Energy Fuels Increases Stake in Lower-cost ISR Production with Mestena Uranium Buy

Leading US uranium producer Energy Fuels (TSX:EFR,NYSEMKT:UUUU) kicked off the first full week of March with the acquisition of Mestena Uranium, a well-known, closely held uranium producer that holds the Alta Mesa ISR project in Texas.
To facilitate the transaction, which is expected to close on May 4 of this year, Energy Fuels will issue roughly 4.5 million shares to the current owners of Mestena.
For investors unfamiliar with Mestena’s Alta Mesa project, it is a fully permitted and constructed ISR operation, complete with processing facility, and a well-established track record of lower-cost uranium production. Alta Mesa brings with it a large land package of 195,501 contiguous acres, including 4,575 acres currently under a lease and mining permit. The remaining 190,926 acres are under a lease option and exploration/testing permit.
Between October 2005 and November 2013, Alta Mesa produced a total of 4.6 million pounds of uranium. As a past-producing mine, Alta Mesa is currently on standby, and is ready to be restarted once the uranium market starts moving in a more positive direction.

Adding to low-cost production profile

Energy Fuels has a longstanding position as the only conventional uranium producer in the US. The company has benefited greatly from a portfolio of conventional uranium projects in Wyoming, Utah and Arizona. However, given the sluggish nature of the uranium market, the company has turned to diversifying its uranium asset base.
In June 2015, Energy Fuels made its first acquisition in the ISR space through the purchase of Uranerz. The buy provided the company with access to the Nichols Ranch ISR mine. Now, with the acquisition of Mestena, Energy Fuels has created significant value for shareholders.
“Most importantly, the Alta Mesa Project is fully-permitted and constructed, and ready to go into production within a short period of time,” Stephen Antony, CEO of Energy Fuels, said in a company statement. “This mine definitely produced on the lower end of the global cost curve,” he added in conversation with BNN.

Energy Fuels increases interest in Roca Honda

Apart from the acquisition of Mestena, Energy Fuels announced on March 4 that it has entered into a non-binding letter of intent with Sumitomo (TSE:8053) to acquire a 40-percent interest in the Roca Honda project.
Roca Honda, as investors may be aware, is one of the largest and highest-grade uranium projects in the US. By buying Sumitomo’s stake in the project, Energy Fuels will become the full owner of Roca Honda, which boasts also boasts an attractive cost profile and total expected production of 25 million pounds of uranium over its nine-year life.
“With the expected acquisition of the remaining interest in the Roca Honda Project from Sumitomo, we will have obtained 100% control over a World-class uranium project in the advanced stages of permitting.  This is particularly valuable to us, because we also own the only operating mill that can produce the uranium extracted from the Roca Honda Project,” Antony said at the time.

Bottom line

“We have an array of projects. And that’s one thing that makes Energy Fuels different,” Antony emphasized on BNN. Indeed, with the largest NI 43-101 compliant resource in the US, spread over several production sources, the company is stacking the deck in its favor.
Unfortunately, like many other players in the sector, the depressed uranium price has made it tough for companies like Energy Fuels. However, as the only conventional and ISR producer in the US, the company will certainly be ready when the market finally does pick up.
On the back of the acquisition news, Energy Fuels saw its share price increase by 4.85 percent to end the day at $3.89.
 
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article. 
Editorial Disclosure: Energy Fuels is a client of the Investing News Network. This article is not paid-for content