As of today, February 26th, I counted 23 Canadian-listed uranium juniors (among the roughly 40 I monitor) that are up AT LEAST 100%, and as much as 500%!!, from their respective 52-week lows. Yet, even after a strong day on February 25th, Powertech Uranium [PWE.to] is up only 25% to 7.5c from its 52-week low of 6.0c. This, despite the fact that Powertech recently received great news from the NRC on the environmental permitting front,
Here's a quote from a January 30, 2014 press release from Powertech, "A proposed uranium mine in southwestern South Dakota [Dewey Burdock] cleared a key regulatory hurdle Thursday when a federal agency issued a favorable environmental assessment of the project. The U.S. Nuclear Regulatory Commission said its final supplemental environmental impact statement found there is nothing that would preclude licensing the proposed Dewey-Burdock mine. The report said the project would generally have small impacts on the area's soil, water, air and economy."
THE BEST YET TO COME?
Importantly, this morning's news regarding the proposed acquisition of Alex Molyneux's Azarga Resources, coupled with the meaningful under-performance of Powertech's stock and the favorable NRC ruling, could set PWE.to up for a powerful upswing. If approved by shareholders, the new entity, to be called Azarga Uranium Corp., "AUC" would have ample liquidity through cash / undrawn debt facilities totaling US$13 million and attributable uranium resources of approximately 94 million lbs. It would be very difficult to overstate the significance of the pro forma $13 million of unrestricted liquidity, equal to approximately 25% of the upfront capital estimated to be requited to get Dewey Burdock into production. A larger, stronger Powertech/Azarga Uranium Corp would find it far easier to finance Dewey Burdock with a prudent mix of debt & Equity.
BRIEF REVIEW OF HIGHLY COMPELLING DEWEY BURDOCK PROJECT
As a reminder, Dewey Burdock is without question one of the strongest near-term (2016 or sooner) U.S. ISR projects. Peer assets just entering production now, or coming online in the next few years, have one or more of the following characteristics- smaller size, lower ore grade and higher costs. Dewey does not have the lowest cost or the largest deposit, but it has by far the highest ore grade… from 30% to 300% higher! For example, although Australian-listed Peninsula Energy's proposed Lance project in Wyoming is meaningfully larger, Lance's ore grade is 0.05% (500ppm) vs. Dewey's grade of 0.21% (2,100ppm). Among the 8 new, or soon-to-be producing, ISR projects, Dewey's forecasted 48% IRR (@ a conservative $60/lb uranium price), is among the best of the bunch.
HUGE DE-RISKING OF, AND VOTE OF CONFIDENCE IN, POWERTECH'S PROJECTS
AUC would hold the legacy Powertech assets, [including Dewey Burdock, the highest grade near-term ISR development project in U.S.] but with much stronger financial backing to get the assets into production. Further, it would enjoy significantly greater geographic and operational diversification, including a 34% stake in Black Range Minerals' 91 million pound uranium resource in Colorado, access through Black Range to a potentially game-changing uranium mining technology, a 12% stake in a company with an ISR project in Turkey boasting a 103% IRR (@ a $60/lb uranium price) and the largest known historical uranium resource in the Kyrgyz Republic. [NOTE: the Kyrgyz Republic borders Kazakhstan, which is by far the largest producer of uranium on the planet.]
The proposed AUC would form a highly significant platform for acquiring additional uranium assets, including acquiring junior peers outright. Over time, AUC could become the most globally diversified pure-play uranium company in the world…. Certainly the most diversified small-to-mid-cap player.
A company that possesses similarly broad diversification, through a portfolio of equity holdings in public uranium companies, is Mega Uranium. Mega's stock has quadrupled from 6c to 24c in the past 3 months. As evidence mounts of a global nuclear renaissance, most notably from recent positive news out of Japan, I strongly believe that Powertech, soon to be Azarga Uranium Corp, has substantial room to rally.
Disclosure: I am long PWURF, UUUU.