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UComps: Project Generation Capability for Uranium Explorers

EXCLUSIVE TO SIGHTLINE U3O8 – This month’s UComparables edition will focus on the Uranium Explorers’ ability to be project generators and de-risk exploration by accessing capital from partners to fund the high-risk and expensive drilling phases of exploration. 

A project generator (“PG”) is defined as a company that acquires and maintains a portfolio of multiple projects they deem to have significant mineral potential and option them to, or obtain exploration financing with the support of, a partner; generally a mid-tier or major mining company.

By applying a PG model, exploration work is expedited, plus Exploration Companies will automatically de-risk their projects by: 

  • Spreading overhead between multiple projects;
  • Decreasing equity dilution and reliance on financing as major funding is covered by JV partners;
  • Spreading the odds of making a discovery to a portfolio of multiple properties rather than just focusing on a single project, which may or may not work out;
  • Attracting partners providing shareholders with heightened reassurance of the technical validity of prospects;
  • Providing revenues derived from partner cash payments in the form of option agreement payments and management fees, or in the case of a junior company partner, share issuances to complete the earn-in.

Uranium Exploration Projects

As stated in the past, it is not our intention to provide analysis or opinion as to the investment potential of these companies.  We are merely compiling and sharing metrics and data points, common across the companies that investors can utilize in their decision-making process.

On the list below, we have only accounted for uranium projects that are in good standing for the 17 uranium exploration companies we are tracking. UEX, ValOre, ALX Uranium, Forum Energy, CanAlaska, Roughrider and Uracan also hold other projects that are not uranium-related projects, therefore these projects were not included herein. 

We were disappointed to find that collecting this information was far more difficult than anticipated.  Many times we found that the projects listed in a Company’s marketing material differed from the information found in their financial statements.  Also, while we aspired to also highlight the operators and the ownership percentage for each project, we found several uranium exploration companies were very selective and inconsistent in what was disclosed. In many cases, they would highlight ownership for key projects only and would fail to disclose the operator. 

Exploration companies hold an average of just over 6 uranium projects each, with the largest project generator being Fission 3.0 with 21 uranium projects. On the other side, Uracan and Azincourt hold one uranium project each, therefore, for this exercise, they are not considered PGs. 

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Uranium Exploration Partners 

The second metric collected sets out to identify the nature, relationship and extent of these Companies’ financial partners. We identified not only partners participating in the advancement of specific projects, but also equity partners who enjoy a special relationship obviously structured to provide financial support to the exploration efforts of an Explorer.  Such relationships include NexGen’s 58% ownership of ISOEnergy and Paladin’s 82% ownership of Summit Partner.

We also identified partners as being a major mining company, a development company or another exploration company as a proxy to their relative financial clout. 

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UComparables Table

In the attached table, we have assembled the results at a high level.  For simplicity sake, we have identified those companies in the top quartile of any particular metric with a green dot.  For those in the bottom quartile we have indicated that with a black dot.  The rest, falling within a safe margin of the average, are noted with a yellow dot. Feel free to click on the dots or headings to get more information. 

Again, we must stress that investors need to take care in evaluating any information pertaining to their investments and that this information is being provided only as a starting point to that evaluation.  We will continue to add new comparable categories and update these as necessary.

We invite any comments or questions pertaining to the information provided or companies we may have missed.  Such questions and comments can be sent to editor@sightlineu3o8.com.

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