Forsys: Next 10x Opportunity?

Forsys Metals

Uranium: Precious like Spice on Arrakis

The best Uranium Buy at $85-125/lbs  

DISCLOSURE: This article is for informational purposes only, you should not construe any information or other material as legal, tax, investment, financial, or other advice. I hold a long-term position in Forsys Metals Corp.


Scenario Analysis:

  • Bear case: -50% or standstill for 3 years.
  • Base case: 10x in 3-4 years.
  • Bull case: 50x in 5 years.

Why I like this stock:

I made a relative valuation of the 15 best uranium stocks (developers & producers) set to make money during the next contracting cycle. Out of these, Forsys Metals stands out as having the lowest valuation in comparison to peers and having the highest likely upside over the next 5 years.

You should have the patience to stick around for 5 years, or skip it.

Investment Thesis:

  • Fully licensed mine with access to infrastructure
  • Located in Namibia (the best jurisdiction)
  • Already has a DFS since 2015. Now working to update it.
  • Probably the first big developer to finish its mine this contracting cycle.
  • Everything in “one” place (only 8 km distance between Valencia & Namibplaas), while most uranium stocks need to build multiple mines.
  • Cheapest on relative valuation, by Total Diluted Value / lbs Uranium.
  • Only 11% dilution, in total.
  • Likely buyout candidate by the Chinese.

Mine: The Norasa Project:

  • Largest annual production (5.2M lbs) out of all new mines except Nexgen (21.7) and Denison (6.3).
  • Life of Mine: 15 Years
  • Exploration upside: Potentially 6 more years — (30M lbs, after spillage)
  • Capex: $433M
  • Opex: $34.72/lbs

We’ll see what the next DFS has to say, but I have that modeled below…….

Why Does This Opportunity Exist?

Probably because Forsys Metals did not update their website and investor presentation until ~2 months ago. Before that, they were for inactive five years.


Most people have likely missed it.

They haven’t promoted themselves.

Forsys is barely on any of the relative valuations or graphical comparisons of other uranium stocks investors presentations.

And they’ve got “Metals” in their name, which might make you think they’re not a uranium miner (how I first missed it).

Not to mention the stock is up 240% in one year.

This stock looks dodgy on technical analysis.

That’s enough to make most people (who are just glancing at it, not doing the research) think it’s already expensive.

Nothing could be further from the truth.

It’s probably going to take 3-12 months until most uranium investors note Forsys Metals the same way they’ve glommed onto the sales pitch of Global Atomic, Bannerman, Deep Yellow, Fission, Denison or UEX.

This is a Diamond hidden in dirt.

While I like Forsys, they lack a coherent sales pitch. And that’s a problem. In my opinion, it should be one of the following:

a) We have a top-3 mine at a low market cap price

b) If you like Bannerman, Goviex, or Deep Yellow, look at us

c) We have a high CAPEX, but we’re the best you can get after Nexgen

d) We’re first in line to be acquired

e) We deserve a simplicity premium

f) All of the above put into one paragraph.

The current sales pitch is the one in the picture at the top:

“Norasa — Fully Permitted Feasability Stage Uranium Project”

It’s the truth.

But it doesn’t make me excited to buy.

Bannerman became extremely popular by saying:

“We’re a call option on uranium prices above $65…..”

Well, if that worked for Bannerman, let me tell you this: Forsys is your very best bet at current prices as long as the uranium contract prices stay within the range of $80-$150 during the next 5 years.

Assuming a longer timeframe (say 10 years) and a higher sustained uranium contract price (above $150) some other uranium stocks will likely do better.

You can see my reasoning below.


Which Uranium Stocks are most similar to Forsys Metal Corp?

In my opinion: Bannerman, Deep Yellow and Goviex.

Why? Because they’re also in African countries, have relatively large mines, and will probably produce and sign big contracts this cycle.

  • Bannerman is already fully valued, assuming uranium prices $65-85/lbs. Around $100/lbs we get a decent risk-adjusted return around ~43% anually over the next 4 years.
  • Deep Yellow has that Borschoff Premium, assuming U-prices $65-85/lbs. Around $100/lbs we get ~42% annual return the next 4 years.
  • Goviex is already fully valued (assuming only its main mine, Madaouela) at uranium prices $65-85/lbs. At $100/lbs we get ~46% annual return over 5 years.

You’ll probably make money on all three…


Forsys is superior at $85-150/lbs, within the span of 3-5 years. 

Forsys has all permits + infrastructure + should finish its mine before the aforementioned three.

