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Energy Fuels Inc: THE INVESTMENT CASE

Energy Fuels to become 2nd biggest US uranium player in 2016 – as prices rise

They say timing is everything. And that’s certainly rung true for Energy Fuels Inc. Earlier this month, the company made the claim that it is likely to have become the second-largest producer of uranium in the USA in 2016 - just as resource prices are rising
Energy Fuels to become 2nd biggest US uranium player in 2016 – as prices rise
INVESTMENT OVERVIEW: EFR The Big Picture
Uranium's on the up again

They say timing is everything. And that’s certainly rung true for Energy Fuels Inc (TSE:EFR, NYSEMKT:UUUU).

Earlier this year, the company made the claim that it is likely to have become the second-largest producer of uranium in the USA in 2016.

But that doesn’t mean a big fish in a small pond. On the contrary, the timing for such an eye-catching statement could not be better.

The market has been in decline in recent years but excitingly is now showing signs of life, with production cuts in Kazakhstan and new legislation in the USA, factors behind a price rise.

"We are going to produce about a million pounds (of uranium) in 2016," said Curtis Moore, Energy Fuels' vice president of marketing in a Stocktube interview.

"Until the recent increase in prices we were looking to cut production a little bit in 2017 but we now have the ability to actually increase production if we see the sustained price increase," he added.

Watch: Energy Fuels well poised to capitalize on improving uranium markets in 2017

In fact, the price of uranium, whose spot prices spiked to more than $135/lb in 2007 before sliding sharply again to around $40 until 2011, according to World Nuclear Association data, slid further in 2016 and marked a nadir at $18 in November. Since then it has crept above $22.

The company is firing on all cylinders at present, after it came a step closer at the start of 2017 to mining its Sheep Mountain project in the Crooks Gap district of central Wyoming after receiving relevant approvals.

The US Bureau of Land Management has issued a final environmental impact statement and record of decision.

Energy Fuels already holds a mine permit and these last two steps were the final major government approvals required.

The company is now facing nice problems to have, as it chooses how it will process the resource and is considering toll processing at other facilities or building its own onsite facility.

Read: Energy Fuels Inc closer to mining Sheep Mountain

It’s been good news out of Energy Fuels’ Canyon mine at the tail end of 2016 too.

The company intercepted additional high-grade areas of uranium mineralization at its Canyon mine, a fully permitted conventional underground mine being developed in northern Arizona. These new intercepts, including 28.5 feet of mineralization with an average grade of 2.41% triuranium octoxide equivalent (eU3O8), further expand the mineralized zone at the mine.

Read: Energy Fuels drills 28.5 ft of 2.41% high-grade uranium at Canyon

In fact, the fourth quarter of 2016 was already mighty busy for the uranium producer.

In late October, the company announced that it has entered into a contract to secure additional quantities of one of its currently licensed uranium-bearing alternative feed materials for processing at the company's 100-per-cent-owned White Mesa mill.

Under the contract, the company will earn a fee for processing the alternative feed material and returning finished uranium product to the generator of the feed material.

Read: Energy Fuels wins uranium processing contract, adds to 2017 business plan

Like with many resources, uranium stocks like Energy Fuels have seen share price gains following the election of US President Donald Trump in November.

Energy Fuels’ share price on its Toronto listing was steady at under C$2.00 in the weeks leading up to the Nov. 8 poll. But with talk of heavy investment in US infrastructure there has been a huge mark-up on everything from cement makers to power suppliers. If you need it to power the industrial power room, the share price likely rose.

The share price in Toronto is currently around C$2.72.

It has been a similar picture for the company’s more liquid New York-listed stock too, where the share price was steady at just under $1.50 in November and is now $2.0499. 

And what do analysts reckon? According to sentiments of 4 analysts the mean estimates of short term price target for the company’s stock is marked at $5.35. The most optimistic analyst sees the stock reaching $8.30 while the most conventional predicts the target price at $2.09.

Approval to expand Nichols Ranch, Wyoming

In March, 2017 Energy Fuels Inc reached a key milestone - receiving the final licence amendment, and thereby approval, from the US nuclear authorities to expand its Nichols Ranch uranium project in Wyoming.

It now holds all of the permits, licences and approvals required to expand the project into the Jane Dough wellfields.

This is important to sustain the company's long-term uranium production at the site

"Uranium spot prices are up over 40 per cent since early December, 2016, and we are optimistic that we will continue to see positive market catalysts as the year goes on. As uranium prices continue to rise on a sustained basis, we expect to resume wellfield construction at Nichols Ranch, which is expected to include the Jane Dough wellfields in the future," said chief executive Stephen P. Antony.



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