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Energy Fuels Inc. (TOR:EFR): New Rocommendation

By: Peter Zihlmann



-- Posted Monday, February 17 2014 | Digg This ArticleDigg It! |

Your independent SWISS asset manager

 

THE TIMELESS PRECIOUS METAL FUND

THE TIMELESS URANIUM FUND

THE SIERRA MADRE GOLD & SILVER VENTURE CAPITAL FUND

THE TIMELESS US GROWTH FUND (PENDING APPROVAL)   

  

Home page of EFR

Chart years 2

 

ENERGY FUELS INC.: CAD 10,000 INVESTMENT

 

Purchase Date

No. of Shares

Purchase Price

Cost (CAD)

Price Today

Value Today

February 12, 2014

1'100

9.05

9'955

 

 

Total

1'100

9.05

9'955

9.33

10263.00

Profit

 

 

 

 

308.00

Profit (in %)

 

 

 

 

3%

 

                                                   

   

SHARES ISSUED AND OUTSTANDING / FULLY DILUTED

MARKET CAP

19.62 million / 22.98 million

CAD 175.22M

52 WEEK LOW / HIGH

TOR

CAD 4.75 to 11.50

39,066 (200-day)

RECOMMENDATION

RISK RATING

BUY

HIGH

 

 American Uranium, Fueling Nuclear Energy

 

Business Summary

 

Energy Fuels, America’s premier uranium producer, is a fully-integrated producer of both uranium and vanadium, with the only operating uranium mill in the United States. 

 

Uranium is the fuel for clean, carbon-free electricity.  Vanadium is utilized in steel alloys and advanced battery technologies.

 

Energy Fuels is well-positioned to capitalize on the World’s growing demand for nuclear energy. Energy Fuels has a mill, two producing mines, a number of mines on standby, and a diverse portfolio of development projects located in some of the most important uranium districts in the U.S.

 

Projects Asset Location

 

           

 

ENERGY FUELS’ STRATEGIC POSITIONING IN THE U.S. 

 

U.S. consumes 50+ million lbs. of U3O8 per year …

  • ~20% of U.S. electricity is generated from nuclear power
  • The U.S. the World’s largest consumer of uranium … yet only produces ~4 million lbs. of U3O8 per year.
  • Over 90% dependent on imported uranium
  • U.S. accounts for only ~3% of World’s primary uranium production
  • U.S. led the World in uranium production from 1953–1980, peaking at 43.6 million lbs. in 1980
  • Final shipment under Russian HEU Agreement arrived in the U.S. in December 2013

The U.S. is a safe & politically stable jurisdiction …

  • With strong property rights, law enforcement and legal systems … yet has significant barriers to entry.
  • Permitting new mining projects in the U.S. can be difficult, time-consuming and expensive

THE WHITE MESA MILL: The Only Operating Conventional Uranium Mill in the U.S.

 

·         Reliable supplier of U3O8

·         Licensed Capacity: 2,000 tons of ore per day (and over 8 million lbs. U3O8 per year)

 

Has produced up to 4.5 million lbs. U3O8 per year in the past

 

·         Central location allows for the processing of ore from Arizona, Utah, Colorado, & New Mexico

·         Separate vanadium and “alternate feed material” circuits

·         Toll milling and ore purchase agreements with 3rd party miners represent significant potential sources of revenue  

ALTERNATE FEED PROCESSING AT WHITE MESA MILL: Relatively Lower-Cost U3O8 Production with No Associated Mining Costs

 

·         Alternate Feed Defined: Uranium-bearing materials – other than conventional ore – with recoverable quantities of uranium

·         Sourced from 3rd party producers, including uranium-bearing tailings from metal & rare earth mineral processing, residues from uranium conversion, etc.

