April has witnessed a number of initial public offerings (IPOs) hit the ground running. As such the 92 Energy Ltd (ASX: 92E) share price will be on the radar when the company makes its ASX debut today.
Newly listed shares such as Island Pharmaceuticals Ltd (ASX: ILA), Delorean Corporation Ltd (ASX: DEL) and Iceni Gold Ltd (ASX: ICL) all opened at least 45% higher than their initial listing prices. There is clearly an investor appetite for IPOs, which 92 Energy investors will be hoping bodes well for the company's float today.
Why the 92 Energy share price is in focus
92 Energy is scheduled to make its ASX debut at 1 pm AEST on Thursday after successfully raising $7 million at an offer price of 20 cents per share. This gives the company a market capitalisation of approximately $13.2 million.
92 Energy is an Australian uranium exploration company searching for high-grade uranium in the Athabasca Basin, Saskatchewan, Canada.
The company recently acquired significant databases of uranium exploration opportunities based in both Saskatchewan and Eastern Europe.
This led to the 100% purchase of Thunderbird Metals Pty Ltd, which holds information regarding uranium exploration opportunities in Saskatchewan, and European Resources Pty Ltd, which holds information for Eastern European opportunities.
Relying on the information acquired from Thunderbird, the company entered into an agreement with IsoEnergy Ltd, holding a 100% legal and beneficial interest in a number of uranium mineral claims adjacent to IsoEnergy.
Current projects
92 Energy currently has three projects that have the potential for unconformity-type uranium mineralisation, which the Athabasca Basin is renowned for. The basin is estimated to have produced around a quarter of the world's uranium from 2016 to 2018.
The Gemini Project is an early-stage uranium project located on the eastern margin of the Athabasca Basin, Saskatchewan, Canada. This project consists of six granted claims of which the company has 100% legal and beneficial interest in five.
The company notes that most uranium exploration programs worldwide took place in the 1980s, but because of an oversupplied uranium market and low prices, there has been little activity in the area since.
92 Energy believes there are considerable untested prospective areas with the potential to host unconformity-type uranium mineralisation. The use of modern geophysical methods and processing techniques will provide greater definition for the targeting of future drill holes.
The Tower Project is an early-stage uranium project also located on the eastern margin of the Athabasca Basin. The company considers its area to be underexplored with untested potential to host uranium mineralisation. Follow-up work is needed involving more detailed geophysics to define drilling targets.
The Clover Project is located approximately 820 km northeast of Saskatoon. The company is looking to use the best available airborne magnetic data for mapping the basement rocks and important structures before drilling.
Could uranium demand drive the 92 Energy share price?
Uranium fuels nuclear power generation which many believe has a critical role to play alongside renewables in a low carbon future.
Uranium prices were as high as ~US$130/lb around 2007 before diving to the mid US$20/lb mark between 2016 to 2019. This has resulted in a significant pullback in worldwide exploration and mine development.
With that backdrop, Tim Gitzel, CEO of Cameco Corp the world's largest publicly traded uranium company, commented:
Growing demand for nuclear power means growing demand for uranium. However, on the supply side there are some big question marks about where uranium will come from to fuel the world's growing demand for nuclear power due to years of persistently low prices that have led to planned production curtailments, lack of investment, the end of reserve life for some mines, shrinking secondary supplies, and trade policy issues, which are currently being amplified by unplanned disruptions due to the COVID-19 pandemic. These are the fundamentals that give us growing confidence the uranium market will undergo a transition similar to the conversion and enrichment markets.
