Uranium Royalty Corp. (TSXV: URC), is a Canadian-based pure-play uranium royalty company. It acquires, accumulates, and manages a portfolio of geographically diversified uranium interests by building strategic stakes inclusive of royalty income, as well as debt and equity investments.

Key Highlights

• Cash Balances: On December 14, 2021, the company released its Q2FY22 unaudited statements, reporting a Cash balance of CAD 104 million which also includes physical uranium and marketable securities holdings, helping the company to sustain its business operations in the near term.

• Building inventory: For the Q2FY22, the company witnessed an increase in its physical inventory of uranium by 0.30 million pounds to 1.34 million pounds which was acquired at the weighage average price of USD 39.80 per pound. This increase in inventory could be a crucial point on the books of the company in the advent of any substantial rise in prices of Uranium.

• Increase in credit facility: To further cultivate its operations, the company got an enhanced margin loan facility to USD 15 million from USD 10 million from the Bank of Montreal.
  

• Weak and volaille chart pattern: The stock printed the lifetime high of CAD 7.31 in October 2021 and since then the investors have made an exodus move from the stock and still the chart is in the declining trend in absence of any strong support nearby.  The two most important trend guiding indicators: 50 & 200 DMA are coming very close to the current prices and from here, the crossovers of one over the other, will be a trend decisive factor in the near time.

Stock recommendation

The lack of revenues and successive losses last for quarters, along with the rise in operating expenses, give the stock a red flag to the risk-averse investors. The rally which was witnessed in the stock prices was also contributed to the volatile and rising prices of Uranium because of its rising demand, which kept the stock in the limelight. Considering the infection points of the 50 DMA & 200 DMA near current prices, increase in the credit facility, and rising inventory, we recommend a “Watch” rating on the stock at the closing price of CAD 4.30, as on February 11, 2022.

1-Year Price Chart (as on February 11, 2022). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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