Uranium Energy Corp. (NYSE-American: UEC) CEO Amir Adnani on Ascension to America’s Largest Uranium Mining Company via Game-Changing Acquisition of Uranium One Americas

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of UEC [Uranium Energy Corp.] — Mr. Amir Adnani. Amir, it's been a bit! How have you been, sir?

Amir Adnani: Gerardo, great to connect! I've been busy. And it's been fascinating and rewarding and exciting for me and all of our shareholders to see the improvements that we've all witnessed in the uranium market and the uranium prices. 

And I don't think we've seen anything yet!

Gerardo Del Real: Let's get into why you don't believe we've seen anything yet. I was pounding the table last year… begging people to buy UEC at 50 cents. Subscribers are up well over 300%, 350%. And I happen to agree with you… I actually believe that we're in the early innings of this cycle. 

And I think the news today, this morning, where UEC basically just announced that you’ve created America's largest uranium mining company with the acquisition of Uranium One Americas. 

I think transactions like this show that you can still be aggressive… you can still be accretive… and why there's a lot of runway. Before we get into today's news, can you walk me through what you see in the uranium space and why you believe it's still early and there's still money to be made in the space?

Amir Adnani: Very simple. At today's spot uranium price of US$44 per pound, are we seeing a mass amount of announcements out there that new mines are being built… that new mines are being commissioned? And yes and no. 

Because at US$44 per pound, we're still below incentive price levels needed to not only restart some of the idled mines out there — namely McArthur River, which, previously, there was talk of it being restarted at maybe US$50 per pound — but at the same time, there is nothing major out there that can be developed in terms of a new mine that's fully permitted or can be justified at US$44. 

And so if we have a structural deficit in the uranium market, which we do, then, naturally, you would say that… hey, maybe the price is perfectly balanced here if you were seeing mine development to help bring new supplies online to meet and address the supply deficit. 

But that isn't happening.

And in addition to that, we have this thing out there called inflation. We have shortages when it comes to labor; we have supply chain bottleneck issues in everything — not just uranium mining. 

And so this impact on development of uranium mines, I think, makes it harder and, arguably, more expensive to get new production up and running, which is why I'm so excited about today's announcement for Uranium Energy to acquire Uranium One Americas because this includes fully built, fully operational assets which have been put together and developed for over a decade by Uranium One. 

But before I go there, Gerardo, I just want to really provide perspective when I say you've seen nothing yet. The first point I made with respect to the uranium price is, again, at US$44, we're well below incentive levels, number one. Number two, pick your uranium price. What's your expectation if you're in this market today?

In '07, we got as high as US$140 per pound. And that was in '07. If you adjust for inflation — if you adjust for everything else going on in the world today — I think the uranium price can get maybe up to US$200 per pound. And then, the reality is that we could get there — and maybe that's not a sustainable long-term price — but we could very well get there. 

And the issues in building new uranium mines is something that I don't think the market has fully grasped or appreciated. And I think that's what should make anyone bullish looking at this sector. We've gone from US$30 to US$40 per pound very quickly in the last few months. But again, this is really nothing in terms of why someone is long and excited about this sector. I still think that this journey hasn't even started yet.

Now having said that, to your point, and to my point about the uranium price, the uranium price was at US$140, as I mentioned, per pound in '07. That's the year that Uranium One acquired a company called Energy Metals for US$1.5 billion. The primary and the most advanced assets of that company were in Wyoming. 

And then, subsequently, Uranium One added to that portfolio with further acquisitions in 2010 and kept developing and actually produced uranium until deciding about a year and a half ago that they were going to strategically exit the US. 

And this is where the opportunity for us came up. And so if you think about it, to acquire for US$130 million today at US$40 uranium, right, assets that were worth almost US$1.5 billion in 2007 at US$140 uranium… goes to show, to your point, that there are, in fact, incredible opportunities out there.

This is a very unique and rare situation because not every company could have pulled this off. Not every company has the bandwidth and the balance sheet and the strengths to pull this off. We came into this acquisition reporting, as of October 26, just about a week ago, US$235 million of cash and liquid assets on our balance sheet. 

So we were in a position where this acquisition could be fully funded for us. And our balance sheet, really, was, and is, a sector-leading balance sheet. And it's that kind of strength that facilitates accretive acquisitions. 

