Energy Fuels Inc (TSE:EFR, NYSEMKT:EFR) provides the investor with good exposure to a potential rise in uranium prices and has a strong portfolio of assets, according to house broker Rodman & Renshaw.
It has repeated a 'buy' rating and targets C$5 a share, which is more than double where they are now at C$2.10.
Rodman scribe Heiko F Ihle is not the only analyst to have been upbeat on the stock recently.
Brien Lundin in the Gold Newsletter says he's long admired the firm's uranium projects in the US, and it has all the makings of a producer in the near term. He repeated a 'buy'.
What are its assets...?
Energy has the White Mesa conventional mill in Utah, which has a licensed capacity of over 8mln pounds of U308 a year, providing good potential to scale up output.
It also owns the Nichols Ranch ISR (in situ recovery) project in Wyoming and ISR assets in Texas that are collectively named Alta Mesa.
Nichols Ranch has total licensed capacity of 2mln pounds of uranium a year, production began in 2014 and it has significant expansion potential.
In situ mining, put simply, is where a leaching method is used to dissolve and then extract the uranium out of the rock.
The advantages of the method are said to include lower capital costs to develop the mine and no waste rock, tailings pond.
In another of its conventional assets - the Canyon mine in Arizona - production is expected to begin as early as 2017. It has an inferred resource of 1.6mln pounds of uranium at an average grade of .98% - the highest grade uranium mine being developed in the US.
An improving uranium outlook...
After lagging for many years, many analysts believe the long term outlook is improving, premised on the building of more nuclear reactors, which will need to be fuelled.
In May a contract between Argentina and China was signed for two rectors in the South American Country. India is also forging ahead with a nuclear power program.
At the beginning of the year, Kazakhstan's decision to curtail output by 10% from its mines meant 3% of global production was taken off the table.
Then later this year, the US Department of Energy have made large cuts to the amount it puts out to market, which should also be a boon.
Canyon mine making progress..
In May this year, Energy said that at the Canyon mine it has more or less completed the production shaft and the core drilling program to delineate the deposit.
It has also completed some 300 feet of lateral development work on the 1,400 foot level.
The firm also announced positive exploration results from the mine, which included drill holes that had strong uranium and copper intercepts.
For example, hole 43 returned 0.81% uranium and 11.95% copper over a total of 120 meters.
Rodman analyst Ihle says he would not be surprised to see a significant upgrade at the Canyon Mine resource estimate later this year.
Meanwhile, at Nichols Ranch, the group now has all of the necessary permits, licenses, and approvals needed to extend the project to the Jane Dough wellfields.
It now has an additional 22 header houses (for processing of the uranium) at its disposal, which can quickly be used for operation should uranium prices rise for a length of time.
"In short, we think that significant near-term, low-cost production remains available for the company should prices begin to recover," says Ihle.
Production for rest of 2017 expected to improve...
In the first quarter, uranium output was 92,000 pounds, while 60,000 pounds were sold in a long-term contract at an average realized price of $58.28 per pound.
Production remained intentionally subdued,notes Rodman, mainly due to weak uranium prices, and lower sales volume was due to the timing of scheduled contract sales.
"We note that production guidance was lowered from 800,000 pounds to 675,000 pounds, mostly due to lower expected recoveries at Nichols Ranch, coupled with lower initial recoveries of tailings pond returns at White Mesa.
"That said, production over the remainder of the year is expected to improve over 1Q17 levels' it adds.