Key Highlights

  • UEX Corporation (“company”, “UEX”) is the holder of one of the largest uranium resources, held by a junior, in the Athabasca basin. Its current portfolio has 18 uranium projects, including four key projects with a combined indicated resource of 69.8 million pounds (“Mlbs”), and inferred resource of 28.8 Mlbs.
  • Cameco Corporation (TSX: CCO), the world’s largest publicly traded uranium producer, currently holds 13% of UEX’s outstanding shares, and is the largest shareholder.
  • The company is currently evaluating the potential of cobalt-nickel mineralization on its West Bear project. A high-grade maiden cobalt-nickel resource was completed on one of its projects in 2018, and the deposit strike length was increased 140% during the 2019 winter drill program. UEX also owns 100% of two early-stage cobalt projects in the Athabasca Basin.
  • The company’s near-term strategy is to aggressively expand the maiden cobalt resource, while simultaneously selectively advancing its uranium projects. We consider this to be an attractive as well as pragmatic strategy; attractive because it will allow UEX to likely maintain its position as a leading uranium junior in the country, and be an attractive player in the event of a recovery in uranium prices; and pragmatic because of management’s conservative approach to spending capital / resources in today’s soft markets.
  • At the end of Q2-2019, UEX had cash and working capital of $5.81 million and $4.99 million, respectively.
  • We are initiating coverage on UEX with a BUY rating and a fair value estimate of $0.45 per share.

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