July 20, 2018 - 8:21 AM EDT
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How Trump’s Potential New Tariffs Shift the Uranium Focus Back to the USA

Shockwaves rang across the uranium sector this week, as US Commerce Secretary Wilbur Ross announced he has launched a new national security investigation into uranium imports. The security probe is anticipated to possibly lead to tariffs or quotas to limit them, which has subsequently led to speculation of what will happen to the leading uranium companies in the sector.

The announcement comes on the heels of the May announcement by the US Department of the Interior, which led to the classification of uranium as a critical mineral. Last month, President Donald Trump called upon Energy Secretary Rick Perry to be proactive in keeping coal and nuclear power plants running.

The impact of the recent security investigation announcement will likely be felt by uranium companies both large and small, including Cameco Corporation (NYSE: CCJ) (TSX: CCO), Energy Fuels Inc. (NYSE: UUUU) (TSX: EFR), Ur-Energy (NYSE: URG) (TSX: URE), Uranium Energy Corp. (NYSE: UEC), and Anfield Energy (TSX.V: AEC) (OTC: ANLDF).

Theoretically, a tariff on imports could be detrimental to Canadian uranium producers and explorers, while delivering an unexpected benefit to US-based companies.

Back in January, US uranium producers Energy Fuels Inc. and Ur-Energy Inc. filed a petition asking the Commerce Department to investigate the matter under Section 232 of the 1962 Trade Expansion Act. President Trump used this same provision to place tariffs on steel and aluminum imports. The intent from US industry players is to utilize the government to shield them from competition from state-owned companies in countries such as Kazakhstan, and Russia.

The initial reaction from Saskatchewan-based Cameco Corp. was that the US announcement will have “no immediate effect” on existing contracts or deliveries. The current largest market for Cameco is indeed the US, with roughly 30% of the company’s total sales by volume last year going to US-based utilities.

However, on the day of the announcement, the immediate effect was a small 1% dip for Cameco, and increases for US-based companies such as Energy Fuels (+3.9%), Uranium Energy (+1.3%), Ur-Energy (+5.58%), and Anfield Energy (+14.75%).

How the field will play out in the long term is still up for grabs. But if the early indications turn into a trend, then the US players will have gained a major win with this security probe, that could lead to further significant gains upon its completion within the next 270-360 days.

CURRENT SNAPSHOT OF NORTH AMERICAN URANIUM PLAYERS

Energy Fuels Inc. (NYSE: UUUU) (TSX: EFR)

Unlike Cameco, which seemed to slough off the announcement as nothing major, Energy Fuels openly rejoiced the news. The investigation came at the request of Energy Fuels and Ur-Energy, so the announcement itself was seen as a major victory for the Colorado-based company with three key American uranium production centers in Utah, Wyoming and Texas. The Utah-based White Mesa Mill is currently the only conventional uranium mill operating in the US, with a licensed capacity of over 8 million pounds of U3O8 per year.

Uranium Energy Corp. (NYSE: UEC)

All but one of UEC’s projects reside inside the continental United States. As for its only international asset, located in Paraguay, the target market of this exploration target’s eventual market will likely be to closer nuclear plants, such as those found in Argentina. Currently UEC hasits turnkey Hobson Processing Plant within 100 miles of Corpus Christi, Texas. Originally licensed in 1978, the plant was completely refurbished in 2008, and is designed to process uranium-loaded resins from satellite mines to a final U3O8 product. The company also has projects in Wyoming, New Mexico, Colorado, and Arizona. By focusing on its low-cost ISR portfolio, and with an added tariff on international products, UEC likely stands to gain from the latest announcement regarding the security investigation.

Cameco Corporation (NYSE: CCJ) (TSX: CCO)

Cameco President and CEO Tim Gitzel was quick to quell the excitement over the announcement, stating it was still too early to speculate what the effect on his company’s Canadian and US operations would be. The company insists there will be no immediate impact on its contracts and deliveries to US utility customers—which is true. Since the investigation can take up to 270 days to complete, and the President would then have another 90 days to take action, the market could be just under a year away from assuredly knowing the direction of the market for US uranium buyers. Cameco rightly has a case to defend itself, if the security threat being insinuated is coming from state-owned companies, which Cameco is not.

