Hey Uranium Bugs!
UR Energy Inc . (URG: TSX:URE) is a US based uranium producer operating the Lost Creek in-situ recovery ( ISR ) mine* and processing facility in Wyoming, expected to produce 50-75,000 pounds in 2019. The company also owns the nearby Shirley Basin development project containing 8.8 million pounds and the Lost Soldier exploration project containing 14 million pounds.
I. The Ugly: The company was one of the co-signers of the Section 232 petition mentioned above. The move cost the company a lot of goodwill with its customers and the unfavorable outcome has caused investors to sour on the stock. It doesn't help that the company lost $6.3 million in the last 2 quarters.
II. The Bad: The average cost of production is over $37/lb, which is 50% higher than the spot price. Luckily, the company doesn't sell into the spot market. It has long-term contracts in place to deliver 915,000 pounds until 2021, at an average price of $48.15/lb.
III . The Good: The company has processing capacity of two million pounds per annum. ISR mines are unlike conventional mines in that they can ramp up production rapidly. If uranium prices recover, the company can very quickly drill wells, install new header houses, and commence production before the uranium explorers even finish submitting their permitting application. The Lost Creek mine is currently producing from 3 mine units, with potential for adding another 10 mine units. If uranium prices leapt up tomorrow, the company could move fast enough to produce a million pounds in 2020, and double that to 2 million by 2021 by bringing on Shirley Basin. In fact, the company was prepared to do this should the Section 232 outcome come out in their favor.
IV. The Wild Card: While rejecting the demands of the Section 232 petition, President Trump established a Nuclear Fuel Working Group to develop recommendations for reviving and expanding US uranium production. Trump recently met with Canadian President Justin Trudeau to develop a joint action plan between the US and Canada to collaborate on critical mineral issues, with uranium being one of the 35 critical minerals. There have been reports that Trump wants to purchase Greenland, a Danish protectorate, to access its mineral wealth. Being a protectionist at heart, he just might find a way to help US uranium producers.
Ur-Energy is not without its risks, but it offers a great option. At production of 2 million pounds at $37/lb, the company's pre-tax profit would exceed the current market cap at a uranium price of $85/lb. If that appears to be an unreasonably high price, recall that in the last uranium bull market, prices went as high as $140/lb.
For investors with a higher risk appetite, Ur-Energy offers explosive upside, a potential 10-bagger!!!
Stay ahead of the masses,
Seth Maniscalco
Founder, Crypto Wealth Coach LLC
Owner, Modern Wealth Management LP
www.CryptoWealthCoach.com/VIP
UR Energy Inc . (URG: TSX:URE) is a US based uranium producer operating the Lost Creek in-situ recovery ( ISR ) mine* and processing facility in Wyoming, expected to produce 50-75,000 pounds in 2019. The company also owns the nearby Shirley Basin development project containing 8.8 million pounds and the Lost Soldier exploration project containing 14 million pounds.
I. The Ugly: The company was one of the co-signers of the Section 232 petition mentioned above. The move cost the company a lot of goodwill with its customers and the unfavorable outcome has caused investors to sour on the stock. It doesn't help that the company lost $6.3 million in the last 2 quarters.
II. The Bad: The average cost of production is over $37/lb, which is 50% higher than the spot price. Luckily, the company doesn't sell into the spot market. It has long-term contracts in place to deliver 915,000 pounds until 2021, at an average price of $48.15/lb.
III . The Good: The company has processing capacity of two million pounds per annum. ISR mines are unlike conventional mines in that they can ramp up production rapidly. If uranium prices recover, the company can very quickly drill wells, install new header houses, and commence production before the uranium explorers even finish submitting their permitting application. The Lost Creek mine is currently producing from 3 mine units, with potential for adding another 10 mine units. If uranium prices leapt up tomorrow, the company could move fast enough to produce a million pounds in 2020, and double that to 2 million by 2021 by bringing on Shirley Basin. In fact, the company was prepared to do this should the Section 232 outcome come out in their favor.
IV. The Wild Card: While rejecting the demands of the Section 232 petition, President Trump established a Nuclear Fuel Working Group to develop recommendations for reviving and expanding US uranium production. Trump recently met with Canadian President Justin Trudeau to develop a joint action plan between the US and Canada to collaborate on critical mineral issues, with uranium being one of the 35 critical minerals. There have been reports that Trump wants to purchase Greenland, a Danish protectorate, to access its mineral wealth. Being a protectionist at heart, he just might find a way to help US uranium producers.
Ur-Energy is not without its risks, but it offers a great option. At production of 2 million pounds at $37/lb, the company's pre-tax profit would exceed the current market cap at a uranium price of $85/lb. If that appears to be an unreasonably high price, recall that in the last uranium bull market, prices went as high as $140/lb.
For investors with a higher risk appetite, Ur-Energy offers explosive upside, a potential 10-bagger!!!
Stay ahead of the masses,
Seth Maniscalco
Founder, Crypto Wealth Coach LLC
Owner, Modern Wealth Management LP
www.CryptoWealthCoach.com/VIP
