Unlike many Uranium investors, we do not think the uranium macro thesis is sufficiently compelling to justify sustained equity exposure to either uranium or uranium miners. This is primarily because our research indicates that commodity prices never explain more than about 50% of a natural resource producer’s equity price, albeit in any given year it might explain 100%, but through cycle it is closer to 50%, as such a commodity bet via equity tends to be sloppy idea expression. Uranium’s headline story, which everyone knows, is a supply/demand imbalance story, essentially a price appreciation story, and one with no predictable timeline.

That story is insufficient; we demand a fundamental company thesis before allocating capital. If that situation aligns with a favorable macroeconomic backdrop for the commodity, as in the case of uranium currently, all the better; if not, so be it. The purpose of maintaining this perspective is to avoid allocating our investors’ capital to investments that, while appealing at a theoretical level, are challenging because the underlying thesis lacks a catalyst on a predictable timeline that will directly impact the company whose equity we are invested in. This approach means we have avoided investing in uranium miners except for one there is a company level opportunity, and in fact, made our only money in uranium in the last decade during a period when uranium prices were only up 20%. We were invested in Kazatomprom from January 2019 to September 2021, generating a 240% return, including dividends.

We have waited and watched, looking for a new opportunity since our Kazatomprom exit. We believe Global Atomic (TSX: GLO) is that opportunity.

GLO embodies the dual narrative that we believe is ideal for a mining investment: first a corporate narrative that is equal parts political risk, execution risk, and financing risk, all wrapped up in a bombed-out equity the result of the market improperly discounting the complex risk profile and second a desirable but by no means necessary, macro thesis. Within the context of uranium, GLO offers the opportunity for company-specific alpha over a 3-5 year horizon, with leverage to uranium’s ongoing upcycle (commodity beta), and return potential of between 130% and 255%.

GLO is also an interesting case study of the new emerging political-economic order, which is changing the nature of the relationship between corporate entities and governments. Regardless of the market, every investor must understand the changing nature of government-corporate relations. Geopolitical shifts currently underway mean states will be flexible with the administration/regulation of corporations when and where they see mutual benefit, national value, and strategic alignment; otherwise, watch out. This nuanced stance is likely to define Niger’s approach to foreign investment for the foreseeable future, and those of many other governments around the world.

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