April 25th, 2023 | 07:40 CEST
Myriad Uranium, E.ON, RWE - What about our energy security?
Table of contents:
Myriad Uranium - Uranium from Niger
Myriad Uranium is a Canadian mining company that has acquired a 100% option on 1,800 sq km in the highly prospective Tim Mersoi Basin in Niger. The Company has access to extensive historical data and plans from previous explorations by Orano, which were abandoned due to the Fukushima disaster. Myriad's licences are adjacent to Africa's largest uranium deposit, Orano's Imouraren, and Global Atomic's high-grade Dasa mine. As a result, extensive infrastructure such as a mill, roads and power supply already exists.
When the discoveries in the basin are developed, Niger is expected to become 2nd in the world in uranium production. This is matched by the news that Orano plans to invest more than CAD 115 million in formal in-situ recovery (ISR) testing at its Imouraren project in Niger. This low-cost ISR production method could thus make its way into Niger. Another asset is the Arlit Fault, which hosts the Imouraren and extends into Myriad's licence area. Drilling is planned for the 2nd half of the year based on historical information. The drilling programme will be carried out by Loxcroft Resources, which is also Myriad's largest shareholder.
To finance the next steps, the Company announced on April 18 a private placement of CAD 750,000 at CAD 0.30 per share plus one half warrant at CAD 0.35. To date, there are only about 26.5 million shares, currently trading at CAD 0.32. The market capitalization of CAD 8.5 million is considered favourable, especially since the Company still holds a 50% interest in the Millen Mountain gold property in Nova Scotia, Canada. However, the focus is on the uranium project; nuclear power is used in many countries worldwide and produces no CO2 emissions.
E.ON - Strong 2022
The Chairman of the E.ON Supervisory Board, Karl-Ludwig Kley, takes a critical view of Germany's nuclear phase-out: "Looking in the rear-view mirror will not get us anywhere. But I also make no secret of the fact that I think the phase-out is wrong in terms of content." As a result, our energy prices will remain high in the long term, and energy-hungry companies, such as those in the chemical industry, could relocate their production abroad. However, as a look at the annual figures for 2022 reveals, the people of Essen also benefit from high energy prices.
Despite the Ukraine conflict, the earnings forecast was exceeded. Adjusted EBITDA was EUR 8.1 billion, and adjusted net income was EUR 2.7 billion. The Group benefited in particular from higher revenues from the nuclear power business. In the current year, no higher profits will be made after the nuclear phase-out. The management expects an adjusted group EBITDA of EUR 7.8 to 8 billion. Shareholders will be rewarded with a dividend of EUR 0.51 for the current financial year.
CEO Leonhard Birnbaum said: "Decarbonization, the energy transition and infrastructure expansion must be massively accelerated, which in turn means great growth potential for our business." But this requires investment. The Group wants to invest EUR 33 billion by 2027. The share has been rising since mid-October without any significant setbacks and is currently priced at EUR 12.05. In April, there were 4 buy recommendations for the share with price targets between EUR 12.50 and EUR 14.00. So the analysts do not expect big jumps at the moment.
RWE - Pushing ahead with the expansion of renewables
RWE also had a good year in 2022. Adjusted EBITDA exploded from EUR 3.65 billion in 2021 to EUR 6.3 billion. Adjusted net income in 2022 of EUR 3.23 billion more than doubled YOY. At the same time, investments of EUR 4.48 billion were made, EUR 700 million more than in the previous year. That means more than 30 plants in 11 countries with 2.4 gigawatts were connected to the grid. Thus, the result of renewable energies also increased by 22%. The growth strategy "Growing Green" is thus gaining more momentum.
In the UK, the Group took over JBM Solar, one of the largest project developers, and thus climbs into the TOP 3 of solar developers. Even before the takeover, RWE was the largest electricity producer in the country. There is also progress to report from the USA. After the takeover of Con Edison Clean Energy Businesses, the portfolio has grown to 8 gigawatts, making it one of the leading companies in the renewable energy sector. The group is also active in the hydrogen sector and recently signed a memorandum of understanding with Kellas Midstream with the aim of producing green hydrogen in the UK.
Only the court hearing in mid-April regarding E.ON's Innogy subsidiary cast a shadow over the other success stories. Management regards the current share valuation of EUR 40.96 as too cheap, as several boards recently bought shares. In April, 5 analysts issued a buy recommendation for the stock, with price targets ranging from EUR 53.00 to EUR 56.00. A dividend of EUR 0.90 is to be paid.
While much of the world continues to rely on nuclear power and build new nuclear power plants, uranium is slowly becoming scarce. This is good for Myriad Uranium, which holds a promising option on a uranium deposit in Niger. The situation is different in Germany, which will do without its own nuclear power in the future. The sharp rise in energy costs is playing into the hands of the utilities. E.ON, just like RWE, has presented very strong annual figures for 2022. Since electricity prices will remain high, the two Essen-based companies should continue to earn well.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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