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Ur-Energy Started At Buy By H.C. Wainwright, Notes 'Strong' Uranium Project Pipeline


In a report published Friday, HC Wainwright analyst Heiko F. Ihle initiated coverage of Ur-Energy Inc. (USA) (NYSE: URG) with a Buy rating and price target of $2.10. The company has a robust pipeline of assets in the development stage.

Ur-Energy owns a processing facility, Lost Creek, in Wyoming, with a capacity of 2 million pounds a year. The company has guided to the production of 750,000-850,000 pounds of uranium at this facility for 2015. The analyst believes that the company would be able to achieve the upper end of the guidance range, "which is more than enough to fulfill existing long-term contracts of 630,000 pounds at an average sales price of $50.10."

In addition, Ur-Energy has long-term, higher priced contracts, which are expected to offer a margin buffer, while inventory build offers leverage to spot prices. "We note that spot uranium prices are currently below $40 a pound, and URG's long-term contracts meaningfully above this figure yielding excess cash flow," Ihle said.

The analyst also believes that the company would stockpile any excess production, instead of selling in a depressed spot market. This strategy would provide a significant inventory that could then be sold when the spot market recovers.

"In short, we think the inventory build-up should provide investors leverage over the spot uranium price going forward," the HC Wainwright report stated.

Ur-Energy is also progressing with its environmental study at Shirley Basin, while also working on the Federal and State permits for the location. The company is expected to file for permits in 4Q15, and the process is expected to take about 18 to 24 months to be completed. Once permission is granted, the analyst believes that the company would "leverage existing excess capacity at the Lost Creek processing facility, which we believe should keep initial capital costs at Shirley Basin relatively low."

"Should all required permits be received in a timely manner, we believe Shirley Basin could contribute low-cost uranium to URG's production mix by 2018," Ihle added.

Latest Ratings for URG

Sep 2019ReiteratesBuy
Aug 2019ReiteratesBuy
Oct 2018MaintainsBuyBuy

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Posted-In: HC Wainwright & Co Heiko F. IhleAnalyst Color Initiation Analyst Ratings


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