$DNN : Denison Mines — Independent Economic Analysis

Long-Term Price Case$65/lb. U308 $65/lb. U308
Flagship ProjectPhoenixGryphon
Project Percentage90% 90%
Mineral Reserves98,460,000 lbs. 98,460,000 lbs.
Shares Outstanding589,100,000589,100,000
Market Cap$342,267,100$342,267,100
Average Annual Production5.966M lbs.7.648M lbs.
LoM10 Years7 Years
Payable Product58.767M lbs.48.817M lbs.
True All-in Cost (TAIC)$39.20/lb.$47.83/lb.
Gross Revenue$3,819,855,000$3,173,105,000
Saskatchewan Revenue Royalties & Surcharges + Resource Credit($276,939,487)($230,050,112)
Total Operating Cost($194,347,597)($567,610,551)
Operating Profit$3,348,567,916$2,375,444,337
Saskatchewan Profit Royalties ($502,285,187)($356,316,651)
Income Taxes($904,113,337)($641,369,971)
Total Capital Costs($425,950,000)($539,660,498)
Net Income (Denison Share)$1,364,597,453$754,287,495
Net Profit Margin36%24%
Absolute Cost Structure (ACS)60%74%
MTQ Score (Higher is Better)0.60.3
True Value$3.60/sh.
True Value Discount (TVD)86%
Cash Flow Multiple10x5x
Net Annual Cash Flow$138,530,520$118,184,544
Future Market Cap Contribution$1,385,305,200$590,922,720
Total Future Market Cap Growth477%

Notes: All Values in U.S. Dollars

We boosted our stake in Denison Mines this morning by 25% following an updated analysis in which the company achieved a maximum in-house Composite Rating of 5. Denison Mines excelled in the following categories: Net Profit Margin (Phoenix), Absolute Cost Structure (Phoenix), True Value Discount, and Market Cap Growth. Our Target, however, has been lowered by 20%, as our updated calculations implied a True All-In Cost (TAIC) that was higher than expected for Phoenix, while Net Profit Margin and Absolute Cost Structure for Gryphon were average.

MTQ Scores & Composite Ratings — Study Group Comparison

$BNNLF : Bannerman Resources — Independent Economic Analysis

Long-Term Price Case$75/lb. U308
Flagship ProjectEtango
Mineral Reserves130.1M lbs.
Fully Diluted Shares1,136,000,844
Fully Diluted Market Cap$40,896,030
Average Annual Production7,059,438 lbs.
LoM16 Years
Payable Product112,951,000 lbs.
True All-in Cost (TAIC) $63.71/lb.
Gross Revenue$8,471,325,000
Gross Income$8,047,758,750
Total Operating Costs($4,291,071,000)
Operating Profit$3,756,687,750
Income Taxes($1,408,757,906)
Total Capital Costs($1,075,141,000)
Net Income$1,272,788,844
Net Profit Margin15%
Absolute Cost Structure (ACS)85%
MTQ Score (Higher is Better)0.2
True Value$1.12/sh.
True Value Discount (TVD)97%
Cash Flow Multiple5x
Annual Cash Flow$79,701,055
Future Market Cap$398,505,275
Future Market Cap Growth874%

Notes: All Values in U.S. Dollars

TAIC Comparison (Lower is Better)

Net Profit Margin Comparison (Higher is Better)

MTQ Score Comparison (Higher is Better)

True Value Discount Comparison (Higher is Better)

MTQ Score — Global Study Group Comparison (Higher is Better)

$URG : Ur-Energy — Independent Economic Analysis

Long-Term Price Case$65/lb. U308$65/lb. U308
ProjectLost CreekShirley Basin
Mineral Resources13,252,000 lbs.8,816,000 lbs.
Shares Outstanding143,400,000143,400,000
Market Cap$131,928,000$131,928,000
Average Annual Production1M lbs.500,000 lbs.
LoM12 Years14 Years
Payable Product12,191,840 lbs.7,052,800 lbs.
True All-in Cost (TAIC) $35.61/lb.$38.29/lb.
Gross Revenue$792,469,600$458,432,000
Gross Income$760,770,816$440,094,720
Total Operating Cost($177,757,027)($102,547,712)
Operating Profit$583,013,789$337,547,008
Wellfield Development($118,504,685)($55,152,896)
Sweetwater Property Tax($1,584,939)
Wyoming Severance Tax($10,226,560)
Carbon County Ad Valorem Tax($16,362,496)
County Property Tax($1,128,448)
Income Taxes($89,244,269)($40,130,432)
Total Capital Costs ($15,400,000)($26,200,000)
Net Income$358,279,896$204,708,672
Net Profit Margin45%45%
Absolute Cost Structure (ACS)55%59%
True Value$3.92/sh.
Cash Flow Multiple10x
Annual Cash Flow$29,390,000$13,355,000
Future Market Cap$427,450,000
Future Market Cap Growth224%

Notes: All Values in U.S. Dollars

There is a great deal of value in Ur-Energy that hasn’t been baked into price. Were shares to trade between 30-40% lower in a general market decline, we would be buyers.


