Laramide Resources (LAM) - End of Year Update & Investor Meetings, London

Laramide Resources Ltd. is a Canadian-based company with diversified uranium assets strategically positioned in the United States and Australia to deliver uranium to an increasingly energy-dependent world. The company owns large development stage uranium projects in the United States and Australia. The company's major assets include the Churchrock and Crownpoint ISR Projects in New Mexico, the La Sal and La Jara Mesa Projects in Utah, and the Westmoreland Uranium Project in Australia. 

Matt Gordon caught up with Marc Henderson, President, CEO, and Director, Laramide Resources. Marc is a chartered financial analyst with over 2 decades of experience leading public mineral exploration companies. He previously served as the CEO and President at Aquiline Resources Inc., which was acquired by Pan American Silver Corp. in 2009. He also served as the President of MinerFinders. His educational credentials include an economics degree from the University of Colorado. 

Company Overview

Laramide Resources is engaged in late-stage uranium development projects with good grades and low technical risk. The company was founded in 1980 and is headquartered in Toronto, Canada. Lagoon Creek Resources Pty. Ltd., Minera Lara S.A. De C.V., Laramide La Sal, Inc., Laramide Resources (USA) Inc., Westmoreland Resources Pty. Ltd., Hydro Resources Inc., and Tackle Resources Pty. Ltd. are the company's subsidiaries. The company is listed on the Toronto Stock Exchange (TSX-V: LAM) and the Australian Securities Exchange (ASX: LAM). 

The Uranium Market

The Uranium Market has seen a bull run in the past year. A major contributor to this run was the establishment of the SPUT (Sprott Physical Uranium Trust). SPUT was founded to purchase physical uranium supply from the market and has led to significant price jumps in the uranium spot market. 

The recent energy crisis has also escalated global efforts towards renewable and clean energy sources. This has led to an increased interest towards nuclear energy for power generation. In the past, a limited number of countries including the United States and France were involved with nuclear energy generation on a large scale. China recently announced a $400Bn investment for building 150 new nuclear reactors. 

China's announcement was a part of the country's effort to meet the growing energy needs of the country along with the need for reducing air pollution. The announcement also shows upcoming growth in demand for uranium supply in the market. 

The utilities market is gradually reacting to the oncoming jump in uranium's demand. During the last WNA (World Nuclear Association) Conference in London, Kazatomprom, the world's largest uranium producer and seller, talked about the growing uranium demands from China. The company said that China is expanding its energy capacity from 60 gigawatts to 200 gigawatts. 

Kazatomprom has made commitments to China for both existing and upcoming build-ups to develop this capacity. The company also stated its plans to halt exploration until 2030 while simultaneously cutting down production numbers by half at 30Mlbs per annum. A major consideration behind this decision is that a 60Mlbs supply is not sustainable in the long run and might lead to severe supply shortages in the near future. 

It is anticipated that 2 main catalysts will drive the uranium market in the coming. In a scenario where McArthur uranium mine re-enters production, a significant supply will be introduced to the market. Additionally, the SPUT's decision to purchase physical uranium supply has led to an increased interest in the utilities market. The SPUT has established itself as a known entity, making investors comfortable with big names in the market, leading to an increased liquidity in utilities. 

Australia's Stand on Nuclear Energy

Australia has upcoming federal elections in May 2022. Both competing parties are known to be pro-uranium. However, the states are in control of the sign-offs for environmental permits and resource allocation. The ruling party has advocated the use of nuclear energy as a way to address climate change. Overall, the geopolitical landscape in Australia surrounding nuclear energy remains largely unchanged. 

The increase in energy prices across Australia and Europe has also demonstrated a positive outlook towards nuclear energy as an alternative power source. 

Additionally, Queensland continues to license new mines for thermal coal. This indicated that the country is looking for a hybrid strategy to meet the growing energy demands while also working towards reducing overall emissions. 

Cash Position 

Laramide Resources successfully raised capital to pay for its US projects through warrants. This enabled the company to become fully financed through 2022, as the company does not have significant overhead expenses. The announcement where the Queensland Premier changed the position on nuclear energy had a positive impact on Laramide Resources' operations as a major part of its assets are based out of Western Australia. 

Ongoing Operations

Laramide Resources has a major Greenfield project in the Northern Territories. Its wholly-owned belt is contiguous with another property that was bought from Rio Tinto under a JV (Joint Venture) arrangement. The company carried out airborne surveys at this asset, leading to a $1Bn discovery. It is looking to develop the belt as a whole. The company anticipates that this deposit would feature a Westmoreland-style discovery. 

The company is working towards launching a big drill campaign next season. Before launching the drill program, the company is looking to carry out geophysics and geochemical surveys on the ground. Due to weather conditions, the company plans to initiate the drill program by April-May 2022. This is because the company needs to relocate a lot of equipment on-site. 

Laramide Resources is looking to carry out additional drilling at Westmoreland as the deposit has significant expansion potential. The company anticipates that these drill operations will lead to a 50Mlbs+ resource.

Laramide Resources' US assets are ISR (In Situ Leach Mining) based. This makes the project smaller in scale along with significantly lower CapEx (Capital Expenditure). The company anticipates that the project is evaluated at $30M with a 1Mlb annual production capacity. The company is looking to restart projects in the US and is expecting the process to be quick and highly cost-effective. 

The Utilities Spot Market

The company is looking to forge long-term business relationships in the utilities market. Business relationships for companies with larger portfolios enable offloading of larger supplies on the spot market. 

Based on the recent shortages, an increasing number of utility buyers and sellers are looking for contractual agreements to secure a consistent supply. The uranium spot market also has an increasing number of intermediaries selling the physical uranium supply to Sprott and other outlets for a mark up. The bulk purchase of physical uranium by SPUT has effectively created a supply vacuum in the spot market in recent weeks. 

Laramide Resources anticipates that smaller projects can choose to offload uranium supplies easily, without approaching the spot market. To offload a larger supply, it is paramount for companies to have meaningful, contractual relationships with utility buyers. 

As per Laramide Resources, the western utilities market is in flux. It appears that the German and the European market are falling back. Meanwhile, the American utilities market requires catching up to building a nuclear supply comparable to other nations. 

M&A Considerations

Laramide Resources' Churchrock project is an asset with a $300M CapEx with a potential $200M debt. The company is open to the idea of a potential M&A (Mergers and Acquisitions) in the future.

To find out more, go to the Laramide Website