Uranium Energy Corp. (NYSE: UEC)
Has been featured in a recommendation by Sprott Research.
Sprott say UEC is “supplanting Cameco as the go to Uranium stock”.
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| NYSE: UEC |
| Production + development |
| Uranium |
| US $1.16 Billion @ $3.17 |
| Texas, Wyoming, USA, Paraguay |
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Comment
Please note, the following is a Sprott Research recommendation for information purposes only.
The opinions expressed are theirs, and not of this website, we are merely reporting their comments and recommendation.
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The research note follows:
Uranium Energy Corp (UEC US) Initiation: Supplanting Cameco as the go-to uranium stock
Initiation: Supplanting Cameco as the go-to uranium stock
RECOMMENDATION: BUY PRICE TARGET: US$7.00/share RISK RATING: HIGH
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North America’s largest pure play uranium inventory
Since the mid-2000s, Uranium Energy Corp (UEC) has been one of the leading uranium developers and producers, initially focused on its Texas ISR assets.
Recent years have seen transformational M&A which has seen UEC diversify to Wyoming and Saskatchewan, with a ~266Mlb resource base (excluding its minority stakes in Canadian assets) that includes fully permitted US ISR assets in WY and TX capable of producing up to 6.5Mlbs, and a >3,000km^2 land position and 146Mlb resource base in the world class Athabasca basin.
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Targeting Cameco’s vacated role as the go-to uranium pure play
With long time bell weather Cameco now diversified into downstream services, we think UEC is well poised to replace Cameco as the go-to uranium pure play for large institutions. Key attractions include its US listing, diversification with US ISR and high grade Athabasca projects, permitted assets in safe jurisdictions, physical uranium on balance sheet, and >US$45m per day trading liquidity. While some investors may prefer either permitted production or big, high grade Athabasca projects, UEC’s has the broadest appeal, which results in sector leading liquidity, making it an institutional hub for uranium investors.
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US domestic production potential with permitted TX and WY assets
UEC has the best domestic US ISR portfolio in our view, with permitted assets in Wyoming (89Mlbs) and Texas (19Mlbs), and hard rock assets in NM and AZ. Both the WY and TX hub and spoke projects have existing processing plants, permitted wellfields and operating permits for a combined 6.5Mlbs per year (~14-16% of US domestic demand). With US$93m of cash and liquid assets (incl 0.8Mlbs of U[3]O[8]), UEC is permitted and well-funded with a further 3.1Mlbs at US$42/lb of committed purchases to add to its exposure.
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Athabasca portfolio brings UEC’s aggressive approach to the basin
In addition to permitted domestic US assets, UEC has one of the largest portfolios in Saskatchewan’s Athabasca basin, home the world’s largest and highest grade uranium deposits. This includes the Roughrider project (historic 58Mlbs at 4.7% U[3]O[8]), which Rio Tinto acquired for US$640m in 2011 (beating out Cameco), 49% of the 95Mlb at 1.3% U[3]O[8 ]Shea Creek project, and a 15% share of Cameco’s 105Mlb at 2.6% U[3]O[8] Millennium project. In addition, UEC has >3,000km^2 of exploration holdings in prolific exploration areas. We think UEC can bring greater value out of these assets with its strong balance sheet and aggressive approach.
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Initiate with Buy rating and US$7.00/sh 1.2xNAV[7% ]price target
We value UEC using a combination of SOTP DCF and EV/in-situ valuation. We value the Texas and Wyoming ISR assets using NPV[7%-60/lb], and the other assets at US$2.0-6.0/lb. Adding in cash and liquid assets, we generate a US$2,280m NAV and US$5.74/sh FD/FF NAVPS estimate to which we apply a 1.2x NAV multiple for US premium, liquidity premium, and management.
Sprott Capital Partners produces this publication and it does not constitute a research report. This commentary is for information purposes only and does not contain investment advice. Sprott makes no representations or warranties with respect to the accuracy, correctness or completeness of such information and they should not be relied upon as such. Please refer to the attached report for addition disclosures and disclaimers.
Sprott
RESEARCH DEPARTMENT
Sprott Capital Partners LP
Royal Bank Plaza, South Tower
200 Bay Street, Suite 2600
Toronto ON, M5J 2J1
Please note that the statements and opinions contained in this third-party report are being provided for informational purposes only and are not adopted by UEC.
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.If you need clarification of any information contained in this note, or have any questions, I will be delighted to assist – Please email andrew@city-investors-circle.com
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Companies featured here have either presented to the Circle in London, or have been selected because they are considered to have interesting projects, in good jurisdictions, run by an experienced management team.
All information used in the preparation of this communication has been compiled from publicly available sources that we believe to be accurate and reliable, however, we cannot, and do not, guarantee the accuracy or completeness of this.
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Disclosure
At the time of writing the author holds no shares in the companies mentioned.
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