Manager) at 3%.  

Similar to Sprott, which massively upsized its Physical Uranium fund just days after launch, Kazatomprom said that “once the Fund is operating, a second stage of development is expected to be carried out through an additional public or private offering, with the timing and details to be determined by market conditions.” At the second stage, the Fund is expected to raise capital of up to US$500 million from institutional and/or private investors, with the proceeds to be used for additional uranium purchases.

“The Fund will leverage the combination of Kazatomprom’s expertise in the uranium market and NIC’s proven track record, with the AIFC offering investors direct exposure to the attractive opportunity presented by the long-term fundamentals of the uranium market and nuclear industry,” said Mazhit Sharipov, Chief Executive Officer of Kazatomprom. “The establishment of ANU Energy is a project that has been in development for almost four years as part of Kazatomprom’s broader value-focused strategy, and the Fund will be operating in an environment of tightening supply, driving positive benefits for its stakeholders.”

In other words, there will now be another price indiscriminate buyer of all the spare uranium in the market in addition to Sprott, an outcome which will have clearly favorable consequences for its price.

For those who missed it, here is a quick detour from the original bull thesis on the Sprott Physical Uranium Trust:

Sprott Physical Uranium Trust commonly known as SPUT (SRUUF– Canada), is the entity that has upended the uranium market. Since launching its ATM 13 days ago, it has acquired 2.7 million pounds of uranium. This is an average daily rate in excess of 200,000 pounds or roughly a third of global production on an annual basis. If GBTC is the roadmap to follow, as the price of uranium begins to appreciate, the inflows into the trust should accelerate. Interestingly, there are plenty of other entities also purchasing physical uranium, uranium that utilities were counting on for their future needs. The squeeze is on.

As expected, the utilities are blissfully unaware. Surprised?? I’m not. Utilities are quasi-governmental agencies, managed by the types of fukwits who’d work at your local DMV, except they enjoy stock options. The fact that they’ve ignored the coming squeeze shouldn’t be surprising. Inevitably, they’ll demand rate increases to buy back this uranium–it’s not their money anyway. This is your bid at some point in the future.

Commodities are determined by supply and demand. Uranium is a small market at roughly $6.3 billion in annual consumption (180 million pounds at $35/lb). SPUT has raised approximately $85 million in the 13 days since the ATM went live. It’s hoovering up supply and is already struggling to procure pounds, as shown by their increasing cash balance—cash that they’re legally forced to spend. Something is going to give here, and I suspect it’s the price of uranium.

Of course, besides pure market dynamics, there is the greater shift observed in recent days, which has seen many nations pitch nuclear power as a mandatory “green” source of energy at a time when reliance on nat gas and coal has led to energy hyperinflation across many regions, something the Kazakhstan potassium uranium energy giant observed: “the accelerated global transition towards clean energy, including nuclear power with its inherent climate and low-carbon benefits, provides a strong investment thesis for the uranium industry.”

However, as the national operator adds, “despite growing interest from a number of international- and regional-focused investors over the past several years, opportunities to gain exposure to the commodity have been limited to two uranium funds – one trading publicly on the Toronto Stock Exchange in Canada and a second listed on the AIM Exchange (part of the London Stock Exchange) in London.”

As such, ANU Energy, being established through the AIFC in Kazakhstan, “will be the first uranium fund providing potential direct access for emerging market investors of various categories, particularly those focused on ESG and clean energy, as well as commodity funds, sovereign wealth funds and state-owned enterprises.”

In other words, expect even less uranium in the open market as various physical Trust scramble to buy what little supply is available. Of course, more supply will come eventually… at a much higher price, something which is not lost on the Uranium sector which is making new decade highs this morning.

Then again, with producers now having the option of selling exclusively to trusts instead of in the spot market – with buying limited by only how much capital said Trusts, be it Sprott of Kazatomprom, have access to – the probability of uranium prices almost literally exploding to record highs can no longer be discounted, creating the potential for an unprecedented meltup in the uranium sector.

Tyler Durden Mon, 10/18/2021 – 10:20

Author: Tyler Durden

Energy & Critical Metals

3 Rare Earth Stocks on Watch as Talk of a Chinese Mega-Merger Grows

At a time when both the global supply chain crisis and U.S.-China relations hang hotly in the balance, China has announced an important decision that threatens…

At a time when both the global supply chain crisis and U.S.-China relations hang hotly in the balance, China has announced an important decision that threatens to affect both matters significantly. Today, the Wall Street Journal reports that China is planning to create a new rare earth mining company that will be owned by the state. While there’s no question that the forming of such a company will directly affect rare earth stocks, so far the reactions from the sector have been mixed.

