With uranium prices hitting the highest level in more than 12 years recently, it has also boosted the stock prices of most uranium companies.
We recently wrote about what we think is the top takeover target in the uranium space, but also believe Ur-Energy Inc. (NYSE:URG, TSX:URE) should attract the attention of uranium companies looking to add pounds and increase output as yellowcake demand is only expected to increase in the coming years.
Ur-Energy is a Wyoming-focused uranium mining company that owns the Lost Creek in-situ recovery (ISR) uranium facility, which has produced and packaged about 2.7 million pounds of uranium from Lost Creek since operations began 10 years ago.
ISR uses a solution to dissolve uranium ore and pump it to the surface for more processing, while leaving the ore where it is in the ground, with the resulting waste being considered less harmful and less radioactive than conventional mining methods, and usually at a lower cost.
Lost Creek has an estimated 11.9-million-pound Measured and Indicated resource as well as a 6.6-million-pound Inferred resource, with a 14-year remaining mine life that has had low output costs during past production.
Ur-Energy also owns the Shirley Basin ISR uranium project in Wyoming, which is expected to begin production in about two years. It has an estimated 8.8 million pound Measured and Indicated resource.
The company also holds about 224,000 pounds of uranium in inventory valued at about US$13.4 million, based on the recent spot price, and had approximately $63.7 million in cash in the bank as of the beginning of August.
PI Financial analysts, in a recent report, wrote that they believe Ur-Energy offers the "greatest torque" to the uranium price and now ranks as North America's second commercial uranium producer behind Cameco Corporation (TSX:CCO).
They also highlighted the company’s near-term, cash-flow growth.
Cameco would make sense as a suitor for Ur-Energy as the uranium giant has assets in Wyoming and neighboring Nebraska, and US production could be beneficial for Cameco as last year US nuclear power plant operators purchased 95% of its uranium from other countries, according to data from the US Energy Information Administration.
And with $2.5 billion in cash, cash equivalents and short-term investments on its balance sheet as of June 30, 2023, Cameco could easily swallow the sub $600 billion market cap Ur-Energy.
A company such as the $2 billion market cap Uranium Energy Corp could also be a potential merger partner for Ur-Energy, as Uranium Energy has two production-ready ISR hub and spoke platforms in Texas and Wyoming.
Shares of Ur-Energy have gained 34% year to date based on its current market price of C$2.08.
Contact Sean at sean@proactiveinvestors.com