·         The White Mesa Mill is the only facility in North America with the ability to process alternate feeds

·         U3O8 grades: < 1% to over 75%

 

  

 

ARIZONA STRIP MINES Current High-Grade, Low-Cost Production

 

·         Arizona 1 Mine (Producing): Production expected until early 2014

·         Pinenut Mine (Producing): Production expected through mid-2014 (then placed on standby)

·         Canyon Mine (Development): Fully-permitted & partially developed (construction on standby)

·         EZ Complex (Development): Progressing through permitting

 

                       

 

ROCA HONDA PROJECT: Large-Scale Development Project in New Mexico

 

·         Energy Fuels’ 3rd Largest U3O8 Resource

·         Joint venture with Sumitomo Corporation of Japan

·         Energy Fuels: 60%

·         Sumitomo: 40%

·         Potential to process uranium resources at White Mesa Mill

·         Avoid the time & cost of permitting & building a new mill in NM

 

Preliminary Economic Analysis(1)

 

·         Assumes annual average production of 2.6M lbs. of U3O8 over a

 

 

HENRY MOUNTAINS COMPLEX: Standby Mine in Utah

 

·         Energy Fuels’ 2nd largest U3O8 resource

·          Production as recently as 2010

·          Major existing infrastructure

·          ~17-miles of existing underground workings

·          ~120-miles to White Mesa

·          Measured & Indicated Resources: Lbs. U3O8: 12.8 million, Tons: 2.4 million,  Avg. Grade: 0.27%

·          Inferred Resources: Lbs. U3O8: 8.1 million,  Tons: 1.6 million,  Avg. Grade: 0.25%

 

SHEEP MOUNTAIN PROJECT: Large Stand-Alone Development Project in Wyoming

 

·         Energy Fuels’ Largest U3O8 Resource: 30.3M Lbs. U3O8,  12.9M tons of Indicated Mineral Resources,  0.12% U3O8 (average grade) Including 7.4M tons Probable Mineral Reserves @ 0.123 % U3O8 wi th 18.4 mi l l ion lbs. U3O8

·          Co-development potential with Gas Hills & Juniper Ridge projects

·          Existing Wyoming mine permit; BLM Plan of Operations expected in 2014

·          Pre-Feasibility Study (“PFS”) completed in March 2012:  1.5M lbs. per year over 15 -year mine life,  Open pi t & underground mining,  Low-cost heap leach recovery

 

WHY NUCLEAR ENERGY?

 

  • Nuclear energy is the most environmentally friendly alternative for electricity generating as the only large-scale viable alternative to fossil fuels (oil, gas, coal)
  • Nuclear energy does not produce greenhouse gas. One gram of uranium produces the same amount of electricity as 3 million tonnes of coal; burning 3 tonnes of coal leads to 7 tonnes of CO2 emission.
  • Responding to the growing public concern over global warming, the Kyoto Protocol (1997) paved the way for nuclear renaissance by striving to reduce greenhouse gas emission of CO2 by 20%. Evidently, nuclear energy cannot be phased out if the requirements of the Kyoto Protocol are to be met.
  • Nuclear energy provides 16% of the world’s total electricity and 28% of European needs, compared to fossil fuels 56%, water power 10%, wind 3% and biomass 3%.
  • Japan wants to restore the number of operating nuclear reactors to 16 by 2014, providing with 18% of its electricity generating requirements. 

 

 

The investment Policy of the Timeless Uranium Fund

 

The Fund Company will attempt to achieve maintenance of value and capital growth through the adoption of the following investment policy:

 

  • the Fund may invest up to 10% of its assets in companies that directly invest, deal and/or hold physical uranium;
  • the Fund may invest up to 60% of its assets in uranium producing and new generation producing companies;
  •  the Fund may invest up to 30% of its assets in junior exploration companies. 

Furthermore, if circumstances and market conditions so dictate, the Fund reserves the right to hold up to 50% of its assets in cash, provided, however, that no more than 10% of the assets of the Fund shall be kept on deposit with any one body. This limit may be increased to 30% in respect of money deposited with a credit institution licensed in Malta or in any other EEA State, or with any other credit institution which has been approved by the MFSA.

 

The Fund shall not invest more than 10% of its assets in securities which are not traded in or dealt on a market which:

  • the Custodian and Investment Manager have agreed between themselves as being appropriate for the Fund;
  • is listed in the Prospectus;
  • is regulated, operates regularly, is recognized and is open to the public;
  •  has adequate liquidity and adequate arrangements in respect of the transmission of income and capital; and
  •  is not the subject of an MFSA restriction.

