How to Invest in a Uranium Explorer

Purepoint Uranium President & CEO Chris Frostad joined Matthew Gordon of Crux Investor on The Energy Show for a wide-ranging discussion on how investors should evaluate uranium exploration companies.

Drawing on historical Athabasca Basin discovery data, exploration company performance and an analysis of hundreds of uranium-sector news releases, the discussion examines an important distinction to investors: uranium explorers do not necessarily create value on the same timeline as the uranium price.

Exploration is a long-term process. Capital must be raised, geological targets developed, drill programs completed and discoveries ultimately advanced toward defined resources. Historical data reviewed during the discussion suggests that significant uranium discoveries can lag major uranium price cycles by many years.

For investors considering exposure to the exploration end of the uranium sector, Chris discusses some of the factors that may matter most when evaluating opportunities, including:

• Management and technical capability – Does the team have the experience to systematically advance exploration targets?
• Project and land position – Does the company control enough prospective ground to provide multiple opportunities for discovery?
• Capital structure – Can the company continue funding exploration without excessive dilution?
• Geological potential – Is there a credible geological case for a meaningful uranium discovery?
• Patience and diversification – Exploration carries significant discovery risk, making portfolio construction and investment discipline particularly important.

The discussion also looks at the historical relationship between uranium prices, exploration spending and resource discovery – and why the companies that ultimately make significant discoveries often require years of sustained exploration before success.

Source: Crux Investor