One glance at the two charts below is all that is needed to see why Western
Uranium Corp. (WUC:CSE; WSTRF:OTCQX) implemented a special resolution to
add "& Vanadium" to its corporate moniker. On September 27, the
company put out a news release updating the market on a number of
developments, the most interesting and appropriate being the name change that
will take effect around October 1.
Vanadium, for those who need a refresher, is used in the hardening of
steel (90%) with the residual 10% being deployed in vanadium flow batteries,
integral to the electric car movement. However, the main price driver for
vanadium lies in new Chinese building code requirements pertaining to the
need for high-strength steel in the construction industry. That coupled with
air quality requirements has served to shift China from net exporter to net
importer of vanadium. Hence, vanadium closed the session at $22.30/lb up
21.8% since I first wrote about the company on August 30th.
In addition to the big move in vanadium, uranium is ahead 5.3% in the same
time frame, which has contributed to a stellar move and technical breakout in
WUC. The decision to highlight vanadium in the new company name lies in its
35 million pound resource, the bulk of which is situated in the
Colorado-based Sunday Mine. With the Section 232 investigation into uranium
imports, domestic uranium resources are certain to favor U.S.
developer/producers.
The company also announced that 983,000 options were priced at $2.15 per
share and while these are modestly in-the-money, they certainly could have
been priced earlier given the 200-dma sits at $0.94. I view this as an
extremely shareholder-friendly action by management and one which enhances
the optics for the prospective new shareholder as well as solidifying loyalty
for existing ones.
I am adding a chart courtesy of John Newell of Fieldhouse Capital
Management simply to provide readers with an independent assessment of the
technical position of WUC. The old 2016 high at $2.75-2.80 is formidable
resistance but once through there, the 2015 price range is certainly
attainable.
Chart courtesy of Stockcharts.
We are entering into a seasonally powerful time of the year for the
uranium space and as the chart of Cameco shown below would illustrate, from
now until late February should be a high-performance window for the uranium
space and those with the all-important vanadium "kicker" such as
WUC should be exceptional performers.
Lastly, the company is embarking on a series of investor conferences and
private meetings commencing in October with the intention of eradicating the
deep discount that exists when compared to peers. With a 97.8-million-pound
of uranium-equivalent resource, the current market capitalization of US$39.1
million is absurdly low when compared to Fission Uranium's
140.5-million-pound resource and $306 million market cap. A similar market
cap to share price ratio would have Western Uranium and Vanadium Corp.
trading closer to US$215 million or US$8.30 per share. For those interested
in viewing an analysis of 30 uranium developers and producers, contact me and
I will be pleased to send it along.
[NLINSERT]
Charts courtesy of Michael Ballanger.
Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of
the data provided. Nothing contained herein is intended or shall be deemed to
be investment advice, implied or otherwise. This letter represents my views
and replicates trades that I am making but nothing more than that. Always
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no liability for any loss arising from the use of the data contained on this
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may result in the loss of part or all invested capital and therefore are
suitable for experienced and professional investors and traders only. One
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