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UEX Corporation: THE INVESTMENT CASE

UEX well positioned in one of the world’s most prolific uranium producing areas

UEX Corp has built an attractive portfolio of projects on the Athabasca Basin and is now pressing forward with exploration work and economic evaluation
UEX well positioned in one of the world’s most prolific uranium producing areas
INVESTMENT OVERVIEW: UEX The Big Picture
The uranium price could be set for a surge in the coming years

 

New funding from Sprott shows high-level backing, as 2017 drill results start to come in

 

UEX Corporation (TSE:UEX) announced in mid-January that it will raise C$6 mln in a private placement of shares to Sprott Private Wealth, one of the most influential and canny mining investors in Canada. Since the company already had over C$3 mln in the bank, that sets it up nicely for the year to come.

Already that money's being put to work with the discovery of a new high grade uranium zone at the company's Christie Lake project. Three sections of the latest drill hole hit such good mineralisation that it went off the scale of the hand-held measuring device the company used. Full assay results are set to make for fascinating reading, and in an environment that could be increasingly favourable.

 

Uranium market set to strengthen

 

Although older nuclear reactors in the US have been closing, some new reactors are now due to come on stream. Watts Bar 2 Unit started up operations at the end of last year, and new projects are planned elsewhere. This increase in nuclear power generation was billed by the Obama administration as a clean energy push. President Trump comes at it from a slightly different angle. Although Trump is on record as saying he’s “very strongly in favour of nuclear energy”, recent submissions by his team to the US Department of Energy indicate that his approach is more about securing jobs in power generation.  

Either way, the trend in the US mirrors that occurring in the wider world. During 2016 nine new nuclear reactors were commissioned worldwide and there are currently another 59 under construction, 20 of which are in China and five of which are in India.

The Chinese in particular are keen on the zero emissions aspect of nuclear, as smog in Chinese cities has now reached dangerous levels.

 

Big name companies AREVA and CAMECO heavily involved

 

UEX has a significant landholding in Saskatchewan on the Athabasca Basin, one of the world’s best known and longest standing uranium producing districts. Some estimates attribute more than 20% of global uranium production to the Athabasca Basin alone, much of which comes from the Canadian national champion, CAMECO (TSE:CCO). With its portfolio of projects and the calibre of its partners, UEX aims in due course to contribute to this output, and in its endeavours it will be helped along by CAMECO itself, which is a major shareholder.

UEX a 49.1% interest in its Western Athabasca Projects, with French nuclear giant AREVA (EPA:AREVA) holding the other 50.9%.

Meanwhile, further to the east, UEX is in partnership with Japanese major JCU on the Christie Lake project. And it also holds a 100% interest in other Eastern Athabasca projects, including Hidden Bay.

 

Significant exploration and development upside in Saskatchewan

 

Already UEX can boast a resource base of nearly 96 mln pounds of U3O8 indicated and inferred at its Shea Creek joint venture with AREVA. And over at Hidden Bay there’s a further 39 mln pounds indicated and inferred. The most advanced of the Hidden Bay projects has already been the subject of a Preliminary Economic Assessment, which laid out a potentially profitable mining scenario if the uranium price moves to between US$65 and US$70 per pound.

That’s more than double where it is now, but given the market dynamics in nuclear power, may be realistic within a year or two.

Meanwhile, newly funded for 2017, the company plans to continue with exploration at Christie Lake, where drilling is now underway, to find new uranium deposits at Hidden Bay and on the Western Athabasca Projects, and to work Shea Creek up towards an economic scenario.

 

Chief executive Roger Lemaitre “very happy” with UEX’s progress

 

“I’m very, very happy with where we’re at,” says chief executive Roger Lemaitre. Referring to recent exploration results at the Ken Pen deposit on Christie Lake Lemaitre noted that the company has been taking a “very measured approach” and that it is “learning along the way.” And on the latest discovery at Christie Lake he congratulated the exploration team and stated that he looks forward to watching them expand the zone "into another deposit."

 

 

 

 

 

 

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Article
December 15 2016

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