Uranium miner Aura Energy is hoping to raise a new slug of cash and join the AIM market in September. The company hasn’t publicly disclosed its fundraising target but we understand it is between £2 million and £3 million.
The money will help fund a feasibility study on its Tiris project in Mauritania which is expected to be completed in 2017, as well as top up working capital and cover the AIM admission costs.
Aura Energy already trades on the Australian Stock Exchange. It is adding a second stock market presence in the UK to broaden its investor base. The timing is interesting for a number of reasons – both positive and negative.
Sentiment among UK investors has improved towards mining stocks this year. Among the best performers has been uranium sector peer Berkeley Energia (BKY:AIM) which has risen 88% year to date to 48.75p as it advances development of a project in Spain.
There is a possibility that investors may be attracted to Aura Energy in the hope it will repeat the success of Berkeley Energia.
On the downside, uranium has been one of the worst performing commodities this year. The price has suffered as a result of plentiful supplies on the back of government inventory sales and re-enrichment. Cheap gas in the US has also made nuclear power less attractive for that country.
The metal last month hit an 11-year low of $24.9 per pound. That is below the $30 per pound expected cost of extracting uranium from Aura Energy’s Tiris deposit.
Uranium prices have been in steady decline since Japan's Fukushima nuclear disaster in 2011, reducing demand and leading to oversupply of the metal over nuclear energy concerns.
The directors of Aura believe the outlook for uranium demand will improve near term.
The company has a second uranium project called Haggan in Sweden which has much lower operating costs but will be much more expensive to build compared to Tiris.
Haggan presently has an 803 million pound resource with $13.50 per pound cost estimate when factoring in credits from metal byproducts. The mine is expected to cost $537 million to build.
In comparison, Tiris has a 49 million pound resource and $45 million capital expenditure estimate.
Aura Energy has applied for exploration permits for gold, lithium and soda ash in Mauritania with some of these prospects located close to Tiris.