Ur-Energy (NYSE: URG) (TSX: URE)

Instrumental to the recent announcement, Ur-Energy had partnered with Energy Fuels to lobby the Department of Commerce to initiate the security investigation. The duo jointly filed their petition back in January, resulting in their combined optimism with the latest announcement. Ur-Energy currently derives sales from production at its Lost Creek ISR Uranium plant, having captured 89,209 pounds of U3O8 there in the last quarter. Since commencing operations on the Wyoming plant, Ur-Energy has produced, packaged, and shipped approximately 2.4 million pounds of uranium. The company is looking to expand into its LC East project area, as well as to obtain permits and licenses to operate at its Shirley Basin Project.

Anfield Energy (TSX.V: AEC) (OTC: ANLDF)

Near term in its production aspirations, Anfield witnessed the highest gains upon the announcement of the group listed. Anfield would begin by processing 500,000 pounds annually in Wyoming, through an agreement that would allow them to use Uranium One’s existing Irigaray ISR processing plant, with material initially sourced from the Charlie ISR project, a low-cost, near-term production asset which is part of Anfield’s recently-announced transaction with Cotter Corporation. Anfield also holds a further 24 ISR mining projects in the state, which will serve as Anfield’s follow-on production pipeline. Finally, Anfield has conventional assets in both Utah and Arizona andits Shootaring Canyon Mill, with a licensed capacity of 1 million pounds per year, is one of only three licensed, permitted and constructed conventional uranium mills in the USA.

ANNOUNCEMENT COULD USHER IN AMERICA’S NEXT URANIUM PRODUCER

Among the US-based companies that gained with the DOC’s decision to pursue a security investigation, Anfield Energy (TSX.V: AEC) (OTC: ANLDF) stood out with a double-digit boost. As other larger companies such as Energy Fuels and Ur-Energy were proactive in their persuasion of the Department of Commerce to begin the investigation, Anfield quietly reaped the benefits.

In the midst of a significant fundraising, Anfield found itself in the right place at the right time when the announcement was made, despite not having an immediate material announcement to make of its own. However, the company is uniquely positioned through its agreement with Uranium One at the Irigaray processing plant to begin its first uranium production in the relatively near future. Should the uranium price continue to rise, Anfield has an opportunity to bring Shootaring into the mix, which would also open the door to vanadium production.

“Anfield continues to strategically position itself for both the inevitable rebound in the uranium price and the continued resurgence of the vanadium price,” said Corey Dias, CEO of Anfield Energy. “It has not only recently entered into a transaction to acquire an advanced uranium project in Wyoming, but it has also revisited the potential vanadium content on its current assets.”

Dias and his team are confident that the trends point towards a uranium rebound, and that a shock of this magnitude could have lasting benefits for US producers as a whole.

He added: “Given that the uranium supply and demand imbalance is certain to be exacerbated by the continued voluntary reduction of production from the likes of Cameco and Kazatomprom and the addition of reactors worldwide, we believe that the currently-low uranium price is unsustainable. In addition, the Trump Administration's investigation into whether or not the importing of uranium may be a national security risk could provide a significant boost to domestic U.S. producers, of which Anfield could be one.”

On top of the nearer term production at Irigaray, Anfield is aggressively moving forward on its Shootaring Canyon mill, located less than 50 miles from Hanksville, Utah. Shootaring is one of only three licensed conventional uranium mills in the country, and after operations were halted on the site in 1982 due to depressed uranium prices, the stars seem to be aligning for the facility to come back on line.

Purchased from Uranium One in 2014, it seems the time may be nearing for Anfield to capitalize on its Velvet-Wood mine, the property that contains a Measured and Indicated resource estimate of 6.8 million pounds of U3O8. This mine could serve as the initial feedstock for Shootaring. Now with the added boost from the government’s actions, Anfield looks to be a likely candidate to become one of the country’s next uranium producers at just the right time.

Disclaimer: Nothing in this article should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this article is not provided to any individual with a view toward their individual circumstances. Baystreet.ca has been paid a fee of four thousand dollars for Anfield advertising. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this article as the basis for any investment decision. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in this article is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

Source: Livemoney (July 20, 2018 - 8:21 AM EDT)

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