At $65/lb., Ur-Energy will achieve excellent Net Profit Margins and enjoy an Absolute Cost Structure that will elude peers (On its worst day, the company’s TAIC won’t rise much above $36/lb.).

Update, 13 July ’19

We do not presently have exposure to the uranium sector in the U.S., and in light of recent developments, the likelihood of our future participation has dropped. Any consideration of a U.S. issue will necessitate a substantial discount to our estimate of True Value. In the case of Ur-Energy, an additional 20% discount to the 12 July close will be essential before a small initial stake is considered.

More likely, future exposure to the U.S. uranium sector will be gained via exposure to Cameco’s Crow Butte and Smith Ranch-Highland Projects, though at that time, we believe Cameco shares will be available to us up to 30% cheaper following a general market decline.

$GVXXF : GoviEx Uranium — Independent Economic Analysis

Long-Term Price Case$70/lb. U308 & $12.38/lb. MoO2$70/lb. U308
Flagship ProjectMadaouelaMutanga
Mineral Reserves60,540,000 lbs.30,050,000 lbs. (FCM Estimate)
Shares Outstanding423,222,000423,222,000
Market Cap$50,786,640$50,786,640
Average Annual Production2,690,000 lbs.2,400,613 lbs.
LoM21 Years11 Years
Payable Product56,725,980 lbs.26,406,740 lbs.
True All-in Cost (TAIC) $53.37/lb.$56.43/lb.
Gross Revenue$3,954,300,000$1,848,471,800
Total Operating Costs($1,686,000,000)($960,000,000)
Molybdenum Credit$339,930,406
Operating Profit$2,174,431,535$833,017,646
Income Taxes($559,139,538)($291,556,176)
Niger Working Interest (10%)($93,929,200)
Niger Carried Interest (10%)($84,536,280)
Total Capital Costs ($676,000,000) ($183,000,000)
Net Income$761,436,720$358,461,470
Net Profit Margin19%19%
Absolute Cost Structure76%81%
MTQ Score (Higher is Better)0.30.2
True Value$2.65/sh.
True Value Discount (TVD)95%
Madaouela & Mutanga
Cash Flow Multiple5x10x
Annual Cash Flow$77,311,018$77,311,018
Future Market Cap$386,555,090$773,110,180
Future Market Cap Growth661%1,422%
Target$0.91/sh. $1.83/sh.
Cash Flow Multiple5x
Annual Cash Flow$44,734,700
Future Market Cap$223,673,500
Future Market Cap Growth340%

Notes: All Values in U.S. Dollars

$UUUU : Energy Fuels — Independent Economic Analysis

Long-Term Price Case$65/lb. U308 $65/lb. U308
ProjectNichols RanchAlta Mesa
Mineral Resources7,195,000 lbs.3,617,000 lbs.
Shares Outstanding93,500,00093,500,000
Market Cap$287,980,000$287,980,000
Average Annual Production630,000 lbs.575,000 lbs.
LoM10 Years6 Years
Payable Product6,359,000 lbs.3,182,960 lbs.
True All-in Cost (TAIC)$41.36/lb.$38.61/lb.
Gross Revenue$413,335,000$206,892,400
Gross Income$380,331,790$190,372,838
Total Operating Cost($69,376,690)(34,726,094)
Operating Profit$310,955,100$155,646,744
Income Taxes($26,707,800)($13,368,432)
Total Capital Costs ($89,725,490)($44,911,566))
Restoration & Reclamation($16,024,680)($8,021,059)
JV Allocation($17,487,250)
Net Income$150,326,760$83,998,314
Net Profit Margin36%41%
Absolute Cost Structure (ACS)64%59%
True Value$2.51/sh.
Cash Flow Multiple10x
Annual Cash Flow$14,893,200$15,174,250
Future Market Cap$300,674,500
Future Market Cap Growth4%

Notes: All Values in U.S. Dollars

Fahy Capital Management has enjoyed a 90% return on Energy Fuels, but we think the stock is overvalued by almost every measure at current levels. We are sellers.

$TMRC : Texas Mineral Resources — Updated Economic Analysis

Flagship ProjectRound Top
Mineral Resources (M&I)307,260,007 kg REOs
Shares Outstanding46,686,252
Market Cap$14,005,876
Average Annual Production10,754,100 kg
LoM20 Years
Payable REOs215,082,005 kg
True All-in Cost (TAIC) $21.43/kg.
Gross Revenue$7,764,424,000
Texas State Royalty($487,476,000)
Gross Income$7,276,947,000
Total Operating Costs($2,213,683,000)
Operating Profit$5,063,264,000
Total Capital Costs($845,000,000)
Income Taxes($1,063,285,440)
Net Income$3,154,978,560
Net Profit Margin41%
Absolute Cost Structure (ACS)39%
True Value (TMRC, 30%)$20.27/sh.
Cash Flow Multiple5x
Annual Cash Flow (TMRC, 30%)$47,324,678
Future Market Cap$236,623,392
Market Cap Growth1,589%

