Money Talk With Tiff
Money Talk With Tiff
Episode•April 28, 2022•20 min

Royalty Investing with Scott Melbye | Ep. 99

Disclaimer: The information in this episode does not constitute investment advice. This content is for informational and educational purposes only. Always do your own research or hire a licensed financial advisor to help with investment decisions. Scott Melbye, CEO of Uranium Royalty Corp joins Tiffany in this episode to break down what royalty investing is, why it's beneficial for investors and how to get started investing in uranium.  About Our Guest Scott Melbye is a 37-year veteran of the nuclear energy industry having held leadership positions in major uranium mining companies and various industry organizations. He also currently serves as President, Chief Executive Officer and a director of Uranium Royalty Corp., and as Advisor to the Nuclear Engineering Program at the Colorado School of Mines. He recently served as Vice President Commercial for Uranium Participation Corporation (now Sprott Physical Uranium Trust), and Advisor to the CEO of Kazatomprom, the world’s largest uranium producer in Kazakhstan. Through to June 2014, Mr. Melbye was Executive Vice President, Marketing for Uranium One, responsible for global uranium sales activities. Prior to this, he spent 22 years with the Cameco Group of companies, both in the Saskatoon head office and with their U.S. subsidiaries. He most recently served as President of Cameco Inc., the subsidiary responsible for global marketing and trading activities with annual sales exceeding 30 million pounds U3O8. Mr. Melbye is President of the Uranium Producers of America and a past Chair of the Board of Governors of the World Nuclear Fuel Market.  Mr. Melbye received a Bachelor of Science in Business Administration with specialization in International Business from Arizona State University in 1984. Connect with Scott Website: https://www.uraniumenergy.com Connect with Tiffany on Social Media Facebook: Money Talk With Tiff Twitter: @moneytalkwitht Instagram: @moneytalkwitht LinkedIn: Tiffany Grant This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

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Key Takeaways

  • 1

    Royalty and streaming companies provide diversified exposure to commodities like uranium without direct mining risk

    Investors avoid needing mining engineering or geology expertise

    Royalties pay a percentage of gross revenue from production

    Streams involve physical commodity payments rather than cash

    Similar to ETFs or mutual funds where professionals do due diligence

  • 2

    Nuclear energy provides 50-55% of U.S. carbon-free electricity and runs 95% of the time

    Unlike wind and solar which operate only 30% of the time

    Nuclear is base load power available 24/7 regardless of weather

    62 new nuclear plants came online in last 8 years, 54 under construction

    Small modular reactors are being proposed across the U.S. and globally

  • 3

    Uranium supply deficit creates investment opportunity as demand grows 3.5% annually

    Global consumption: 200 million pounds/year vs production shortfall of 60 million pounds

    Uranium price at 11-year highs signaling market shift

    Geopolitical tensions with Russia/Kazakhstan may boost Western production

    U.S. has 1 billion pounds of known uranium resources but currently produces near zero

  • 4

    Investors can access uranium through multiple vehicles depending on risk tolerance

    Physical uranium trusts (Sprott, Yellow Cake) for pure commodity exposure

    Mining companies like Uranium Energy Corp (UEC) for direct production play

    Royalty companies like Uranium Royalty Corp (UROY) for diversified approach

    ETFs/mutual funds holding baskets of uranium mining companies

Intro

  • Tiffany explores royalty investing and the uranium sector with a 37-year industry veteran who leads both a major uranium mining company and the first pure-play uranium royalty company.
  • Scott Melbye is CEO of Uranium Royalty Corp and EVP of Uranium Energy Corp. He previously served as VP Commercial for Uranium Participation Corporation, Advisor to Kazatomprom's CEO, and Executive VP Marketing for Uranium One. He spent 22 years with Cameco and is President of the Uranium Producers of America.
Uranium Energy CorpUranium Royalty Corp

– What is Uranium and Why It Matters

  • Nuclear energy generates electricity from nuclear power plants, with uranium as the fuel. In the Carolinas, nuclear provides 50%+ of electricity. Nationally, nuclear supplies 20% of U.S. electricity and 50-55% of carbon-free energy.
  • Nuclear runs 95% of the time as base load power, unlike wind and solar at 30%. It provides reliable, affordable, safe, clean electricity regardless of weather conditions.

– Understanding Royalty Investing

  • Royalty companies like Franco-Nevada, Wheaton Precious Metals, and Sandstorm have become popular for resource investing. Uranium Royalty Corp doesn't own mines but invests in 15 mining companies, providing financing in exchange for royalty percentages of uranium produced.

It's like an ETF or a mutual fund in that regard, because we've gone out, we've done our due diligence... we do that legwork for the investor.

– Scott Melbye
  • Royalties are often on gross revenue (top line), providing payments even if mines aren't profitable. The company also holds 1.6 million pounds of physical uranium warehoused at low prices from the recent bear market.

– Investment Options in Uranium

  • Physical uranium trusts (Sprott Physical Uranium Trust, Yellow Cake PLC) - pure commodity speculation
  • Mining companies like Uranium Energy Corp (UEC) - direct production exposure
  • ETFs/mutual funds holding uranium mining baskets - maximum diversification
  • Royalty companies like Uranium Royalty Corp (UROY) - diversified commodity exposure
  • Key factors to evaluate: supply/demand dynamics, macro trends toward green energy, and geopolitical considerations.

– Geopolitical Factors and U.S. Production

  • The U.S. imports half its uranium from Russia, Kazakhstan, and Uzbekistan. Melbye testified before Congress advocating for domestic production over sending $1B+ annually to Russia.

We have a billion pounds of known and likely resources in the United States. We led global production in 1980. We're practically down to nothing these days.

– Scott Melbye
  • Producing domestically ensures highest standards of health, safety, and environment versus uncertain standards in Congo, Uzbekistan, or Kazakhstan.

– Where to Learn More

  • Uranium Energy Corp: uraniumenergy.com (NYSE: UEC)
  • Uranium Royalty Corp: uraniumroyalty.com (NASDAQ: UROY)
  • World Nuclear Association website
  • Nuclear Energy Institute (Washington, D.C.)

Resources

Topics

Royalty InvestingUraniumNuclear EnergyCommodity InvestingEnergy IndependenceGeopoliticsMining FinanceAlternative InvestmentsGreen EnergySupply Chain Security
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