And its mine is the biggest out of its African Peers:

Annual production: Million pounds (lbs):

Forsys (5.2)

Bannerman (3.33)

Deep Yellow (2.4)

Goviex (2.2)

Forsys’ mine lasts 15-21 years. Bannerman’s mine lasts 15 years. Deep Yellow’s mine lasts 20 years. Goviex mine lasts 20 years.

That gives us: 78-109M lbs versus: 50M lbs, 48M lbs, 44M lbs.

So…. Forsys has more than 50% uranium than its peers, will likely start producing before them, and has a lower valuation?

Total Diluted Value Compared to Peers:

Forsys: $162M

Bannerman : $219M

Goviex  $274M

Deep Yellow : $300M

Forsys beats its peers by a large margin as long as the uranium price stays between $85-$150/lbs during the next 5 years.

Forsys Metals

Note: This comparison is old. They should update it! The only two (new) mines bigger than Forsys Metals’ Norasa are Denison (6.3) and Nexgen (21.7). Both at a much steeper relative valuation.

Read more:

What Else?

Norasa has the infrastructured needed, but needs a waterpipe to the mine.

Are there any red flags?

None that are obvious to me. But one thing I dislike is that the main owner Leonardo Trust / DM Windsor UK has continually sold shares over the past 6 months. They started the year with 43% of shares and now have slightly below 40%. Reducing their shares by 3% isn’t enough to  get me paranoid (when they’ve made 240% gains in one year), but it gets my attention. It’s probably profit-taking or rebalancing. They’re still the majority owner and stand to gain the most by the stock appreciating.

Furthermore, Richard Parkhouse (now working at Forsys Metals) used to be chair of the board for Leonardo Trust.

What I haven’t uncovered yet, but would like to find out, is whether financier Henry Gabay personally owns Forsys or if DM Windsor (AKA Leonardo Trust) is “only” part of Merit Capital’s Wealth Management Unit.

(Yes, complex financial structure…)

If it’s the former, then it would show greater incentive.

If the latter, they still have their reputation on the line and custodial care.


I’ve chosen to value Life of Mine as P/E (Price/Earnings).

Why? Because that’s the approximate amount of uranium they will be able to produce each year, after the mine begins, during a set amount of years. Which is basically the same as the P/E-ratio of a normal company.

However, I don’t think it’s reasonable to use this valuation method if the price of uranium goes above $150/lbs.

  • P/E 15 as base case
  • P/E 21 if the Exploration Upside proves true. And if so, it should happen within 1-5 years.
    • Reasoning: They had 6-7 years to verify this. So I`m thinking: (a) they know what they’re doing and basically are just dragging their feet around. Or (b) they haven’t made the least progress and it will take a couple of years until they prioritize this, before securing financing for the main mine.
  • Current OPEX & CAPEX:
    • OPEX: $34,5/lbs
    • CAPEX: $433 — at 7.5% annual interest rate, by my estimated calculations = $32.5M
  • Main assumption: 50% higher OPEX & CAPEX



On December 11, 2021:

Market Cap: $132

Total Diluted Value: $147M

Debt: None.

Cash: $11.7M  (but they will need it)

(Update 27th January 2022: According to this piece of news, they should now have $11.7 + 7.72 = $19.42M cash)

This makes me feel safer that they will be able to go through the next couple of years without diluting shareholders.

[CAGR based on TDV]

Assuming the DFS from 2015:


Assuming we add on 50% higher OPEX & CAPEX for the updated DFS during 2022:  (This is my base case)

  • Base case: $85/lbs in 3-4 years at P/E 15. Gives us 10x the money, or 71-105% increase per annum.
  • Bull case: $150/lbs in 5 years at P/E 21 (assuming they realize the Exploration Upside of another 30M lbs, amounts to roughly 6 more years of annual production). This gives us 50x the money or 110% increase per annum, during five years.

I estimate the probability of my base case to be 50%.

I estimate the probability of uranium prices within the interval of $100-125/lbs to be around 30%.

And I estimate the probability of my bull case to be 10%.

The probability of uranium prices below $85/lbs, in another 3 years I deem lower than 10%.

At uranium prices of $85-100/lbs, maybe even $110-$120/lbs, I am certain that the market will value Forsys at Life of Mine – P/E 15 or 21, unless they contract off the whole mine during the off-take agreement.

Will the market see how undervalued Forsys Metals Corp is?

