Uranium Weekly
Uranium Equities Up Again — Signs of Life?
Uranium Equities advanced for the fifth week out of the last six as the global adjusted average EV/LB increased 2.2% this week to $1.88/lb of in‐situ U3O8. This is undoubtedly tied to the strength of the spot uranium price over the same period, with the spot U3O8 price holding firm this week at US$46.50/lb but up from the sub‐$42/lb level that it traded at for a significant part of the year. Since our July 8 update six weeks ago, 50 out of the 55 uranium companies in ourdatabase posted strong gains with an average return of 23.3% for the entire universe. This was led by Mawson Resources (MAW‐TSX) and Tournigan Energy (TVC‐TSX), which gained 80.5% and 80.0%, respectively.
Our comprehensive uranium database further highlights the strength in uranium equities this week with a data point that first appears negative on the surface. This week, the adjusted average EV/LB valuation for exploration phase companies plummeted 26.6% after soaring 30.1% last week. However, this decline was caused by the elimination of Hathor Exploration (HAT‐TSXV) from the adjusted average calculation as its $15.21/lb valuation was more than three standard deviations away from the group mean. The removal of this high valuation dropped the group average from $1.75/lb to the reported $1.26/lb, or by ‐28%.
In our top five “Deepest” relative value group, Continental Precious Minerals Inc.2 (SPECULATIVE BUY, Target $3.00, CZQ‐TSX) remains as the most undervalued uranium company on an EV/LB RVM basis; Bayswater Uranium Corp. (BYU‐TSXV) ousts U3O8 Corp. (UWE‐TSXV). In our top five “Over” valued category, Summit Resources Ltd. (SMM‐ASX) again replaces JNR Resources Inc. (JNN‐TSXV) as the most “over” valued in our unbiased, marketdriven relative valuation model; Extract Resources Ltd. (EXT‐ASX) swaps places
with Berkeley Resources Ltd. (BKY‐ASX) in the top five. Due to the “heating” up of the uranium sector, we would caution investors against shorting a uranium company at this time.
with Berkeley Resources Ltd. (BKY‐ASX) in the top five. Due to the “heating” up of the uranium sector, we would caution investors against shorting a uranium company at this time.
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