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.
Want to read more Energy Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Energy Fuels. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
Additional disclosures about the sources cited in this article
( Companies Mentioned: EFR:TSX; UUUU:NYSE.MKT,
UEC:NYSE.MKT,
)