Insider buying at Energy Fuels looks to be a positive sign for the American uranium market
Following the early February news that President Trump’s FY2021 budget provisioned for a U.S. uranium reserve of US$150 million pa, there has been increased insider activity from a prominent US uranium miner likely to benefit.
As Trump allocates $150 million per annum to establish a U.S. uranium reserve the Department of Energy’s Office of Nuclear Energy (NE) commented: “NE is asking for $150 million to set up a uranium reserve to further protect the nation’s energy security interests. The new program will help to re-establish the nation’s nuclear fuel supply chain through the domestic production and conversion of uranium. The reserve is expected to support the operation of at least two U.S. uranium mines.”
Given the two US uranium miners that started the Section 232 Petition were Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) and Ur‐Energy Inc. (NYSE American: URG | TSX: URE), it could be a guide that these two US uranium producers have a strong potential to benefit.
Recent insider trading in US uranium miner Energy Fuels
InvestorIntel has confirmed from management that insiders have purchased 62,390 shares on the open market in the past week, giving insiders a total of about 2 million shares. The top ten shareholders are institutions holding in total ~17%.
Given the current coronavirus market rout, Energy Fuels is currently trading at US$1.16, well below the price company insiders were paying just a few days ago.
Energy Fuels has a market cap of US$133 million, and an analyst’s consensus price target of C$3.65, representing 132% upside.
In case Energy Fuels Inc. (TSX: EFR | NYSE: UUUU) is new to you, Energy Fuels is one of only three US uranium miners still in production. Energy Fuels supplies U3O8 to major nuclear utilities. Energy Fuels also has the largest uranium resource portfolio in the U.S. among producers with an ability to rapidly scale up production if needed.
Energy Fuels holds three of America’s key uranium production facilities with a combined licensed capacity of 11.5m lbs. of U3O8/year:
- The White Mesa Mill in Utah is a fully-licensed and operating conventional uranium mill. It has a licensed capacity of over 8 million pounds of U3O8 per year. It is the only producing conventional uranium & vanadium mill in the U.S.
- The Nichols Ranch Processing Facility in Wyoming is an in-situ recovery production center with a licensed capacity of 2 million pounds of U3O8 per year.
- The Alta Mesa Project in Texas is an in-situ recovery production center with a licensed capacity of 1.5 million pounds of U3O8 per year, which is currently on hold (care & maintenance).
The Energy Fuels advantage – Able to ramp up uranium supply quickly
The ability to quickly scale up uranium production is definitely a huge advantage for Energy Fuels going forward.
Analysts are bullish on Energy Fuels with a price target representing over 100% upside. Insiders have been actively buying up Energy Fuels shares the past week and the US uranium sector is waiting to see how the US Government awards the US$150 million of allocated funds to uranium miners.
It is still too early to know any possible details of future US government supply contracts (prices, volumes); however, speculation is accumulating that Energy Fuels is likely to be offered a contract sometime in the foreseeable future.