Source: LuYago / Shutterstock.com

What’s Happening With Rare Earth Stocks

The rare earth sector has been an interesting one to follow this year, particularly as the electric vehicle (EV) boom has highlighted a new market for its companies. The news out of China today hasn’t done much to affect Nevada-based MP Materials (NYSE:MP), a company that has seen more than its fair share of turbulence this past year but has remained overall in the green for most of it. As of this writing, MP stock is up 2.16% for the day, although it has declined slightly from the peak it saw this morning. While it’s down more than 6% for the week, the stock is in the green for the month by more than 2%.

In a state not too far away, though, things aren’t looking so rosy. Texas Mineral Resources Corp (OTCMKTS: TMRC) has seen its shares fall by more than 4% today, demonstrating a fairly turbulent pattern. Despite being up by more than 12% for the week, TMC is down for the month by almost 19%.

Many miles away in Australia, a similar company is experience similar patterns. Lynas Rare Earths (OTCMKTS:LYSCF) is down by more than 2% for the day with losses for the week just shy of that figure. For the month, though, the small stock has seen shares rise by more than 18%.

Why It Matters

China’s new firm, titled China Rare Earth Group, will be based in the country’s southern province of Jiangxi, an area rich in resources. It will be built through the merging of assets of several prominent state-owned mining firms. According to WSJ, part of the mindset behind this massive industry consolidation is the goal of gaining the clout necessary to “undercut Western efforts to dominate critical technologies.”

For a company like MP Materials, there will very likely be negative implications if the firm is indeed constructed. The company has emphasized that its goals involve helping restore the rare earth supply chain and helping reduce the sector’s heavy dependence on China. The international economic superpower that MP has focused on challenging is about to get considerably stronger and more powerful. That’s bad news for MP and most other rare earth stocks.

While some reports have framed it as a company well-positioned to accomplish an important task, the picture painted for investors hasn’t always been so positive. In October 2021, a report from Grizzly Research staked the claim that the company had issued unattainable projections. While the stock was down during that month, it’s been rising fairly steadily since. Earlier this year, InvestorPlace’s Joseph Nograles touted the upside potential he saw in MP stock as a key component of the emerging EV market.

What It Means

As TRMC and LYSCF trade at much lower levels than MP, it’s hard to gauge just how much they stand to be affected. What is clear, though, is that China is clearly furthering its quest to dominate the section of the global supply chain that concerns strategic metals. The construction of a state-owned giant to help the country gain further control of highly valuable rare earth materials certainly won’t do any favors for the U.S.

This story is certainly worth watching as it unfolds, but this is likely not the time for a bullish play on rare earth stocks.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Author: Samuel O'Brient

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Energy & Critical Metals

Dear NIO Stock Fans, Mark Your Calendars for This Potential Catalyst on Dec. 18

Fans of electric vehicle (EV) stocks are anxiously awaiting Nio Day, which has been confirmed to take place on Dec. 18 in Suzhou, China. Nio (NYSE:NIO)…

Fans of electric vehicle (EV) stocks are anxiously awaiting Nio Day, which has been confirmed to take place on Dec. 18 in Suzhou, China. Nio (NYSE:NIO) is expected to debut at least two new vehicle models and possibly a brand new vehicle brand. During Nio Day 2020, the EV maker unveiled the ET7 sedan to much fanfare. Deliveries for the ET7 sedan are expected to start in 2022 for most countries, although confirmation for this timetable will likely be answered at Nio Day.

Image showing a Nio store with a glowing logo on the front.Source: Andy Feng/Shutterstock.com

Nio also impressed shareholders after releasing its November delivery numbers. The company reported that it had delivered 10,878 vehicles, up nearly 106% year-over-year (YOY). This brings total year deliveries to 80,940 vehicles, up more than 120% YOY. The November numbers were much needed after Nio reported disappointing October deliveries. Those numbers came in lower due to supply-chain issues and chip shortages. InvestorPlace contributor Vandita Jadeja notes that Nio’s expected fourth-quarter deliveries of 23,500 to 25,500 vehicles will be difficult to accomplish.

Without further ado, let’s dive right in to what investors should know about Nio’s most exciting day of the year.

