The world is growing. More and more countries fullfill the step from the Third World onto some kind of a prosperity level, which leads to a much higher demand for energy. While oil and coal will become more and more exhausting, there is one thing that could solve all oncoming power problems: uranium. Currently there are 436 nuclear reactors operating in 30 countries, which are only providing 15% of the world’s electricity. 50 reactors are currently under construction, 137 being formally planned and for 295 more there are reported proposals seeking construction approval. But production licences are rare. There is only a handfull of companies worldwide which owns a production licence for a new uranium mine. Both points show a enormous shortfall of the uranium supply within the next decades. One company which secured a project and a fully licensed production facility by making a spectacular deal with a subsidiary of Uranium One, is Uranium Energy Corp.
The coup
Uranium Energy’s management team negotiated the acquisition of 100% of the Hobson Uranium Plant, the Palangana Uranium Project and 5 additional exploration projects in southern Texas. The important thing is, that the Final Mine Permit and Draft Production Area Authorization have already been issued for Palangana, which means that production could start by the 3rd quarter of 2010. Furthermore, all of Uranium Energy’s southern Texas projects (Goliad, Nichols and Palangana) lie within 100 miles from the Hobson Plant. Before the deal, Goliad and Nichols included 8.2 mm pounds of U308, after acquiring Palangana, there will be 15 mm pounds! The whole acquisition of the Hobson Plant, the Palangana Project, the 5 additional exploration projects and a database of further exploration targets will cost Uranium Energy only $US1million and 2.7 million shares. A sensational if you think about the fact that in mid-2007 as part of a merger between Energy Metals and Uranium One, Hobson and Palangana, which at the time were owned by Energy Metals, made up ~$US500million of the total $US1.7billion market value attributed to Energy Metals for the merger! Now Uranium Energy can generate a Net-Asset-Value (NAV) of more than $300mm or over $6.00 share price with the Hobson and Palangana acquisition!!!
Hobson and Palangana
Hobson is fully licensed and permitted, total refurbishment was completed in late 2008. Hobson has a drying and packaging capacity of 1mm pounds of U3O8 per year and can be doubled to 2mm pounds U3O8 per year by constructing a new bigger vacuum dryer. Hobson is a new “Rolls Royce”! All of Uranium Energy’s southern Texas projects (Goliad, Nichols and Palangana) lie within 100 miles from the Hobson Plant. This catapultes Uranium Energy into a completely new dimension. Right now, UEC is the dominant uranium player in Texas and the Hobson Plant is the basis of a new regional operating strategy in South Texas. The Palangana Project is at an advanced stage of permitting and could start production by Q3/2010. The Final Mine Permit and Draft Production Area Authorization have been issued, the Draft PAA can be made final soon. The project owns a resource of 6.8 mm pounds of U308. UEC picks up five additional properties within 100 miles of a licensed facility portfolio of exploration-stage projects in South Texas, which ensures that there is a strong and diversified pipeline of advanced, development and exploration-stage properties for expanding production for many years.
Uranium-friendly Texas
Texas is a so-called „Agreement State“. The Texas Commission on Environmental Quality (TCEQ) issues the mining permits on ist own, which means that no federal approvals are necessary. The TCEQ issued a Draft Mine Permit for the Goliad ISR Project, which was the first in over ten years to a publicly listed company in the U.S. All required permitting applications have been filed with the TCEQ. Within 30+ years of uranium mining in Texas, all 31 made applications got their final permits granted.
The South Texas Uranium Trend
The South Texas uranium trend covers 300 miles in over 54 counties. 26 of 31 current or historic deposits within this trend have been ISR amenable deposits. The South Texas trend shows good potential to make the company’s Goliad Project a long-term regional uranium production center. Uranium Energy announced a 43-101 report on the Nichols property for a first satellite project. The company’s technical team has been involved in 35 ISR plants or satellites in the US.
