Red Cloud’s Talbot shares his top uranium picks

With investors flocking into the uranium space over the past year as the spot price has doubled, we asked David Talbot, Red Cloud Securities managing director and head of equity research, for some of his top picks in the sector. He covers all of these and more in a Feb. 12 research report outlining his expectations for the uranium market (see full interview here) and highlighting the companies that are poised to profit from rising demand for the nuclear fuel.  

Energy Fuels (TSX: EFR; NYSE-AM: UUUU)

Rating: Buy; Target price: $15; Recent price: $8.33

One of Talbot’s top picks in the producer space is Energy Fuels, which has a large portfolio of conventional and in situ recovery (ISR) uranium projects in the United States. It restarted production at three mines in December: Pinyon Plain mine in Arizona and LaSal and Pandora in Utah. It also aims to restart its Nichols Ranch and Whirlwind ISR projects (in Wyoming and Arizona, respectively) within one year. 

“We expect Energy Fuels to start up extra uranium production at two to three mine sites as we speak. I think before long we’ll see additional offtakes and a decision to restart the White Mesa mill in Utah — the only active uranium mill in the U.S.” 

NexGen Energy (TSX: NXE; NYSE: NXE)

Rating: Buy; Target price: $14.80; Recent price: $9.46 

NexGen is waiting for final federal approval to develop its $1.3-billion Rook I project in the Southwest Athabasca Basin in Saskatchewan. It received provincial environmental approval in November. The project is expected to produce 21.7 million lb. of uranium oxide annually for nearly 11 years, according to a 2021 feasibility study.

“We believe that NexGen’s Rook I is probably the best deposit on the planet,” Talbot says. 

Aerial view of NexGen Energy’s Rook I uranium project in Saskatchewan. Credit: NexGen Energy

IsoEnergy (TSXV: ISO)

Rating: Buy; Target price: $8.00; Recent price: $4.11

After acquiring Consolidated Uranium last year, IsoEnergy has a pipeline of uranium projects in Canada, the U.S., Australia and Argentina, including Hurricane, the highest-grade deposit in the world, at its Larocque East project in the Athabasca Basin. 

“The core of that is 35% uranium — it’s just a phenomenal deposit,” Talbot says. “They’re also moving two mines towards production in Utah.” 

Global Atomic (TSX: GLO)

Rating: Buy; Target price: $7.10; Recent price: $3.10

“If we had one top pick in the sector, this is probably it,” Talbot says of Global Atomic. The company is building the first phase of its large Dasa project in Niger, where there was a coup last year. While that did slow development, Talbot says it’s now business as usual with the U.S. government and military maintaining its presence in the country. 

An updated feasibility study and resource is due out in the first quarter, but according to a 2021 study, the first phase of the project will produce 4.5 million lb. U3O8 annually over 12 years, with an initial capital cost of $208 million.

“The economics of this project worked at 35 bucks a pound, so I think it looks great at over 100 bucks a pound,” Talbot says. 

Lotus Resources (ASX: LOT)

Rating: Buy; Target price: A75¢; Recent price: A32¢

Lotus Resources is hoping to restart its Kayelekera mine in Malawi by late 2025. Talbot says the company is working on a mine development agreement with the government and expects news on that soon.  A 2022 feasibility study outlined an US$88-million project that would produce 2.4 million lb. uranium over 10 years.

“We anticipate the company to make four real major changes at the mine: adding beneficiation, connecting to the grid, improved leach efficiency and recycling, and some tailings improvements,” Talbot says. The company also acquired A-Cap Energy for its Letlhakane project in Botswana, giving it the third highest uranium resources of any ASX-listed stock, he adds. 

Aura Energy (ASX: AEE)

Rating: Buy; Target price: A65¢; Recent price: A24¢ 

Aura Energy completed a feasibility study on its Tiris uranium project in Mauritania last year. The study outlined a 16-year open pit project with an initial capex of US$87.9 million, plus US$90.3 million in year three to more than double production to 1.9 million lb. per year. 

“They believe they can get the project into production relatively quickly. We think they’ll go out and go straight to a fully expanded 2 million pounds production per year… we’re really waiting for a FEED (front-end engineering design) study from the company right now detailing its updated plans as uranium prices continue to rise.

F3 Uranium (TSXV: FUU)

Rating: Speculative Buy; Target price: 60¢; Recent price: 43¢

F3 Uranium is drilling its PLN project in the southwest Athabasca Basin, with a 55-hole, 24,000 metre program under way. The company discovered the high-grade JR zone in 2022, hitting 15 metres of 7% uranium oxide. The JR zone is now 165 metres and the company’s also made a parallel discovery 3.4 km to the south on the 1-2 km B1 conductor. 

“We think F3’s JR zone is already in the 15-to-20-million-pound range at grades of around 2.6% U3O8 and that F3 will make further discoveries along trend to the South and on parallel structures,” Talbot says. 

Analyst disclosures: ISO Energy, Global Atomic, Lotus Resources and F3 Uranium are banking clients of Red Cloud Securities; David Talbot holds positions in NexGen Energy and IsoEnergy.