Interview with Marc Henderson, President and CEO of Laramide Resources (TSX:LAM)
Uranium has had a torrid time in recent years. However, uranium equities are regaining momentum. This is primarily influenced by the suspension of numerous uranium mining operations in the midst of the COVID-19 pandemic. The suspensions have helped lift the spot price near a 12-month high, concluding March at stronger, but still low, US$27.35/lb.
Laramide Resources is a Canadian-based uranium explorer/developer. Uranium companies have dropped like flies in a bear market that has lasted over 9 years, but Laramide is still alive and kicking. Laramide Resources owns several large uranium projects in both Australia and the U.S. Investors should be aware that Laramide Resources is dual-listed on the TSX and ASX, and is on the OTC (LMRXF).
While many uranium investors expected the USD$150M NFWG budget to be a catalyst for uranium price discovery, it failed to materialise. Henderson claims Laramide was never reliant on the outcome, but instead saw it as a nice bonus. However, with COVID-19 disrupting possible budget proceedings, the "significant" US$150M now sits in limbo.
Cameco and Kazatomprom are the two biggest players in the small uranium space. Henderson was able to comment on their recent decisions. Cameco's Cigar Lake has recently been put on care & maintenance; many uranium investors have perceived this as a white swan event. And today's announcement that all uranium production in Kazakhstan will cease for three months and got the market excited again as those events represent a huge production shortfall for 2020. Henderson himself is a believer too. He thinks that the buying behaviour of utility companies will have to change in the near future.
How are the U.S projects holding up? The key here appears to be timescale. Laramide Resources' USP appears to be how fast it can flip the switch at its U.S projects, get into production and possibly benefit from the NFWG outcome. Laramide’s conventional hard-rock asset La Sal in Utah, United States, has permits in hand to commence a bulk sample program. This looks like a 1-year process from decision to production. It's towards the top end of the cost curve, and will need to be milled at Energy Fuels' White Mesa Mill. The project could churn out 500,000lbs of uranium for 5-6 years. This number isn't huge, but this one of Laramide Resources' smaller projects. The CAPEX looks like US$5M.
The more exciting Churchrock/ISR project (contained resource estimate of 50.8Mlbs) could also get moving as soon as the uranium spot price rises to US$35-40/lb. As the projects aren't very capital intensive, Laramide's strategy would be to get them online first. The New Mexico-based La Jara Mesa project has received a draft Environmental Impact Statement from U.S. Forest Services. Henderson predicts Laramide Resources will need to spend US$30M of CAPEX to get the La Jara Mesa resource online at 1Mlbs of uranium per year, with the potential to eventually scale up to 3Mlbs as the uranium price rises and margins increase. Permitting is the absolute focus moving forward, and the message appears clear: things are finally moving in the uranium space.
Laramide Resources raised US$4.5M in January. This looked extremely expensive at the time, but considering current COVID-19-induced market sentiment, it looks a lot better now. Nothing has really changed at Laramide Resources' Australian Westmoreland and Murphy projects; they are still on the shelf for the time being. There is plenty of work to be done and money to be spent, and even then there may be politically-created permitting issues.
What did you make of Marc Henderson? Is uranium in for 2H/20?
Company page: https://laramide.com/
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