At uranium prices above $120/lbs, I start feeling insecure the market will value Forsys at P/E 15-21. Therefore, the probability of getting 50x the money in the bull case is hard to ascertain. But you never know. In the last uranium bubble (ca 2005-2007) many uranium stocks were valued far above their life of mine.

As per 27th January they just got another $7.42M. This makes me feel secure we can go several years, sitting still, without dilution.

What will happen next?

That depends on how quickly they are able to follow up on their plans, what the uranium contract price will be in ~3 years, and how much Forsys Metals are willing to forgo in negotiations to finance the building of their mine.

I would prefer if they were able to lock in high prices at the get-go in a long-term contract, or if they could keep the off-take price at a low level, not locked many years into the future.

I think Forsys should re-rate at 50% or more just based on relative valuation.

Timeline: When will the market pay attention?

  • Updated DFS (2022, H1)
  • Financing for the mine (2022, H2)
  • Mine built (2024-2025)
  • First Year production (2025-2026)

(Note: These are my estimations, not the official guidance of Forsys.)

I think Forsys will be valued at its Life of Mine no later than the first year of production. Probably far sooner.

Almost looks too good to be true……..

How can I be wrong?

The Uranium Thesis fails and there is no supply deficit.

I’m too optimistic with regards to long-term contract prices above $65.

Forsys fails at financing. There’s a delay in building the mine.

A new version of Covid delays building the mine.

(But if the supply deficit exists, and the production is getting delayed, even with inflation, it should be a positive thing.)

There could be another Fukushima-type accident.

The stock market could crash, in which case everything goes down 30-60%.

However, it seems to me that the biggest risk of all is that they sell it all to China for 20 cents on the dollar….

But I don’t think that’s gonna happen.

The main owner, DM Windsor (AKA: Leonardo Trust) has held more than 40% of the shares for over 10 years. And if you had the patience to wait ten years, you probably have the patience to wait until prices are right. Or if disrespected by low-ball offers, secure the financing needed to build out the mine and profit by yourself (as per my calculations).

Anyway —

I think this is the most undervalued uranium stock at current prices.

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  1. Great analysis, Ludvig!

    I would love to know if your opinion and scenario analysis of the uranium industry in general and Forsys in particular has changed in the last 12months?
    Especially, since lots of countries in- and outside of Europe have publicly stated an increasing interest in nuclear energy.

    Keep up the great work.

    Best Regards from Germany

    • If the contracting cycle doesn’t start by end of 2023, which should positively impact the whole sector, then I believe reserves are larger than anticipated and I’d become very skeptical to the whole uranium thesis.

      That said, Forsys is both overlooked and undervalued. It’s easily the most undervalued uranium stock that has a workable project (all the permits and able to be built in the next 2-3 years with good timing for capturing high prices of the cycle), now that Aura was re-rated recently. Bannerman might be closer to it now than when I wrote this article though, I’d have to update my models for them before answering that.

      Anyway, it seems the overall macro situation is looming over the uranium sector for the foreseeable future. If the contracting cycle doesn’t start by the end of 2023 (preferably in h1), then I will say I was wrong and that I believe that existing supply reserves are vastly larger than believed.

      • Thank you for your extensive answer, Ludvig. I agree with you regarding the overall macro situation looming over the uranium sector. My long-term view is bullish though and I will use the current situation to secure some more shares for a discounted price.

  2. Pavel Pek says

    I am really not well educated in this regard (albeit I really appreciate your analysis and your whole blog), but why should Uranium go up in the future? Does it somehow correlate with the UKR war/oil prices/electric cars?

    • Two possible reasons:

      Reason #1: There will be a significant supply deficit no later than 2030 due to construction of new nuclear reactors (mainly from China). Most likely before that – perhaps already in 2024-25.

      I’m unable to find the specific link I’m looking for, but this one is good enough to give you an overview:

      Reason #2: Due to western countries (U.S.A and Europe) likely becoming forced buyers due to having low stockpiles as a matter of habit due to having been able to easily secure their uranium from the spot market over the last 10+ years (without having to sign long-term contracts directly with miners).

  3. Seems like one hell of a stock if the uranium price goes where you say, above $65 per pound. But now it’s at $43. What makes you think it will increase so much in the coming years?

  4. Good analysis, very thorough.

    I would need to do my own research on the company website next but thanks for putting it on my radar.

    Btw is this your only nuclear stock or do you have others?

    • I have others as well, they have all gone up, but I didn’t find Forsys until recently. Then I researched Forsys and it stood out — by a large margin — on relative valuation. I think it’s slept on.

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