There are more than a few folks suggesting that one of the obvious targets is Denison Mines, but should uranium be about to see a bit of a renaissance in the next twelve months or so, analyst David Talbot, who you have probably seen much of on BNN, particularly during the days of the Hathor takeover has written some articles on two other uranium stories we should be following as well.
On the cheapy Energy Fuels, he writes “Conclusion: We recommend Energy Fuels as a BUY with an adjusted 12-month share price target of
C$0.90 from C$1.00.
Our lower target is largely due to dilution, a more conservative capex estimate for Sheep Mountain, and other cost adjustments. We were restricted
on the stock since mid April.
With two financings and the Denison (DML-T ) transaction behind them, Energy Fuels has emerged as the second largest producer in
the U.S. with a resource base of 69.6 MM lbs. Essentially a merger with Denison U.S., EFR incorporated the strategic White Mesa Mill, the only
conventional uranium mill in the US, and several operating mines into the fold. This saved EFR US$150 MM by not needing to construct its own mill for which it just received its NRC license. Numerous synergies in Utah, Colorado and Arizona can be also employed.
We believe this is paramount as filling the mill with feed helps keep costs as low as possible… very important as these smaller mines tend to have higher op costs.
We view investment in EFR as an opportunity. The new company has significant leverage to rising uranium prices. With cash and cash flow, it
is preparing pipeline projects such as the permitted Whirlwind and Energy Queen Mines and Pinenut towards production within the year. Management has operating experience within the old Energy Fuels Nuclear. And development of Sheep Mountain in WY could bring this company to a whole new level. Risk moves from financing to execution and U308 prices.
We also expect some of the 425 MM shares issued to Denison shareholders to come out and about 5% has so far. While liquidity is up over five
fold since the deal, EFR is off 26% as investors not interested in production leave”.
On UR-Energy Talbot writes “We continue uto recommend Ur_Energy with a BUY recommendation and C$2.30 share price target.
Ur-Energy announced on Monday that they have entered into a definitive agreement to acquire 100% of Pathfinder Mines Corp (AREVA) for
US$13.25MM. AREVA owns the past-producing Shirley Basin (SB) and Lucky Mc (LM) mine sites in Wyoming and host to 10MM + 4.7MM lbs U308
respectively (non-compliant) both grading ~0.21%. This would imply an acquisition cost of ~$0.90/lb— in-line with current trading multiples for
explorers and developers.
Ur-Energy announced on Monday that they have entered into a definitive agreement to acquire 100% of Pathfinder Mines
Corp (AREVA) for US$13.25MM. AREVA owns the past-producing Shirley Basin (SB) and Lucky Mc (LM) mine sites in Wyoming
and host to 10MM + 4.7MM lbs U308 respectively (non-compliant) both grading ~0.21%. This would imply an acquisition
cost of ~$0.90/lb— in-line with current trading multiples for explorers and developers.
SB mine has apparently moved up to URE’s second priority project given its high grades and ease of licensing and mining.
The main project to deliver near-term production still remains Lost Creek, however. We understand a final EIS from the
BLM is expected in the near-term and ground-breaking is anticipated around September. That would close off a long and
bumpy process to get the mine licensed, and should be the catalyst the stock needs. However, we believe that URE may
need to come back to market to finance construction of Lost Creek”.