Sunday, April 16, 2006

6th Uranium Stocks Pick: Ur-Energy (TSE:URE)

Ur-Energy (TSE:URE) is a company focused in on North American uranium. If you haven't noticed already, I traditionally like companies with uranium properties elsewhere: sxr Uranium (TSE:SXR) in Australia and South Africa, Paladin Resources (TSE:PDN) in Namibia and Urasia Energy (CVE:UUU) in Kazakhstan. North American uranium plays generally have a much longer permitting process and therefore, will not produce yellowcake anytime soon (not to mention that there are hundreds of uranium juniors all vying to use the same drill rigs!)

However, there are reasons to be interested in Ur-Energy:

Uranium Claims

While Ur-Energy has stakes in Northern Canada, the ones of main interest are in Wyoming. The uranium company's main priority are the Great Divide Basin Projects comprised of the Lost Creek, Lost Soldier, Radon Springs and North Hadsell properties. Other uranium claims include URE's Shirley Basin Project comprised of the Bootheel, Buck Point and Chalk Hills and the Kaycee and Shamrock Project. Just a few days ago, Ur-Energy and Energy Metals Corporation (TSE:EMC) traded several Wyoming properties between them in an effort to consolidate and become more efficient: Ur-Energy gave up Chalk Hills and Shamrock in exchange for consolidation of the Bootheel project.

Of the Great Divide Basin Projects, Lost Creek and Lost Soldier are the ones of most interest because they are in the process of being verified to industry NI 43-101 standards. Historical estimates of 13 million lbs and 26 million lbs respectively should actually be taken seriously, as these estimates were provided by Conoco and Cameco through actual drilling. Ur-Energy claims another 45 million lbs of historical uranium resources distributed amongst its other Wyoming properties (34 million in Radon Springs) but these are not as accurate and should be taken with several grains of your proverbial uranium salt.

Production at Lost Soldier is optimistcally set to begin in mid-2008. Of the 26 million lbs of uranium in Lost Soldier, half are indicated and half are inferred. A look at their proposed timeline indicates that several key events must take place for 2008 production to happen: good resources studies, environmental studies + permitting, engineering, financing, and then construction of the actual in-situ leaching ISL wellfield. In addition, Ur-Energy must establish a satellite plant to expedite the ISL operation, and to tie the plant in with an existing uranium-producing company's NRC license, most likely with Power Resources (Cameco-owned).

Lost Creek has much the same elements for their timeline, but is not scheduled to begin production until 2009.

Uranium Environment

Fortunately for Ur-Energy, Wyoming is a very uranium-friendly environment. The state already has ISL plants and knows the technology well so Ur-Energy is not expected to run into opposition here.

The People

With any investment in an uranium junior, experience with uranium is of paramount importance. Ur-Energy prides itself on having 18 geologists with 340 combined years of uranium experience between them. URE is currently headed by William Boberg, who has a wealth of experience in uranium exploring in Wyoming. This is an acting CEO who is also their senior geologist with 25 publications under his belt, a guy who has actually written articles entitled "Exploration for Uranium in Wyoming."

Quick Facts

Shares Outstanding = 49 million
Fully Dilated = 65 million
Cash on Hand = $11 million
Cash from Warrants = $10.7 million

Insider Activity

William Boberg: Director + CEO = 400,000 common shares, no activity
Jeffrey Klenda: Chairman + Director = 700,000 common shares, no activity
Eric Cragie: Senior VP Exploration + Director = 350,000 common shares, no activity
Paul Pitman: VP Canadian Exploration = 500,000 common shares, no activity
James Franklin: Chief Scientist + Director = 250,000 common shares, no activity
Paul Macdonell: Director = 150,000 common shares, no activity
John McNeice: CFO = 250,000 common shares, no activity

Final Thoughts

With a $100 million Cdn market cap, Ur-Energy is not cheap, but not overly expensive either. They are still at least two years away from uranium oxide production, and that's in the most optimistic light. Still, they have all the right elements to become one of those few succesful uranium juniors to separate themselves from the pretenders.

For that reason, Ur-Energy becomes my 6th uranium stock pick.


Blogger collinsofsachse said...

These are certainly exciting times to be investing in Uranium Jrs!! You never know which one will pop for 20-25% gain in a single trading day!

2:35 PM  
Blogger Tom said...

I just noticed on the UR-Energy website all of the warrants that expire starting Monday and going through you this will put some downward pressure on the stock price?

6:22 PM  

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