What are the various developments Uru Metals may undergo to start its mining process in South Africa?

Summary

• Uru Metals Limited had not reported any revenue for the six months period ended on 30 September 2020.
• The total comprehensive loss of the Company had increased from negative US$230,000 during H1 FY20 to negative US$1,633,000 during H1 FY21.
• The final environmental study impact report will be submitted to DMRE by the first quarter of the next financial year.
• The Company had a cash balance of US$223,000 as of 30 September 2020.

Uru Metals Limited (LON:URU) is the FTSE AIM All-Share listed metals & mining company having its engagement in development and exploration of minerals present mainly in South Africa and Sweden. The Company is a well-established mining player.

Based on its 1-year performance, shares of URU have generated a return of about 65.00%. Shares of URU were up by close to 10.20% from the last closing price (as on 04 January 2021, before the market close at 03:00 PM GMT).

Project Details

The Group has three different projects under its belt, SSOAB Licences, Nueltin Licence and the South African Projects as detailed below:

SSOAB Licences - SSOAB had 100% ownership of several exploration licences near Orebro, Sweden. The Company had decided to exit from SSOAB properties due to the continuous decline of the prices of oil and uranium during its financial year ended on 31 March 2016. It had determined that they did not require to recover any amount of intangible assets associated with the project. The Group had completely impaired its intangible assets in its financial statements for the year ended on 31 March 2016.

 Nueltin Licence – The Nueltin division of the Company had an optional agreement with Cameco Corporation, which was having all the licences located in the Nunavut Territory of Canada. Under the agreement, Nueltin could earn up to 51% interest in the Cameco project, which would require exclusively funding of CDN$2.5 million in exploration expenditure by 31 December 2016. The Group had completely impaired its intangible assets in its financial statements for the year ended on 31 March 2015 as the Company had decided not to proceed further with this project and further allowed the option to expire.

 South African Projects – The Company had acquired 100% stake in Southern Africa Nickel Limited ("SAN Ltd.") during November 2013, the Group's joint venture partner since 2010 on the Zebediela Nickel Project and a 50% stake in the Burgersfort Project.

 H1 FY21 results (ended 30 September 2020) as reported on 30 December 2020

(Source: Company result)

• The Company had not reported any revenue during H1 FY21 ended on 30 September 2020.
• The total comprehensive loss of the Company had increased from negative US$230,000 during H1 FY20 to negative US$1,633,000 during H1 FY21.
• The diluted earning per share also went down to negative 1.34 cents per share during H1 FY21, while it was negative 0.34 cents for the equivalent period of the prior year.
• Regarding the financial position, the Company had strengthened its balance sheet by increasing its cash balance from US$66,000 as of 31 March 2020 to US$223,000 as of 30 September 2020.
• The Company had increased its weighted average number of shares outstanding from 779,944 as of 30 September 2019 to 1,347,591 as of 30 September 2020.

Key Operational Highlights as reported on 30 December 2020

The Company’s primary focus was on smoothening its environmental study process required to obtain mining rights from the Department of Mineral Resources and Energy (DMRE) in South Africa.

The next step would be to start mining of the nine billion pounds of nickel resource as well as to mine and explore on behalf of Platinum Group Elements for thirty years. The application was already submitted and got approved during its last financial year. As a part of the process, the Company needs to undergo Environmental Authorisation (EA) approval. The Company must submit an environmental study report that encapsulates the potential impacts of its operations required to extract nickel. The Company had already submitted the draft report to DMRE. The final environmental study impact report will be forwarded to the concerned department by the first quarter of the next financial year.

Recent News

On 26 November 2020, the Company had issued 32,858 new Ordinary Shares for the closing mid-market price of 245 pence each on 25 November 2020, for a notional value of £80,500 in aggregate.

On 25 November 2020, the Company had raised £280,600 of the share capital through the subscription for 122,000 new shares of the Company for 230 pence per share.

Share Price Performance Analysis of Uru Metals Limited

(Source: EODHD/Others, chart created by Kalkine group)

Shares of Uru Metals Limited were trading at GBX 248.00 and were up by close to 10.22% against the previous closing price as on 04 January 2021, (before the market close at 03:00 PM GMT). URU's 52-week High and Low were GBX 350.00 and GBX 70.50, respectively. Uru Metals Limited had a market capitalization of around £3.69 million.

Business Outlook

The Company is highly confident of its long-term fundamentals of the base minerals due to growth prospects of its industry. It will be putting a lot of efforts in the coming year to generate the true potential of the projects. The Company will keep focusing on developing its nickel assets, as the Board anticipates a surge in demand and price appreciation for nickel in short to medium term. The Company is undergoing an environmental study process for starting the mining process of nickel in South Africa. The draft report for the findings is already submitted, and the final report is expected to be completed by the beginning of the next financial year.