Uranium to test lower limits of 2022 range?

In my weekly uranium sector roundups, I have been highlighting the range spot uranium has been in for most of 2022.

After a monster rally in Q2 2022 hitting highs of $64.50, spot uranium dropped down to $46.65 and has ranged or consolidated since. A rebound was attempted, but was rejected at the $53 zone.

Uranium has been ranging between $46.65-$53.65. In late October 2022, uranium bulls got excited as it appeared as if uranium was about to breakout. We even had some fundamental rumors to back it. There was, and still is, a lot of talk regarding a ban on Russian uranium. On December 5th 2022, we saw that the EU imposed a price cap on Russian oil. Uranium could be the next commodity on their radar.

Alas, we did not breakout, and instead continued to hold the range. Now it appears as if uranium price will be heading lower to test the lower portion of the range at $46.65.

What does this mean? Well for starters, the long term fundamental reasons to be bullish uranium still stand. Nuclear energy to deal with the climate crisis and possible energy crisis in Winter, as well as geopolitics. But with spot uranium potentially heading lower, it means that uranium stocks will either follow along or just range. For uranium bulls, this pullback will provide a great opportunity to pick up uranium stocks while they are on sale.

Knowing this, let’s take a look at what happened with the Athabasca basin stocks.

IsoEnergy (ISO.V)

IsoEnergy announced the closing of a previously announced CAD $18.3 million financing. Financing is composed of:

• 6 million raised through the issuance of 1,801,802 common shares to NexGen Energy Ltd. (TSX: NXE) (NYSE: NXE) (ASX: NXG) (“NexGen“), at a price of $3.33 per share;

• $5 million raised through the issuance of 940,000 charity “flow through” common shares at a price of $5.35 per share, to a syndicate of underwriters led by PI Financial Corp., and including Canaccord Genuity, Haywood Securities Inc., Raymond James Ltd., Sprott Capital Partners LP, and TD Securities Inc. (collectively the “Underwriters“); and

• $2 million raised through the issuance of 600,000 non-“flow through” common shares to the Underwriters, at a price of $3.33 per share.

With the financing, IsoEnergy now has cash reserves of approximately CAD $20.7 million. A lot of money to trigger a catalyst. Proceeds from the financing will be used for exploration and development of the Company’s properties in the Athabasca Basin, Saskatchewan, potential future acquisitions and for general corporate purposes.

Unfortunately, the stock closed below a range which has lasted since September 2022. Now another support zone is being tested. There is some support at $2.80, and we shall see if the stock can hold above it. If uranium does drop lower to test our bottom range of support, we could see IsoEnergy break here.

 

Denison Mines (DML.TO)

Billion dollar market cap uranium company Denison Mines announced successful results from long-term core leach metallurgical testing completed to further support the feasibility study underway for the Phoenix in-situ recovery (ISR) uranium mining operation proposed for the company’s 95% owned Wheeler River project.

The results from long-term core leach testing of Core 4A are highlighted by the following:

• Overall recovery of uranium in excess of 97% – demonstrating excellent recovery of uranium from intact high-grade core, without the use of permeability enhancement.
• Average recovered solution uranium head grade of 18.3 grams per litre (“g/L”) – exceeding the assumed 15 g/L uranium head grade being used in FS plant designs (see news release dated August 4, 2021).
• Continuous intact core leach testing over a period of 377 days, with uranium recovery head grades consistently maintained above 5 g/L during the final stages of the production curve and then declining during the ramp-down stage.
• Maximum recovered solution uranium head grade of 49.8 g/L achieved using similar lixiviant concentrations as to those used during the Feasibility Field Test (“FFT”).

Kevin Himbeault, Denison’s Vice President of Plant Operations & Regulatory Affairs, commented, “The positive results of the long-term intact core leach test carried out on Core 4A add to the weight-of-evidence de–risking the use of the ISR mining method at the high-grade Phoenix uranium deposit.  The ability to demonstrate the recovery of over 97% of the uranium from a high-grade intact core sample is quite positive and provides notable support for the estimated recovery value of 85% used in the 2018 Pre-Feasibility Study (“PFS”).  Additionally, demonstrating an average uranium head grade of 18.3 g/L, over a year of testing Core 4A, provides further tangible support for the assumed 15 g/L uranium head grade being used in FS plant designs.”

