Late last week dealing volumes in the main market listed Neo Energy Metals (LON:NEO) were almost doubled following news that it had signed formal documentation for its South African 90Mlb Uranium Acquisition at Beisa North and Beisa South.
The Business
The shares of this Uranium developer and mining company are also quoted in South Africa on the independent stock exchange A2X.
It holds up to a 70% stake in the Henkries Uranium Project, an advanced, low-cost mine located in South Africa’s Northern Cape Province, which has been estimated by some that the historical investment in the project was over $30m in exploration and feasibility studies.
The company aims to increase the project’s mineral resources and complete an updated feasibility study with the aim of bringing Henkries into production in the shortest possible timeframe.
It also holds a 100% interest in the Beisa North and Beisa South Uranium and Gold Projects in the Witwatersrand Basin, located in the Free State Province of South Africa.
The combined projects record a total SAMREC Code compliant resources of 90.24Mlb of U₃O₈ and 4.17Mozs of gold.
The SAMREC Code sets out minimum standards, recommendations and guidelines for Public Reporting for solid minerals of Exploration Results, Mineral Resources and Mineral Reserves in South Africa, giving conformity in project promotion.
Neo Energy’s strategy focuses on an accelerated development and production approach to generate cash flow from Henkries while planning for long-term exploration and portfolio growth in the highly prospective Uranium district of Africa.
Transformative Acquisitions
CEO Sean Heathcote stated that:
“The Beisa North and Beisa South Uranium Project acquisitions are transformative for the Company.
The Beisa Projects contains over 90 million pounds of uranium resources and over 4 million ounces of gold resources and are located on two granted Prospecting Rights, over an area of approximately 80km2 in South Africa’s primary uranium producing region.
Importantly this is a region where uranium has been mined continuously for over 70 years and where at its peak there were over 40 uranium mines in production.
It is also historically one of the richest gold-producing regions in the world, having produced about 2 billion ounces of gold over more than a century.
It truly is a great place for Neo Energy to strategically consolidate its position in South Africa’s uranium sector.
We will now look to progress the regulatory process with the South Africa authorities and commence work at the Beisa North and South Projects.
In parallel with this, we will look to finalise some of the additional acquisitions, that I believe will further strengthen our position in the region and demonstrate our intent in South Africa’s uranium sector.
As we move forward, our commitment to innovation, operational excellence, and responsible resource management remains steadfast and we look forward to working closely with all our stakeholders to ensure the successful advancement of Beisa North and Beisa South, setting a strong foundation for future growth and value creation.”
Broker’s View
Jason Robertson, at First Equity, rates the expanding group’s shares as a Buy, while upping his Price Objective by 15% to 23p a share.
He notes the group’s ambitious strategy to establish itself as South Africa’s leading Uranium mining company and one of Africa’s major uranium mine operators and developers, and the plan to consolidate itself with additional acquisitions.
With the deal to acquire the Beisa projects now signed and secured we have removed our 10% project sign off risk, therefore lifting the share price valuation from 20p to 23p, representing a risked value of $763.1m for the combined Beisa and Henkries projects for both uranium and gold assets.
In My View
I was impressed to see that various of the group’s Directors have opted to take shares at 1.25p each in lieu of their fees and salaries – which is surely an act of financial faith by its ‘insiders’ – that is well worth following.
With Robertson’s upped Price Objective being over 19 times the current market price of 1.18p – they appear to have some significant upside.