At a time when reputation in business has never been more important, eyebrows are bound to be raised when any boss of a public company is willing to have their name linked to Boris Johnson. But that has not deterred Amir Adnani, the Canadian chief executive of Uranium Energy Corporation, a $2bn US-listed mining company. Last week it emerged that Adnani and the only British prime minister ever forced to resign in disgrace have become co-chairmen of Better Earth Limited, an environmental consultancy established by Adnani in December 2023.
One reason for the raised eyebrows is that as prime minister Johnson met with Scott Melbye, UEC’s executive vice president, in the House of Commons in May 2022, although there is no record of this in his official diary. Another is that Better Earth has been staffed with Johnson acolytes, including Charlotte Owen, the young aide who Johnson catapulted into the House of Lords in his resignation honours list, and Nigel Adams, the former minister without portfolio. Its chief operating officer is Chris Skidmore, the former minister for net zero, who quit parliament and the Tories over Rishi Sunak’s climate backsliding.
It’s easy to imagine the appeal for Johnson. Given his well-documented lifestyle and family obligations, he is unlikely to have joined the board out of altruistic concern for the environment. But what is in it for Adnani? Why would the boss of an American mining company and the director of a network of British Virgin Island-registered companies, as revealed by the leaked Panama Papers, want to create a British start-up staffed by ex-Tory politicians? None of those involved have commented publicly. But a look at the record of Adnani and UEC may provide some clues.
One thing that immediately stands out is that, even by the standards of the mining sector, UEC is a speculative operation. It owns a number of exploratory concessions in America and Canada. But apart from a few months in 2012-13 and 2015, it has never mined any uranium. Its revenues have come from selling uranium acquired in the market. Nor is there any guarantee that any of its mines will ever yield any significant quantities of uranium. According to its latest filing: “We have not established proven or probable reserves through the completion of a final or bankable feasibility study for any of our projects.”
Instead, UEC’s real business is issuing shares, according to a waspish report published last year by Kerrisdale Capital, a short-selling hedge fund. In the past 20 years it has issued half a billion dollars’ worth of new stock, increasing the number of shares outstanding by 10 times. It uses this equity to buy distressed assets from other miners, betting that future rises in the price of uranium will eventually make them commercially viable. In one case, it paid $150m for assets whose value the vendor had written down to zero. Its most recent deal was to buy the US assets of Rosatom, the Russian state nuclear fuel company, in 2021.
Of course, if you’re issuing so many shares, it’s important to ensure the share price stays up, both to keep your existing shareholders onside and to avoid giving too much of the company away. Perhaps it’s not surprising therefore, that UEC has spent vast sums over the years on stock promotion, including via Blender Media, a Vancouver-based agency that was founded by Adnani and is still owned by his family members. A 2015 court filing said that the company paid around 30 agencies to publicise its stock to retail investors with advertisements masquerading as newsletters written by objective analysts, with the true nature of the communication buried in the small print and disclaimers. Another of UEC’s promoters has been Steve Bannon, Donald Trump’s adviser, on whose War Room podcast Adnani has appeared twice. Kerrisdale has accused UEC of “being managed more like a penny-stock-pump-and-dump than a legitimate mining company”, a reference to the high pressure boiler-room sales tactics of unscrupulous stock promoters.
That said, Kerrisdale’s bearish note was spectacularly ill-timed. Since it was published 18 months ago, the price of uranium has more than doubled, as did UEC’s share price, though it has since fallen again. From a low of $17.75 in 2017, uranium oxide peaked at $108 per pound in February before falling back to $80 today, fuelled in part by the US government’s decision earlier this year to ban the importation of nuclear fuel from Russia, as well as last year’s Nuclear Fuel Security Act, which provided $2.7bn of US government funding to rebuild the domestic industry. Whether prices can stay high enough for long enough for UEC’s mines to become viable is unclear, but all six analysts that cover the stock currently have a buy recommendation, while Adnani himself has recently been buying the shares.
Nonetheless, Adnani and UEC cannot simply count on geopolitics to salvage their currently uneconomic mines. The long-term bull case for UEC relies not only on soaring demand for electricity from new technologies such as electric vehicles and AI but on nuclear energy playing an important role in the future energy mix. And who better to proselytise for nuclear power around the world than the former UK prime minister who professed himself to be so convinced of its merits that he wanted Britain to build a new reactor every year? Indeed, it was after his unrecorded meeting with Melbye and days before he left office that Johnson approved the new nuclear reactor Sizewell C, much to the delight of Adnani, who welcomed it on Twitter.
Of course, that meeting may also be why Adnani is joining the board of Better Earth rather than Johnson joining the board of UEC. After all, if it were the other way around, the advisory committee on public appointments could hardly have concluded that “you did not meet with, nor did you make any decisions specific to [UEC] during your time in office. Therefore the risk that this appointment can reasonably be perceived as a reward for decisions made in office is low.” Instead, Johnson can claim to be merely joining a private consultancy whose clients, as the committee notes, are unknown and whose sole shareholder is a Nevada-registered entity. Meanwhile, Adnani now appears to have a world-class booster on his payroll, plus the mysterious talents of Baroness Owen of Alderley Edge.
