Marenica Energy Ltd
- TSX: EQX
- Shares Outstanding: 130M
- Share price A$0.06 (29.04.2020)
- Market Cap: A$8M
We recently interviewed Marenica Energy, an ASX-listed Uranium exploration company with a patented beneficiation process called U-pgrade™.
Marenica Energy claims U-pgrade™ reduces processing capital and operating costs of uranium mining operations by c. 50%.
This was where we kicked off our scrutiny of CEO, Murray Hill: what type of ore does U-pgrade™ work for? The simple answer is that is doesn’t appear to work universally. It would appear to be specific to his Namibian ore, and no company has bought, used or deployed the technology economically at scale. John Borshoff of Deep Yellow confirmed that they had declined to take up the option of using the process “for their own reasons.”
So, does it have any value? The answer is probably only for Marenica itself. We asked if and when U-pgrade™ is going to generate any cash for Marenica Energy in the short-term.
Marenica has multiple licences in Namibia representing a large land-package and a recently acquired an asset Australia.
The Australian asset is an option and was picked up cheaply and may have value attributed to it when the uranium sector picks up. But, for now, we are interested in seeing Marenica create value in Namibia. Investors have an awful lot of choice in the uranium space, so what sets Marenica Energy apart? Hill pointed to the size of the Namibian Resource, the Marenica Uranium Project. It has an inferred Resource of 61Mlbs across two deposits, Marenica, and MA7.
The Marenica Uranium Project
Marenica Energy claims the project shares similar mineralogical characteristics to Paladin’s Langer Heinrich deposit and Deep Yellow’s Tumas deposit, which a contributor wrote an article about on our platform.
Marenica Energy also claims to have 48.5Mlbs underground in Australia. These numbers are all well and good, but where are the results, and what is the plan other than drill, drill, drill? Investors want to know whether they can get it out of the ground, when, and for what price?
How does the management team plan on getting uranium investors and existing shareholders the returns they will demand?
Hill claims frugality is at the heart of Marenica Energy’s current plans. The company is trying to maximise the bang for their buck, an example of which is drilling holes in Namibia at a relatively low cost (<A$50,000). Is this drilling really going to add value? It hasn’t so far, but Hill can point to the many peers in the sector suffering from the same fate.
Marenica will hope that the recent interest in uranium helps their share price. As things stand, the comapny does not have the capital to develop any of its projects without a cash injection. The management team must decide how to best move forward. There are a lot of unknowns.
Company Website: http://marenicaenergy.com.au/
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