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Trading under the symbol URNMX, the North Shore Global Uranium Mining Index will contain both miners and physical uranium holders.
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As the push for green energy solutions grows, the first US pure-play uranium exchange-traded fund (ETF) is getting ready to launch.
Trading under the symbol URNMX, the North Shore Global Uranium Mining Index will contain both miners and physical uranium holders.
The newly formed ETF will focus largely on the junior miners within the sector.
“The growing demand for nuclear energy will increase demand for uranium. Historically, access to uranium investments was difficult,” notes the ETF prospectus. “The North Shore Global Uranium Mining Index can serve as the basis for gaining exposure to the growth potential for uranium.”
Thirty percent of the ETF’s holdings will be comprised of Canada-listed companies: Cameco (TSX:CCO,NYSE:CCJ), NexGen Energy (TSX:NXE,NYSEAMERICAN:NXE), Denison Mines (TSX:DML,NYSEAMERICAN:DNN) and Fission Uranium (TSXV:FUU).
US-based companies will make up just over 18 percent of the fund — Energy Fuels (TSX:EFR,NYSEAMERICAN:UUUU), Ur-Energy (TSX:URE,NYSEAMERICAN:URG) and Uranium Energy (NYSEAMERICAN:UEC) will be the only domestic uranium miners included in the ETF.
North Shore is aiming to capitalize on what it believes is the bottom of the uranium market. Prices for the energy fuel have decreased 80 percent since hitting US$136 per pound on June 1, 2007.
Currently the U3O8 spot price is US$26, its highest value since February of this year.
With a potential supply deficit on the horizon as no new major mines are opened and long-term contracts expire, uranium prices are poised to climb in the new year.
As the primary fuel for nuclear reactors, demand for U3O8 is slated to increase over the next decade; 56 reactors are currently under construction and another 447 are in various stages of planning.
“As the world’s thirst for clean, emissions-free sources of alternative energy continues to grow, nuclear power is emerging as the means to meet this demand. Nuclear energy can generate large amounts of energy at reasonable prices relative to other forms of alternative energy and emits no greenhouse gases,” states the ETF overview.
While it is the first US-based uranium ETF, the North Shore ETF isn’t the only uranium ETF to be introduced to the market this year.
In May, Horizon ETFs Management launched Canada’s first uranium ETF, called the Horizons Global Uranium Index ETF (TSX:HURA).
Like URNMX, Horizons Global includes some of the sector’s most prominent players, as well as several juniors establishing names for themselves in the industry.
“Global mining ventures can carry significant investment risks. By investing through a diversified ETF like HURA, you can potentially achieve greater stability and risk-mitigation to your uranium-sector exposure,” Nick Piquard, portfolio manager and options strategist at Horizons ETFs, said at the time.
“Our global basket approach to the uranium sector provides access to production happening across the globe — from the world’s largest in Kazakhstan to emerging mining operations in the United States.”
The North Shore ETF is expected to debut sometime before December 4, 2019.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
