Sprott March29 / 2022
29 March 2022
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Ticker: UEX CN Net cash: C$4.7m Project: Multiple incl Millennium, Wheeler River
Market cap: C$213m Price: C$0.40/sh Country: Saskatchewan, Canada
RECOMMEND (unc): BUY TARGET (unc): C$1.15/sh RISK RATING: VENTURE
Today’s exploration results at Waterfound, 64% owned and operated by Orano but with a 12.9% UEX
shareholding are indicative of a highly prospective 20km plus trend of unconformity deposits that includes
Iso’s electrifying Hurricane Discovery, Cameco’s Larocque project, and now today’s unconformity style
exploration results that included 3.9m @ 5.9% U3O8 and 9m @ 0.99% U3O8. For UEX, this highlights that
i) excluding the implied value of Wheeler River and Millennium, UEX is trading at ~C$50m mcap, similar to
early stage Athabasca explorers; 2) unlike the majority of new Athabasca juniors, UEX holds ground in the
major trends and exploration camps in the eastern and western Athabasca, and 3) with >3,000km2 of
exploration ground, UEX has 10x the exploration ground of a typical explorer in addition to better access
to the prime Athabasca camps. We reiterate our BUY Rating and C$1.15/sh price target based on our
unchanged SOTP in-situ valuation (C$9/lb for Millennium and Wheeler River, C$3/lb for Shea Creek,
Christie Lake and Kiggavik and C$2/lb for other resources). Stepping back, we think there is significant
opportunity to daylight value through JVs to increase the pace of exploration on the landholdings. The
thesis for UEX is the company provides exposure to the best place to explore for uranium: The Eastern and
Western Athabasca, at bargain basement entry cost and backstopped by the stakes in Wheeler River and
Millennium.
Orano drilling at Waterfound (13% UEX) hits 3.9m @ 5.9% U3O8, highlights undervalued UEX portfolio
UEX highlighted exploration results from three holes drilled by Orano at the Waterfound JV property
(62.4% Orano, 24.7% Denison, 12.9% UEX, respectively). Best hits included 9m @ 0.99% U3O8 from 474m,
3.9m @ 5.9% from 474m, and 5.3m @ 1.27% at Waterfound (62.4% Orano, 24.7% Denison, 12.9% UEX).
The holes intercepted mineralisation 7m and 12m apart, respectively. The zone targeted is 700m E-NE
along strike from the 1991 Alligator Zone discovery hole (10.5m @ 4.5% U3O8). The program was
completed after six holes for 3,175m and drilling will resume in the summer field season.
Figure 1. Waterfound River Project and Larocque Trend; Map of UEX/JCU projects in E Athabasca
Source: UEX Corpor ation29 March 2022
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Why we like UEX Corporation
Lowest cost access to leading Tier-I projects including Millennium and Wheeler River
Largest (4,151km2) landholdings in the Athabasca by an independent
Experienced geology team with a proven history of discovering and growing resources in the
basin
Catalysts
1H22: 15 hole, 9,000m drilling program at Christie Lake
1H22: 20-hole, 3,000m drilling program at Hidden Bay
1H22: 10-12 holes for 7,400m on JV partner-operated projects
Justin Chan (London) M: +44 7554 784 688 jchan@sprott.com
Brock Salier (London) M: +44 7400 666 913 bsalier@sprott.com
Brandon Gaspar (Toronto) M: +1 437 533 3142 bgaspar@sprott.com
Eleanor Magdzinski (Toronto) M: +1 705 669 7456 emagdzinski@sprott.comTicker: UEX CN Price / mkt cap: C$0.4/sh, C$213m Project PNAV today: 0.35x Asset: Multiple Athabasca Properties
J Chan / B Gaspar / E Magdzinski Rec / 1xNAV PT: BUY, C$1.15/sh 1xNAV1Q21 FF FD: C$1.13/sh Country: Saskatchewan, Canada
SOTP project valuation Commodity price CY21E CY22E CY23E CY24E CY25E
C/lb C$m O/ship NAVx C$/sh LT uranium price (US$/lb) 65.00 65.00 65.00 65.00 65.00
Millennium (attritbutable) 9.0 142 15.0% 1.00x 0.23 USD/CAD 0.79 0.79 0.79 0.79 0.79
Wheeler River (attributable) 9.0 61 5.0% 1.00x 0.10 Measured, ind. & inf. kt % U3O8 Mlbs UEX share EV/lb U3O8
Kiggavik (attributable) 3.0 67 16.9% 1.00x 0.11 Millennium (15.0%) 11,149 2.57% 104.9 15.8
Shea Creek (attributable basis) 3.0 178 49% 1.00x 0.29 Wheeler River (5%) 1,891 3.24% 135.1 6.8
Christie Lake 3.0 64 83% 1.00x 0.10 Kiggavik (16.9%) 11,149 0.54% 132.6 22.4
Horseshoe Raven 2.0 95 100% 1.00x 0.15 Horsehoe-Raven (100%) 11,403 0.15% 37.8 37.8
West-Bear 2.0 9 100% 1.00x 0.01 Shea Creek (UEX 49.1%) 3,340 1.30% 95.9 47.1
Cash (3Q21) 4.7 100% 1.00x 0.01 Christie Lake (UEX 82.8%) 589 1.57% 20.3 16.8
Debt and transaction payable (C$m) - 100% 1.00x - West Bear (100%) 79 0.91% 1.6 1.6
Cash from options 24.4 100% 1.00x 0.04 TOTAL URANIUM 148.2 1.28
C$50m for licences 50 100% 1.00x 0.08 West Bear Ni-Co 1.2Mt @ 0.19% Co and 0.21% Ni for 5.1Mlbs Co and 5.66Mlbs Ni
Asset NAV8% US$65/lb 694 PT: 1.13 Capital structure Basic FD
Market P/NAV 0.35x Shares (m) 532.8 613.1