GUE: Big USA uranium deal now done. Enrichment tech strategic partner next?

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 2,671,018 GUE shares and 500,000 GUE options and the Company’s staff own 35,000 GUE shares at the time of publishing this article. The Company has been engaged by GUE to share our commentary on the progress of our Investment in GUE over time.

Remember seeing all those tech billionaires at Trump’s presidential inauguration?

They want cheap US power to fuel massive energy demand growth from AI data centres.

Two months ago President Trump signed an Executive Order to boost domestic critical minerals production which for the first time ever included, you guessed it... uranium.

This could be a prelude to the US really taking the gloves off and revving up domestic uranium production with faster permitting, grants and direct investment.

In fact it's already begun - over the last few years the US government has committed over US$10BN to support the domestic uranium industry and re-establish the country as a uranium powerhouse.

The macro momentum for "uranium in the USA" is very quickly building in our Investment Global Uranium and Enrichment (ASX:GUE)’s favour.

GUE is targeting a 100M pound uranium resource across its US exploration and development assets.

It recently underwent a major transformation of its capital structure via the acquisition of its biggest uranium asset in Wyoming, welcoming a NASDAQ listed partner as a 19.9% holder - which we will cover in detail today.

Yesterday it staked a further 85% of ground around that same asset, swallowing up all the best available bits of nearby acres.

GUE ALSO owns 21.9% of a private uranium enrichment company which is currently in the later stages of discussions with potential major strategic partners.

News on a partnership is expected to be announced this half...

There’s only one other ASX listed enrichment company - and it's capped at over half a billion dollars...

News on a funding round from a major partner would allow the market to benchmark GUE’s ownership of this private stake, as well as giving new momentum to development of the tech.

More on GUE’s enrichment tech later - lets get back to its USA pounds in the ground...

GUE’s newest project has a 24.4M to 51.3M lb exploration target in Wyoming - the capital of uranium in the USA.

GUE’s ground is ~15km from the biggest permitted ISR uranium processing plant in the USA, owned by the $31BN Cameco.

Earlier this week GUE settled a transaction to acquire 50% of this asset, the other 50% is owned by NASDAQ-listed Snow Lake Resources.

As part of the deal, Snow Lake also came onto GUE’s register as a 19.99% shareholder - they paid $5.6M for their stake in GUE at 6.5c per share.

All up, GUE raised $10M at 6.5c to support the transaction.

(GUE is currently trading less than that - 6.2c at last close).

Then yesterday as we mentioned above, GUE’s asset just got bigger - with GUE staking 85% more ground at its new project.

(Source)

Having such a big exploration target that close to an already permitted facility is important because it makes the pathway to commercialisation a lot clearer...

This part of Wyoming has also been the centre of a wave of uranium M&A with $3.6BN Uranium Energy Corp going on an acquisition spree over the last few years.

The US Department Of Energy (DOE) has also been active in the region, signing purchase orders with uranium suppliers in the region - Uranium Energy Corp for example received a US$17.5M purchase order to sell its uranium to the government.

With that additional ground staking, the total prospective strike on GUE’s Wyoming asset yesterday increased from ~225km to 435km (almost double)...

So there is potential for that exploration target to get even bigger...

Here are the before and after images in a handy GIF format - keep watching to see the image magically change before your eyes:

Here is all that additional strike highlighted in the image from today’s announcement (highlighted in yellow):

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With some drilling on the expanded project area we think there is a good chance GUE can define a JORC resource above the upper end of its 51.3m pound exploration target on this asset

That would put GUE’s project on par with the assets owned by the majors in this part of the US.

Cameco’s project ~15km away only has a 36.2m lb resource.

Here is how GUE’s project ranks versus Cameco’s:

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This week GUE confirmed that drill planning was “advanced” - so we should get some newsflow on that front in the coming weeks.

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GUE also has two other uranium projects in the US which the company should have newsflow coming out from over the next few months.

Following the recent transaction, GUE is in a position where it’s well funded following its $10M capital raise.

So GUE should have no need to raise cash between now and and the two key catalysts we see ahead for GUE

Catalyst #1: A partnership on its enrichment tech investment.

GUE has previously given guidance for a deal to be announced before the end of H1-2025 (Source: 3 April GUE announcement).

Catalyst #2: Drilling at Pine Ridge (the new Wyoming asset)

GUE expects to outline its exploration program in the coming weeks, with drilling aiming to deliver results on exploration target of up to 51.3Mlbs.