Notes: All Values in U.S. Dollars

$NXE : NexGen Energy — Updated Independent Economic Analysis

Long-Term Price Case$65/lb. U308
Flagship ProjectRook I
Mineral Reserves234.1 Mlbs.
Shares Outstanding355,761,699
Market Cap$565,661,101
Average Annual Production25.4M lbs.
Payable Product228.4M lbs.
LoM9 Years
True All-in Cost (TAIC)$34.69/lb.
Gross Revenue$14,846,000,000
Transportation Costs($58,664,379)
Provincial Revenue Royalties($1,076,335,000)
Net Revenue$13,711,000,621
Total Operating Costs ($1,015,956,897)
Provincial Profit Royalties ($1,645,320,075)
Operating Cash Flow($11,049,723,649)
Income Taxes (27%)($2,983,425,385)
Total Capital Costs($‭1,143,580,221)
Net Income (LoM)$6,922,718,043
Net Profit Margin47%
Absolute Cost Structure (ACS)53%
MTQ Score (Higher is Better)0.9
True Value$19.46/sh.
True Value Discount (TVD)92%
Cash Flow Multiple10x
Annual Cash Flow$769,874,000
Future Market Cap$7,698,740,000
Future Market Cap Growth1,261%

Notes: All Values in U.S. Dollars

We are steady buyers of NexGen Energy on weakness and believe it represents the single best, liquid opportunity in the market whereby which to capitalize upon a future bull market in uranium.

NexGen Energy is the only development-stage uranium company with a projected Net Profit Margin approaching 50%. It also has a peer-crushing Absolute Cost Structure of 53%. Both of these already respectable values will improve at higher spot uranium prices.

MTQ Score — Global Study Group Comparison (Higher is Better)

$FCUUF : Fission Uranium — Updated Economic Analysis

Long-Term Price Case$65/lb. U308
Flagship ProjectPLS (Triple R)
Mineral Reserves90.5M lbs.
Shares Outstanding486,014,642
Market Cap$179,728,215
Average Annual Production10,937,500 lbs.
Payable Product87.5M lbs.
LoM8 years
True All-in Costs (TAIC)$46.34/lb.
Gross Revenue$5,687,500,000
Provincial Revenue Royalties($412,343,750)
Net Revenue$5,275,156,250
Total Operating Costs ($604,625,000)
Operating Cash Flow$4,670,531,250
Provincial Profit Royalties($467,053,125)
Income Taxes($1,261,043,438)
Total Capital Costs($1,310,029,112)
Net Income$1,632,405,575
Net Profit Margin29%
Absolute Cost Structure (ACS)71%
MTQ Score (Higher is Better)0.4
True Value$3.36/sh.
True Value Discount (TVD)89%
Cash Flow Multiple10x
Annual Cash Flow$204,093,750
Future Market Cap$2,040,937,500
Future Market Cap Growth1,036%

Notes: All Values in U.S. Dollars

$FOSYF : Forsys Metals — The Glaring Value Proposition

Long-Term Price Case$65/lb. U308
Flagship ProjectNorasa
Mineral Reserves90.7 Mlbs.
Shares Outstanding147,500,000
Market Cap$18,511,250
Average Annual Production5.2 Mlbs.
LoM15 Years
Payable Product77,800,000 lbs.
True All-in Cost (TAIC)$55.16/lb.
Gross Revenue$5,057,000,000
Gross Income$4,905,290,000
Total Operating Costs($2,701,216,000)
Operating Profit$2,204,074,000
Income Taxes (37.5%)($826,527,750)
Total Capital Costs($‭612,100,000‬)
Net Income$765,446,250
Net Profit Margin15%
Absolute Cost Structure (ACS)85%
MTQ Score (Higher is Better)0.2
True Value$5.19/sh.
True Value Discount (TVD)97%
Cash Flow Multiple5x
Annual Cash Flow$51,168,000
Future Market Cap$255,840,000
Future Market Cap Growth1,282%

Notes: All Values in U.S. Dollars

Like GoviEx, Forsys Metals needs to bide its time for substantially higher uranium prices. Though the economics technically work at the Base Case ($65/lb.), the Net Profit Margin is too thin. To be successful, the Net Profit Margin needs to rise above 30% and the Absolute Cost Structure needs to drop below 70%, which implies a spot uranium price of $80/lb.

So where is the value?

The Forsys Metals value proposition stems from a discrepancy between share price and True Value, as the present discount to True Value is 97%. Similarly, the value proposition for Bannerman Resources stems from its 97% discount to True Value, as opposed to value being derived from Net Profit Margin or Absolute Cost Structure, neither of which are particularly good at a Long-Term Price Case of $65.


We take it for granted that the merits of the Forsys Metals story have not gone unnoticed and that it is daily becoming more ripe as an acquisition target. Naturally we’d like to witness and profit from Market Cap growth up to 1,282%, but we would also be delighted to learn that the Norasa Project had found a good home on an acquirer’s long-term development schedule.