Nio Day: What NIO Stock Investors Should Know

  • Rumors are flying around that one of the new vehicles to be released during Nio Day is the ET5, a mid-sized sedan. The ET5 will reportedly compete with the BMW (OTCMKTS:BMWYY) 3-series and the Audi A4 at a lower price (Audi is owned by Volkswagen (OTCMKTS:VWAGY)).
  • The ET5 will likely be priced below the ET7, which has a base cost of around $69,000.
  • According to a research note from Deutsche Bank, the second mystery EV is expected to be similar to the Toyota (NYSE:TM) Alphard, a luxury multi-purpose vehicle (MPV) that “sold 20,000 units in China last year.” Deutsche’s second guess is a high-performance sports coupe.
  • Nio recently filed a trademark registration for the name EF9, according to ElectricVehicleWeb. This has led many to speculate that the new vehicle will be a convertible version of the EP9.
  • CEO William Li confirmed that Nio plans on adding three new models to the Nio Technology Platform 2.0 in 2022. One of the models will be the new ET7 sedan. The other two are still unknown.
  • Fans of NIO stock are also waiting for an update on overseas delivery times and availability, especially in European countries. The company will likely answer this question at Nio Day.
  • Li confirmed during a Q2 conference call that Nio had assembled a team to work on a new vehicle brand. In regards to the possible new vehicle brand, Li commented, “The relationship between Nio and our new mass-market brand will be like that of Audi-Volkswagen and Lexus-Toyota.”
  • On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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    Energy & Critical Metals

    Nubank IPO: When Does Nubank Go Public? What Is the NU Stock IPO Price Range?

    “Finally, you’re in control of your money,” promises Nubank. The Brazilian-based company is the largest fintech institution in Latin America, but…

    “Finally, you’re in control of your money,” promises Nubank. The Brazilian-based company is the largest fintech institution in Latin America, but its reach expands as far as Berlin, Germany. Operating completely digitally with no physical headquarters, the neobank has a list of investors that includes Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A) investment fund, which took a $500 million position earlier this year. Now, as this year winds to a close, Wall Street is bracing for the Nubank IPO (initial public offering). Indeed, this could be the last in a long line of exciting debuts that investors have seen this year.

    A Nubank sign outside of an office building.Source: Jo Galvao / Shutterstock.com

    What to Know About the NuBank IPO

    There’s plenty that investors should be keeping in mind as markets prepare for the Nubank IPO. Let’s discuss the specifics.

    As of tomorrow, Nubank will begin trading on the New York Stock Exchange under the symbol NU. However, it doesn’t stop there. Additionally, Nubank will be trading on Brazil’s San Paolo Exchange. In late November, the company updated the price range to between $8 and $9 per share. Assuming that the price stays at $9, the IPO will raise roughly $2,859,497,856. It’s worth nothing, though, that this price range is a downgrade from where it previously stood, between $10 and $11.

    InvestorPlace’s William White recently reported that the company claims to have a commitment from “certain investors to purchase an aggregate amount of at least $1.3 billion of Class A shares in the IPO.” While the term “certain investors” carries ominous undertones, it may just be an unconventional choice of wording. The offering will also include a 30-day option from underwriters that will allow for the  purchase an additional 28,571,429 shares set at the IPO price point. As of now, the company is valued at slightly over $40 billion, also a downgrade from its original valuation of $55 billion.

    Founded in 2013, Nubank was built by three entrepreneurs, David Velez of Colombia, Edward Wible of the United States and Cristina Junqueira of Brazil.

    What Can We Expect?

    As of Sept. 30, the neobank reported an active user count that totaled 48 million. As the company operates primarily in Latin America, where many lean toward an unbanked lifestyle, that statistic is impressive.

    That said, the aforementioned decrease in Nubank’s valuation certainly raised some questions — and not without reason. While some have made arguments that it is indicative of a diminishing market or troubling sector, the fact that Warren Buffett maintains his position in the company shouldn’t be discounted.

    It’s also worth noting that this season has brought some highly impressive IPOs, such as electric vehicle (EV) producer Rivian (NASDAQ:RIVN), which rocked Wall Street in the best way possible in its debut. By comparison, most of the IPOs that followed haven’t looked so good. But that certainly doesn’t mean they don’t have the potential to take off.

    The Nubank IPO is happening a time when markets are still reeling in reaction to the omicron variant. Plus, there still may be darker days ahead. However, if that proves to be the case, completely digital banking institutions like Nubank could certainly stand to benefit. Even at the current lowered valuation, its IPO is worth watching.

    On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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