07-29-2014, 07:10 AM
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Join Date: Mar 2009
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Aura Energy Update RCR confirms 5x upside recommendation
Summary:
Scoping Study confirms viability of Reguibat at the contract uranium price: capex US$45m, opex US$30/lb.
The market appears to have overlooked Reguibat as a rapidly emerging and economically viable uranium project with high beneficiation grade (0.25% U₃O₈), large resource (49mlbs U₃O₈), easy mining and expected streamlined permitting - trading at a large discount to peers.
AEE 12 month target price $0.15/share.
Longer term, the large Haggan project represents a free option.
Investment points:
- Reguibat Project, Mauritania (AEE 100/70%): Exciting new calcrete uranium province. AEE resource 49mlbs at 0.033% U₃O₈ at or near surface. Exploration Target indicates potential for global resource to exceed 100mlbs.
- Reguibat Scoping Study (July '14) confirms economic viability with project breakeven NPV uranium price ₃O₈ from shallow open pits. Feasibility Study possible 2H15; production potential 1H17.
- Reguibat Project - RCR after tax NPV₁₀ A$71m ($0.27/share or US$1.28/lb resource; assuming uranium price US$60/lb, AUD/USD 0.90). AEE is trading at a steep discount to ISR peers with similar project economics: less than US$0.20/lb resource for AEE Vs ~US$1.50/lb (AEK, PEN).
- Highly amenable to beneficiation - a defining and distinctive element of the Reguibat Project: Initial testwork indicates 5-9X grade uplift achievable. This could see the 66mt resource concentrated to around 15mt at +2500ppm U₃O₈ (0.25%).
- Haggan Project (Sweden) is a world class uranium project, large capacity, long life, easy to mine, in a stable mining friendly jurisdiction, proximal key infrastructure, staged low capital development, and low opex in the bottom 2 quartiles of the WNA 2010 cost curve. The project represents a long term value driver for AEE.
- Sweden and Mauritania are pro uranium jurisdictions with strong mining sectors. Global miners active in Mauritania include Glencore (building the US$900m Askaf North iron ore project), Kinross (Tasiast), and First Quantum (Guelb Moghrein).
- AEE equity funding facility for $3.8m in place through 1Q16.
- We (RCR) expect AEE to be rerated as key technical and permitting milestones at Reguibat are achieved: 12 month target price $0.14/share (mkt cap $28m).
- The uranium price is US$28.50/lb (spot); US$44.50/lb (contract). Challenging market conditions are expected to persist short to mid-term, though a rebound is anticipated as Japanese reactors start to come back online, possibly 2H14. Positive fundamentals are expected to drive the incentive price >US$60/lb later this decade.
Get the full RCR report here
Note at this price Haggan is a free carry.... not bad for the world's second/third largest undeveloped uranium resource
Disclaimer: The author of this post, may or may not be a shareholder of any of the companies mentioned in this column. No company mentioned has sponsored or paid for this content. Comments on this forum should never be taken as investment advice.
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