In my last few updates, I have been covering what may just be the next MAJOR uranium discovery in Canada — Fission 3.0 (TSXV:FUU). The stock has performed incredibly well since and looks to be going higher after announcing a flow-through financing at a 45% premium to market this morning.
In this next article, I am going to talk about another uranium exploration company, with the EXACT SAME management team as Fission 3.0 but with a much tighter share structure and a market cap of just $10 million. If you are looking for torque, look no further than Strathmore Plus Uranium. The ticker is $SUU.
Strathmore Plus is a uranium exploration company with an expansive portfolio of projects in the State of Wyoming.
For Strathmore, I am going to use my three-pillared due diligence framework to analyze the company, which highlights the asset, the management team, and the share structure. However, since Strathmore is still in the exploration stage, I am going to put a heavy emphasis on the management team and structure.
THE MANAGEMENT TEAM
The most important aspect when analyzing a pure-play exploration company is the management team, so that is what I am going to focus on first: the people. The quality of the management team is an unquantifiable metric but is easily the most important when looking at exploration companies. If the management team has had success in the past, they are more likely to repeat that success in the future than an inexperienced management team - and the team at Strathmore Plus has a VERY STRONG track record of immense value creation for shareholders in the uranium space.
In order to fully understand the story, we need to go back to the mid-2000’s, when Strathmore Minerals (STM), which was also spearheaded by Dev Randhawa & Ross McElroy, ended up spinning off its Canadian and Peruvian mineral properties to Fission Uranium Corp.; a spin-co created by Strathmore Minerals. Fission Energy Corp (TSX:FCU) is still around today, and currently boasts a market cap north of $550 million and is advancing towards a feasibility study. A ton of value was created for shareholders here.
In 2013, a few years after the spinout, Strathmore Minerals (STM) ended up selling off its near-production uranium assets in Wyoming to Energy Fuels, one of America's largest conventional uranium producers, supplying approximately 25% of the uranium produced in the USA. It’s also important to keep in mind that this transaction was done at the trough of the uranium market, which says a lot about the ability of this team to create value for shareholders, even in a tough market.
More recently, this same management team hit a major discovery hole in the Athabasca Basin with Fission 3.0, which you are probably already aware of from my recent articles.
Strathmore’s CEO Dev Randhawa and Director Ross McElroy have won many prestigious awards in Canada’s mining industry. Mr. Randhawa and Mr. McElroy were behind both the Waterbury (unconformity model) and the Triple R (basement hosted model) uranium discoveries in the Athabasca basin. These guys are no strangers to uranium deposits.
Another part of the team at Strathmore is John Dejoia, who is one of the most experienced uranium geologists in the USA and helped to acquire all of Strathmore’s projects. John has overseen the mining of over 20 million lbs of uranium in Wyoming and has been in the industry for almost 50 years. A true industry veteran.
Long story short, this management team is no stranger to the uranium space, nor are they strangers to success. Not only do they know how to find Uranium in the ground, but they also know how to create value for shareholders, even in the toughest market conditions. This management team has the hot hand, so it is definitely worth taking a look at any other projects they are working on, which is what led me to Strathmore Plus.
THE ASSET & MACRO OUTLOOK
Since Strathmore Plus is a pure-play exploration company, there is not as much to unpack here compared with a developer or producer. We are going to take a top-down approach, by first briefly looking at the positive macro-trend for uranium and then at Strathmore’s portfolio of uranium exploration projects.
URANIUM IS A HOT COMMODITY IN 2022
Uranium has been one of the best performing commodities this year alongside natural gas.
Governments across the world are quickly coming to the realization that nuclear energy is KEY in order to transition to a green economy while meeting modern-day power needs. Japan, Germany and the USA are just three of many countries that have begun to restart their Nuclear reactors. About 100 power reactors with a total gross capacity of about 100,000 MWe are on order or planned, and over 300 more are proposed. Most reactors currently planned are in Asia, with fast-growing economies and rapidly rising electricity demand. Many countries with existing nuclear power programs either have plans to, or are building, new power reactors.
As such, the demand for uranium has picked up, and so has the price. Since August of last year, the price of uranium has risen from $30 to $50, an increase of ~60%.
Now that we have established a positive macro trend for uranium, let’s take a closer look at Strathmore’s portfolio of uranium assets in Wyoming.
