UEX's main focus this summer will be expanding the highly promising Ōrora zone

Uranium explorer UEX Corporation (TSE:UEX) was lauding its Ōrora Zone discovery in its results, saying its significance had not yet been fully realized.

Holes from the Ōrora Zone at the company’s Christie Lake project in Saskatchewan have returned very high uranium grades over substantial core lengths, the company reminded investors.

“This ultra high-grade mineralization appears to be hosted within a fault structure along the unconformity, and mineralization is wide open for expansion along strike in both directions and down-dip into the basement,” the company’s first quarter results statement disclosed.

UEX said expanding Ōrora would be the company’s focus in this summer’s drill program, which is scheduled to start late next month.

Roger Lemaitre, president and chief executive officer of UEX, noted that after starting the year like a rocket, uranium prices have leveled off.

He did not seem unduly worried, however; indeed, his comments suggested he welcomed it.

“Prices remain not only well below the marginal cost of uranium production, but are beginning to erase the profitability of even the low cost quartile producers, causing significant production cutbacks and shut-downs,” Lemaitre said.

“The recent appreciation of the US dollar no longer protects even the lowest cost producers as their higher price long-term legacy contracts begin to expire. Uranium prices are far from the levels needed to incent the new exploration, development, and production required to fuel the anticipated rapid growth in uranium demand,” he added.

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Lemaitre is confident demand is set to rise, and that supply is “relatively inelastic to increases in uranium price”, which bodes well for UEX’s existing resource portfolio, not to mention the growth potential offered by the new Ōrora discovery.

UEX is involved in fourteen uranium projects located in the Athabasca Basin, the world’s richest uranium district, which in 2015 accounted for around 22% of global primary uranium production.

It is a pre-revenue company and as such is loss-making.

Exploration and evaluation expenditures rose year-on-year in the quarter, as might be expected of an exploration company, with the figure this time round clocking in at C$2.06mln, up from C$1.43mln the year before.

These increased expenditures were the primary reason for the deepening of the first quarter net loss to C$2.17mln from C$1.67mln the previous year.

The loss per share of 0.7 cents was barely changed from the previous year’s loss of 0.6 cents.

Story by ProactiveInvestors