Two Uranium Firms Transact a 'Win-Win' Deal

Source: Streetwise Reports 11/07/2017

Analyst Rob Chang, with Cantor Fitzgerald, discussed how the sale and acquisition of a Wyoming uranium asset benefit both energy companies involved in the deal.

In a Nov. 2 research note, analyst Rob Chang of Cantor Fitzgerald reported that Uranium Energy Corp. (UEC:NYSE.MKT) and Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.MKT) entered into an agreement for the former to buy the latter’s non-core Reno Creek North uranium project.

The sale price is $5.39 million ($5.39M), to be “comprised of $2.94M in cash and $2.45M in shares of Uranium Energy,” Chang noted. The deal is “priced at a valuation of $1.25 per pound,” based on Reno Creek North’s “NI 43-101 compliant resource of 3.8 million tons grading 0.056% U3O8 containing 4.3 million pounds (Mlb).”

This compares to the cost of Reno Creek, which Uranium Energy acquired in May. That was “$0.79 per pound plus warrants and a net profit interest royalty of 0.5%,” indicated Chang.

About the acquisition, Chang concluded it is “positive for Uranium Energy as it consolidates its Reno Creek project and increases its Measured and Indicated resource by 20%.” Additionally, it “adds 4.5 Mlb U3O8 to a project that already had 22 Mlb of Indicated resources.”

With respect to the sale, Chang noted: “This is a positive development for Energy Fuels as it monetizes an asset that we did not see going into production until 2025” because it needs “permitting, developing and financing.” Together, the company’s numerous, more advanced projects, including Jane Dough, Hank, Alta Mesa, West North Butte, North Rolling Pin and the Arkose Mining Venture in situ recovery properties, “have a global resource of nearly 18 Mlb U3O8.”

Cantor Fitzgerald has a Buy rating and CA$2.65 per share target price on Energy Fuels, whose stock is currently trading at around CA$1.82 per share on the TSX. On Uranium Energy, Cantor’s rating is Sell; the company’s current share price of US$1.09 is above Cantor’s target of US$0.95.

Read what other experts are saying about:

  • Energy Fuels Inc.

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( Companies Mentioned: EFR:TSX; UUUU:NYSE.MKT,
UEC:NYSE.MKT,
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