Impact: Neutral to Positive
ValOre Metals Corp. has entered into a definitive agreement with Labrador Uranium (CSE:LUR, BUY, C$1.35 target, David A. Talbot) to sell its 100%-interest in the Angilak uranium project in Nunavut. LUR is to pay C$3M in cash and issue 100M shares to ValOre in a deal originally worth C$43M. LUR also has an option to earn an initial 10% interest by incurring C$3.5M in exploration expenditures to cover immediate costs needed to prepare for summer drilling. The deal is subject to TSXV and ~67% shareholder approval. While it’s a shame to see the departure of such a prospective U3O8 project from its portfolio, ValOre maintains significant upside exposure to LUR’s project pipeline and stock price with its ~49% share pro-forma. While we believe VO sold the asset for half our valuation, the market didn’t provide it with that value either, and further dilution to fund exploration would have been necessary. With sole attention on the Pedra Branca PGM project in Brazil, management’s focus there should help it move forward expeditiously. We remove Angilak from our VO model and reduce our target price to $0.60/sh (was $1.05/sh). This reflects a lower current valuation than we previously had in our model, and a recent share price depreciation in LUR.
