One glance at the two charts below is all that is needed to see why Western Uranium Corp. (WUC:CSE; WSTRF:OTCQX) implemented a special resolution to add "& Vanadium" to its corporate moniker. On September 27, the company put out a news release updating the market on a number of developments, the most interesting and appropriate being the name change that will take effect in early October.
Vanadium, for those who need a refresher, is used in the hardening of steel (90%) with the residual 10% being deployed in vanadium flow batteries, integral to the electric car movement. However, the main price driver for vanadium lies in new Chinese building code requirements pertaining to the need for high-strength steel in the construction industry. That coupled with air quality requirements has served to shift China from net exporter to net importer of vanadium. Hence, vanadium closed the session at $22.30/lb up 21.8% since I first wrote about the company on August 30th.
In addition to the big move in vanadium, uranium is ahead 5.3% in the same time frame, which has contributed to a stellar move and technical breakout in WUC. The decision to highlight vanadium in the new company name lies in its 35 million pound resource, the bulk of which is situated in the Colorado-based Sunday Mine. With the Section 232 investigation into uranium imports, domestic uranium resources are certain to favor U.S. developer/producers.
The company also announced that 983,000 options were priced at $2.15 per share and while these are modestly in-the-money, they certainly could have been priced earlier given the 200-dma sits at $0.94. I view this as an extremely shareholder-friendly action by management and one which enhances the optics for the prospective new shareholder as well as solidifying loyalty for existing ones.
I am adding a chart courtesy of John Newell of Fieldhouse Capital Management simply to provide readers with an independent assessment of the technical position of WUC. The old 2016 high at $2.75-2.80 is formidable resistance but once through there, the 2015 price range is certainly attainable.
Chart courtesy of John Newell and Stockcharts.
We are entering into a seasonally powerful time of the year for the uranium space and as the chart of Cameco shown below would illustrate, from now until late February should be a high-performance window for the uranium space and those with the all-important vanadium "kicker" such as WUC should be exceptional performers.
Lastly, the company is embarking on a series of investor conferences and private meetings commencing in October with the intention of eradicating the deep discount that exists when compared to peers. With a 97.8-million-pound of uranium-equivalent resource, the current market capitalization of US$39.1 million is absurdly low when compared to Fission Uranium's 140.5-million-pound resource and $306 million market cap. A similar market cap to share price ratio would have Western Uranium and Vanadium Corp. trading closer to US$215 million or US$8.30 per share. For those interested in viewing an analysis of 30 uranium developers and producers, contact me and I will be pleased to send it along.
Chart courtesy of Haywood Securities.
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger's adherence to the concept of "Hard Assets" allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.
Disclosure:
1) Michael J. Ballanger: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Western Uranium Corp. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies referred to in this article: Bonaventure Explorations Limited is owned by me and my wife and has earned consulting fees from Western Uranium in the past. I determined which companies would be included in this article based on my research and understanding of the sector. Additional disclosures are below.
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Charts courtesy of Michael Ballanger.
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