UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

UEX Corporation is a Canadian uranium exploration and development company formed in 2002 under an agreement between Cameco Corporation and Pioneer Metals Corporation. The company is listed on the Toronto Stock Exchange (TSX-V: UEX), and the OTC Markets (OTCQX: UEXCF). The company is an active explorer in the Athabasca Basin in northern Saskatchewan, the most important uranium-producing district in the world, accounting for 16% of the global uranium production in 2014. 

Matt Gordon caught up with Roger Lemaitre, President, CEO, and Director, UEX Corp. Roger is a Professional Engineer and Geologist with over 2 decades of experience with senior and junior mining companies. He previously served as the CEO and Executive Director at URU Metals Limited. Over the course of his career, Roger has held numerous senior management positions including the Director of World Exploration Projects for Cameco Corporation. His educational credentials include a Master of Applied Science degree in Geology from McGill University, a Bachelor of Applied Science degree in Geological Engineering from Queen's University, and an MBA from Athabasca University. 

Company Overview

UEX Corp. has made significant advancements in the discovery and development of new and existing uranium and cobalt deposits in the Athabasca Basin. The company has 4 flagship projects in its portfolio, the Christie Lake Project, the West Bear cobalt-nickel project, the Horseshoe-Raven Deposit, and the Shea Creek property. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

UEX Corp. has a large resource space through its own direct assets along with the assets owned through JCU (Canada) Exploration Ltd. The company is an explorer, which also provides it a development angle, a rare feature in the uranium space. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

The Uranium Market

UEX Corp. anticipates that the recent developments in Kazakhstan demonstrate the untapped potential of the uranium market within the country. It expects that there will be a flood of uranium supply to the market through Kazatomprom and the Kazakh ministry, the entity that controls the country's uranium fields. 

Notably, Kazatomprom signed a supply contract for natural uranium concentrates with China. This contract is a way for Chinese energy companies to meet the country's growing demands. There are indications that this can potentially cause small-scale damage to the uranium supply chain. 

The SPUT (Sprott Physical Uranium Trust) also saw market activity, as the trust purchased an additional 2 million pounds of uranium from the market. UEX Corp anticipates that the market volatility in the uranium space won't be as extreme as seen between August-October last year. 

There has been an increase in the Canadian uranium equity space in the last 18 months. There have been indications of higher trade volumes in the US compared to Canada in the past 6 months. The company predicts that SPUT's NYSE listing will lead to a change in the volume of uranium in the market, while the behavior of uranium pricing will remain largely unaffected. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

Listing Considerations

UEX Corp has a current market cap of $250M. The company is considering making changes to its existing share structure. It is currently evaluating various exchanges for listing considerations. As per the company, the listing is cheaper, however, the compliance procedure is considerably expensive. SEC compliance is known for being highly rigorous and requires additional support staff and lawyers. 

Ongoing Operations

UEX Corp acquired 50% of JCU's assets in 2021. This year, the company is looking to increase the pace of its operations for JCU and its own assets. All the JCU assets are operated by partners as JV (Joint Venture) assets. These assets have 2 upcoming drill programs planned in the winter season. 

Denison Mines Corp announced the Wheeler River Feasibility Study last year in September. Notably, Denison acquired 50% of UEX Corp's JCU assets for settling a $20.45M loan from the JCU transaction. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

UEX Corp. anticipates that 2022 will have a significant operational increase in company-owned assets. The company spent $2.3-$2.4M on exploration in the previous year as it was focused on the JCU takeover. As a result, the company did not raise additional capital but focused on ramping up the summer exploration work. The company intends to achieve a 4x increase in its exploration budget for 2022. 

The focus for 2022 is on the core assets that are controlled by the company including the Christie Lake and Hidden Bay projects. The company intends to carry out maintenance and grassroots work at these projects and has allocated $8.5M for the same. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

The 2 drill programs on the JCU assets will commence in winter and a part of it is expected to continue into the summer. The Waterfound River Project has been allocated $2M for geophysics and drill operations. A hole with over 5% was identified at this deposit 2 years back. This hole originates from the late 80s. There have been surrounding holes drilled and the company is looking to expand the deposit as it continues to work along the trend. 

A second drill program is planned for the region located west of the McClean Lake operations. This property is being operated both directly and as a partner project with Denison. UEX Corp. is looking to conduct a small drill program here and has allocated $800,000 in capital for the same. This project has similar characteristics to the company's Hidden Bay project. As a result, a small capital deployment can provide a large number of holes. This is because a lot of holes feature 100m or less sandstone. The company anticipates that an $800,000 budget will enable it to drill 15-16 holes. 

