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Here’s a look at Cantor Fitzgerald’s latest update on the junior uranium companies it’s currently covering. Those include well-known names such as Fission Energy, Kivalliq Energy and NexGen Energy.
To start, Cantor brought its uranium forecasts down for the next three quarters — from US$39 to $37 per pound for Q1, from US$41.50 to $41 for Q2 and from US$44 to $42.50 for Q3. That said, the firm also increased its long-term forecast from US$70 per pound to $80 per pound, stating that “the marginal cost of production required to meet the increase in expected global demand over the next five to ten years will be at least US$80/lb.”
It suggested that the current marginal cost of production for uranium miners is likely closer to US$50 per pound than US$40 per pound once all-in sustaining costs are considered. Furthermore, undeveloped deposits that are lower-grade and/or in difficult jurisdictions may be more challenging to develop in the future.
With that out of the way, Cantor moved on to company updates. Here’s a look at some of the junior uranium companies covered by Cantor Fitzgerald, along with the firm’s ratings and comments from last week:
Those following the uranium space will have been hard pressed to have missed what’s been happening with Fission Uranium lately. The company recently made headlines when it released its maiden resource estimate for its Patterson Lake South property in the Athabasca Basin. At 106 million pounds of U3O8 (80 million pounds measured and indicated and 26 million pounds inferred) the resource exceeded most analyst estimates, including Cantor’s.
The firm was “particularly impressed with [the] positive surprise,” and noted that “more conservative metrics” are commonly used for maiden resources. “While already impressive, we believe PLS still has plenty of room to grow as the resource only incorporates two of four known lenses of mineralization,” it stated.
Cantor gave Fission a “buy” rating and a target price of $1.95, up from a previous $1.65.
Kivalliq currently holds the Genesis uranium property in Saskatchewan and Manitoba. Roughrider Exploration (TSXV:REL) is funding exploration for the project, with the option to earn up to an 85-percent interest in the property. Cantor noted that the project is located along the Wollaston-Mudjatik trend, which extends northeast from the Athabasca Basin.
The company reported final results of its 2014 Phase I exploration program in early December, and recently announced another winter exploration program at the property. Kivalliq was rated a “speculative buy” by Cantor with a target price of $0.25.
NexGen Energy (TSXV:NXE)
Cantor has also rated NexGen a “speculative buy,” but has not given the company a target price. The firm initiated coverage of the company on December 17, “highlighting the potential of [NexGen’s] Rook I Project situated adjacent to Fission Uranium’s PLS property in the Athabasca Basin.”
Case in point: Cantor picked out one hole drilled at the Arrow discovery at Rook 1 as “one of the best holes in Athabasca basin history.” The company just started another $8-million winter drill program, and other analysts have also suggested results so far at Arrow could signal a new uranium discovery.
Other companies mentioned
The firm also commented on some of the larger players in the uranium space. It upped its price target for Cameco (TSX:CCO) from $24.65 to $28.55 and gave Denison Mines (TSX:DML) a slightly lower price target of $1.80, down from a previous $1.85.
Ur-Energy (TSX:URE) also got a “buy” rating and an increased target price from Cantor ($2.90 up from $2.30) on the back of better-than-expected results of a preliminary economic assessment for its Shirley Basin in-situ project in Wyoming. Likewise, Cantor raised its price target for Uranium Energy (NYSEMKT:UEC) from $2.15 to $2.75. It noted that the company “continues to be one of the most sensitive companies to changes uranium pricing,” so its target price was increased along with the rise in Cantor’s higher long-term uranium price forecast.
Finally, though it isn’t a miner, Uranium Participation (TSX:U) was also mentioned. The company invests all of its interests in uranium concentrate and hexafluoride. Given its optimism regarding the uranium price, Cantor has given Uranium Participation a “buy” and upped its target price from $6.45 to $6.95.
“With the compelling supply and demand backdrop for uranium continuing, we believe Uranium Participation provides investors with the upside of the pending rise in uranium price without operational risks,” Cantor said. “We remind our readers that the current low price environment is unsustainable.”
Securities Disclosure: I, Teresa Matich, hold no direct investment in any of the companies mentioned in this article.
Editorial Disclosure: Kivalliq Energy and NexGen Energy are clients of the Investing News Network. This article is not paid-for content.