Raymond James $16 targetNov. 8, 2007
URANIUM ONE INC. (UUU-T, $9.75) Bart Jaworski, P.Geo.
Selloff Appears Overdone; Upgrading to STRONG BUY bart.jaworski@raymondjames.ca
Market Capitalization (mln) $4,587
4-Week MA Daily Volume 5,110,700
= NAV per Share $8.29
Working Capital per Share $0.81
Shares Outstanding (mln) 470.5
Fully Diluted (mln) 500.9
Pro Forma Pro Forma
EPS(US$) CFPS(US$)
12/05A ($0.59) ($0.20)
12/06A ($0.38) ($0.30)
= 12/07E $0.00 $0.12
= 12/08E $0.20 $0.26
= 12/09E $0.45 $0.54
Pro Forma Pro Forma
EPS(US$) CFPS(US$)
12/05A ($0.59) ($0.20)
12/06A ($0.38) ($0.30)
12/07E $0.00 $0.12
12/08E $0.37 $0.45
12/09E $0.62 $0.73
All figures in C$ unless otherwise noted.
STRONG BUY 1
$16.00
• JV Partner Announces US Plans. Yesterday, Uranium Power Corp. (UPC-T; not rated) announced an update on its U.S. properties, including three in which Uranium One is a 50-50 joint venture partner.
• Sheep Mountain Mine Plan. Consulting firm BRS Inc. has been hired to generate an updated mine plan, as well as to investigate the feasibility of developing an open pit mine immediately to the north of the Sheep Mountain mine in Wyoming. An 8-10 hole drilling program has been planned, with a mine plan update expected to be released in January 2008.
• Additional Targets at Breccia Pipes. An additional 35 targets have been identified and staked at the Breccia Pipes project in Arizona. This brings the total number of targets to 85. Uranium One also indicated they have begun the initial stages of a threeyear
exploration program on this property.
• Burro Canyon, Colorado. An exploration program will be developed for 2008, following up on the successful drilling program in 2006.
• Kazakh Acid Problems to Resolve. Last Friday, Nov. 2/07, state-owned Kazatomprom announced that it will resolve the shortfall in sulphuric acid by the "first of next year". While continuing to receive acid from primary suppliers Kazakhmys and Kazzink, Kazatomprom concluded contracts with new suppliers in
Uzbekistan. Additionally, negotiations are ongoing with Russian enterprises for additional quantities of sulphuric acid by early 2008. The company also announced a new sulphuric acid plant will begin production in Balkhash in May 2008.
• Outlook. With uranium prices likely to advance in the near term, sulphuric acid problems in Kazakhstan appearing fixable, and low US exposure, we believe that the stock's recent selloff has been overdone.
• Target and Rating. We are increasing our rating to STRONG BUY (from
OUTPERFORM) and maintaining our $16.00 target. Our 64% projected return justifies our upgrade. Our target is based on a blended average of: (i) a 1.9x P/NAV multiple and an $8.29 NAVPS estimate ($15.76/afd.sh.), (ii) US$15/lb value for UUU’s attributable resource of 781.9 million pounds ($23.22/afd.sh.), and (iii) an 18x
P/E multiple to 2010 estimated cash flow ($11.83/afd.sh.).