Aura Energy Ltd (ASX:AEE, AIM:AURA) has received a ‘speculative buy’ valuation with a share price target of A$0.36 per share from Pac Partners as uranium’s strong price momentum continued through December.
The analyst says that major upside potential is yet to be factored in for its big Häggån Project, plus the optionality of a likely larger or longer life Tiris Uranium Project.
Aura’s shares are currently trading at A$0.28 and the company has a market cap of approximately A$159.83 million.
Following are the excerpts from Pac Partners research report:
FEED study progresses, closer to FID
AEE enters 2024 with a packed program including the imminent release of the Tiris FEED study. We also expect offtake negotiation results, and debt, as well as equity financing progress.
There is potential for AEE to reach a Final Investment Decision for its Tiris ultra-shallow surface mining project in Mauritania.
Excellent metallurgy sees operating costs AEE aims to expand its resource to ~100 million lb U3O8 and has just announced that on-the-ground exploration has started. AEE’s historical finding cost is very low at US$0.20/lb of added resource. Extra resources could be quickly converted to boost currently assessed US$226 million project NPV via supporting an expanded throughput to match full process system/packaging capacities over 3 million lb pa. In Sweden, AEE’s 2 billion tonnes Häggån polymetallic project may provide further value-add in 2024 particularly as there is the prospect for the uranium mining/production ban to be removed. AEE share price appears cheap and has lagged the move in uranium prices and currently presents a good entry point for multiple catalysts points in 2024 Uranium market Spot U3O8 is currently trading at US$91 per pound, while longer-term contract prices, according to Cameco, were rising but lagging spot. Meanwhile, contract pricing reached approximately US$68 per pound in December 2023. Spot U3O8 pricing is at levels not seen since for over a quarter of a century except for a brief period 2007-08. As the contract price rises, this will also add incentive for new mines to emerge and for debt as well as equity providers to be more willing to support supply additions.