Anfield
Impact: Very Positive
``Anfield Energy has entered into a definitive agreement with Uranium
Energy Corp. (NYSEAM:UEC, Not Rated) for an asset swap and settlement
of its debt obligations. We view this pending transaction very positively
as it transforms Anfield into one of the largest US uranium and
vanadium companies with ~29M lb in U 3 O 8 and ~116M lb in V 2 O 5
resources (Figure 1) and eliminates any debt overhang. We expect the
asset swap and debt settlement to take place in Jun/22. UEC will become
a strategic shareholder with ~15% interest and has the right to appoint a
board member. On the back of the transaction, Anfield has closed a C$15M
private placement, positioning it well to advance its suite of conventional
uranium assets which now includes the Slick Rock project. Fundamentals
for both U and V remain strong supporting Anfield’s consolidation of
assets in the historic Uravan Mineral Belt.
• Asset swap increases value of portfolio and resources. Anfield
receives the conventional, PEA-stage, Slick Rock project in CO (see
page #3 for details) in exchange for all its ISR assets in WY (Charlie,
Nine Mile, Clarkson Hill, Red Rim and Sweetwater). This swap is
positive from both an NPV and resource point of view: 1) Slick Rock has
an NPV 10% of US$31.9M while Charlie has an NPV 10% of US$12.5M, and 2)
Slick Rock hosts 11.6M lb U 3 O 8 and 69.6M lb V 2 O 5 (23.2M lb U 3 O 8 eq)
while all the WY assets contained 12.5M lb U 3 O 8 (Figure 2).
• Focus on conventional assets. We concede that the ISR assets were
more advanced, but they also require specific technical expertise.
More importantly, is that the deal bulks up conventional resources
such that Anfield’s portfolio is now focused around its Shootaring
Canyon mill, one of three licensed and permitted mills in the US with
Slick Rock becoming its cornerstone asset providing future mill feed.
• Cleaning up its balance sheet. The UEC debt of US$18.34M is to be
settled for US$9.17M cash and US$9.17M in shares. Last week Anfield
closed a C$15M financing by issuing 125M units at C$0.12/unit. Each
unit consists of a common share and one purchase warrant entitling
the holder to purchase a share C$0.18/sh over 60 months. This
financing provides settlement for the cash portion of the debt and
adds to its balance sheet to help advance its assets in the near-term.
• Deal accretive to our model. We value Slick Rock using DCF to arrive
at an NPV 10% of C$182.2M (Figure 3). We value its remaining assets
(Velvet-Wood, Frank M, Findlay Tank and West Slope) with ~25M lb in
current or historic U 3 O 8 resources, using an in-situ metric of
US$3.00/lb. We lowered our NAV multiple to 0.6x from 0.75x to
account for the earlier stage and higher permitting risk of Slick Rock
as compared to Charlie. After accounting for changes and increased
dilution, we increase our target price to C$0.25/sh (was C$0.20/sh).
We maintain our BUY rating and increase our target price to C$0.25/sh
(was C$0.20/sh). Our target price is based on a DCF model for Slick Rock
and in-situ valuation metric for the remaining current and historical
resources, to which we apply a 0.6x multiple. We expect AEC to re-rate as
its projects advance towards development. Upcoming catalysts: 1) UEC
transaction close (Q2/22) and 2) Taylor Ranch/West Slope MRE (2022).``
David A. Talbot | MD, Mining Analyst
research@redcloudsecurities.com
another overlooked company with huge potential imo
Target Increase on Transformative Asset Swap, Debt Elimination to 25 cents
full info at RedCloud