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Energy Fuels sees working capital position perk up in second quarter

The company reported earnings of US$7.1mln for the second quarter and added to its working capital, which grew to US$55.25mln, including cash and cash equivalents
Energy Fuels sees working capital position perk up in second quarter
The White Mesa mill in Utah

Uranium mining company Energy Fuels (TSE:EFR) (NYSE:UUUU) CEO Mark Chalmers recently updated Proactive Investors on the company's recent news, adding the firm reported earnings of US$7.1mln for the second quarter.

The company also added to its working capital, which grew to US$55.25mln, including cash and cash equivalents. Chalmers says the company was happy to pull in US$26.9mln in revenue for the quarter, despite "a very difficult market."

WATCH: Energy Fuels boosts working capital position in second quarter

"The past quarter was extremely productive for Energy Fuels. We completed a large quantity of uranium deliveries, and as a result we are reporting a profit for the quarter. And, due to a number of factors discussed below, we have significantly improved our working capital position to over US$55mln," said Chalmers. 

Headquartered in Colorado, Energy Fuels is a fully-integrated producer of both uranium and vanadium, and owner of the only operational conventional uranium mining in the US.

"I am particularly excited about the progress of our Section 232 application and current vanadium opportunities. On July 18, 2018, the U.S. Department of Commerce (DOC) initiated its investigation under Section 232 of the Trade Expansion Act of 1962 in response to the petition we and Ur-Energy filed in January, 2018. The petition seeks a remedy which would set a quota to limit imports of uranium into the U.S., effectively reserving 25% of the U.S. nuclear market for U.S. uranium production. The remedy, if granted, would be expected to bolster national defence, further global non-proliferation objectives, improve supply diversification for U.S. utilities and their customers, and strengthen the U.S. uranium mining industry."

Company completes significant deliveries

The company completed 500,000 pounds of U3O8 deliveries for the quarter ended June 30, 2018, at an average realized price of US$53.55 per pound. On April 1, 2018, the company delivered 400,000 pounds of U3O8 into long-term sales contracts at the price of US$61.30 per pound, resulting in the receipt of over US$24.5mln on May 1, 2018. In addition, on June 15, 2018, the company delivered 100,000 pounds of U3O8 into a spot contract at US$22.57 per pound.

Uranium production for Energy Fuels' own account totalled 128,000 pounds of U3O8 (triuranium octoxide) during the quarter, plus another 91,000 pounds of U3O8 for the accounts of others.
The company began fulfilling toll processing alternative feed contracts which are expected to result in approximately US$7.1mln of revenue for 2018, including US$3.8mln of cash and US$3.3mln of uranium for the company's account, of which US$196,000 has been earned or recovered to date.

In early May, the company announced that it intends to resume vanadium recovery operations at the company's White Mesa mill in 2018. The company expects to recover significant quantities of currently dissolved vanadium from the tailings and evaporation ponds at the White Mesa mill.

"As the only company currently capable of producing vanadium in North America, we are also very excited about our current vanadium opportunities. As previously reported, with spot prices nearing US$20 per pound of V2O5, we have decided to resume vanadium production in 2018 by recovering solubilized vanadium from the White Mesa mill's tailings and evaporation ponds. We expect to initially recover approximately 500,000 pounds of V2O5 in late 2018 or early 2019, and given favourable costs, recoveries and then-prevailing market conditions, we expect to continue vanadium recovery in 2019, recovering up to approximately four million pounds of V2O5 over the life of the project. For longer-term alternatives, we are evaluating other vanadium production opportunities, including the processing of previously mined uranium/vanadium stockpiles in the vicinity of the mill, processing other vanadium-bearing streams and, with improved uranium prices, the reinitiation of conventional uranium/vanadium mine production from certain of our mines that contain large, high-grade vanadium resources."

"These opportunities are exciting because they provide us with unsurpassed optionality to increase uranium production as prices rise as well as allow us to take advantage of the recent significant increases in vanadium prices.

Added to the Russell 3000 Index

A the end of June 2018, the company announced that it had been added as a member of the broad-market Russell 3000 Index. Annual reconstitution of the Russell indices captures the 3,000 largest US stocks as of May 11, ranking them by total market capitalization.

"Finally, we were able to significantly strengthen our balance sheet by joining the broad-market Russell 3000 Index during the quarter. During the Russell rebalance period, we were able to raise significant cash, while our stock outperformed our peers. Inclusion in the Russell is expected to increase the company's liquidity, visibility and exposure to key institutional investors. In addition, Energy Fuels has been able to maintain a very strong working capital position, and we intend to use some of these proceeds to repay all of our existing long-term Wyoming debt the third quarter of this year."

Shares of Energy Fuels closed down 3.1% at C$4.07 on Friday. 

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