Lets take a closer look at where GUE is at, and what we can expect over the coming months.

Wyoming the place to be for uranium in the US

GUE announced the deal to acquire its Wyoming asset on the 13th of March.

Only seven days later the Trump administration signed an Executive Order aimed at increasing “American Mineral Production”.

That order alone, changes things in a big way for GUE.

The order which was primarily aimed at “critical minerals” also explicitly mentioned uranium as one of the areas the government wants to focus on.

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Until then uranium hadn’t really been mentioned in the same light as the “critical minerals” we are used to talking about...

But it starts to make more sense given that the USA is home to the world’s largest fleet of nuclear reactors.

~20% of all US electricity generation relies on nuclear power.

Despite this, the country is reliant on imports for ~95% of its nuclear fuel consumption, much of which still comes from Russia and Kazakhstan...

We think the US will need to bring domestic supply back online - which is good for GUE.

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The US government has already shown that they are willing to support the domestic uranium industry with over US$10BN in funding committed to encouraging more production.

The US Department Of Energy has specifically started signing purchase orders with Wyoming based companies - the first set of direct interventions to get projects off the ground:

(Source)

Our view is that with the recent Trump Executive Order signed, uranium projects in the US will soon start to get more of the mainstream attention that other “critical minerals” projects have been receiving like lithium and rare earths...

Wyoming to play a key role in that domestic supply response

The US DOE purchase orders are a solid signal to the market that the US sees Wyoming as important to increasing domestic production.

So GUE is in the right place.

The state of Wyoming was for decades the biggest producer of uranium in the US.

Since 1951 Wyoming has produced nearly 240m lbs of uranium...

That means there is an established industry ready to switch back online, as long as the uranium price is high enough or there are government incentives to do so.

Remember, GUE’s project sits within 80km of 5 permitted ISR uranium facilities and is only 15km away from the USA’s biggest ISR uranium plant (owned by Cameco).

Those plants are all owned by the likes of $31BN Cameco & ~$3.6BN Uranium Energy Corp.

(Source)

The existing infrastructure tied in with ISR style assets (which are easier to bring back online) means that with far less development/start-up capital, projects can be brought back to life relatively quickly.

ISR projects have far smaller project footprints and are more similar to oil & gas projects where wells are drilled and the valuable stuff is brought to surface to be processed in plants.

(Unlike hard rock projects which need big upfront CAPEX spends to get a mine up and running)

🎓 Read more about the differences between ISR and hard rock here: Mining for Uranium: ISR vs Conventional Mining

So the big hurdle for ISR style uranium projects is more the CAPEX to get a processing plant built, which isn't a problem in this part of the world...

We also know that the majors in Wyoming are active with M&A.

Uranium Energy Corp has always talked about a “Hub and Spoke” operating model and has been trigger happy on deals paying US$134M for a junior back in 2021 when the uranium spot price was only US$42/lb.

Bear in mind, the uranium spot price shot up to ~US$107/lb early last year and currently sits at ~US$67.50/lb.

(Source)

The fact that Uranium Energy Corp is doing deals like this at a low price, we think points to the company wanting to position ahead of a sustained uranium bull market and a big ramp up in domestic US production.

Overall, we like where GUE’s asset is located & we think the macro tailwinds are slowly starting to blow in GUE’s favour.

With some momentum in the uranium spot price we think GUE could advance its Wyoming asset relatively quickly...

The blue sky tech upside - GUE’s 21.9% uranium enrichment exposure

A big reason for our Initial Investment in GUE was for its ownership in a “world-leading” uranium enrichment technology through its 21.9% stake in private enrichment company Ubaryon.

Uranium enrichment is a technology process which brings uranium mined from the ground to a state where it is suitable as fuel for reactors.

Ubaryon’s tech is a chemical process for enriching uranium - which if it works, could use less energy, be more environmentally friendly and simplify the enrichment process.

It’s very hard to find enrichment exposure on any stock exchange globally...

The only other stock in this space on the ASX is $714M capped Silex Systems.

Silex was first listed in 1998 but things really started getting interesting once a partnership deal was signed with General Electric (GE)-Hitachi.

Silex’s share price has over the years moved up and down based on partnership newsflow and global uranium macro winds...

After that big rally in 2006, the share price came back down to a low of 15c after the deal with GE-Hitachi was abandoned.