STRATHMORE'S PROJECTS
Strathmore Plus Uranium has multiple prospective uranium projects all of which are located in the state of Wyoming. Wyoming has historically been the largest producer of Uranium in the US. In 2018, it produced 78% of all U.S. Uranium.
It is essentially the USA’s equivalent of the Athabasca Basin, except drilling costs are significantly cheaper in Wyoming compared to the latter.
There are major players hovering in the immediate vicinity of Strathmore’s land package, such as Cameco and UEC, which already have multi-million lb resources in the measured and indicated categories.
STRATHMORE’S PROJECTS
1. NIGHT OWL
2. AGATE
3. BEAVER RIM
NIGHT OWL PROJECT
The Night Owl Project appears to be the main focus for Strathmore Plus Uranium and rightfully so. This is a highly prospective land package which has already demonstrated its potential via sampling. The first survey of the property showed scintillometer readings of 9,999+ CPS at surface. The outcrop where the survey took place was 400 feet by 30-50 feet wide. Readings came back ranging from 200 CPS-9,999 CPS. Scintillometer surveys will continue until exploration permits arrive. First batch of assay results in the four samples tested included 0.326%, 0.283%, 0.226%, and 0.189% Uranium.
So, there is definitely uranium in the ground at Night Owl. The real question becomes: how large of a land package in the area will the company be able to assemble?
From the latest news release, we can see that the company has actually been adding to their land position after positive assay results from its last sampling.
They must have really liked what they saw in those initial samples — a very positive sign.
AGATE PROJECT
The Agate Project is an in-situ recovery (ISR) project in the Shirley Basin uranium district of Wyoming, that lies to the south of Cameco's and boarders UEC's properties. The property consists of 52 mining claims covering 1,075 acres. Kerr-McGee, the previous owner, drilled at least 500 holes in the area covered by the claim. So, there is a ton of data for these drill holes available which is currently being evaluated.
The mineralization is shallow, from 15 to 150 feet deep and is below the water table and is amenable to in-situ recovery. The average thickness varies from several feet to tens of feet, with grades ranging from 0.02% to 0.18% eU3O8 as noted on the historical gamma logs.
BEAVER RIM PROJECT
The Beaver Rim project consists of 131 lode mining claims totaling 2,706 acres. The claims were strategically located in areas previously delineated by drilling as highly prospective for uranium mineralization. The claim groups are adjacent to and south of Cameco's Gas Hills Uranium Project that is fully permitted for in-situ recovery. Historical and recent reports suggest 50-100 million pounds of uranium resources remain in the Gas Hills, with significant discovery potential in the less explored areas to the south, in the Beaver Rim area. The company has received a drilling and exploration permit.
THE STRUCTURE
Aside from having a highly experienced management team and a portfolio of prime real estate in Wyoming, one of my favorite parts about Strathmore Plus is how tight the share structure is. Not only has the management team has done an excellent job of putting together an expansive portfolio of prospective uranium assets in a highly sought-after area, but more importantly, they have done so while keeping the share structure INCREDIBLY TIGHT.
Strathmore Plus has just 29.3 million shares outstanding and is sitting on about $1.5M in cash.
Up until very recently, there was about 6 million warrants outstanding at $0.20, which was putting downward pressure on the stock. However, the company recently announced that a majority of those have been exercised for total proceeds of about $450k, with the rest of those 20-cent warrants expiring on Dec. 6, 2022 (TOMORROW!). So, as of tomorrow, any and all downward pressure from those warrants will be completely gone, presenting a perfect opportunity to jump in. Also, the warrant exercise means more money in the bank for the company to round out their land package and also to do some more drilling.
Given how tight the structure on Strathmore is, I am expecting the share price to move VERY FAST if the company’s drill program at any one of their properties is successful. I would also not be surprised to see some nice movement after tomorrow when the warrants expire.
This is an exploration story, so it does carry elevated level of risk, but also comes with HUGE upside potential. I like my odds here and have positioned myself accordingly.
-SmallCapInvestor
DISCLOSURE
The publisher of this report was paid a fee of CAD $10,000 by Strathmore Plus Uranium for the publication of this and other reports regarding the Issuer for a period beginning on or about December 1st, 2022 and set to end on or about March 1st, 2023. From time to time, the author of this report, the publisher, and the publisher’s directors, officers, and other insiders may purchase or sell securities of the Issuer.