A bill in Congress wants to stop Russia from getting any more uranium or nuclear fuel from other countries. Ur-Energy (NYSE:URG), which mines uranium, maybe in a better position than any other US uranium mining company to add a large amount of mined uranium to the domestic total if the law has any stimulating effects. It can happen quickly if the market or the government creates incentives that make it desirable. What the bill or other similar plans will give uranium miners in the U.S. is still unknown. It seems unlikely that putting a limit on imports will only help the mining and processing industries in the United States. Ur-Energy stock is trading at a price that is half of its all-time high for this decade. This gives investors a cheap way to get into the market. This means that the U.S. uranium mining industry is about to start a new, longer period of growth. But if this planned move doesn’t help domestic miners in any way, it could be a few more years before Ur-Energy’s production price goes up enough to make it worth investing in.
Ur-Energy’s Financial Situation Is Getting Worse Because Operations Have Been Stopped
Ur-Energy financials haven’t done much to make us happy in the past few years, as we can see. The main reason for recent poor performance is the decision to stop most mining and other work. Ur-Energy hasn’t sold any uranium in the last two years, according to its full-year report. This year, it plans to sell 280,000 pounds of uranium, which will bring in about $17.3 million. Even if sales growth is slow and well below what it could be, it is still possible to lose money for the whole year, though it might not be as bad as the last two years. With a forward P/E of about 9, it looks like good things will happen in the future.
It’s worth noting that Ur-Energy did make money when it was still a uranium mining company. In 2018, Ur-Energy made $23.5 million in sales and made a net profit of $4.5 million. It was sold for 480,000 pounds. I think the company’s past performance shows that it has the potential to make money. This means that the current financial losses we are seeing because the company is not doing anything could be turned around if market conditions were good enough for the company to start mining, processing, and trading uranium again.
Russian Limits on Uranium Exports
Because of the many rounds of sanctions, the West’s economic war against Russia for invading Ukraine affects fewer and fewer industries. Nuclear energy is one area that has not yet been harmed, and it appears that Congress will discuss it and, most likely, approve legislation to address it.
I think this bill will pass because of how politics are right now. Since local production has been low in recent years, I think it will also include plans to improve the mining and processing industries in the United States.
Given the times, having some energy independence has become increasingly tempting from a geopolitical standpoint, even if Canada and Australia may be able to supply some of America’s nuclear fuel needs. Having a supply of goods made in the country is also good for the economy.
No one knows what kinds of incentives will be part of this effort. Because Russia will most likely sell it to other customers and there will be other supplies of uranium on the global market, the fact that Russian uranium will no longer be available on the US market will not significantly increase the price of nuclear fuel on the US market. Because this is a great chance to bring back the country’s uranium mining industry, which has been dormant for a while, I expect that measures to help American uranium miners will be approved at the same time as a ban on Russian nuclear fuel.
Ur-Energy has the resources and infrastructure to grow production and keep it going.
Based on what can be seen and measured, Ur-Energy has a little less than 12 million pounds of uranium at its Lost Creek site. The company has the licenses to make up to 2.2 million pounds of uranium per year and the physical infrastructure to quickly increase production if needed. There are also 6.6 million pounds worth of resources that could be used better.
In the “measured and indicated” group, the Shirley Basin property has 8.8 million pounds. The area isn’t quite as ready for development as Lost Creek, but with enough time and money, it could become a second source of mining resources. Ur-Energy also owns the Lost Soldier property, which could add to its uranium resources, and the Lucky Mac Mine site, which is a very experienced mining operation that has already mined about 47 million pounds of uranium for another company. Because the price of uranium was so low in the 1990s, it is possible that more resources can be taken from a project that was mostly shut down because of this. As the price of uranium goes up, the project may hold a lot of promise.
What Will Happen to the Stock
At the time, Ur-Energy stock looked like a good investment opportunity. It has a market capitalization of about $280 million, proven uranium resources worth more than $800 million at the current spot price of $40 per pound, and a good chance of adding more proven reserves. It’s important to know that the price of uranium usually goes up when it’s sold under contract. For example, Ur-Energy has orders for 2023 that will cost on average just under $62 per pound. But because there’s no way to know when these resources will start bringing in money, the company isn’t using most of its production capacity right now. This could make it less appealing as an investment to buy and keep for a while.
I think it will also help US producers, but Congress’s recent decision to start the process of possibly getting rid of Russian uranium from the US market may give Ur-Energy the push it needs to get back to work. It is not clear how Congress’s plan will work or if it will help the American uranium mining industry, which I think it will. In that case, Ur-Energy might be the best place to put your money because it stands to gain the most from the situation. I’m going to keep my eyes open for now because I don’t know what kind of help the US uranium mining business will get.
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