Wednesday, February 16, 2011

Investors Guru Small Cap Stock Observer

(Amex/TSX: URZ) Uranerz Energy - Imminent Final Permit To Commence Construction Of WY, USA Uranium Mine

Uranerz Energy Corporation (Amex/TSX: URZ) (Frankfurt: U9E) is a company in transition. In addition to active uranium exploration and property acquisition programs in the Powder River Basin of Wyoming, USA, the company is now on the cusp of joining a select group of uranium companies worldwide that can call themselves producers.

The timing couldn't be better to be part of this elite group. In 2007 uranium prices topped out at $137/lb. Then after bottoming at around $40/lb. in 2009 with the rest of the market, uranium prices have since been trending higher again. Yellowcake U308 currently trades at $72.50/lb. and a recent report expects long-term prices to average $85/lb.

This Feb. 9, 2011 equity research report by Dahlman Rose & Co. entitled "Increasing Production Provides Attractive Leverage to Spot Uranium" initiated coverage of Uranerz Energy. The report anticipates the company having its last permit in hand over the near-term, and should be ready to commence construction activity soon - as URZ catalysts.

Wyoming is the top U.S. uranium producing state and is a cost effective, safe and friendly jurisdiction to mine uranium compared to some far away lands. U.S. demand is expected to grow under the current administration, as is worldwide demand projected at 200 million pounds annually by the end of this decade.

In Wyoming there are two major permits / licenses required before starting an In-Situ Recovery (ISR) mine to produce uranium:
  1. Federal Nuclear Regulatory Commission (NRC) Source Material License
  2. Wyoming Department of Environmental Quality (WDEQ) Permit to Mine

Management has done an excellent job navigating the complicated permitting process in an efficient and timely manner. On January 4, 2011 the company announced receiving state approval of one of the first new commercial uranium Permits to Mine issued by the WDEQ in almost 20 years.

The approval status of the final NRC Source Material License is expected very soon, a matter of weeks to any day now!

For more on permit related announcements, read the following URZ news releases:

If / when URZ receives this final NRC SML permit, they are expected to break ground around a month later. Construction of the Nichols Ranch ISR Mine is budgeted to cost $35 million, which is less than the company already has in its treasury.

ISR uranium production is currently scheduled to commence mid 2012 and ramp up from there as feedstock from URZ's other properties becomes available. Uranerz is permitting its central processing plant for annual production capacity of 2 million pounds annually.

Nichols Ranch is only the first of 30 uranium projects Uranerz can draw from in the Powder River Basin Wyoming. The company has had significant success increasing its resources through exploration, going from less than two million pounds in 2007 to nearly 20 million pounds measured, indicated and inferred in 2010.

Uranerz Attributable NI 43-101 Resources Table
Property Name Pounds eU3O8
Measured & Indicated
Average Grade
% eU3o8
Pounds eU3o8
Average Grade
% eU3o8
Date of 43-101
Report or Update
Reno Creek 4,292,948 0.056 142,167 0.039 October 13, 2010
South Doughstick 1,852,673 0.121 153,337 0.096 February 25, 2010
Doughstick Properties 882,736 0.081 86,909 0.055 January 26, 2010
Nichols Ranch 2,949,546 0.114 - - June 5, 2009
Hank 2,236,050 0.123 246,753 0.087 May 1, 2008
West North-Butte 2,837,015 0.153 2,681,928 0.120 December 9, 2008
North Rolling Pin 664,521 0.058 32,522 0.042 June 4, 2010
TOTALS 15,715,489 0.103 3,343,616 0.111
more information and cautionary note

We anticipate further drill campaigns, and look forward to more 43-101 uranium resource updates this year.

And don't forget Uranerz is sitting on $36 million currently, with no debt, plus up to another $12.7 million expected shortly via the accelerated exercise of warrants announced January 26, 2011. I wouldn't be surprised if several uranium property acquisition deals were already in the works to further ramp-up resources.

Then again, why even use cash! The Analyst tab on our Uranerz Energy Stock Research Portal shows a consensus rating for URZ as a Strong Buy ranked 23 out of 110 in its industry. The company's stock has outperformed over the past three months, with URZ up 141% compared to its peer group rise of 65%.

Having a strong stock is surely an attractive bargaining chip; an alternative currency to woo attractive property deals. For that matter, with Uranerz expecting a working mine in a year or so, this especially might be very attractive to uranium resource owners.

The point is that deals can happen in many forms for cash, stock, royalties or any combination of buyout, merger or partnership. Uranerz now has the means and we look forward to property acquisition and other types of deals to grow their resource base and mine life.

Now that Uranerz appears ready to join the exclusive uranium producers club, how are other uranium producers doing? The market currently values Uranerz at $370 million, with the uranium producers below having market caps ranging from $1.5 billion to over $260 billion.

Direct comparison cannot be made as every situation is different and these companies have established operations, including production of other types of resources. However Uranerz does seem to have blue-sky potential as the newest company on the uranium producers' block.

