·Major resource beat: raising target to C$5.00 (from C$4.50) and maintaining SPECULATIVE BUY rating
Rated SPECULATIVE BUY for exposure to one of the most important high-grade uranium discoveries in the past decade
Release of the updated Roughrider resource estimate on Tuesday delivered 27.9 million pounds U3O8 overall, including 24.2 million pounds in a high-grade core averaging 11.6%. This puts the 90%-owned Midwest NorthEast project in an elite category of high-grade deposits in the Athabasca Basin of Saskatchewan.
Hathor’s share price has appreciated 82% since the beginning of October, or 121% since the beginning of July, but…
·There are important valuation implications from the new resource that drive our valuation and target price higher.
·We expect strong news flow as Hathor delivers assays from the summer Midwest NE program, assays from the Russell Lake project, and an initial Roughrider East resource.
·Momentum is building in junior uranium equities as the spot price passes through US$60/lb.
New C$5.00 target delivers 60% projected return
Our mine model is based on a conceptual 48 million pound resource, valued using a cash flow analysis discounted at 10%. Taking into account corporate adjustments generates a corporate NAV of C$1.1 billion, or C$6.16 per share. Applying a 0.8x multiple to Hathor’s corporate NAV produces our new C$5.00 price target