The Conversation (0)
May. 06, 2013 04:00AM PST
In a recent research note, Raymond James revised its uranium prices and shared its 3 top picks in the uranium space.
Despite having reported a cut in its short term price forecast for uranium, in a recent revision of uranium supply demand fundamentals, Raymond James analyst David Sadowski writes that “we retain conviction of a global shortfall situation commencing in 2014, which should result in sustained, higher uranium prices.”
With prices trailing below $50/lb so far this year, Raymond James has reduced its 2013 uranium price forecast to US$45 per pound from $58/lb. However, despite lowering its estimates, the firm feels that uranium has the potential to move towards the $50/lb range by year-end. For 2014, Raymond James sees uranium at $45/lb, and remains bullish on uranium’s long term fundamentals, maintaining its original outlook of $70/lb.
Raymond James recommends investors look at “quality uranium equities with compelling near-term catalysts,” that can weather current lows and benefit from the inevitable rising price. Among Raymond James’ top picks sit Cameco (TSX:CCO), Denison Mines (TSX:DML) and Kivalliq (TSXV:KIV).
Top 3 picks
Cameco is Sadowski’s top pick for uranium producer, calling it the “go-to” blue-chip name in the uranium space. The company is a low-cost producer with a low risk profile. Cameco is one of the largest uranium producers with the two top high-grade uranium mines, McArthur River and Cigar Lake, located in Saskatchewan’s Athabasca Basin.
Investors should be on the lookout for the start-up of Cigar Lake, slated for mid-year with first production delivered in Q4.
As far as development projects go, Denison is Sadowski’s top pick. The company is working on developing its Wheeler River Phoenix deposit located between the McArthur River and McClean Lake mill. Phoenix has roughly 60 million pounds of uranium, at 16.5 percent grading, making it the third highest grade uranium deposit in the world, after Cameco’s McArthur River and Cigar Lake deposits. With the finalized acquisition of Fission Energy’s assets, Denison is poised to be a premier uranium miner.
Denison has several upcoming catalysts that investors might want to note. The company is working on resuming operations at the McClean Lake mill, as well as starting a summer drill program at Wheeler River.
Raymond James continues to believe that Denison Mines could be a potential takeover target for either Rio Tinto (NYSE:RIO), Cameco or Asian nuclear utilities.
Kivalliq Energy is Raymond James’ top exploration company pick. With its projects located outside the Athabasca Basin, the firm views this junior as “one of the most exciting uranium explorecos operating today.”
So far, Kivalliq is off to a strong 2013, kicked off by a 60-percent increase in its previous resource estimate for the Lac 50 Trend in January, and new discoveries at the Angilak property in April. For the remainder of the year, Kivalliq has a number of upcoming catalysts that include preliminary results from its 3,000- to 4,000-meter phase 1 drill program at the Angilak deposit, which are expected over the next several weeks, as well as assay results, further drilling during the summer months, followed up by a potential resource update in the new year. The company expects a maiden preliminary economic assessment in early 2014.
Other considerations
Raymond James also had a look at several other uranium companies that could be valuable assets for an investor. The firm looked at Paladin (TSX:PDN), highlighting its improving operations and looming asset sale, which should significantly reduce debt.
UEX Corp. (TSX:UEX) owns 49 percent of Shea Creek, which is noted as one of the largest undeveloped resources in the Athabasca Basin. Raymond James believes the project has “superb exploration upside.” Ur-Energy (TSX:URE) is working towards production on Lost Creek in Wyoming; investors should look out for that in late 2013.
Featured Energy Investing Stocks
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.
- Bullish Market Fundamentals: Generation Uranium is well-positioned to meet the growing global demand for carbon-free nuclear power, supported by a projected supply deficit and increased interest from major tech companies seeking clean energy.
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.
