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Thursday, Jul 25, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Alternative Energy

New uranium-backed token provides innovative way to own commodity

The token is meant to address increasing demand by streamlining uranium’s price exposure for individuals

Uranium 238 token graphic
Via Sanmiguel Capital Investment Ltd.

Investors seeking to pad their portfolio with uranium, a difficult to acquire commodity, may just be in luck.

Bahamas-based Sanmiguel Capital Investment Ltd announced the arrival of Uranium308 ($U), the first token to be physically-backed by uranium on Thursday.

The primary objective of the token is to address the increasing demand by streamlining uranium’s price exposure for individuals. It also offers a clear-cut pricing mechanism and a blockchain-verifiable trace of uranium’s journey from the mine to the plant.

Uranium3o8 has become a reality due to the support of Madison Metals Inc (CSE: GREN) (OTCQB: MMTLF) , a mining company with decades of expertise in resource extraction. Underpinning each $U token is a tangible commitment involving one pound of uranium secured through a forward sales arrangement solidified between Madison and Sanmiguel Capital Investment.

“Our goal is to democratize ownership of this vitally important resource,” said Ryan Gorman, head of strategy at Uranium3o8.

“Utilities are seeking easier ways to obtain uranium, and individuals are starting to view it as an emerging asset class worth inclusion in their portfolios; and to enable mining firms to better finance operations for extracting previously illiquid resources from the earth.”

In the past, buying uranium for power plants was complicated. It involved negotiations, many logistical challenges and middlemen who added extra costs and uncertainties. This was because there was no straightforward market for uranium.

Read more: Centrus Energy to begin producing high-assay low-enriched uranium at Ohio plant

Read more: University of New Mexico gets US$3M to combat toxic legacy of uranium mining

Uranium is sourced from Madison’s reserves in Namibia

The team behind Uranium3o8 is turning uranium into digital tokens, with each token representing one pound of Uranium 3o8. This uranium needs to be enriched to be used in reactors, but the goal is to create a transparent and available market for this commodity. In the process, they’re making a new type of asset that anyone, including individuals and institutions from around the world, can invest in.

The uranium supporting the $U tokens is sourced directly from Madison’s underground reserves in Namibia, with an initial commitment of 20 million pounds allocated to the project.

Receiving delivery of the physical uranium requires compliance with strict regulations. A person must possess a minimum of 20,000 $U tokens, which signifies 20,000 pounds of uranium, and demonstrate to Madison Metals that they’re eligible under local laws and regulations.

Madison Metals takes care of the actual delivery, following legal requirements. After the delivery is successfully made, the tokens associated with the delivered uranium are removed from circulation. The Uranium3o8 team’s sole responsibility lies in creating and managing the tokens.

Read more: University of New Mexico gets US$3M to combat toxic legacy of uranium mining

Read more: Kazatomprom reports 25% revenue growth YoY to US$1.3B

Buying U308 token grants one fifth of a pound of uranium

Purchasing the U3O8 token grants ownership of 1/5lb of Uranium. The key benefit of this token is its price tracks the uranium market, eliminating the complexities of custody and related requirements. It can be found on the Sushiswap on the Binance Smart Chain decentralized exchanges.

According to United States Federal Reserve economic data, the global spot price for uranium is approximately USD$46 per pound.

Token owners receive a share of trading fees, equivalent to 0.1 per cent of each transaction on the U3O8 token for which they provide liquidity. This share is automatically settled for each transaction on the host blockchain and sent to the U3O8LP owners’ addresses.

The amount of commissions earned from the liquidity pool increases as the pool size grows. These commissions are paid out when U3O8LP tokens are redeemed, along with the investor’s portion of the liquidity pool supply. The calculation for determining an investor’s share of the liquidity provided in the overall U3O8 ecosystem is represented as ‘S = G/GT,’ where:

  • S stands for the token owners’ stake.
  • G represents the amount of U3O8LP tokens held by the owner.
  • GT is the total number of U3O8LP tokens in circulation (excluding those in the Issuer’s wallets).

Additionally, there is a reseller margin, which is calculated as 50 per cent of the total margins within the Uranium Ore Concentrate supply chain, after deducting the direct expenses of the supply chain participants. This margin is paid out on a monthly basis, no later than 15 working days after the end of the month.

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