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Ron Hera
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Ron Hera, founder of Hera Research, LLC, and the principal author of the Hera Research Newsletter holds a master's degree from Stanford University and is a member of Mensa and of the Ludwig von Mises Institute. A native Californian, Ron is a self described "escapee" from Silicon... More
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  • Analyst Report: Uranium Energy Corp (NYSE:UEC)

    Uranium Energy Corp is a uranium mining, development and exploration company operating the newest in situ recovery (NYSEMKT:ISR) uranium mine in the U.S. The company, which has $26 million in cash and no debt, is one of only 5 U.S. uranium producers. Compared to conventional uranium mining, ISR is a less costly and environmentally unobtrusive method of mining that poses virtually no risk to human life.

    Uranium Energy's cumulative production, as of April 30, 2012, was 273,000 pounds of uranium at an average cash cost of $18 per pound. The company has sold 120,000 pounds of uranium at an average price of $52 per pound, generating $6.2 million in revenues while retaining 153,000 pounds of uranium with a current spot market value of approximately $8 million. The company's production is un-hedged. The company plans to reach an annual production rate of 1 million pounds of uranium per year.

    The company's currently operating Hobson uranium processing plant is central to its ISR projects in the South Texas Uranium Belt, which include the producing Palangana project, the much larger Goliad project, the development and exploration stage Salvo project, and the exploration stage Nichols, Burke Hollow and Channen projects. The company's six South Texas projects span 45,965 acres and contain approximately 13.2 million pounds of NI 43-101 compliant uranium resources.

    In addition to achieving production status in Texas, the company has capitalized on lower uranium prices to aggressively expand its project portfolio.

    Outside of the company's hub-and-spoke operation in Texas, the company has an additional 19 projects in the U.S. with total NI 43-101 compliant resources of approximately 47.8 million pounds of uranium, not including historical resources. The company controls one of the largest historical uranium exploration databases in the U.S.
    As a practical matter, the world needs nuclear energy. Despite the 2011 nuclear disaster in Fukushima, Japan, approximately 433 nuclear reactors remain online in 30 countries worldwide. In recent years, crude oil prices have risen, substantially because of China's growing demand for energy. There are 63 new nuclear reactors are currently under construction and 26 of them are located in China. Uranium is a strategic resource in North America. Over 100 nuclear reactors are currently operating in the United States. There are more than 150 nuclear powered naval vessels worldwide.

    Uranium mine supply is inadequate to meet existing demand. The Megatons to Megawatts uranium recycling program, resulting from the 1993 Highly Enriched Uranium (HEU) treaty between the U.S. and Russia, increased uranium supply to the market for roughly 2 decades, but the program will end in 2013. A uranium supply gap is developing that will become evident in 2014. Higher uranium prices will be necessary for uranium mine supply to increase.

    Low uranium prices and the Fukushima disaster led to an indiscriminate sell off in uranium mining shares in 2011. In response to the depressed share market, Uranium Energy began an aggressive series of acquisitions, increased the scope of its exploration activities and more than doubled its resources without losing focus on its expanding operations in South Texas. The company has been successful in developing a very large project pipeline with enormous resource expansion potential without excessive share dilution. Having sacrificed near term profitability in exchange for long term resource growth, the company's share price, which recently fell to a new 52-week low, has suffered heavily. Nonetheless, Uranium Energy has a strong balance sheet with no debt and has shown consistent operational and business execution, while greatly expanding its resources and increasing its production.

    ISR is a low cost, low risk, environmentally friendly method of uranium mining that is operationally profitable at or below current uranium prices. Uranium Energy is well positioned as a fast growing, low-cost producer in the U.S. with a strong production growth profile and a large project pipeline. Uranium Energy is a strategic resource play. Over the next two years, the company will be in a winning position vis-à-vis uranium supply and demand fundamentals and higher uranium prices. As its production and revenues continue to ramp up, the company is likely to be revalued in the next 12 to 18 months.

    Uranium Energy Corp (NYSE:UEC)

    Disclosure: I am long UEC.

    Jun 16 4:51 PM | Link | Comment!
  • Analyst Report: Fortuna Silver Mines, Inc. (TSX:FVI / NYSE:FSM / BVL:FVI / FSE:F4S)

    Established in 2005, Fortuna Silver Mines is a growing, low-cost silver producer with two operating mines in Peru and Mexico. The company is focused on organic growth in production and resources, as well as on exploration and acquisition of economic silver mineral assets in Latin America.

    Fortuna expects to increase production from an estimated 3.7M oz of silver and 17,400 oz of gold in 2012 (4.6M silver equivalent oz) to an estimated 5M oz of silver and 26,000 oz of gold, not including significant lead and zinc by-products, by 2014. In 2014, the company projects total production of 6.4M silver equivalent oz, a 39% increase. In 2011, the company's net realized price per ounce of silver sold was over $30 USD.

    The company is profitable and growing in terms of mineral assets, production and revenues. The company's low cash costs suggest that profits will grow in step with increasing production. Production is expected to increase 39% in the next 24 months. The company's share price is near its 52-week low. The company's execution has been very consistent. All other things being equal, the company's share price seems likely to rise from recent lows.

    For comparison, First Majestic Silver Corp. (TSX:FR / NYSE:AG) has consistently increased its mineral assets, production and revenues while developing new mines and maintaining relatively low production costs. Fortuna Silver Mines is well positioned to become the next First Majestic.

    Fortuna Silver Mines, Inc. (TSX:FVI / NYSE:FSM / BVL:FVI / FSE:F4S)

    Disclosure: I am long FSM, AG.

    Jun 16 4:46 PM | Link | Comment!
  • The Petro Profit Report

    Oil and gasoline prices continue to rise after collapsing in 2008 following the financial crisis. Consumers and businesses once again are struggling to keep up with rising energy costs. In fact, rising energy costs affect 95% of the economy. The costs of doing business and heating your home have become more expensive.

    The oil prices and gasoline prices will continue to go higher in the long run due to many factors. The emerging market such as China, India and Brazil are growing rapidly. The consequence of this will be more energy consumption. According to BP, the global energy consumption is expected to grow 39% by 2030. A recent IEA report said that demand for oil in developing countries will grow 1.2 million barrels per day (bpd) while oil demand in developed countries will shrink 400,000 bpd.

    Another factor is that central banks all over the world are stimulating the economy with cheap money. This makes oil and gasoline more expensive with the fiat currencies. Also, government interventions in the oil market such as taxes, royalties, threats of nationalization and regulations create under investment in the public and private oil companies to find, develop and refine more oil.

    Unfortunately, there is no substitute for oil and gasoline that is economical and cheap. Consumers and businesses have no choice but to hedge against rising energy costs. One of the ways to protect your holdings is to invest in the futures market. The futures market is a place for professional investors in the commodity industry. The futures market focuses on farm futures, commodity futures, energy futures and transportation.

    Jun 15 1:12 PM | Link | Comment!
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