Flagship Projects: Churchrock & Westmoreland = 100% Ownership … 1 Point
Resource Base (Westmoreland; Churchrock and ISR Projects; La Jara) = 94,000,000 Mlbs U308 … 1 Point
F/D Share Structure = 147,143,115 … 1 Point
Recent Price = US $0.19
F/D Market Cap = US $27,957,191
After-tax IRR (Westmoreland) = 35.8% … 1 Point
NPV/CapEx (Westmoreland) = 126% … 1 Point
Capital Intensity (Westmoreland) = US $3.37/lb.
F/D Market Cap per Resource Lb.= US $0.30 … 1 Point
In other words, each lb. in the ground is valued at US $0.30 by market cap.
Share Price Valuation by Resources in the Ground @ $22.65/lb. U308
Each share is worth .64 lbs. in the ground. In other words, each share is worth ~US $14.50 worth of U308 lbs. in the ground.
Resource Valuation as a Percentage of Market Cap
Value of Resources @ $22.65/lb. U308 = US $2,129,100,000
In other words, the market cap is valued at a little over 1% of the value of the aggregated U308 resources in the ground. This is very low. There is room for substantial market cap growth.
Cost Structure = 93% … -1 Point
Cost Structure is > 2/3 spot U308. Production is not economical at this time.
Near Future Cash Flow @ $22.65/lb. = $5,775,000 … Unrated
- Market Cap / Near Future Cash Flow = 4.8x … 1 Point
Future Cash Flow @ $65/lb. = $154,000,000 … Unrated
- Market Cap / Future Cash Flow = .18x … Unrated
Debt Coverage = Debt:Cash is negligible relative to Future Cash Flow … 1 Point
Projected Future Market Cap = US $611,000,000 … Unrated
Projected Future Market Cap Growth Percentage = 2,085% … 1 Point
Location: Australia; United States … 1 Point
We think Laramide Resources is worth approximately US $4.15 at $65/lb. U308. Today, an aggressive acquirer might offer as much as US $1.45 for the entire company, if they were as generous with resource estimates as we have been (Laramide needs to convert Churchrock Inferred to M&I). Nonetheless, we included Churchrock in our calculations, as an official Resource Estimate and PEA are forthcoming.
We think Laramide Resources is an interesting development-stage company. The project portfolio has legs and the management team appears interested in bringing one or two of the portfolio projects into production. Westmoreland and Churchrock will be economical at higher uranium prices. Westmoreland’s grade is in-line with peers and the strip ratio is good (2.3:1). The company passes the Debt Coverage test with flying colors, and if financing is sought in the future, Cash Flow from operations will be more than sufficient to service debt.
Finally, Laramide Resources’ present market cap is valued at a little over 1% of the value of the U308 resources in the ground, leaving room for substantial market cap growth.
We think the investment case for Laramide Resources is a good one while the market cap hovers below US $30M. Fahy Capital Management has tentative plans to take a stake at ~US $0.20. Our own target is US $1.76, which assumes Westmoreland enters production and uranium is trading at $65/lb.