The uranium spot price has hovered around US$25 per lb. over the better part of the last year and long-term pricing is at the US$32 per lb. level. The prolonged bear market and weak macro-environment continue to erode investor confidence in the primary uranium producers, which in some cases have been forced to curtail output to trim operating costs and stem losses.
Market stresses on uranium producers have boosted the popularity of investment alternatives in the energy metal space, specifically physical uranium holding companies such as Uranium Participation and Yellow Cake.
These companies offer investors exposure to the physical commodity — uranium oxide concentrates (U3O8) — through their direct purchase of material from primary producers and the holding of it in inventory for future resale. These companies are leveraged to the uranium price without taking on the risks associated with mining the commodity including permitting, resource and reserve development, and operations.
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