At the time of writing, shares in the uranium miner are trading at 68 cents each, the same price at yesterday’s close of trade. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.93% higher.
Let’s take a closer look.
‘Well-positioned for growth’
In today’s presentation to investors, Deep Yellow outlined some of the reasons why it believes it is on a strong path to growth. They include:
- A dual-pillar growth strategy consisting of organic and inorganic growth;
- A “standout” uranium team, and;
- Key achievements over the last 12 months.
Organic and inorganic growth
To put us all on the same page, a company achieves organic growth by increasing sales and operations. Inorganic growth comes through strategic mergers and acquisitions.
On the organic growth front, Deep Yellow is forecasting a squeeze in the supply of uranium in 2023/24. A decrease in supply will increase the price of its product, as per the laws of supply and demand.
Regarding inorganic growth, the uranium explorer has identified “2 or 3” projects it wishes to acquire. It believes doing so will lead to tangible benefits from 2024 and beyond.
Deep Yellow also believes it has the management and technical teams to identify better opportunities for purchase than its competitors.
The company says its team is better than others because it has “experience across all disciplines”, a “proven track record”, vision and leadership, growth strategy, and funding support.
Deep Yellow currently has two major projects, the Premier Uranium Mining site and Tumas Mining site in Namibia. The Premier site contains at least 1.5 billion pounds of uranium with the potential for another 350,000 pounds. Deep Yellow says 6% of all the world’s uranium comes from this one site.
The company acquired the latter site in 2017. It believes Tumas is “highly prospective” and is similar to the Heinrich mine located at the Premier Uranium site. Only 50% of the 125km area has been tested so far. Deep Yellow also says it can extract uranium at a cost of only 11.5 cents per pound.
Uranium commodity price
The price of uranium has been on an upswing since August last year when Joe Biden announced a plan for green infrastructure if he were to become the US president.
At the time of writing, uranium is trading for US$31.05 per pound. It’s up 12.1% over the last month and 1.14% in the year-to-date. Yet, the element’s price has fallen since hitting a 5-year high of around US$34 a pound in May last year, due to oversupply and underwhelming demand.
Deep Yellow share price snapshot
The Deep Yellow share price has increased 159.62% over the last 12 months. However, since hitting a 5-year record in February this year, shares in the miner have fallen 23.73%.
Deep Yellow has a market capitalisation of $217.9 million.
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