And where this acquisition is accretive is really the fact that we're doubling the size of our business in some really key categories that are production-related categories. So we're doubling the size of our production capacity when it comes to the total number of permitted US ISR projects, resources, and processing infrastructure but at a price that's equal to only 12% of our current enterprise value. 

So it's a very accretive deal. Very excited about it. Lots of details about this acquisition in our press release. So I encourage anyone who's interested to go and take a look at it.

Gerardo Del Real: I think you did a wonderful job summarizing it. Let me just add to that, that, historically, you just picked up just over 42 million pounds. You not only did that… you added approximately 100,000 acres in Wyoming's Powder River and Great Divide Basins. 

And yeah, by the way, this acquisition not only adds the pounds and adds the land package but it's also going to contribute to significant capital expenditure savings, right? And you mentioned that, in the release, how there's deep operating synergies — I believe is how you put it — with UEC's permitted and nearby Reno Creek ISR project. 

So just, I think, an accretive and intelligent acquisition all the way around. You and the team deserve to be commended, and I agree with everything you said about the spot price. I do think it overshoots to US$200. I also don't think US$200 is sustainable but we're at US$43, US$44, US$45 right now. 

So I think anything near where we think it's going to go is going to make for a fun couple of years in the space! Anything else to add to that, Amir?

Amir Adnani: I think the points you covered are really key here in terms of, again, production readiness, right? So we've had for the longest time in our history as a company at UEC our South Texas hub-and-spoke strategy, which was really anchored by the fully-built and permitted Hobson processing plant. 

Hobson has given UEC a competitive advantage, and that's the advantage to process our own uranium… something that, typically, in most other commodities, it's the domain of producers who control the infrastructure; the processing infrastructure. 

And here, the key asset that really anchors the portfolio for us in Wyoming is the Irigaray processing plant, which is one of the largest uranium processing plants in the United States, fully built, currently operational. 

And it really helps anchor and create a new Wyoming hub-and-spoke strategy for UEC in addition to our South Texas hub-and-spoke strategy. This production platform, on a proforma basis, is unparalleled to have this many assets: four separate individual fully-permitted ISR projects and the production readiness that comes with the projects in Wyoming.

And Wyoming's Powder River Basin — for people that are not familiar with it — is the largest source of in-situ recovery uranium mining in the Western Hemisphere outside of Kazakhstan. And Kazakhstan is the world's biggest uranium producer exclusively using the in-situ recovery method. 

Wyoming is home to where the next biggest district for uranium mines that are amenable to this in-situ recovery method are situated. And to your point, not only picking up a fully-built and one of the largest processing plants in the country in Wyoming that anchors our new hub-and-spoke but the 100,000 acres of land package in addition to that. 

And the synergy of Reno Creek; Reno Creek is a project we acquired in 2017. It's the largest pre-construction, fully-permitted ISR project in the country, and it's only 45 miles away from the Irigaray processing plant. 

So now, we save the capital that otherwise would've been needed to build a central processing plant at Reno Creek because we can now, instead, ship uranium loaded resin to Irigaray and benefit from that infrastructure.

And again, cost savings, operating synergies, and creating scale, creating big scale. And this is all complemented and really augmented, Gerardo, with the 4.1 million pounds of physical uranium that we've contracted for as we disclosed, again, recently at an average cost of US$32 per pound. 

So what we have here is absolutely unparalleled in the sense that, before uranium prices took off, we got out there and we contracted to purchase uranium at fixed prices with fixed delivery dates between now and December of 2025. 

At US$32 per pound, we're well below where that cost of production is, globally, for most producers. In fact, even our own all-in cost for these assets in the US will be around the high US$20's or kind of US$30 per pound range.

And so without any capex we’re operating with, we've locked in 4.1 million pounds of inventory that will be available to us that would accelerate cash flows as we go back into production because, in the early days, we can deliver from inventory we already have secured while these production-ready assets ramp up and come in. 

So the combination of the inventory secured at such a low cost and the permits and the infrastructure and the production capability, I think, gives UEC a platform that you simply don't see out there in any other uranium company our size.

Gerardo Del Real: Amir, congratulations to you and the team, again, on this deal. I've known you for several years now… I suspect you're not done making deals. I'll leave that there! Thank you so much for your time today, and looking forward to having you back on.

Amir Adnani: Thank you, Geraldo. Looking forward to it as well.




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