Then the deal with Cameco was signed in 2019 and the stock started its run back up to ~$6.75 highs last year (into a really good macro backdrop for uranium):

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

We are expecting a big catalyst from GUE’s uranium enrichment investment inside the next few months.

In February GUE put out an update on its investment and said that:

GUE’s Ubaryon is targeting a transaction “with selected organisations involved in the Nuclear Fuel Cycle production industry” which have “expressed interest in reviewing technology and potentially investing”.

At the same time GUE said that the process to identify a strategic partner was “well advanced”.

In early April, GUE mentioned that something would be announced within “the first half of 2025”.

We are now about to enter May so that means two months starting now...

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We think the sudden movement on this has a lot to do with the recent export restrictions Russia put on enriched uranium...

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Remember - Russia currently controls ~50% of the global enrichment capacity, and Russia and China combined control ~63%.

Below is a quick summary of the companies that have enrichment capacity in the world matched up against sources of demand:

Quick takeaway: As of 2022, Russia and China dominate the global uranium enrichment market with a combined 63% of global capacity - and there’s a big squeeze going on in the West for enrichment capacity.

Those restrictions have also pushed conversion & enrichment pricing higher exponentially:

We think that any news from GUE’s enrichment investment could start to get some interest from the broader market AND potentially from the US market, because of NASDAQ listed Snow Lake’s 19.99% shareholding in GUE.

We’re hoping that GUE can move much quicker than Silex in achieving a major re-rate through a commercial outcome for a number of reasons:

• It’s a chemical process and doesn’t require “fancy lasers” (like Silex’s technology does)
• It isn’t encumbered with a commercial partner that has different business priorities (like the GE-Hitachi partnership was)
• Unlike Silex, GUE hasn’t had to navigate the GFC (2008) and Fukushima (2011), and as far as geopolitics go, the case for nuclear power and uranium is much stronger now than it has been in decades

What’s next for GUE?

🔄 Drilling & exploration plans for Pine Ridge

In yesterday’s announcement GUE said that "preparations for initial drilling” at Pine Ridge were advanced.

Within the next few weeks we want to see GUE lay out a clear exploration plan and put some timelines around the drill program.

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Here were the latest timelines from the recent investor presentation from GUE:

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🔄 Enrichment Technology (GUE owns 21.9% of private company Ubaryon)

We want to see Ubaryon de-risk its enrichment tech operationally and from a regulatory perspective.

Key Milestones we are tracking:

🔄 Secure strategic/commercial partner for uranium enrichment technology

🔄 Further validation and extend the enrichment performance (show how well it works)

🔲 Achieve continuous operation at bench scale (scale up process)

🔲 Regulatory approvals

GUE’s other mining projects

GUE has a number of other North American uranium exploration & development assets.

Here is what we are looking out for across these projects:

🔄 Project 1: ~52 Mlb Resource Scoping study at Tallahassee (coming months)

A Scoping Study is due shortly at GUE’s advanced ~52Mlb JORC resource in Colorado.

GUE indicated in September 2024 that the scoping study is due in the “coming months”.

🔄 Project 2: maiden JORC Resource at Maybell (coming months)

GUE completed its drill program in October last year, now it is preparing a maiden mineral resource estimate for Maybell in another part of Colorado.

Depending on the resource size and economics, next steps could potentially include additional drilling in 2025 and a scoping study to evaluate development options.

What are the risks?

The two main risks for GUE right now are “Commodity Price Risk” and “Market Risk (Macro)”.

Uranium small caps tend to be bid up or sold off in line with the uranium price.

If macro sentiment is weak, small cap companies share prices can suffer pretty aggressively.

If the uranium price falls or trades sideways then we would expect GUE’s share price to trade sideways or be sold off.

Commodity price risk

The uranium price could fall, or fail to rise enough to make GUE’s US assets viable.

Source: “What could go wrong”? - GUE Investment Memo 20 Feb 2023

Market risk (macro)

The broader market could sell down or crash, impacting the risk appetite of market participants and hurt the GUE share price.

Source: “What could go wrong”? - GUE Investment Memo 20 Feb 2023

We list more risks to our GUE Investment Thesis in our Investment Memo here.

Our GUE Investment Memo:

You can read our GUE Investment Memo in the link below. We use this memo to track the progress of all our Investments over time.

Our GUE Investment Memo covers:

• What does GUE do?
• The macro theme for GUE
• Our GUE Big Bet
• What we want to see GUE achieve
• Why we are Invested in GUE
• The key risks to our Investment Thesis