Goliad is good to go

Uranium Energy Corp.’s (UEC-X) Goliad in-situ recovery (ISR) project in the uranium belt of southern Texas has received its final permit and is now fully authorized for production, which Haywood Securities analyst Colin Healey expects will take place some time in the first half of 2013.

Healey anticipates it will cost the company about US$11 million in pre-production capital to bring Goliad online and believes management may need to raise US$15 million in an equity financing next year despite having about US$17.2 million in cash in its treasury and no debt.

Goliad makes up part of the company’s hub and spoke system with uranium-loaded resins from satellite projects turned into yellowcake at the Hobson central processing plant, 80 km away. The in-situ recovery uranium processing plant, about 160 kilometres northwest of Corpus Christi, also processes uranium from the company’s Palangana ISR mine, which in the three months ended Oct. 31 produced 29,000 pounds of U308 from production areas one and two.

Goliad has measured and indicated resources of 5.48 million lbs of  U308 at an average grade of 0.05% and inferred resources of 1.51 million lbs grading 0.05% U308, while Palangana has measured and indicated resources of 1.06 million lbs grading 0.135% U308 and inferred resources of 1.15 million pounds at an average grade of 0.176%.

Eventually the Hobson plant will also treat production from the company’s Salvo and Nichols exploration-stage projects. Inferred resources at Salvo measure 2.84 million lbs grading 0.08% U308 and at Nichols stand at 1.31 million lbs. grading 0.07% U308.

Meanwhile, exploration continues at the company’s Burke Hollow and Channen projects about 100 km from the Hobson plant.

Earlier this month, Uranium Energy completed development and began production from Palangana’s third production area. 

For the three months ended Oct. 31, the company sold 50,000 pounds of U308 at US$43 per lb., and at a cash cost per lb. sold excluding royalties of US$26, generating revenues of US$2.2 million.  

Using a discounted cash flow analysis of the Hobson ISR operation, Haywood Securities’ Healey estimates a net present value of US$267 million. With corporate adjustments, including a US$30 million credit for the other Texas assets and a $41 million credit for exploration potential ex-Texas, he says the hub-and-spoke operation yields a corporate net asset value of US$273 million, or US$2.85 per share.

At presstime Uranium Energy was trading at US$2.36 per share.