By Sam Boughedda
Uranium Energy (NYSE:UEC) shares dropped more than 11% Thursday after Kerrisdale Capital revealed it is short the company and labeled it a "long-running scam."
The short-selling firm claimed in a tweet that UEC issues shares and enriches insiders and that even if uranium prices spike, the company will "still remain uneconomic, too small, low quality and/or unlikely to be developed."
In its report, the company stated that while it is "presently optimistic on uranium prices and believes that they need to rise to meet continued demand growth," they don't expect UEC or its shareholders to be any more successful this time around.
"As we dug into UEC's deposits, we discovered that the resource edifice is just a façade. Of the company's stated 140Mlb of estimated resources in the US, none can be mined profitably at current uranium prices," they add.
Kerrisdale went on to explain that UEC's Canadian resource portfolio, which it acquired last year in two deals worth a combined $350 million, is comprised of 5 significant assets, but like its US-based projects, "none can be mined profitably at current uranium prices," while in two of them, UEC's resource estimate is overstated by 50 to 100%.
The firm tweeted: "Altogether, $UEC's nameplate uranium resources massively overstate the uranium $UEC can hope to actually extract from its deposits. But then again, we don't think $UEC ever intends to mine and sell uranium – rather, it exists to sell shares."