Uranium Royalty Corp: Riding the Nuclear Renaissance with Strategic Royalties

The global uranium market is undergoing a seismic shift. With rising demand for nuclear energy to combat climate change and energy insecurity, uranium prices have surged to decade highs, and companies with exposure to high-quality projects are poised to capitalize. Uranium Royalty Corp (NASDAQ: UROY) stands at the forefront of this trend, leveraging its portfolio of strategic royalty streams and partnerships to position itself as a beneficiary of the uranium bull market. Let's dissect its FY2025 results, key projects like Cigar Lake and McClean River, and why now could be a timely entry point for investors.

FY2025: Navigating Short-Term Challenges for Long-Term Gains

Uranium Royalty's FY2025 financial results, released in late July .2025, revealed a net loss of CAD 5.65 million, a stark contrast to the CAD 9.78 million profit in FY2024. Revenue also plummeted to CAD 15.51 million from CAD 42.7 million year-over-year. While these figures may raise eyebrows, they must be contextualized:

1. Royalty Model Lag: Uranium Royalty's revenue is tied to production volumes and uranium prices at partnered mines. The decline reflects lower production at certain projects (e.g., Cigar Lake's 2024 mill issues) and delayed cost recovery thresholds on its key royalties.
2. Strategic Investments: The CAD 22.9 million raised in a February 2024 bought deal financing underscores the company's focus on bolstering liquidity to weather short-term volatility and fund growth initiatives.

The Heart of the Portfolio: Cigar Lake and McClean River

Uranium Royalty's crown jewel is its sliding-scale net profit interest (NPI) royalty on the Cigar Lake/Waterbury project in Saskatchewan, Canada. This royalty, which ranges from 10% to 20% of production (capped at a 3.75% share), is already at its maximum rate due to cumulative production exceeding key thresholds. However, it only begins generating revenue after recovery of significant development costs—a hurdle the company expects to clear as uranium prices rise and Cigar Lake's production ramps up to 18 million pounds/year by 2025.

The McClean Lake mill, which processes Cigar Lake's ore, is another linchpin. With a licensed capacity of 24 million pounds/year and a renewed license until 2031, it ensures efficient processing of high-grade uranium (17.04% U3O8) from Cigar Lake's reserves. The mill's role in converting Cigar Lake's 192.9 million pounds of proven and probable reserves into production positions Uranium Royalty to benefit from a mine life extended to 2036.

Why Uranium's Bull Market Matters Now

The company's fortunes are inextricably linked to uranium's upward trajectory. Spot prices for uranium have climbed from ~$30/lb in early 2023 to over $50/lb in mid-2025, driven by:

• Global Nuclear Expansion: Over 30 new reactors are under construction globally, with China, the U.S., and Europe prioritizing nuclear as a low-carbon baseload energy source.
• Supply Constraints: Mine closures and geopolitical risks (e.g., Russia's dominance in European uranium supply) have tightened the market.
• Depleted Inventories: Utilities are burning through stockpiles, creating urgency to secure long-term supply contracts.

Uranium Royalty's royalty model thrives in this environment. Unlike miners, it avoids operational risks while benefiting directly from rising prices and production volumes. For instance, Cigar Lake's projected 18 million pounds/year at a $50/lb price would generate significant revenue for Uranium Royalty once its cost recovery is complete.

Investment Thesis: A Timely Entry Point

While FY2025's results reflect short-term headwinds, the company's long-term prospects are compelling:

• Scalable Royalties: Cigar Lake's production growth and uranium's structural bull market position royalties to deliver exponential returns.
• Diversified Portfolio: Beyond Canada, Uranium Royalty holds interests in projects across Australia (e.g., Yeelirrie) and Africa (e.g., Langer Heinrich), mitigating geographic risk.
• Valuation: At a trailing P/E of 45.81 (despite losses), the stock appears expensive, but this reflects investor optimism about future earnings. A forward P/E of 45.80 aligns with expectations of stabilization and eventual profit growth.

Risks to Consider

• Production Delays: Cigar Lake's past mill issues and McClean's operational risks could delay cost recovery.
• Price Volatility: A sudden drop in uranium prices (due to oversupply or policy shifts) could stall royalty payouts.
• Regulatory Hurdles: Permitting delays or environmental opposition could impact project timelines.

Conclusion: A Buy for the Nuclear Renaissance

Uranium Royalty Corp is not a company for investors seeking immediate profits. Instead, it's a strategic play on the long-term secular growth of nuclear energy. With its royalty streams positioned to capitalize on rising uranium prices and expanding production, UROY offers asymmetric upside potential.

Investment Recommendation: Buy with a 12–18-month horizon, targeting a price target of $4.00–$5.00/share (a 60%–100% gain from July 2025 lows). Monitor for catalysts like Cigar Lake's production ramp-up, new supply contracts, or regulatory approvals for key projects. This is a stock for investors willing to bet on the energy transition—and the companies set to fuel it.

Data as of July 2025. Always conduct your own research or consult a financial advisor before making investment decisions.