The annual reconstitution of the Russell indexes was completed on June 19, and this year’s update saw two companies in the uranium space make the cut. Uranium Energy was added to the Russell 3000® Index and the Russell Global® Index, while Energy Fuels took a spot on the Russell 3000® Index.
The annual reconstitution of the Russell indexes was completed on June 19, and this year’s update saw two companies in the uranium space make the cut.
The Russell 3000® Index measures the performance of the 3,000 largest US companies, representing about 98 percent of the investible US equity market. The criteria for being added to the index are fairly straightforward: member companies must meet market cap requirements, have a close price at or above US$1 on their primary exchange and have more than 5 percent of their shares available in the marketplace.
Here the Investing News Network looks at recent news from Uranium Energy and Energy Fuels, focusing on analyst commentary on why they are worth taking a closer look at.
Uranium Energy has been working hard to develop two of its Texas-based projects, both of which received the necessary permits at the end of May. Specifically, the company’s Palangana ISR mine was granted all permits for a planned expansion and is now fully permitted for extraction in new resource areas. In addition, Uranium Energy’s Burke Hollow ISR project received disposal well draft permits; according to Rob Chang of Cantor Fitzgerald, it has traditionally been difficult to obtain deep disposal well permits in the ISR space in the US.
Besides making progress at its properties, Uranium Energy has been securing sales deals, announcing earlier this month that it has received $3.08 million in cash from the sales of uranium inventory. Most recently, the company faced some legal backlash regarding its uranium stocks, with Pomerantz putting out a release last week stating that it is investigating claims on behalf of Uranium Energy investors. The company quickly responded to the allegations, and said they have “absolutely no merit and are comprised of unfounded allegations made by a third party whose motives are questionable.”
Chang agrees that the claims are questionable, and has said that “[t]he fact that two legal investigations were initiated solely off of an article disclosing a short position on the stock is baffling.” He also believes the 30-percent drop in the company’s share price following the news was irrational.
Energy Fuels has been working to acquire Uranerz Energy (TSX:URZ,NYSEMKT:URZ) for some time, and closed the deal this past Friday. There were mixed reviews about the deal initially, as some had raised concerns about merging two companies with different methods of producing uranium. Conversely, others were happy with the deal and thought the combined company would be stronger and more competitive in the US.
However, now that all is said and done, analysts are pointing at the positives. Chang noted in a research report that the merger gives the new company six long-term sales contracts, with total deliveries for this year expected to reach 1 million pounds at an average price of $59 per pound. Nichols Ranch, which is the newest ISR production center in the US, is of particular value, as it has a licensed capacity of 2 million pounds of U3O8 per year.
The vote of confidence from the Russell indexes reflected positively in the share prices of both companies. At end of day Monday, Energy Fuels was up 11.11 percent on the TSX, trading at C$6.30, and up 9.87 percent on NYSE MKT, trading at US$5.12. Uranium Energy saw a 13.06-percent boost up to $2.04 on the NYSE MKT.
Securities Disclosure: I, Kristen Moran, hold no direct investment in any of the companies mentioned in this article.
Editorial Disclosure: Energy Fuels is a client of the Investing News Network. This article is not paid-for content.