New Research Report on UEC

Dear Valued Subscribers, we are delighted to share with you an independent report that was conducted by Rodman & Renshaw on one of our favorite companies Uranium Energy Corporation (UEC).  The value proposition for UEC is just beginning! We encourage you to review the enclosed report.  In addition, we have enclosed recent interviews conducted by CEO Amir Adnani, and our exclusive interviews with Executive VP Scott Melbye and Rick Rule of Sprott Global Resource Investments, to provide additional insight into what we believe is one of the premiere names not just in the Uranium Sector, but in the Natural Resource Space!

Uranium Energy Corp.
UEC: Price: $1.58; Market Cap (M): $214
Rating: Buy; Price Target: $4.20
Heiko F. Ihle, CFA
Jake Sekelsky
2017 Outlook; Gearing Up for Higher Uranium Prices; Reiterate Buy
Click here for complete report and disclosures
On February 7, 2017, Uranium Energy Corp announced its 2017 outlook. We note that over the last few months uranium prices have rebounded strongly from lows of below $19.00 per pound to over $26.00 per pound. Given that UEC remains fully exposed to spot prices, this price improvement should have a direct impact on earnings once the firm restarts production. That said, for now management has committed to preserving its uranium resource in the ground during this period of historically low prices. We remain supporters of this strategy, as UEC has significant infrastructure in place to quickly ramp up production as prudent, including a full suite of assets such as a fully permitted processing plant and well-advanced projects.

Strong balance sheet to allow for opportunistic approach. On January 20, 2017, UEC closed an oversubscribed $26.0 million equity raise. We highlight that the capital raise was upsized from $10.0 million due to high demand. We view the upsized placement as not only a vote of confidence for the uranium sector, but also as a testament to the investment community’s support for UEC’s management team and strategy. Given the firm’s strong balance sheet, we feel further opportunistic acquisitions could be made for the right price. As an example, in March of 2016 the firm purchased a titanium asset in Paraguay, which we expect to receive greater visibility over the next few quarters. In short, we think management’s track record of purchasing assets for minimal cash outlay and extracting value from the neglected properties should continue to manifest itself while the uranium price recovery continues.

We believe a perfect storm could be brewing in the uranium market. In our view, supply, demand, and political forces could contribute towards continued positive price movement for uranium. The first major production cut came in 1Q17-and we believe this may be followed by more cuts. Kazatamprom, which accounts for approximately 40% of the world’s uranium output, announced a production cut of 10%, resulting in a decrease in worldwide uranium supply of approximately 4%. Moreover, the demand side of the equation remains strong as a total of 60 new reactors are being constructed. In our opinion, the driving force behind the nuclear renaissance here in the United States may be the recent change in Administration that appears to be focused on sourcing energy needs from within our borders. Given that the United States imports approximately 95% of its uranium, we think UEC is well positioned to potentially serve as a strategic source of uranium for U.S. energy requirements going forward.

We are reiterating our Buy rating and $4.20 per share price target on UEC. Our valuation is based on a DCF of future operations utilizing an 8.0% discount rate. To this, we add in-situ value for UEC’s significant resources in the ground coupled with a flat $25.0 million valuation for the firm’s exploratory-stage assets. We continue to view UEC as a leveraged play on increasing uranium prices and expect management to maintain its proactive stance with respect to further expanding its portfolio of assets.

Risks. 1) Uranium price risk; 2) operating and technical risk; 3) political risk; and 4) financial risk.

→ Click here for the Corporate Presentation ←

Uranium Energy Corp Issues Shareholder Letter and CEO Presentation

{Interview} Scott Melbye – Perfect Storm: Undervalued, Unloved, Uranium entering a period of strong nuclear growth

{Interview} Rick Rule – The Best People Beat The Best Commodities

Contact Rodman & Renshaw
Heiko F. Ihle, CFA
212-356-0510
hihle@rodm.com
Jake Sekelsky
212-356-0511
jsekelsky@rodm.com

 

Please note that the statements and opinions contained in this third-party report are being provided for informational purposes only and are not adopted by UEC.

Amir Adnani  |  President & CEO

URANIUM ENERGY CORP

Toll Free: 1-866-748-1030

NYSE MKT: UEC  |  www.uraniumenergy.com

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