Future Looks Bright for this US Uranium Developer

by Mike Fagan

Mike Fagan


 

Uranium Energy Corp. (NYSE: UEC) — currently trading below US$2.85 per share — has announced that it has entered into contracts to purchase a total of 1.2 million pounds of U3O8 at a purchase price of approximately US$29 per pound.

Additionally, the company has entered into an agreement with institutional investors on the purchase of 10,000,000 common UEC shares [at a price of US$3.05/share] resulting in gross proceeds to the company of US$30.5 million.

UEC president & CEO, Amir Adnani, commented via press release:

"We are successfully executing and expanding upon our physical uranium strategy.  This initiative will support three objectives: 1) strengthens our balance sheet as uranium prices appreciate; 2) provides strategic inventory to support future marketing efforts with utilities that could complement production and accelerate cash flows; and 3) increases the availability of our Texas and Wyoming production capacity to pursue specific opportunities for uranium of U.S. origin, which may command premium pricing due to the scarcity of domestic uranium production.  Following the closing of this offering and delivery of contracted drummed uranium, UEC will have approximately $95 million of cash, equity and inventory holdings, including approximately $35 million of U.S. warehoused uranium."
 

The company’s expansive U3O8 inventory is expected to provide greater marketing flexibility for utilities while freeing up UEC's domestic mine production for the newly established $1.5B US Uranium Reserve.

Additionally, UEC reports that the market value of its 19.5% equity stake [14 million shares] in Uranium Royalty Corp. (TSX-V: URC) — the first and only publicly listed uranium royalty and streaming company — has increased to US$34.3 million following URC's announced acquisition of royalties on Cameco’s world-class MacArthur River and Cigar Lake uranium mines in Canada’s Athabasca Basin.

The McArthur River and Cigar Lake mines rank as the two largest high-grade uranium mines in the world with ore grade 100 times world averages as disclosed by Cameco. Based on disclosed production capacities, the two mines have combined capacity equal to one-fifth of global forecasted uranium demand.

Mr. Adnani added:

"With $65.8 million in cash and equity holdings, UEC has the balance sheet strength to lead U.S. uranium production higher at the most critical time for the domestic industry since the inception of the civilian nuclear power program began in the 1950s. Nuclear power is the second largest source of electricity generation in the U.S. and its largest source of carbon-emission free electricity. America is also the largest consumer of uranium in the world, yet there is no uranium currently mined domestically. As a leading pure-play American uranium company, UEC is investing to build the next generation of low-cost and environmentally friendly uranium projects that will be competitive on a global basis. Despite our focus on low cost In-Situ Recovery mining with its low capital requirements, we see a unique opportunity to purchase drummed uranium at prevailing spot prices which are below most global industry mining costs…”

 

The company’s recent balance sheet initiatives have been well received by the market with UEC shares more than tripling since November of last year from US$0.80 per share to currently just below US$3 per share.

                    1YR UEC

For speculators, it’s important to note that — due to consolidation in the North American uranium industry over the last decade — UEC is one of only a handful of US-based uranium companies positioned to become a near-term producer and contributor to the US Uranium Reserve.

Operational catalysts expected to generate news flow for UEC in the coming quarters, include:

  • Advancement of the company’s Burke Hollow, Palangana, Goliad and projects, Texas.
     
  • Advancement of the Reno Creek project, Wyoming, where the fully permitted portion of the project boasts 23.97 million tons grading 0.04% U3O8 containing 18.71 million pounds.
     
  • Potential for higher uranium prices resulting from continued supply disruption coupled with strong demand; recent move from ~24/lb to ~30/lb.

Keep in mind also that UEC’s Texas operations are anchored by the company’s fully licensed and permitted Hobson Processing Plant (below).

                    UEC Processing Plant

With no less than four fully-permitted ISR (In-situ Recovery) uranium projects on US soil with a 4MM/lb per year production profile — now is an opportune time to be taking a closer look at UEC as a potential future leader in America’s resurgent uranium sector.

Be sure to click here for our most recent report on Uranium Energy Corp.

Yours in profits,

Mike Fagan

Mike Fagan
Editor, Resource Stock Digest
 

Mike Fagan has mining in his blood. As a teenager he staked countless gold and silver properties in Nevada alongside his dad, Brian Fagan, who created the Prospect Generator model that’s still widely used today in the resource space. One of those staking projects was put into production by a major Canadian mining company — a truly rare and profitable experience. That background uniquely qualifies him as a mining stock speculator. One of the most well-known names in the business, Mike is now putting that experience to use for the benefit of Resource Stock Digest and Hard Asset Digest readers.

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