At the Wheeler River Project, the company intends to spend a bulk of its allocated capital on engineering test work and Feasibility Study. The allocated capital is a part of the funds that UEX Corp inherited during the JCU acquisition. As a result, the company does not need to allocate out-of-pocket capital for running operations on its JCU portfolio in 2022. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

UEX Corp has a large portfolio of assets. It currently does not plan on spending additional capital on PR and Marketing. Instead, it is deploying capital for asset development. The company is looking to make new discoveries at the lowest risk profile. 

The company does not plan on targeting the Michael Lake project in 2022. This is because Michael Lake is a cobalt project and the company's investors want it to focus on uranium assets. The company has made several discoveries in the past 2 years, however, it is looking to make additional discoveries to gain market recognition. Its asset portfolio features mid-stage resource level assets which provide a low-cost profile. 

UEX Corp intends to spend the majority of its financial resources towards new discoveries on higher-end exploration projects as these offer peak revenue generation. The company is also looking to monetize its earlier-stage assets. It is currently in discussions with multiple interested parties. However, the two barriers for entry for deals are the price being offered and whether the interested party possesses the skill and resources to operate the project. 

The company is open to moving one of its assets this year, given the offered price is fair. The company is currently in discussions with 2 parties for partnership considerations, the details for which were not disclosed at this time. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

The West Bear cobalt-nickel Project

UEX Corp is looking to offload its 100%-owned West Bear cobalt-nickel Project. However, the company is mainly being approached for its uranium assets. In the past 3 months, cobalt has seen a lack of interest from the investors' point of view. 

Despite the company offering a sale or partnership deal, its cobalt asset hasn't received any offers from the market. It is looking for a deal that enables the company to stay involved in the project. Notably, the West Bear cobalt-nickel Project features a unique satellite spoke model. 

The company is looking to spend between $3M-$3.5M on the West Bear cobalt-nickel Project to demonstrate the asset's scale. The company has plans to test the next 2 targets on the West Bear property that are analogous to the Michael Lake target. The company has a target for producing up to 1% of the market resource over a decade-long period. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

Targets 2022 and Beyond

UEX Corp. raised $2.5M in capital by way of flow-through funds in 2021. The funds were raised for the company's exploration budget for the next year. Previously, the company faced a challenging situation where it sought help from drilling contractors and contractors. Due to the recent gold boom, the company found it difficult to get the required material supply from its contractors. This led to a 2-month delay in the company's operations. 

The company is looking to sidestep this issue in the future by signing deals with contractors by November-December. Additionally, it seeks to ensure that sufficient capital is available for a drill commitment plan. 

The capital raised by the company was a way to secure funding as its stock price was moving backward. The capital raise was done directly by way of flow-through funds, leading to a cheaper raise. It does not plan on raising additional funds as the current capital will enable it to carry out operations as planned. 

The company is looking to allocate financial resources to its cobalt asset and towards advancing the Michael Lake resource. The company anticipates that drilling new holes, working towards a discovery will help drive investor interest. 

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

There are indications from the market that uranium pricing will hover around the $50 mark. This price point has the potential to generate a lot of interest from the market, especially for the Athabasca companies. The uranium pricing will also enable the company to restart the McArthur River project. A uranium pricing of around $50 will provide investor margin for the Arrow project, the Triple R project, and the projects under Denison. The company is also looking to advance its Millennium and Horseshoe-Raven projects. 

UEX Corp's capital raise has enabled the company to fund its drill programs. The company also has plans for advancing the Michael Lake project. It is estimated that an investment of $4M-$5M will allow the company to set the project free and enable it to run operations for a year. The company is also looking at its other assets that can be freed by signing the right deal and bringing in the right people. 

The company intends to develop a smaller portfolio of uranium exploration projects. It is looking to spin out some of its grassroots-level assets. The company believes that the spin-out strategy can work in 2022 as it has the flexibility to raise additional funds if required. The company is considering floating its grassroots-level assets in the market for the next 12-24 months.

UEX Corp (UEX) - Drilling Budget Quadrupled & Expect Regular News

To find out more, go to the UEX Corporation website

FAQs
Start your free trial
What is Crux Investor?
Crux Investor an app that provides monthly stock recommendations from world-class analysts in quick, easy-to-understand Memos. The truth is – everyone wants to invest, but it's almost impossible to know what to invest in unless you’re a professional. Crux fills the gap and makes building a long-term investing portfolio effortless.
Start your free trial
You might also like
Chile's copper and lithium industry: Rejecting nationalisation reports
March 29, 2022
Meet the App that’s Revolutionizing Investing for Everyday People
March 28, 2022
Unpicking the African uranium narrative for retail investors
March 15, 2022
How to invest in index funds for beginners
March 14, 2022
How to invest in the current gold environment
March 14, 2022
Illustrated gold bars
Start your free trial
Sign up now to discover great long-term stocks and stay in-the-know with market news
Start your free trial