Good morning Tony,
Please find below a research note from Dundee Capital Markets reporting on UEC's Q3 production results.
Best Regards,
Stefanie Makagon Investor Relations |
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Direct: (604) 682-9775 ext. 311 Fax: (604) 682-3591 Cell: (778) 881-5575 Toll Free: 1-866-748-1030 www.uraniumenergy.com |
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From: David Talbot (Research) [mailto:dtalbot@dundeesecurities.com]
Sent: Friday, June 10, 2011 7:12 AM
Subject: UEC - Uranium Energy Corp. - Uranium Production Ramping Up on Schedule
Please see link to pdf file below for full note and detailed tables.
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Uranium Energy Corp.
(UEC-AMEx: US$3.06) |
Idea Support |
buy, High Risk*
12-month target price: US$6.10 |
June 10, 2011 |
David A. Talbot / (416) 350-3082
dtalbot@dundeesecurities.com
Mansur Khan / (416) 350-3314
makhan@dundeesecurities.com |
Uranium Production Ramping Up on Schedule |
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Source: See Note 1 |
Conclusion: We re-iterate our BUY recommendation for UEC and our 12-month share price target to US$6.10. The outlook for UEC continues to improve as indicated by its fiscal Q3 results published yesterday. Palangana production more than doubled QoQ and costs declined to a point where it already has lower cash costs than most of its peers, large or small. Stockpiling continues of inventory for future sales into the spot market. Meanwhile UEC believe it is getting very close to permits at Goliad. Production from that mine could see UEC producing at a rate of 1 MM lbs annually by this time next year. With a $200 MM market cap, UEC is one of the small producers in an otherwise small peer group. Therein lays opportunity for investors. We expect uranium investors may move upstream into cash flowing stocks and UEC is one that maintains a significant growth profile.
Start up proceeding well
� Hitting targets - production more than doubles. Palangana produced 49,000 lbs of U3O8 in Q3 versus 21,000 lbs in Q2 (including inventory). May production was 27 MM lbs, and with the 70,000 lbs already produced Palangana is on track for over 150,000 lbs of uranium production by FYE11 (July). This beats our production estimate of 141,000 lbs.
� Three phase startup remains on schedule. We assume full production of 350,000 lbs by calendar year end for Palangana (and ~ 1 MM lbs for UEC once Goliad is producing). Phase I wellfield is comprised of 15 production and 30 injection wells. Phase II wellfield started in mid-April and half of its 45 production and 30 injection wells are in operation. Phase III wellfield with 20 production and injection wells is expected to start up in Sep-11.
� Impressive cost control. Q2 cash operating costs were $15/lb vs $18/lb U3O8. This is in line with our expectations but excludes royalties and production tax which we believe would bring total cash costs closer to $19/lb vs our assumption of $20/lb. Sustaining capital has also been capitalized whereas we expect it to be expensed in late 2012 adding perhaps $1.50/lb to our costs. Nonetheless, this is impressive cost control, particularly for a new operation (although the Hobson plant is a re-start).
� Q3 earnings don't matter. The company is still ramping up production and has not sold any of its 70,000 lb inventory into the market. UEC reported a Q3 loss of $6.2 MM or $0.09/sh. We forecast a $0.30/sh loss for F2011.
� Contracts pending. UEC appears close to signing its first uranium sales contract. We presume it will be small, perhaps 100,000 lbs, but will likely be met as a positive signal to the market. A second contract is in the works.
Preparing the pipeline for production
� Goliad Radioactive Materials License Imminent. UEC expects delivery of this License within a month from the Texas Commission on Environmental Quality. This 7 MM lb project is 50 miles from the Hobson plant and production is likely to be double that of Palangana. We estimate start up later this year. As a tabular sandstone deposit we expect a quicker ramp up than we see from Palangana's more linear roll front sandstone deposits.
� Exploration ongoing. A 50 hole drill program at Palangana Production Area 3 commenced in Q3. At Salvo project where a 2.9MM lb U3O8 resource was recently announced, Phase II drilling is to continue through the summer to potentially expand the resource and upgrade inferred resources to M&I. |
UEC-A: Price/Volume Chart
Source: Thomson ONE |
Company Description
Uranium Energy is a uranium exploration and development company primarily focused on feeding its newly acquired Hobson ISR mill and developing the Goliad project in Texas. The company has an extensive pipeline of projects located in the Colorado Plateau, New Mexico, Wyoming, Arizona and Texas. |
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Please click on the link below to open the full multi-page report and printable version.
http://research.dundeesecurities.com/Research/UEC061011.pdf
(Pertinent and general disclosures attached.)
This email, including attachments, is intended for the named recipients only and may contain confidential and/or privileged material. If you have received this email in error, please notify the sender immediately and permanently delete this email from your system. No confidentiality or privilege is waived or lost by any mistransmission. Dundee Securities Ltd. and its affiliates reserve the right to monitor and archive all electronic communications through its network.
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Uranium Energy Corp.
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PRODUCER |
CODE : UEC |
ISIN : US9168961038 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Uranium Energy is a uranium development stage company based in United states of america. Uranium Energy holds various exploration projects in Uruguay. Its main assets in production are AMBROSIA LAKE, PALANGANA and GOLIAD in USA, its main asset in development is NICHOLS in USA and its main exploration properties are COYOTE RANCH in USA and CORONEL OVIEDO, CEBOLLETA, GRANTS RIDGE, RAVEN, WEST RANCH, SAN MATEO MESA, LAGUNA TREND, RED BASIN, GRANITE MOUNTAIN THRUST, BURNT WAGON, LO-HERMA, EAST POISON SPIDER, 55 RANCH & DL, BULL CANYON, PARADOX, LONG PARK, SQUAW POINT, RADIUM MOUNTAIN, BIG GYPSUM, SAN MIGUEL, CARNOTITE, CRAIN, LAKE CANYON, LOS CUATROS, ARTILLERY PEAK, DRY MOUNTAIN, CARRIZO, LA PALANGANA / HOBSON, NEW RIVER and SALVO in Uruguay. Uranium Energy is listed in Germany and in United States of America. Its market capitalisation is US$ 838.1 millions as of today (€ 753.9 millions). Its stock quote reached its lowest recent point on December 12, 2008 at US$ 0.16, and its highest recent level on February 02, 2024 at US$ 8.34. Uranium Energy has 157 544 080 shares outstanding. |