The Fund shall not invest more than 10% of its assets in securities issued by the same body.

The Fund shall not hold more than 10% of any class of security issued by any single issuer.

The Fund may, subject to approval from the MFSA, invest up to 100% of its assets in securities issued or guaranteed by any State, its constituent States, its local authorities, or public international bodies of which one or more States are members.

 

www.timeless-funds.com

 

The Timeless Uranium Fund’s Prespectus can be requested at info@timeless-funds.com.

 

Recent News: Energy Fuels Inc. announced that it has entered into a Strategic Relationship Agreement (the “SRA”) with Korea Electric Power Corporation (“KEPCO”).  KEPCO (NYSE:KEP) (KRX:015760) is the largest electric utility in South Korea, responsible for 93% of South Korea’s electricity generation and the development of nuclear power projects worldwide.  The South Korean government owns a 51% equity interest in KEPCO.  On the 2013 Fortune Global 500 ranking of the world's largest companies, KEPCO was ranked 235.  KEPCO is also a member of the World Energy Council, the World Nuclear Association and the World Association of Nuclear Operators.  KEPCO is Energy Fuels’ largest shareholder, and an affiliate of KEPCO is Energy Fuels’ largest uranium customer, based on FY-2013 deliveries.  Mr. Eun Ho Cheong, KEPCO’s Vice President of Overseas Resources Project Development, is a member of Energy Fuels’ board of directors.

  

Fundamental Considerations

 

NEW URANIUM MINE SUPPLY IS NEEDED … … BUT WHERE WILL IT COME FROM?

 

New Uranium Projects … Deferred Due to Low Prices:

 

·         Russia | Stopping new uranium development, Honeymoon, Willow Creek, Mkuju River, Priargunsky, Khiada, Elkon

·          Kazakhstan | Halting future uranium development

·          Areva | Delays at Imouraren; Cominak & Somair (Niger) halted

·          Cameco | Kintyre; Delayed start-up of Cigar Lake

·          BHP Billiton | Olympic Dam deferred

·          Rio Tinto | Ranger & Rossing shut down indefinitely

·          Paladin | Langer Heinrich expansion deferred

·          Uranium Energy Corp. | Palangana deferred

 

Other Constraints:

 

·         HEU Agreement Has Expired | Major source of secondary supply

·         Japan | 14 reactors have applied for a restart

·         Worldwide | 71 new nuclear reactors now under construction

·         Africa | Terrorist activity affecting major uranium production centers  

 

Past Recommendations

Date

Price

Today

%-Change

Greenland Minerals & Energy (AUD)

04.10.2013

0.28

0.21

-25%

Ur-Energy (CAD)

20.11.2013

1.12

1.55

38%

Uranerz Energy (CAD)

22.11.2013

1.05

1.7

62%

Toro Energy (AUD)

06.12.2013

0.08

0.067

-16%

Energy Fuels

12.02.2014

9.05

9.33

3%

Average

 

 

 

12%

Uranium Participation Corporation: (TOR)

04.10.2013

4.72

5.56

18%

  

Technical Considerations

 

 

 

 

 

The Timeless Funds (The Timeless Precious Metal Fund, The Sierra Madre Gold & Silver Venture Capital Fund, The Timeless Uranium Fund, The Timeless US Growth Fund (waiting for approval)) are managed by

 

Timeless Asset Management Ltd, Malta (www.timeless-funds.com)

 

Investment Advisor is P. ZIHLMANN INVESTMENT · MANAGEMENT AG

 

Peter Zihlmann

 

 

www.pzim.ch

invest@pzim.ch

phone:  +41 44 268 51 10, mobile +41 79 379 51 57

 

 

 

 

 

 


To receive Recommendations free of charge every now and then, register at register@pzim.ch

 

 

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Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company’s share price.

 

Disclaimer: The author’s objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.

 

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-- Posted Monday, February 17 2014 | Digg This ArticleDigg It! |



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