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Denison Mines (NYSE:DNN) +3.2% in Thursday’s trading as Roth MKM initiates coverage with a Buy rating and $2.60 price target, saying the company is well positioned to become a low-cost uranium producer in the coming years and has significant exploration growth potential through its large portfolio of projects.
U.S.-based uranium mines likely will fall well short of domestic demand regardless of the uranium price, which creates an ideal situation for Canadian-based development projects that are generally larger and lower cost than U.S. competitors, MKM Roth’s Joe Reagor says.
Given such a backdrop, the analyst sees Denison’s (DNN) Phoenix deposit as an ideal source of uranium for the U.S. market, with the potential to produce more than 9M lbs/year of uranium in peak years at an average all-in cost of $16.04/lb, which would represent a significant portion of U.S. domestic needs while coming from a friendly and stable jurisdiction in Canada.
Also, the fully permitted McClean Lake mill has the potential to process up to 24M lbs/year of uranium from conventional uranium mines in Canada, which Reagor believes has significant strategic value for Denison (DNN) in the medium-to-long term, as the company has a number of other projects in the Athabasca region.
Reagor thinks Denison (DNN) boasts a portfolio of world class assets that are undervalued by the market, and the company has significant potential for resource growth through exploration projects, which could provide further upside to valuation.