Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares might get a boost in the future from a reported investment in uranium.
Soul Pattinson is a diversified investment house. It invests in a variety of different sectors including telecommunications, building products, property, agriculture, swimming schools and mining.
One of its biggest portfolio investments is the coal miner New Hope Corporation Ltd (ASX: NHC). This indicates that involvement in an energy-related mining business would fit into its investment philosophy of finding businesses that can provide differentiated returns to the overall ASX share market.
Investment in nuclear?
According to reporting by the Australian Financial Review, Canadian uranium developer Nexgen Energy (Canada) (ASX: NXG) has secured A$240 million in "financing" from Soul Pattinson and recourse sector investor Queens Road Capital.
The AFR reported that those two institutional investors are alongside Hong Kong billionaire Li Ka-shing as major shareholders in the company, which has a market capitalisation of $3.5 billion.
There are a reported $170 million worth of convertible debentures with a coupon (interest) rate and a five-year term – partly cash and partly shares. Soul Pattinson has reportedly also bought a $70 million block from Queens Road.
What is NexGen Energy working on?
NexGen Energy is working on a large amount of land in the Athabasca Basin in northern Saskatchewan in Canada. The Rook 1 project could turn into the single largest uranium mine in the world at a full annual production of more than 27 million pounds.
The company also highlighted that "extensive geophysical surveys conducted over the past 10 years have identified numerous, untested targets on anomalies consistent with known mineralization."
The payback on capital expenditure is less than 12 months, according to the AFR. And NexGen is projected to earn around $2.3 billion of earnings before interest, tax, depreciation and amortisation (EBITDA) at current uranium prices, which are at 12-year highs of US$58 per pound.
It'll be interesting to see how Soul Pattinson's investments in nuclear and perhaps renewable energy develops.
Soul Pattinson share price snapshot
Soul Pattinson shares are currently trading at $33.46, an increase of more than 30% in the past 12 months.
