DISCLAIMER: Any written content contained herein should be viewed strictly as analysis, observation & opinion and not in any way as investment advice. No compensation was received for this report. Visitors to this site are encouraged to conduct their own due diligence.
Since we've conducted the due diligence, built the models and love crunching numbers, we decided to create some sensitivity analysis with the goal of identifying which specific near term uranium project will offer the highest torque to rising (or conversely declining) uranium prices. Our sample size comprises Ur-Energy (URG), enCore Energy (EU) and Peninsula Energy (PENMF), all companies with U.S. based ISR projects expected to move forward and enter meaningful, long term production starting sometime between 2023-2025. The specific projects that we look at include Lost Creek (est. production 2023) and Shirley Basin (est. production 2025) owned by Ur-Energy, Alta Mesa (est. production 2024) and Dewey Burdock (est. production in late 2025) owned by enCore Energy and finally Lance (est. production in 2023) owned by Peninsula Energy. Note that we specifically exclude enCore's Energy's Rosita - despite an expected 2023 startup keep in mind the current LOM is only for 1.5 years.
As for base case assumptions, the sensitivities are based on $10/lb uranium price intervals, starting at a base of $60/lb and encompassing a range from $40/lb-$80/lb. Additionally, the specific output calculated is the pre-tax project NPV based on a constant 8% discount rate (though discount sensitivities range from 6%-10%, see the project specific tables below). The project lives are based on current technical studies, zero value is given to any potential resource exploration upside which may extend the project LOM. Keep in mind that these calculations are our own, as are the numerous estimates and assumptions which form the basis of our model driven valuation and analysis. Note as well that we exclude any current company specific hedges or contracts - we are strictly looking at the project value based on a given LT price. As for uranium price torque, the results are telling:
As can be seen, Lance offers the highest sensitivity to a uranium price swing of +/- $20/lb ranging from -120% to +120% while Lost Creek offers the least sensitivity, ranging from -75% to +75%. The highest to lowest sensitivity ranking are specifically: Lance +/- 120%, Alta Mesa +/- 98%, Dewey Burdock +/- 81%, Shirley Basin +/- 79% and Lost Creek +/-75%. More specifically:
The full project details for any of these companies can be found in the in the research repository posted above. More granular comparisons based on project LOM, cash costs, asset quality and corporate strategy can be found there. The purpose of today's analysis was strictly to quantify the specific change in project value (given our current forecasts) to LT uranium price sensitivities. Note that the current uranium spot price is ~$52/lb.
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