Strateco SRSIF
December 30, 2011 - 2:19pm EST by
bruin821
2011 2012
Price: 0.43 EPS $0.00 $0.00
Shares Out. (in M): 140 P/E 0.0x 0.0x
Market Cap (in $M): 75 P/FCF 0.0x 0.0x
Net Debt (in $M): 0 EBIT 0 0
TEV (in $M): 75 TEV/EBIT 0.0x 0.0x

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Description

Strateco is an obscure, Canadian uranium producer that will begin production in 2013, but have 2012 catalysts that should unlock sharholder value.
 
The story is a simple one.  Strateco's principal project is the Matoush project in the Canada.  Strateco has the largest uranium copper deposits out of the Athabasco Basin and is the one Canadian uramiumn project in the process with the Canadian Nuclear  Safety Commission.
 
Matousch has 20mlb of U308 with nearly a .6% grade of uranium.  The potential is for 60mlbs.  The project should produce 2.3m pounds per year and it could be as high as 4m lbs, which would yield 40mm lbs of uranium with a 10 year life.
 
Strateco has carried out 60,00 meters of drilling in parallel with underground exploration work. The results of the surface drilling program should allow the maximum capacity of the Matoush ore processing plant to be established
 
The company enjoys a 50% pre-production rebate in the providence of Quebec.
 
The company has $21mm in cash.
 
Acquisitions have been done at about $9/lb which would value Strateco at about $1.50-$2 depending on what the results will be in the new Resource Report.
 
Very logical buyers include Camaco and AREVA.
 
Why is the stock so cheap?
 
1)  The Fukushimo earthquake destroyed the Uramium market.
2)  The great majority of resource stocks, especially  the juniors have been very weak in 2011.
3)  The company has not been able to finalize an agreement of sorts with the Cree people.
4)  The updated resource report has been behind schedule.
 
 
The Uranium market is now beginning to recover and we expect the stock to follow in 2012.
 
The company has signed an agreement with the Crees last week.  While they will not formally endorse the project for political reasons, their signing of the agreement paves the way for the project to be built and get the final regulatory approvals. 
 
The updated resource report should be finished in January.
 
Lastly, the CEO Guy Hebert has an excellent track record of creating shareholder value.  This is his fourth resource company he has headed and the previous three have all been sold for premiums.

Catalyst

1) Agreement with the Cree Nation
2) Resource update
3) Prime acquisition target in 1h 2012
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