Dundee Capital Markets increased its target price for Energy Fuels after the company unveiled updated plans to position itself as the premier uranium producer in the U.S., including a scheme to recover U3O8 from tailings ponds at its White Mesa Mill facility.
In the Sept. 12 press release, Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.MKT; EFRFF:OTCQX) outlined its planned activities through 2018, including a new recovery scheme for the White Mesa ponds. "This water contains dissolved uranium that was not recovered in earlier processing activities ('Pond Returns'). For 2016, the Company expects to recover a total of approximately 25,000 lbs. of U3O8 from Pond Returns at the Mill," the release stated.
After the updates, and noting Energy Fuels' guidance beat expectations, Dundee Capital Markets increased its target price on the company from CA$5.80 per share to CA$6.
In addition to the White Mesa plans, analyst David Talbot noted that "savings, innovation, and efficiency improvements [that] may include lower reagent use and recycling, higher recoveries, ore sorting, potential copper recovery at Canyon, [and] improved practices such as mechanized or water jet mining," also played a role in the Dundee's new target.
Talbot also detailed developments at White Mesa, noting this "new source of uranium from tailings pond returns complements processing of stockpiled alternate feed materials. . .this water sitting in tailings ponds contains dissolved uranium that wasn't recovered earlier in mill life. . .the tails water appears to be running at 0.2–0.3 g/l U, even exceeding many ISR well concentrations, and is simply there for the taking."
Energy Fuels has "40 acres of tailings ponds each ~30 feet deep in solution," the analyst added.
The company's goal is to "sustain production capability, ramp up potential and resources, ultimately becoming the largest US producer. It should achieve this in 2017 given Cameco (CCO-T, BUY, CA$17.50 target) closures," Talbot wrote.
Additionally, "management has a proven track record of dealing with multiple uranium sources, finding lower cost feed and how to blend it," Talbot stated.
Energy Fuels is the largest uranium producer in the U.S., with conventional production at the White Mesa Mill in Utah and the Canyon Mine in Arizona, and in situ recovery production sites at Nichols Ranch in Wyoming and Alta Mesa in Texas.
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Dundee Capital Markets, Energy Fuels Inc., Sept. 12, 2016
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