We are short shares of Uranium Energy Corporation, a “fast growing” $1.2 billion uranium miner that has indeed exhibited a blistering growth rate since its entry into the uranium business in 2005, but on the wrong metric – shares outstanding, the company’s best-selling product, which have grown by an astounding 10x over that time. Revenue from selling mined uranium has been much less consistent, first making an appearance in Fiscal 2012 and last seen in Fiscal 2013.

Over the course of the last two uranium bull markets – in 2006-7 and 2010-11 (the latter abruptly cut short by the Fukushima accident) – UEC completely failed to exploit the run-up in prices, only belatedly mustering a meager half million pounds of mined uranium – unprofitably and inconsistently – between 2012-2013. While we’re presently optimistic on uranium prices and believe that they need to rise to meet continued demand growth, we don’t expect UEC – or its shareholders – to be any more successful this time around.

UEC has spent the last few years acquiring uranium deposits with both its expensive stock as well as cash raised by issuing its expensive stock. As we dug into UEC’s deposits, we discovered that the resource edifice is just a façade. Of the company’s stated 140Mlb of estimated resources in the US, none can be mined profitably at current uranium prices. A quarter requires conventional mining in Arizona, which is unlikely to pass profitability or environmental hurdles this century, while the rest can only be mined in-situ where low recoveries mean that less than two thirds are retrievable. Finally, only about a quarter of the resources will be economically viable even at the much higher uranium prices optimists assume will be needed to balance the market in coming years.

Meanwhile, UEC’s Canadian resource portfolio – acquired last year in two transactions worth a combined $350 million – is comprised of 5 significant assets. Like its US-based projects, none can be mined profitably at current uranium prices. Additionally, in two of them, UEC’s resource estimate is overstated by 50-100%; one is too small to mine conventionally unless uranium prices triple; one was acquired for $150 million after the informed seller marked it down to zero; and the final one is operated by Cameco, which has suggested that production will probably not get going for another 12-15 years (though it could take longer depending on the trajectory of the uranium price). We estimate that UEC’s underlying assets are worth just over $350 million at best, which is about 30% of its current market capitalization.

UEC’s market capitalization, and its success in selling almost half a billion dollars’ worth of stock over the last 20 years (excluding its initial public offering), are a testament to the triumph of the company’s prolific use of paid stock promotion. Outlets shilling for UEC have spanned a wide range – from media companies founded by UEC’s CEO Amir Adnani and owned by his family members to much less savory conspiracy-theory purveyors that urge their “clients” to beware of the Deep State Globalists and listen – simultaneously – to both Adnani and…Steve Bannon. Neither is UEC’s involvement with these disreputable hawkers some sort of youthful indiscretion of its microcap past – UEC was last disclosed as paying hundreds of thousands of dollars for this kind of publicity just last month. These shenanigans make a lot of sense if UEC’s management team believes – as do we – that the fundamentals just don’t exist for real investors to be interested in the company: when you look beneath the surface of this uranium miner, there’s not much there.

Read our full report here.