Uranium Energy Corp (NYSE MKT:UEC) had its “Buy” rating and US$4.20 price target reiterated by analysts at HCWainwright, who consider the Texas based uranium miner to offer investors an opportunity as M&A activity in the sectors starts to build up interest, despite the efforts of “baseless” short-sellers.
Analyst Heiko Ihle in a note to investors on July 7, noted that the mergers of Energy Fuels (NYSE MKT UUUU), which he also rates a Buy, and Uranerz, in addition to the proposed merger of Denison Mines (TSE:DML) (NYSE MKT:DNN) and Fission Uranium Corp (TSE:FCU) (OTCQX:FCUUF) announced this week “bodes well for Uranium Energy as the company is well positioned with a strong portfolio of Unites States based uranium assets…and could be an attractive bolt-on ISR acquisition for a larger uranium company”. Nevertheless, said Ihle, “We view the firm as more likely to be an acquirer in an active transactional market.”
Ihle points out that legal efforts to block the Uranerz/Energy Fuels merger were proven pointless given that the transaction “was consummated without a hitch.”
Recently, Uranium Energy announced a $10.0 million financing, giving the company “ample liquidity to weather the current downturn in the uranium spot market, “said Ihle, who quelled fears of dilution, noting that “the infusion of liquidity should allow the firm to maintain its stance to preserve its high quality asset base for a higher spot uranium price environment rather than selling into the currently depressed spot market”.
Uranium Energy is poised for growth, with the company planning to return its Palangana mine in Texas to commercial production once uranium spot pricing improves. Currently, the mine is being operated on a small scale, stockpiling inventory.
As for the short selling, Ihle says this may have been prompted by a news item from mid-June that said Uranium Energy had low sales and an 80,000 pound inventory sale for approximately $3.0 million that failed to mention “that the firm has openly dictated the strategy to the market in order to reduce its selling into the spot market at current prices.”
Meanwhile, permitting at its Burke Hollow project continues to advance, with the mine permit and aquifer exemption applications progressing into the technical review stage with the Texas Commission of Environmental Quality.
The company has also submitted two waste disposal well applications and the radioactive material license, with all of these permits representing the last meaningful requirements at the state level to permit the project.
Last November, the company announced 5.1 million pounds of inferred resources at its Burke Hollow asset, with management stating that substantial exploration upside remains at the site given that more than half of the project is still unexplored.
Shares rose 2.4 percent to $1.28 on Tuesday in New York.