Shares of uranium mining companies Uranium Energy UEC and Energy Fuels UUUU flew higher yesterday on news that they will be inducted into the Russell 3000 Index at the conclusion of the annual reconstitution of the Russell indexes on June 26. Russell 3000 measures the performance of the largest 3,000 companies in the U.S. equity market.
The annual reconstitution of the Russell indexes captures the 4,000 biggest U.S. stocks as of end-May 2015 and ranks them by total market capitalization. Membership in the Russell 3000 remains in place for a year. As a member of Russell 3000, both Uranium Energy and Energy Fuels will automatically join the Russell 2000 Index that measures the performance of the small-cap segment of the U.S. equity market.
Russell indexes, which are part of global index leader FTSE Russell, are broadly used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. Roughly $5.7 trillion in assets are benchmarked to the Russell's U.S. indexes.
The news triggered a lift in the shares of both companies with Uranium Energy surging as much as around 33% while Energy Fuels climbing roughly 12% in the trading session yesterday. Shares of Uranium Energy and Energy Fuels closed the day at $2.02 and $5.12, respectively, gaining around 12% and 10%, respectively.
Uranium Energy extracts and processes uranium concentrates with a full-licensed processing facility in South Texas. It also controls a pipeline of advanced projects across Arizona, Colorado and Paraguay. The company remains focused on its key projects and has received necessary permits for planned expansion of the Palangana in-situ recovery (ISR) mine in South Texas last month. It has also secured a key permit for the development-stage Burke Hollow ISR project.
Energy Fuels produces uranium and vanadium and operates the only conventional uranium mill in the U.S – the White Mesa Mill in Utah. The company also acquired the Nichols Ranch processing facility in Wyoming through its purchase of uranium miner, Uranerz Energy Corporation. The facility has an annual licensed capacity of 2 million pounds of uranium.
The acquisition of Uranerz, which was completed last week, is expected to make the integrated company a major supplier of uranium to the American nuclear energy market. Energy Fuels’ CEO Stephen P. Antony said that the inclusion in the Russell 3000 is a significant achievement as the company is looking to enhance its visibility in the marketplace.
The U.S. is the world’s biggest consumer of uranium. The uranium market has long been reeling under the effects of lower uranium prices. Prices of the metal came under pressure following the March 2011 Japan quake that led to the Fukushima Daiichi nuclear power plant disaster and shut down of the country’s other nuclear plants.
However, the uranium market recovery has been gathering momentum of late with spot prices are up more than 30% since last summer. Nuclear power, which is considered to be one of the lowest-carbon means of generating electricity, is expected to play a pivotal role in combating the threats of air pollution and climate change.
Per the World Nuclear Association, 66 reactors are currently under construction globally, which is expected to drive demand for uranium. This augurs well for Energy Fuels and Uranium Energy who are increasingly looking to expand their position as a supplier of the metal to the nuclear energy market.
Both Uranium Energy and Energy Fuels sport a Zacks Rank #3 (Hold).
Better-ranked mining stocks include Platinum Group Metals Ltd. PLG and US Energy Corp. USEG. While Platinum Group holds a Zacks Rank #1 (Strong Buy), US Energy is a Zacks Rank #2 (Buy).
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