Low-risk, high-reward uranium junior.
To say that we are bullish uranium here at Equity Guru would be an understatement. We love uranium. Other than the whole idea that commodities and durable assets are doing well in an inflationary environment, there are some real fundamentals to be bullish for uranium.
The energy situation is disastrous in Europe. Germany plans to switch on coal-fired power plants to compensate for a reduction in Russian gas supply by increasing coal burning. For a country that wants to go green, it is sure to back down. I’m just wondering if an energy crisis in Europe is simply accelerating the adoption of nuclear power as a CO2-free energy source that can handle baseload power.
In his article titled “Uranium is the Future”, our very own Lukas Kane highlighted the importance of nuclear energy as a pivot in the fight against the climate crisis. He said eloquently:
Trying to beat global warming without nuclear power is like the Edmonton Oilers trying to win the Stanley Cup without Connor McDavid. A valiant undertaking with hopeful subplots – but unlikely to succeed.
He goes on to expand on the bullish case for uranium:
Nuclear power plants produce no greenhouse gas emissions during operation”, reports the World Nuclear Organization“and over its life cycle, nuclear produces about the same amount of carbon dioxide equivalent emissions per unit of electricity as wind”, and even less than solar.
Uranium is needed for nuclear power plants.
As the need for nuclear energy becomes more evident, the price of uranium has increased.
And ride it has! Uranium is still up 47.69% for the year and returning to a major technical support level. For more on the technical details (and the bullish flag pattern I spotted!), you can get all the details in last week’s article on all things uranium here. To quickly summarize: we are approaching a support zone where we should expect to see buyers entering. Uranium could be on the verge of its next big breakthrough!
With this movement, we will see an epic explosion of uranium stocks. I myself am excited about small-cap uranium juniors in good jurisdictions and the imminent arrival of a near-term catalyst. Standard Uranium (STND.V) corresponds to the invoice.
standard uranium is an exploration company that evaluates, acquires and develops uranium properties in Canada. Its flagship project is the Davidson River Project. The Davidson River project is located in the heart of the Patterson Lake uranium district (southwestern Athabasca region). Surrounded by major players in uranium exploration and development including Cameco, Orano, NexGen, Fission Uranium, Fission 3.0, Denison, Purepoint, UEX, ALX and Skyharbour. Other projects include the Sun Dog and East Basin projects.
On May 16, 2022, Standard Uranium announced the mobilization of its exploration and drilling team for the Company’s flagship project, Davidson River.
Here are some highlights:
- The objective is to make a basement hosted the discovery of high-grade uranium
- Drilling at start the third week of May 2022
- Two drilling rigshelicopter
- Follow-up drilling on the Southeast Warrior and Bronco Corridors with vectoring information obtained during the 2021 Phase II programs (Figure 1)
- Thunderbird trending basement rocks will be tested for the first time
- Increase the discovery potential of the project through the collection and interpretation of technical information from strategically planned drill holes
The Company has mobilized to start the fourth drilling campaign on its flagship Davidson River project. The 25,886 hectare Davidson River Project is located in the Southwest Athabasca Uranium District of Saskatchewan and contains significant untested blue sky potential for a uranium discovery. high-grade housed in a basement. The upcoming program is expected to include approximately 5,000 meters in 13 drill holes.
“Drilling targeting will focus on the southeast portions of the Bronco and Warrior conductors, and we will be testing the Thunderbird conductor for the first time,” said Jon Bey, CEO and President, “I’m excited to see drills turn again at our Davidson River projectin order to prove to investors that patience will be rewarded.
While drilling is underway, Standard Uranium has announced a private placement negotiated up to C$3.5 million. Gross proceeds of up to $3.5 million from the sale of any combination of Company units at a price of $0.11 per unit and flow-through units at a price of $0.13. As for the warrants, they will allow holders to purchase one common share of the company at a price of $0.17 at any time on or before that date, i.e. 24 months after the offer closing date. The Offer is scheduled to close on or about June 27, 2022.
Current drilling is underway and the company will raise funds to fund and continue its exploration program this year.
There is always a risk in investing in a junior. You may have experienced management, assets in a good jurisdiction, assets next to past finds/current producers, and yet you may find nothing when the drills start rolling. But if there is a discovery and the chances of discovering a large reserve increase, the stock tears up. We’re talking three-digit percentage returns.
What adds more drama to this whole piece is the fact that Standard Uranium CEO Jon Bey took over the Davidson River project as two major uranium companies battled it out. For more information, be sure to check out our investor roundtable at Youtube!
The highlighted blue area displays the Davidson River Project. Look at the main deposits above and to the right of this one. You can probably begin to understand why this land area has attracted the majors.
Two years of exploration on the project (drilling 2020-2021) have confirmed lithological and structural parallels between uranium-fertile Patterson Lake Corridor and the Davidson River Driving Trendsstrengthening the Company’s confidence in the continuation of exploration on the project.
Just adds more excitement to this game, and the fact that there is a real possibility of a great discovery. This all looks more attractive considering the current price action on Standard Uranium shares.
Standard Uranium has had a tough time lately. But so are many other junior miners… and large-cap stocks. The broader stock market selloff is driven by fear and uncertainty regarding the Federal Reserve and interest rates. Money runs into the safety of cash…and short of risk on assets. A drop like this presents an excellent opportunity for investors to buy stocks in sectors that have real long-term growth potential and catalysts. Nuclear energy is one of them.
Standard Uranium recorded new all-time highs reaching $0.07. Since then, the stock has started to fluctuate, giving some optimism that the selling pressure has worn off. Unfortunately, a major support zone was recently removed at $0.11. The stock was actually ranging above $0.11 between May. 10th 2022- June. 9 2022. I was actually looking for an escape, and this setup was my favorite in uranium space, as I’ve described here.
No escape. Instead, we collapsed. I would like to see Standard Uranium reclaim that $0.11 area to start building a reversal case. Not only would we recover what was once support, but the price would rally back above my moving average. The crossing of a moving average is considered an important reversal indicator.
Keep in mind that the company has a catalyst to come with drilling results and will have more money in the bank to move the drilling forward and create catalysts for shareholders. In terms of a broader market catalyst, uranium prices bouncing off this support and starting another leg higher would also be a catalyst for uranium stocks. They will follow as the uranium goes up.
I mentioned the desirability of picking small-cap uranium companies in this market environment. Standard Uranium has a market capitalization of less than $10 million. $8.94 million to be exact. Companies with small market caps are more likely to double when the right catalyst is present. It’s a company that has an experienced management team, has the right assets in the best jurisdiction, has catalysts to come, and the share price is the cheapest it’s ever been. Too cheap when you consider everything I just said in my opinion.
Low risk. High reward.
The right catalyst to bring us back above $0.11 and this stock has plenty of room upside.