RE:Thankyou tcellingthelastclass wrote:
I agree that management deserves every penny. And your insight on the tandem move is consistent with my observations as well. That said, I read a spot price forecast on the net that did not move past $45 long past June 2016. Do you think that this will drag on the URE SP?
First, I would consider that this is one of the lowest (if not the lowest) estimate. So, this could be considered a lower case scenario. However, as a natural pessimist, I too like to consider what would happen at continued low U prices. While I can't really tell you what will happen with the SP as it appears to defy all logic, it would obviously leave URE less valuable than say a $70 U spot. However, URE is still very profitable at $45 spot to go with their $62 contracts. Imagine an average of $50/pound when spot is $45/lb. URE is producing at a cash cost under $12/lb so they still have operating cash flow of $38M/year (@1M lbs/year). If you agree with me, you'd apply a 10x multiple to this and get an enterprise value of $380M. Take off $40M for debt, if they still have it, and you get $340M split between around 130M shares or $2.61/share. This applies no value to other properties or any cash on hand at that time. Not bad for a low level estimate, especially since I rounded all values down for my estimate. More aggressive estimates would put the value at >$40 with a 10x multiple. If uranium starts to take off, I anticipate this multiple could be stretched up to 15x.
All of this is rather moot, however, since the SP seems to trade with no regard to fundamentals at this juncture.