The Conversation (0)
Apr. 16, 2014 02:48PM PST
Uranerz Energy has just joined the ranks of uranium producers.
The Wyoming-focused company started its mining operations this week at Nichols Ranch after having been issued clearance from the Nuclear Regulatory Commission. In a note to clients, Cantor Fitzgerald’s Rob Chang called the news a “transformational event” as Uranerz has now joined a select group of companies actively mining uranium.
What allows Nichols Ranch to produce in this weak price environment is the in-situ recovery (ISR) mining method being used. When compared to hard-rock mining, ISR generally comes out on the lower end of the cost curve due to lower capital costs and initial inlay costs.
As Dennis Higgs, chairman of Uranerz, explained to Uranium Investing News, Uranerz “was able to get into production within the $40-to-$50-million range of capital expenditure,” which is significant when compared to the steeper costs associated with hard-rock mining.
Beyond that, however, Higgs pointed to sales contracts that the company entered into in 2009, when uranium prices were thriving. Uranerz has several offtake agreements with two major US utilities, including Exelon (NYSE:EXC), which operates the largest nuclear fleet in the US. The company also has a toll processing agreement in place with Cameco (TSX:CCO,NYSE:CCJ), which is operates in the Powder River Basin.
Higgs said that Uranerz is looking to produce somewhere in the area of 300,000 to 400,000 pounds in 2014, hopefully ramping up to 500,000 to 600,000 in the coming year. Even so, Higgs warned that production ramp up does, to some extent, rely on uranium prices.
“If the uranium price next year were to double,” he said, “we’d be looking to significantly increase production.” Unfortunately, there is a trade off between rapid development and growth and a weak pricing environment.
Now that Uranerz has become the newest uranium producer in the US, investors might want to note the overwhelming concern of uranium supply security. The US currently consumes somewhere in the area of 50 million pounds of uranium per year, but its domestic production only contributes about 4 to 5 million pounds. With only five companies currently producing uranium in the US, domestic supply is still going to be a concern — so much so that Chang speculates that uranium produced in the US could command a premium in the future. That would be a good thing for producing companies like Uranerz.
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.
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Investor Insight
Generation Uranium offers investors high-leverage exposure to a potential major discovery in Canada’s underexplored and resource-rich Thelon Basin, led by a management team with a proven track record of securing high-value exits.
Overview
Generation Uranium (CSE:GEN, OTCQB:GENR, FRA:W85) is a Canadian exploration company focused on wealth creation through discovery within the uranium sector. The company’s primary strategy is to build a high-caliber exploration team that can rapidly test and drill high-potential targets, de-risking projects for potential takeover by larger producers. Currently centered in the prolific Thelon and Angikuni Basins of Nunavut, the company is also actively evaluating additional project acquisitions in the Athabasca Basin to expand its portfolio.
The company is led by a veteran management team with nearly 30 years of experience in mineral development. CEO Michael Collins has a significant track record of building and exiting public companies, including the co-founding of Bluerock Resources, a conventional uranium producer during the 2000-2008 cycle. This expertise is paired with a focused business model that leverages modern geophysical targeting to accelerate exploration timelines and reduce costs, ensuring the company can deliver results quickly in a bullish uranium market.
Company Highlights
- Strategic Location in a Premier Uranium District: The flagship Yath Project is located in Nunavut’s Thelon Basin, contiguous to ATHA Energy’s Angilak Project, which hosts the high-grade Lac 50 deposit.
- High-Grade Discovery Potential: Historical surface sampling at the Yath Project has yielded exceptional uranium grades, including boulders testing at 9.81 percent, 3.95 percent, and 2.14 percent U3O8.
- Expert Management with Exit Experience: Led by CEO Michael Collins, the team has decades of experience in mineral exploration and a history of co-founding companies that were later acquired, such as Prime Mining and Nuclear Fuels.
- Low-Cost, Rapid Exploration Strategy: By leveraging modern geophysics and extensive historical data, the company aims for a "short road to discovery," de-risking projects quickly to maximize shareholder value.
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Key Project
Yath Project - Nunavut, Canada
The Yath Project is Generation Uranium’s flagship project. This 100 percent owned property covers about 120 square kilometers within the underexplored Thelon Basin in Nunavut, Canada. The project is located where the Yathkyed and Angikuni sub-basins meet, which is a region known globally for high-grade uranium potential. It sits directly along the same trend as the Angilak Project owned by ATHA Energy (TSXV:SASK, OTCQB:SASFK, FWB:XSU.F), which contains the Lac 50 deposit, one of the highest-grade uranium resources found outside of the Athabasca Basin with a historical mineral resource estimate of 43.3M lbs at an average grade of 0.69 percent U3O8.
The Yath Project is contiguous to the Lac 50 trend and is crossed by several regional faults and basin boundaries. Past exploration work has already identified high priority targets, while surface sampling in the area has produced uranium grades from boulders, with some testing at 9.81 percent, 3.95 percent, and 2.14 percent U3O8.
The company has commenced its initial field program at the site, set to define and rank drill targets. Historic showings will be combined with new anomalies from the MMT geophysics survey, preparing the project for an anticipated drill permit.
Management Team
Michael Collins - CEO & Director
Michael Collins is a professional geoscientist with nearly 30 years of experience in mineral exploration. He has co-founded several public companies, including Exploits Discovery, Prime Mining (acquired in 2025), and Nuclear Fuels (merged with Premier American Uranium in 2025). He is also currently a director of First Atlantic Nickel.
Christoph Bruening - Director
Christoph Bruening is the founder and managing partner of Value Relations GmbH, a full-service investor relations and public relations agency in Frankfurt with over 25 years of excellence, focusing on mining, exploration, biotech and health care. In addition, he has listed over 600 companies on the Frankfurt Stock Exchange and is a speaker and author of several publications, including on rare earths and uranium.
Dallas Miller - Director
Dallas Miller has been working within the international mining industry for over 15 years, working with BHP and Santos Ltd. He has experience on the ground from an operational standpoint, as well as being an integral part of raising millions of dollars in capital funding for both private and public companies in recent years.
Roger Leschuk - VP Corporate Development
Roger Leschuk has been in corporate management for over two decades, with the past 15 years dedicated to corporate development and investor relations. He has experience participating in and assisting with mergers and acquisitions, and was an investment advisor for various services such as stocks, mutual funds and tax-sheltered investments. He is a Chartered Investment Manager and a Fellow of the Canadian Securities Institute.
Monty Sutton - CFO
Monty Sutton brings over 35 years of experience in public markets and corporate governance. He previously served as CFO for Nuclear Fuels from its IPO through its acquisition.
