A variation on this ad ran in August of 2022, and we covered it at that time… but the story has changed a little, and readers are still asking about it, so we’re digging in for an updated look.

The tease is from Nick Hedge and Gerardo Del Real, they’re selling Del Real’s Junior Resource Monthly newsletter ($99 for the first year), and this is the intro that’s generating some questions from Gumshoe readers:

“Multi-Millionaire Mining Investor Reveals His #1 Uranium Stock To Buy Now

“This Yellow Metal (NOT Gold) Could Make You A Millionaire By 2025

“The Last Time These Market Conditions Occurred – Investors Were Able To Turn Every $1,000 Into $1.3 Million In Less Than 4 Years With Just One Single Uranium Stock”

Uranium has moved in big cycles over the past 15-20 years, including a wild spike in the mid-2000s that culminated in crazy profits for those who had gotten in on the right penny stock speculations in this space, so that’s the dream: That the resurgent interest in nuclear energy, following Russia’s invasion of Ukraine, will bring another wild bull market in uranium prices and cause some of the speculative little uranium stocks to skyrocket.

That has already happened to some degree, with Germany delaying its shutdown of nuclear reactors and Japan restarting some of their reactors that were closed after the Fukushima incident, and with strategic deals and trade jitters hitting the uranium market pretty hard (Kazakhstan, still very much under Putin’s sway, is essentially the Saudi Arabia of uranium, and that country plus decommissioned nuclear weapons from Russia were the source of much of the uranium used in US reactors in recent decades, neither seems likely to be a reliable source of fuel in the future).

The caveat is that strategic and environmental interests should have mandated much greater use of nuclear energy in the “West” and higher prices for uranium, driving more uranium extraction in North America and Australia and other relatively safe jurisdictions, but that has been true for more than a decade, people are still afraid of moving nuclear power forward because of past accidents, and uranium has still mostly languished.

Uranium does not really have a “spot market,” most production is either tightly controlled for strategic reasons or sold on long-term contracts, and there are also substantial strategic stockpiles around the world, so it doesn’t react as tidily or cleanly to supply and demand forces as you might think. Partly because high prices do not deter nuclear energy — compared to the dance between supply and demand for coal and natural gas in most power plants, where fuel prices are often the leading factor in setting electricity costs, the cost of new uranium rods is a very small piece of the cost of running and refueling a nuclear power plant.

I agree that we need a lot more nuclear power, and am encouraged by all of the smaller and safer nuclear power plant designs that are moving forward, particularly in the US and the UK, but after getting some small bets wrong for a few years I have acknowledged my personal failing in this department — which means I have given up on trying to time the price swings of uranium. Hodge and Del Real are in the junior mining timing business, though, so they’re not so shy on that front.

Their “$1,000 to $1.3 million” pitch is based on the single best uranium stock trade that anyone can remember — that was the big runup by Paladin Energy from 2003-2007 or so, I believe both Rick Rule and Doug Casey have talked about being investors in that company at the time and getting those 1000X+ returns, and newsletters very often bring up this particular trade as an example of the wild returns that are possible from the most fortunate junior mining speculations.

So that’s not made up, those returns were real, if you happened to buy extremely early when it was trading for pennies and not at all appreciated by anyone and sell near the peak in 2007…. but that’s like saying that people really win the lottery; It happens, but not so regularly that you should count on it. And I’m sure Doug Casey and Rick Rule kissed a lot of frogs in the search for that occasional prince, that’s just the nature of mining speculation — a LOT can go wrong. Most of these smallest and most speculative junior mining stories don’t end in, “this company became a hugely successful producer and generated a lot of cash flow,” they end in the crash of the commodity price well before a mine is even built. Which means you have to have one eye on the exit at all times, there’s nothing “buy and hold” about this kind of speculation.

Does that cool your jets enough that we can look at this stock with a little less passion? Grand… what, then, is the stock?

Well, that’s going to take a little clue-sifting. Here’s what they say about this little company:

“Worldwide demand for this yellow metal is set to skyrocket to unprecedented levels as we shift away from fossil fuels.

“And my partner and co-investor, who has guided investors to massive profits in the mining sector many times before…

“…Has discovered a tiny company — trading for just under $2.00 — that’s positioned to corner the entire US market for this metal within the coming months.

“But please be aware — there is no time to waste with this profit opportunity.

“Historically, the peak cycle for this metal typically lasts for just two to four years.”

And they imply that it’s an American uranium project…

“… you know that relying on Russia and its satellite states for “keeping our lights on” is NOT a good position for us to be in now… or at any time!

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“But…

“This massive supply-demand gap is what provides us with the peak cycle profit opportunity that my partner has discovered…

“…A tiny Uranium mining company that’s positioned to corner the entire US market for this metal within the coming months.”

What other clues do we get? Hodge says that they have “at least 46 million pounds” of uranium on their property, which is pretty close to what the US consumes in a year… and adds this tidbit:

“A leading Uranium analyst has called this site ‘one of the best… in the US,’ because of its large size and high grade.”

And that they have gotten past some of the regulatory roadblocks:

“… this company recently received both its NRC license and all of its final EPA permits after a decade of waiting. It’s perfect timing for Uranium’s peak profit cycle.

