In an April 6 research note, Haywood Securities analyst Colin Healey reported that Uranium Energy Corp. (UEC:NYSE AMERICAN) purchased 705,000 pounds of physical uranium for its stockpile.
"Uranium Energy Corp. continues to take advantage of the strength of its share price and financial resources to build its inventory of physical uranium by making spot purchases below most industry production costs," Healey wrote.
The value of this latest uranium purchase, to be delivered in December 2022, is $21.8 million, the report noted. This quantity bought takes Uranium Energy's physical inventory to 2.105 million pounds and a value of about $65.3 million. Between its physical uranium, cash and equity holdings, the company now has about $110 million on its balance sheet.
For all of the uranium the company has purchased since announcing its plan to develop an inventory, it paid an average of $30 per pound. This is below the current uranium spot price, which is about $31.04 per pound.
Healey noted that Uranium Energy highlighted that the uranium purchases support three objectives: "potential to strengthen its balance sheet as uranium prices appreciate; flexibility with utilities in marketing efforts with inventory backstopping commitments, and the potential to accelerate cash flows; and increase the availability of its U.S. production capacity for emerging U.S. origin specific opportunities (UEC notes these purchases may attract premium pricing due to scarcity)."
In other news, Uranium Energy agreed to sell to investors 3,636,364 of its common shares at $3.30 apiece, generating $12 million in gross proceeds. This will take the company's cash on the balance sheet to about $73 million.
"We continue to rank Uranium Energy Corp. as a Top Pick," Healey wrote. "We recommend accumulating shares at the current price for maximum leverage."
Uranium Energy "is in the enviable position of controlling multiple permitted, near production-ready uranium ISR assets in the U.S., where fundamental and government driven catalysts are expected to push uranium prices higher," the report concluded.
Haywood has a Buy rating and a $3.50 per share target price on Uranium Energy, the current share price of which is about $2.96.
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Disclosures from Haywood Securities, Uranium Energy Corp., April 6, 2021
Analyst Certification: I, Colin Healey, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
The following Important Disclosures apply for Uranium Energy Corp.: ▪ Haywood Securities, Inc. has reviewed lead projects of Uranium Energy Corp. and a portion of the expenses for this travel have been reimbursed by the issuer. ▪ Haywood Securities Inc. or one of its subsidiaries has managed or co-managed or participated as selling group in a public offering of securities for Uranium Energy Corp. in the past 12 months.
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