Bell Potter view on BOE

Valuation discrepancies between uranium producers BOE and PDN have widened in
the last month, with the BOE trading at a ~40% discount to our valuation (Buy $6.35/sh
vs last price $4.53) whereas PDN appears fully valued (Hold $15.70 vs last price
$15.60). We see this as a potential opportunity, with BOE soon to bring Alta Mesa into
production, and the ramp up at Honeymoon progressing. We see the market factoring
in a higher likelihood that BOE is slow to ramp-up production at Honeymoon given the
delay to begin production. Other issues such as the recent Director sell-down have
weighed on BOE. At this level, on our base case of production over life of mine at
Honeymoon (21Mlbs) and BOE’s share of Alta Mesa production (4.58Mlbs) BOE
trades at an EV/lb of uranium produced multiple of $56/lb. For PDN, on a production
profile at LHM of 77Mlbs, adjusted for ownership of 75%, this multiple is $79/lb. Whilst
it appears that PDN has executed it’s restart of LHM seamlessly, the question is how
much you pay for that execution, and at what point does BOE become a value play?
With 40% upside to our target price we would argue that point is now