“These recent developments position it to become the newest major Uranium producer in the US.”

Finally, in a clue that helps us get a precise match, they show us a photo of the property, with the description that “all of this land is owned by the mining company that Gerardo has been researching.” I captured that image for you here…

And I share that image only because it helps us match the stock perfectly — this is a photo of the Dewey Burdock project in South Dakota, which was owned by Azarga Uranium at the time picture was taken and now, after Azarga was acquired in 201, is owned by enCore Energy (EU.V in Canada, ENCUF OTC in the US).

Here’s how enCore describes itself:

“enCore Energy is the most diversified In-Situ Recovery uranium development company in the United States and recently announced it entered into a definitive agreement to acquire the Alta Mesa In-Situ Recovery uranium project (the “Transaction”). The Transaction will position enCore as a leading US-focused ISR uranium company with the proven management expertise required to advance multiple production opportunities within its portfolio. enCore is focused on becoming the next uranium producer from its licensed and past-producing South Texas Rosita Processing Plant by 2023. The South Dakota-based Dewey-Burdock project and the Wyoming Gas Hills project offer mid-term production opportunities, with significant New Mexico uranium resource endowments providing long-term opportunities. The enCore team is led by industry experts with extensive knowledge and experience in all aspects of ISR uranium operations and the nuclear fuel cycle. enCore is committed to engaging and working with local communities and indigenous governments to create positive impact from corporate developments.”

They also have a pretty detailed investor presentation if you’d like to see more of an overview, updated this month. This is an “ISR” uranium company, which stands for in-situ recovery, so their operations look a little more like oil production than conventional mining — they pump “fortified water” into the uranium-rich deposits, dissolving some of that uranium into the water, and then pump the water back out and extract it to produce yellowcake. They are hoping to have production underway at their first plant this year, following modernization work at their Rosita project in Texas and their acquisition of Alta Mesa, and they also see a couple other areas where they can expand production in Texas over the next three or four years, and then the potential development of Dewey Burdock in South Dakota is their next phase, perhaps as soon as 2024 or 2025. They did just get some good news, as the courts upheld their initial permits for Dewey-Burdock after they were sued by the local Sioux tribe and a “responsible mining” group, though there’s still technically a possibility that the Supreme Court could take up the case this year and delay things further (or scuttle the project entirely, though that doesn’t seem very likely).

What’s it all worth? Well, their preliminary economic assessment for the South Dakota project puts the value of that property at $147.5 million, assuming that it produces for 16 years and averages about a million pounds of uranium a year. That’s assuming a $55/pound price, which is about where uranium peaked after the Russian invasion (Cameco, the biggest North American producer, tracks uranium prices here — $55 is well below where uranium peaked in 2007, at around $145, and it spiked again to $70 in 2011, but prices have mostly been in the $20-40 range for the past decade). The Gas Hills ISR project in Wyoming, which is the other fairly advanced project acquired in the Azarga deal and would be their second-biggest, probably a ways off in the future, had a reported Net Present Value, using similar assumptions, of about $103 million last year. So that’s about US$250 million in estimated net present value for the two most advanced development-stage projects they got from Azarga, and that’s where most of the “asset value” on enCore’s balance sheet comes from. Their acquisition of Alta Mesa from Energy Fuels is not finalized, but they still plan to close on that deal by mid-February — it should cost $120 million, half cash and half in a promissory note, but it looks like that deal will not create any immediate dilution for enCore shareholders, and if uranium prices remain elevated or climb further, it should speed up the cash flow generation over the next few years (Alta Mesa is a large past-producing ISR uranium project, closed down years ago because prices were too low to justify operating, but it is licensed and built and has been “maintained in a state of readiness” in recent years).

So… with a market cap of about C$400 million (US$300 million), then, you just have to figure out for yourself how much the pending production next year from Alta Mesa, Rosita, and their South Texas projects is worth. Investors drove the shares of enCore up over the course of 2020 and 2021 as they acquired those projects in Texas and made some offtake deals with customers for uranium sales starting in 2023, so even before the Azarga or Alta Mesa deals were announced, enCore was being valued by investors at C$200-300 million.

What does that mean? Well, it means there’s probably still room for a speculative frenzy — if uranium goes back to the $70+ range of previous spikes sometime soon, then there will be plenty of investors happy to drive the stock higher as those projects come closer to production. But there’s also room for a pretty strong collapse if uranium prices go back to the $20-40 range and these projects get delayed further. Going by the somewhat rosy projections of net present value for those Azarga projects, which probably need to be discounted further because of inflation, my initial judgement is that enCore’s share price is in the “fair” range. Not wildly cheap, so get daydreams of 130,000% returns out of your head, but probably justifiable if uranium stays steady.

That’s just my take, though, and I’ve spent only a few minutes looking over enCore’s materials — I’m sure there are some more well-informed uranium speculators out there in Gumshoe land, so feel free to chime in with your opinion, just use our friendly little comment box below. Thanks for reading!

Thoughts on uranium? See bullish or bearish days ahead? Let us know with a comment below — I’ve attached the comments on our original August 2022 article on this story in case that helps to provide some context. Thanks for reading!