What happened

Uranium Energy (UEC -9.20%) describes itself as a U.S.-based uranium mining and exploration company. In a market where uranium prices are soaring, and expected to go up another 67% over the next three years, that sounds like a good business to be in.  

But Uranium Energy stock is going down today, falling 9.8% through 10:50 a.m. EDT. Why is that?

Simple red arrow declining stock chart on a white checked background

Image source: Getty Images.

So what

The problem, it seems, is that Uranium Energy's business is supposed to be mining uranium and selling it at the high prices noted above. But lately, Uranium Energy has been doing a whole lot more buying of uranium than mining and selling the stuff.

Last month, Uranium Energy announced plans to acquire some 1.2 million pounds of U3O8 "yellowcake" uranium oxide. Today, the company said it has contracted to buy 705,000 more pounds of the stuff. Combined with other contracts recently announced, the company says it's now positioned to acquire more than 2.1 million pounds of U3O8 for an average price of $30 per pound.

Now what

To help finance these massive purchases of uranium, Uranium Energy also announced today that it is selling another 3.6 million shares of stock for $3.30 apiece. On the one hand, that's a share price 7% below where Uranium Energy stock closed yesterday -- one good reason for the stock to sell off.

A second reason though, I suspect, is that investors may be wondering why this uranium "miner" is spending so much of its time and energy buying uranium instead of digging up its own and selling it.

That's a good question to ask.