May 25, 2021
Laramide Resources Ltd. (TSX:LAM, BUY, C$0.90 target, David A. Talbot) reminded warrant-holders that warrants expire on 20-JUN-21, and expects to resume exploration during 2021 on its considerable project pipeline. Management reminded holders of the June 2017 private placement financing warrants, which are in the money (ITM) and exercisable at C$0.45 (the stock currently trades at C$0.54 and has traded as high as C$0.60). Once exercised, the company is expected to have much more financial flexibility – C$1.3M of warrants were exercised in Q1, C$0.9M in Q2, and management estimates that another C$16.5M is currently ITM and due this quarter. At Q1/21, the company had no cash and C$1.5M in investments, C$0.7M of which were liquid shares in Treasury Metals (TSX:TML, Not Rated). We believe management is keen on the conversion as they have refused to take money from the active uranium equity market thus far. Laramide is also planning an exploration program for the remaining portion of 2021. An improving macro market has spurred action from management as field work is being designed for both the US and Australia. Permitting for these programs are well advanced, and we await further details. Laramide has a strong project pipeline including flagship Westmoreland, Murphy in Australia, and Churchrock, Crownpoint, and other US projects. The 100%-owned Westmoreland (51.9M lb U3O8) and Murphy projects in NW Queensland and Northern Territory, both have significant upside. Investors would benefit from a discovery at Murphy. However, we believe the main focus might be on Churchrock and Crownpoint ISR projects in NM. They host 50.8M lb of U308 with potential for near-term production, already have water rights, an EPA aquifer exemption, and an NRC license for a 3M lb/year ISR plant. There will also be potential to toll mill in South Texas, where companies such as enCore Energy (TSXV:EU, Not Rated, David A. Talbot), Energy Fuels (TSX:EFR, Not Rated, David A. Talbot), and Uranium Energy (NYSE:UEC, Not Rated) all have ISR plants. Despite pending dilution, and maybe even an overhang on the stock given the number of outstanding warrants, we believe that this might be a good entry point for investors given the potential re-rating of the stock as activities resume. Laramide is significantly undervalued relative to peers, trading at US$0.65/lb versus peers averaging US$2.21/lb or US peers at US$3.68/lb, largely due to its development inactivity. Laramide would also be eligible to help source material for the US Uranium Reserve and any development in the USA might help them get closer to that end. Read more
