GTR appoints USA Uranium expert to lead USA operations - good timing

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 37,918,000 GTR shares and 1,579,715 GTR options at the time of publication. The Company has been engaged by GTR to share our commentary on the progress of our Investment in GTR over time.

Uranium spot price surging.

USA scrambling to develop local supply.

GTR has uranium assets in the USA...

The perfect time to appoint a US uranium expert to accelerate its operations in the USA.

As we noted yesterday, the uranium spot price is kicking off - it hit a 16 year high just late last week.

Wyoming is the traditional heartland of US uranium production.

This is where our small cap Investment GTi Resources (ASX:GTR) will be drilling to grow its "pounds in the ground" this year.

Today GTR announced a new “President of US Operations” - Matt Hartmann - a 20 plus year uranium veteran, with significant experience in ISR projects in the USA - including in Wyoming.

Matt has held senior technical roles with many uranium companies, and has provided his ISR uranium expertise to bigger names including the $20BN NYSE listed Cameco - the world’s biggest publicly traded uranium company.

Having someone of his calibre leading commercial and technical activities is good news for GTR investors.

We are hoping he can accelerate GTR’s project development and commercialisation plans in the current bullish environment for uranium stocks.

Today’s announcement also hinted at “strategic partnership opportunities” which sounds interesting...

We’ve got more on the unique set of skills that GTR’s new President US Operations, Matt Hartmann, brings to the company later in this note.

Hartmann would also be keenly aware that now is the perfect time to drill for uranium in the US, as the uranium spot price seems to go up every week.

And he’s going to help our Investment, GTR, do it.

We started calling a potential 3rd ever uranium bull market back in September last year.

Back then the uranium price was ~US$62/lb.

Now 4 months later, the uranium price is as high as ~US$104/lb and is still rising...

In the last two bull cycles, the price went up 14x and 12x, respectively, AND the valuation of uranium companies, big or small, reached nosebleed levels.

Technically, uranium is in a bull market, BUT are we about to see a repeat of what happened between 2006-08?

We hope so and are Invested in a few uranium small caps - companies with low valuations that we think will re-rate the hardest in a bull market.

One of our current three ASX uranium Investments is in GTi Energy (ASX:GTR).

(we originally Invested in GTR back in 2020 when it looked like a U bull market was about to happen, but it was a false start)

GTR has three projects in Wyoming, USA - as we noted above, this state is the uranium capital of the US, so we don't expect too many regulatory issues getting development moving.

Across its three Wyoming projects GTR has JORC uranium resources of ~7.37 million lbs.

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Most importantly, GTR’s resources all sit within ~80 km of five permitted uranium processing plants owned by the likes of $4.6BN Uranium Energy Corp to the $32.5BN Cameco.

Location matters, because historically, Wyoming has produced most of the USA’s uranium supply.

It also means the majors operating in the area have existing processing infrastructure that can take on extra pounds from smaller deposits in the region.

The opportunity for juniors then becomes clear - to prove out JORC resource bases that hopefully one day catch the eye of the majors and get taken over.

Last year GTR defined maiden resource estimates across two of its projects.

Now, the company is moving into the growth stage, looking to increase its resource base and show size/scale potential.

Here is GTR’s overall strategy:

Today GTR released a short video with CEO Bruce Lane talking through today’s announcement - you can watch below. Of note to us was his comment on how GTR could start having “discussions with potential strategic partners regarding commercialisation” of its projects.

(Source)

Takeovers have happened in the region before

The more the uranium price rises, the more it makes sense for majors to acquire smaller projects and plug them into existing processing infrastructure.

Back in November 2021 when the uranium price was just US$35 per lb GTR’s neighbour Uranium Energy Corp took over a Wyoming Junior (Uranium One) for US$134M.

Uranium One had JORC resources of ~100m lbs meaning Uranium Energy Corp paid ~A$2 per lb of resource the junior had.

Keep in mind that this deal was done when the uranium price was ~1/3rd of what it is today...

Then in 2022 Uranium Energy Corp CEO Amir Adnani confirmed his company's commitment to a “Hub and Spoke” strategy in Wyoming after the company put out its first consolidated resource report.

Right now, GTR has a market cap of ~$26M and is trading at a valuation of A$3.62 per lb of uranium resource.

GTR’s new US President of Operations today suggested “the company is undervalued in the current US$100 per pound uranium market”.

