Impact: Positive
Laramide Resources announced a PEA for its Churchrock U project in New Mexico. The PEA outlined an ISR operation to recover 31.2M lbs U3O8 over a 31-year LOM with an after-tax NPV8% of US$239M and IRR of 56%. The study assumed a uranium price of US$75/lb U3O8 and estimated an initial capital cost of US$47.5M, unit operating costs of US$27.70/lb and AISC of US$34.83/lb. Overall, this represents rather low capital cost production potential. Its total cash costs are on the higher side for US producers and developers, but current uranium prices more than make up for those levels. We view completion of the PEA as a positive step forward for Laramide as it should help add the company to the conversation regarding mid-term production in the USA, and with this de-risking step, we lower our discount rate to 8% from 10%. We believe Laramide needs to take steps in shoring up management and technical teams, and social license in the Four Corners area, to help move development forward. Upside potential is considerable. This is one of the larger, highest grade undeveloped deposits in the US, located within the prolific Grants Mineral Belt, which was source of over 340M lbs U3O8 over its history.
