In an April 15 research note, H.C. Wainwright & Co. analyst Heiko Ihle provided an update on Uranium Energy Corp.'s (UEC:NYSE AMERICAN) Burke Hollow project and the company's recent offering.
As for its Burke Hollow in situ uranium asset in Texas, the company has been working since April 9 to delineate the resource there, Ihle noted. Using two rigs, Uranium Energy completed 40 holes, the goal being to better understand the five Goliad Formation trends in production area PAA-1.
Of that set of holes, highlight hole 283.0-319 encountered an average uranium grade of 0.163% and a 4.483 grade thickness.
The energy company also placed 45 exterior monitoring wells there, adding to the existing 75, "to account for trend extensions," Ihle wrote.
Regarding Uranium Energy's recent financing, Ihle relayed that it closed, having generated $12 million. The company now has more than $110 million in cash, equity and inventory holdings. Its cash on hand is enough for Uranium Energy to completely fund its purchases of physical uranium for its stockpile.
Along with using the financing's proceeds to add to its uranium inventory, the company intends to use it as working capital.
Looking forward, Ihle reiterated H.C. Wainwright's view that macroeconomic developments eventually should boost uranium prices, thereby making production for Uranium Energy economically viable. At such time, the company is expected to commence production at one or more of its facilities.
"This is especially important given ongoing wellfield development and definition drilling that should support a meaningful production ramp-up at Burke Hollow," Ihle added.
Also as the prices of the metal rise, the company should realize value through its uranium inventory.
H.C. Wainwright has a Buy rating and a $5 per share price target on Uranium Energy, the stock of which is trading now at about $2.88 per share.
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