Another unfortunate breakdown of a technical pattern with Denison Mines dropping below a triangle. I would be watching to see if we can close above $1.60 to nullify this breakdown, but what I expect to see is a retest of the triangle and another leg lower. If spot uranium continues to decline, then we can test the $1.30 zone.

 

Forum Energy Metals (FMC.V)

Forum Energy announced a non-brokered private placement of up to 13,076,923 flow-through units at a price of $0.13 per flow through unit for gross proceeds of $1,700,000. A warrant at a pice of $0.17 for a period of 24 months following the closing date of the offering is also included.

The use of proceeds are for drilling at its 100% owned Wollaston uranium project in the northeast Athabasca Basin, Saskatchewan and further exploration of the Company’s uranium, copper, nickel and cobalt projects in Saskatchewan and Nunavut.

I highlighted this set up last week, and it remains the best looking set up on the uranium markets. A breakout is looking likely, but we require a close above $0.125. If we don’t get this, the stock can continue ranging. This is one of the stocks that is already bottoming, while other uranium related stocks may drift lower with spot uranium.

 

Fission 3.0 (FUU.V)

Fission 3.0 has announced a financing. Due to significant investor demand, the financing has increased to the sale of up to 19,047,619 flow-through common shares to be sold to purchasers for gross proceeds of up to C$8.0 million.

The gross proceeds under the underwritten offering have been increased from C$5.0 million to C$6.0 million, under which 14,285,714 FT Shares are to be sold to purchasers on an underwritten basis at a price of C$0.42 per FT Share. A 45% premium to market. 

The Company has also increased the potential size of the Over-Allotment Option to up to C$2.0 million. The Offering is expected to close on December 21, 2022.

The proceeds of the Offering will be used by the Company to fund exploration of the Company’s projects in the Athabasca Basin.

The financing was not a surprise given the recent discovery and the jump in the share price. The company confirmed a double bottom reversal pattern with a break above $0.125 and remains above the key level of $0.285.

If we hold above, the next level I see coming is the $0.45 zone.

 

Fortune Bay (FOR.V)

Fortune Bay has announced analytical results from the 2022 maiden drilling program on the 100% owned Strike Uranium Project located in northern Saskatchewan.

Analytical results have confirmed anomalous uranium in three of the nine drill holes completed, up to a maximum individual assay result of 0.43% U₃O₈. The uranium is associated with enriched levels of “pathfinder” elements that are typically associated with high-grade, unconformity-related deposits in the Athabasca Basin.

Gareth Garlick, Technical Director for Fortune Bay, commented, “This was the very first time the extensive electromagnetic conductors on the Project have been drill tested and the analytical results confirm Strike’s potential for shallow, high-grade uranium mineralization. The uranium intersected within S22-013 represents a new discovery of mineralization which is open in all directions. This result, located on the K Conductor, warrants priority follow-up in addition to the testing of numerous additional targets on the Project.”

Highlights:

• Drill hole S22-013 (K3 target) returned a maximum assay of 0.43% U₃O₈ from 145.7 to 145.8 metres (approximately 105 metres below surface), with the interval from 145.6 to 145.8 metres averaging 1,170 ppm U. Nearby historical surface grab samples include HY080 1.51% U₃O₈, Stancliff 0.19% U₃O₈, and Hacker Atompower 0.13% U₃O₈ (see Figure 2).
• Drill hole S22-005 (Tena target) returned a maximum assay of 0.42% U₃O₈ from 82.3 to 82.4 metres (approximately 60 metres below surface), with the 1.8 meter interval from 82.3 to 84.1 metres averaging 356 ppm U.
• Drill hole S22-006 (Tena target) intersected an average of 141 ppm U over 0.8 metres from 106.9 to 107.7 metres (approximately 75 metres below surface).

Last week, I gave this set up to my readers. Fortune Bay was confirming a bottoming reversal pattern which was triggered with a close above $0.33. Now, many positive things are happening on the chart. We have a retest of the breakout zone which is completely normal. Buyers have stepped in on the retest and are driving prices higher. We are also on the way to confirm our first higher low. All that is required is a close above recent highs of $0.39. This set up looks really good and a new uptrend has begun. The next resistance comes in at the $0.55 zone.