A large part of the reason we are Invested in GTR is to see its valuation grow as its resource becomes more attractive to a major in the region.

Now, of course, this is pure speculation on our part. There is no guarantee that any major company is interested in GTR’s ground in particular, and this is only one possible scenario for GTR.

GTR just finished a round of drilling to expand its JORC resource

GTR recently finished a 26-hole drill program at its Lo Herma project, which holds 5.71m lbs of the company's ~7.37m lb uranium resource.

Our key takeaways from the results announcement were that:

1. GTR is looking to upgrade its project's JORC resource in 2024 - GTR has an exploration target for the project of ~10m lbs of uranium.
2. Drill results consistent with historical data - Across the 26 holes, the highest grade hit was ~800ppm uranium, and the thickest intercept was for ~19 ft - consistent with previous results that make up the company’s JORC resource.
3. GTR picked up more ground at the Lo Herma project - GTR added ~566 acres of land to its project across areas where the company sees the strongest exploration potential.

To see our detailed Quick Take on the drill results, check out the following:

(Source)

More on GTR’s new USA Uranium Leader

Today, GTR added a deeply qualified specialist to head up its USA operations, in the country’s uranium heartland - Wyoming.

GTR’s new President US Operations is Matt Hartmann who brings 20+ years of experience to the role, with a special emphasis on Wyoming uranium.

Welcome aboard GTR Matt:

What we really like about Hartmann’s appointment is that he brings BOTH geologist's experience and commercial acumen.

Matt worked at other ISR projects like Cameco’s Smith Ranch–Highland, Encore’s Rosita central processing plant & wellfield, Laramide’s Churchrock and Encore’s Dewey-Burdock project.

On top of that, his last role was as VP Technical Services for Sweetwater Royalties which happens to be the largest private landowner in Wyoming - meaning he knows the grounds he will be working on like the back of his hand.

And has knowledge of what value is when assessing existing or new projects for GTR.

With Hartmann on board, this is what we are looking for from GTR going forward...

What’s next for GTR?

Restart exploration in 2024 🔲

GTR still has ~42 drillholes permitted and undrilled at its Lo Herma project.

In today’s announcement, GTR confirmed that the plan would be to re-analyse all of its data and then develop a 2024 exploration program before going back out on site again.

We are hoping to see GTR back and drilling at least two of its three projects in the new year which we would hope eventually leads into a resource upgrade for the company.

Resource upgrades forms the basis for our GTR “Big Bet” which is as follows:

Our GTR Big Bet:

“GTR proves out a large resource base in the “uranium capital” of the USA and generates offtake or acquisition interest as the USA moves to secure local uranium supply”.

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our GTR Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

Uranium macro investing thematic heating up

Since our last GTR note, the whole uranium macro thematic has gotten even stronger.

Below are some of the key news items we think are relevant to any uranium investors:

1. Countries at the COP 28 climate summit committed to tripling nuclear power by 2050 -

(Source)

1. US Department Of Energy (DOE) is asking around for domestic supplies of High Assay Low Enriched Uranium (HALEU) -

(Source)

1. World's biggest uranium miner warned of production shortfalls -

(Source)

1. US House Of Representatives passed a bill to ban Russian Uranium imports

(Source)

1. Russian state-owned uranium suppliers threatened export bans

(Source)

All this macro news probably explains why some of our uranium investments are starting to move upwards, including GTR.

What are the risks?

In the short term, the key risks to our Investment in GTR are:

Exploration Risk

There is always a chance that GTR finds uneconomic uranium mineralisation with its next round of drilling at its Lo Herma project.

If this happens, then the market will start to discount the potential for GTR’s Lo Herma project and likely sell the company down, leading to a lower share price re-rate lower.

Dilution Risk

GTR had $2.74M cash in the bank at the end of the September quarter. Since then it has been ~4 months, the company has run a 26 hole drill program and a geophysics program.

GTR is likely to have spent more money than it would otherwise have over the December quarter and as a result may need to raise more capital at some stage over the coming months.

To see more risks we have touched on in the past, check out our GTR Investment Memo here.

Our GTR Investment Memo:

Click here for our GTR Investment Memo where you can find a short, high level summary of our reasons for Investing.

In our GTR Investment Memo, you’ll find:

• Our GTR Big Bet
• Key objectives for GTR
• Why we are Invested in GTR
• What the key risks to our investment thesis are
• Our investment plan