Dundee Capital Markets rated Ur-Energy (TSE:URE) (NYSEMKT:URG), an exploration-stage mining company, as a BUY and increased its target price to C$1.85 from C$1.75.
Dundee made its assessment after the Littleton, Colorado-based company incorporated a refined mine plan averaging 0.9 mln pounds of U3O8 pa and slightly lower cash costs.
Ur-Energy is one of Dundee’s Top Picks for safety in that market, as well as its top defensive pick for 2016.
“URE continues to hit targets and improve operating efficiencies at the Lost Creek Mine in WY, and deliver into amongst the highest priced long term contracts in the uranium sector,” analyst David talbot wrote in a research note to investors.
“Recent operating results demonstrate improving flow rates and sustainable production,” he added.
The Lost Creek’s preliminary economic assessment (PEA) update incorporates multiple resource estimate updates and operating experience since production began two years ago.
Dundee said the PEA suggests decreased financial risk as margins near $30 per pound in a realistic, largely contracted price environment.
“A nine year LOM [life of mine] extension over previous studies increases project NPV, trims cash operating costs, and overall simply improves our confidence in Lost Creek,” Talbot noted. “Longer mine life was an obvious economic driver, and future resource growth is likely.”
Talbot said the project’s economics and cash cost are improving. Cash operating costs decreased to $11.87 from $13.64 per pound, excluding well field development, he added.
Talbot said that the stock is currently undervalued and that it outperformed peers recently.
Shares wavered on Thursday and were last up 1.2% at C$0.850 at 12:38 p.m. in Toronto. The stock has lost 26% over the past year, but was up 3.1% over the past three months.