Judging by recent transactions and IPOs, a similar dynamic is at work in the uranium sector. A few months ago, however, this didn't stop us from highlighting an interesting situation with Yellow Cake, whose stock has since performed very well.
Today, let's focus on Uranium Energy Corp.
Controlled by a Canadian hedge fund (first alert), UEC never had a commercial operation until last year (second alert) and actually established itself through a series of acquisitions (third alert) between 2017 and this autumn.
The company explains in its presentation to investors that it has built its reserves and infrastructure on an acquisition strategy calibrated between $20 and $45 a pound. However, the spot price of uranium is currently at $62 per pound, a twelve-year high since Russia was blacklisted on the international markets.
Over the last fifteen years, the price of a pound of uranium has hovered around $25-$30, with the exception of the brief surges in 2007 and 2011. In the event of a return to the historical average, it will be difficult for UEC to recoup its growth investments (fourth alert).
The company is chaired by Amir Adnani, founder and chairman of GoldMining Inc. whose operational and stock market track record speaks for itself (fifth alert). In addition, members of UEC's management team are aggressively selling the shares they receive free of charge via stock options (sixth alert).
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