The Goliad ISR Project
The company’s most advanced project is located in Goliad County, Texas, USA. The Goliad Project is the largest ISR Uranium Project in Texas. It owns a 43-101 compliant resource of 6.9 mm pounds of U308, therefrom 5.4 mm pounds are within the measured & indicated category and 1.5 mm pounds are in the inferred catergory. This independent resource estimate is based on the results from 1,086 drill holes, therefrom 599 by UEC and 487 historic ones. The Goliad Project offers an exciting “Blue Sky” Potential, which means that the uranium mineralization remains open laterally in all directions. The current resource is poised to grow.
The Cebolleta Project
The Cebolleta Project offers a premier development opportunity. The project was a former producing uranium mine and is situated in the Grants Uranium District, New Mexico. The Grants District produced over 340M lbs U3O8 prior to 1986, which turned it into the largest producing uranium field in the USA. Over 100 M lbs have been produced from the Jackpile Mine which lies immediately adjacent to Cebolleta that was operated by Anaconda between 1953-1982. UEC controls 49% of Cebolleta in partnership with Neutron Energy Inc. The Cebolleta Land Grant is a private entity managed by a board of trustees who have the authority to approve and use the natural resources within the grant boundary. A 43-101 report showed a historic resource of 20.86 million pounds of U3O8 grading 0.124%.
The Colorado Plateau
UEC controls over 8,000 acres of lode claims, state mineral leases & private leases in the prolific Uravan Mineral Belt. The whole acreage contains 15 former producing mines that averaged 0.25% Uranium and 1.7% Vanadium. The known resources are readily accessible by conventional mining methods including Open Pit Mining. All land positions are located in uraniumfriendly areas with an experienced mining work force. The projects offer a strategic direction towards near-term plans for heap leaching or toll milling utilizing existing mills of uranium-vanadium ores on private property, rather than waiting for the permitting and construction of a new mill facility, for most efficient economics.
The mining method
ISR-mining offers some long standing advantages. It has several advantages over conventional mining, including a minimal environmental Impact and lower capital (CAPEX of $20 to $25 million) and operating costs ($12 to $15 per pound). According to the World Nuclear Association, 25% of global uranium production in 2006 was by ISR mining.
The management-team
Uranium Energy has a very experienced management team. - Chairman Alan Lindsay has over 30 years of experience in executive management. He has been a successful founder of public companies in the mining and biotech sectors. - President and CEO Amir Adnani is an entrepreneur with extensive contacts throughout the financial and mining communities. He was founder of Blender Media Inc, a financial marketing firm that was named as fastest growing company in Canada - COO Harry L. is an internationally recognized expert in the field of ISR uranium mining.
Cash on hand: $23,000,000 (pre Uranium One Deal) Cash potential from warrants: $24,643,962 Cash potential from options: $3,037,267 Total: $ 50,681,229
Outlook / further opportunities
The deal with Uranium One and Everest (holding 1% of Hobson/Palangana) catapultes Uranium Energy into a new dimension. The company will have not one but two properties ready for production and an additional production plant. Uranium Energy’s management should get some interesting take-over bids within the next weeks and months. UEC is very well positioned within uranium-friendly Texas and a growing uranium market. The near-production-project Goliad can be mined by ISR-mining, a very low cash cost – and capital-cost mining mehtod. By acquiring the Hobson Uranium Facility, Uranium Energy will have a unique chance to produce a large amount of „Yellow Cake“ from the nearby projects. UEC’s management shows a huge experience in both the technical and the financial part. The company’s cash position is very strong. The company is seeking for more excellent mine properties within its current mining areas, which could lead to even more benefits and a even more economic way of production. Uranium Energy combines all benefits from a situation of uranium shortage, a cheap mining method and a uranium-friendly environment. By acquiring the Hobson Plant, Uranium Energy will fullfill the step to a complete producer. The value of the plant can be numeralized by $6.00 share price. Therefore UEC is an excellent investment in the future development of a strong uranium market and the US’s independence from oil and gas. Take-over-bids could be only a matter of time.
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