Company Name Exch. Symb. Quote Market Cap. EPS P/E Div./Sh. Yield
Cameco NYSE CCJ $43.00  $17.0 Billion  $ 2.25 19.40 $0.40 0.94%
Rio Tinto NYSE RIO $73.69  $112 Billion  $ 2.75 27.60 $0.45 0.61%
Areva - CI Paris CEI E37.39  E13.4 Billion  E 0.81 46.30 E0.71 1.89%
BHP Billiton NYSE BHP $94.56  $264 Billion  $ 4.56 21.00 $1.80 1.90%
Uranium One TSX UUU $6.19  $5.9 Billion  $ 0.32 19.30 $0.00 0.00%
Paladin Energy TSX PDN $5.27  $4.1 Billion  $-0.06 -- $0.00 0.00%
Denison Mines TSX DML $4.22  $1.55 Billion  $-0.11 -- $0.00 0.00%
Uranerz Energy AMEX URZ $5.23  $370 Million  -- -- $0.00 0.00%

The market is starting to notice Uranerz! Our URZ Stock Research Portal's Company / (Share Information) tab as of 1/1/11 shows 43 institutions holding 11.20% of the stock. A further 11.70% is held by insiders, with a public float of only 15.25 million shares out of 70.82 million. Here are the top 10 institutional holders and top 6 mutual fund holders of Uranerz Energy Corp.'s common shares:

Top 10 Institutional URZ Stock Holders Shares % Out Value Reported
 American International Group, Inc 2,122,561  3.30% $3,417,323  Sep. 30/10
 Andreeff Equity Advisors, L.L.C. 400,956  0.62% $645,539  Sep. 30/10
 Royal Bank Of Canada 227,841  0.35% $366,824  Sep. 30/10
 Calpers (California-Public Employees Retirement System) 222,700  0.35% $888,573  Dec. 31/10
 Bank of New York Mellon Corporation 216,414  0.34% $863,491  Dec. 31/10
 Corsair Capital Management, L.L.C. 115,000  0.18% $185,150  Sep. 30/10
 Northern Trust Corporation 100,000  0.16% $161,000  Sep. 30/10
 BlackRock Fund Advisors 78,142  0.12% $125,808  Sep. 30/10
 Goldman Sachs Group Inc 70,309  0.11% $113,197  Sep. 30/10
 DekaBank Deutsche Girozentrale 54,500  0.08% $87,745  Sep. 30/10

Top 6 Mutual Fund URZ Stock Holders Shares % Out Value Reported
 SunAmerica Focused Small Cap Value Fund 1,221,589  1.90% $2,736,359  Oct. 31/10
 Global X Fds-Global X Uranium ETF 1,136,000  1.77% $4,532,640  Dec. 31/10
 Valic Company II-Small Cap Value Fund 986,059  1.54% $1,242,434  Aug. 31/10
 IShares Russell Micro Cap (TM) Index Fund 95,452  0.15% $380,853  Dec. 31/10
 Northern Small Cap Core Fund 9,725  0.02% $38,802  Dec. 31/10
 Claymore ETF Tr-Claymore Wilshire Micro Cap ETF 1,337  0.00% $1,684  Aug. 31/10

URZ Summary:
  • Uranerz Energy is a pure-play uranium company, fully leveraged to spot prices that have been trending higher.
  • Focused on Wyoming ISR uranium projects - cost effective, safe and friendly jurisdiction to mine uranium, close to growing demand.
  • Skilled management with experience in financing, permitting, constructing, operating and selling uranium projects worldwide.
  • Advanced projects with established resource base, plus substantial exploration potential.
  • $36 million cash, up-to $12.7 million more via warrants exercise, and no debt.
  • Uranerz received its WDEQ state Permit to Mine last month.
  • Construction of URZ's first ISR uranium mine should commence within weeks of receiving its final NRC SML permit.
  • Nichols Ranch uranium production is currently anticipated for mid 2012.
  • Mine plan is for up-to 2 million pounds per year after initial ramp-up period.
  • Nichols Ranch is the company's first of 30 uranium projects in the Powder River Basin Wyoming, USA.
  • Ongoing exploration and drilling of these nearby properties should add to an already active news flow.
  • 43-101 resource updates anticipated later this year - may be developed via permit amendment provisions.
  • More analysts and institutions may see final permit approval as de-risking event to initiate coverage, and as production starts to evaluate URZ more in-line with its peer producers.

Uranerz has successfully transitioned as an exploration play, to the development phase, to anticipated near-term uranium producer. Uranerz strengths provide several options to its property acquisition and deal making quiver - to expand the company's resource base, mine life and overall growth profile.

Word on the company's NRC SML final permit is expected any day!

Watch BNN's recent interview with URZ's CEO @

Investors Guru added Uranerz Energy Corporation (Amex/TSX: URZ) to its
Top 30 Small-Cap Stocks watch-list at US$3.20 on December 22, 2010. Read our comprehensive January 29, 2011 URZ Featured Stock Profile @

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1 comment:

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