
Uranium project developer Atomic Eagle Ltd (ASX: AEU) was formed late last year through the reverse takeover of GoviEx Uranium by Tombador Iron.
Since that time, it has been proving up the resources at its Muntanga heap leach uranium project in Zambia, as well as progressing studies at the Madaouela project in Niger, which it owns a 60% stake in.
Broker Morgans has recently initiated coverage of the company with a speculative buy recommendation and a very bullish share price target, which I’ll get to shortly.
First, let’s have a look at the company’s projects.
Zambian project coming together well
Atomic Eagle’s flagship asset is the Muntanga project, where it has to date proved up a resource of 58.8 million pounds of uranium.
The company currently has drilling ongoing at Muntanga, and recently said new drilling at Muntanga North had identified a zone of uranium mineralisation that remains open along strike and down dip.
Atomic Eagle Chief Executive Officer Phil Hoskins said of the program:
The objective of our 30,000m drilling program is to grow the Muntanga resource base while systematically testing a portfolio of exploration targets across the broader Project area. Earlier drilling at Chisebuka delivered encouraging results and is expected to support future resource growth. We are further encouraged by the results at Muntanga North, where wide-spaced drilling has identified a zone of uranium mineralisation that remains open along strike and down dip to the east. We are over half-way through an active exploration program, with the large-scale Muntanga North Targets 6 to 8 still to be tested.
Atomic Eagle also recently said in a statement to the ASX that it had started a technical review of the Madaouela project, designed to “evaluate opportunities to increase project scale, expand the mining inventory and enhance project economics relative to the earlier 2022 Feasibility Study undertaken by GoviEx”.
Madaouela currently has a resource of 116 million pounds of uranium, and US$160 million has been spent on the project to date.
Shares looking cheap, broker says
Morgans, in its new research note on the company, said it was currently being valued on Muntanga alone.
They said that the project was “capital light”, and they had confidence in the board, which had experience bringing uranium projects into production.
Morgans has a price target of 80 cents per share on Atomic Eagle, compared to 35 cents currently.
They added:
Most of the value is currently derived from Muntanga via a discounted cash flow valuation with a 10.5% weighted average cost of capital, supplemented by risked value for undeveloped resources, AEU’s interest in Madaouela and unpaid capital via current options. We believe the market is discounting Madaouela and resource growth potential, creating an attractive entry point for long-term investors.
Atomic Eagle is valued at $134.2 million.
The post Could this ASX uranium developer more than double in value? appeared first on The Motley Fool Australia.
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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

