- Leading US producer of two strategic minerals
- Vanadium used in steel and chemical industries, also next-generation batteries
- As prices increase, it has capacity to significantly increase uranium production in the US
What Energy Fuels does:
Energy Fuels Inc (TSE:EFR) (NYSEMKT:UUUU), headquartered in Colorado, is a fully-integrated producer of both uranium and vanadium, and owner of the only operating conventional uranium mill at White Mesa in the USA.
It supplies uranium (U3O8) to major nuclear utilities and can also produce vanadium from some projects as market conditions allow.
The firm's White Mesa mill has a licensed capacity to produce over eight million pounds of uranium a year, and can generate vanadium when market conditions warrant. The mill is also licensed for the production of other minerals, including tantalum, which has made it onto the US government's 'critical minerals' list.
Energy Fuels has said it is in talks with several entities, including the US government, about the potential to recover both light and heavy rare earth elements (REEs) at the mill, as well as uranium from certain natural ores and alternate feed materials.
Meanwhile, its Nichols Ranch ISR Project is in operation and has a licensed capacity of two million pounds of U3O8 per year. It is currently producing and has generated over 1.2 million pounds of uranium since 2014. The Alta Mesa ISR project is currently on standby.
In addition to the above, Energy Fuels also has one of the largest NI 43-101 uranium resources in the US and several uranium and uranium/vanadium mining projects on standby and in various stages of permitting and development.
The White Mesa mill is also operating under a new processing deal to assist in the cleanup of a formerly producing, Cold war era abandoned uranium mine in New Mexico.
It has a strong cash position in readiness for when opportunities arise. As at December 31, the company had $17.7 million in cash and marketable securities.
It also had $22.8 million of inventory, including 515,000 pounds of uranium and 1.6 million pounds of vanadium - both as immediately marketable products.
The firm has said it reckons it could generate up to 2 to 3 million pounds of uranium production per year in short order at minimal cost, if warranted.
How is it doing:
In its full-year results statement in March, Energy Fuels outlined what had been a busy 2019, in which it significantly continued to advance efforts to have the US government provide support for the uranium sector.
The firm is producing, and has generated 70,000 pounds of uranium from White Mesa and 1.8 million pounds of high-purity vanadium pentoxide over the year, due to a shift in focus to the latter.
Vanadium output stopped, however, during the fourth quarter, due to a fall in price for the commodity.
"Since 2006, uranium facilities currently owned by Energy Fuels have supplied roughly 34% of all uranium produced in the US, putting us second only to Cameco during this period, who produced a little over 50%," Mark S. Chalmers, the group's president and CEO, noted n the statement.
In July 2019, President Trump announced that he was creating a US Nuclear Fuel Working Group, recognizing the urgent need for action to help support domestic uranium miners, as well as uranium conversion and enrichment, to bolster the country's energy and national security.
There was good news in February when President Trump announced his budget proposal, which included a 10 year, $150 million per year, or $1.5 billion plan to support domestic uranium miners through the creation of a so-called US uranium reserve.
Assuming no changes by the time an appropriations bill is signed into law by September 30 2020, purchases could start in fiscal 2021 which begins on October 1 this year.
Last month, the group boosted its balance sheet with a bought-deal financing, raising $15.1 million and it has brought in around $4 million with its At the Market (ATM) program so far in 2020.
In March, the firm posted news on its Sheep Mountain uranium project in Wyoming, which consists of the Congo pit, a proposed open-pit mine, and the reopening of the Sheep underground mine.
The company has now filed an updated pre-feasibility study for the project, which, assuming a uranium selling price of $60 per pound, would recover an average of around 1.4 million pounds of uranium a year over a 12-year mine life at an average operating cost of $36.80 per pound.
Capital expenditures are expected to total $152.6 million during the life of the project, including $120.8 million of initial capital, representing $9.04 per pound of recovered uranium.
Following the full year results, Noble Capital repeated a 'market perform' rating on Energy Fuels and highlighted Trump's 2021 budget proposal and the $150 million a year to fund a strategic uranium reserve to provide assurance of supplies and to support US nuclear fuel cycle capabilities through domestic production.
"Industry participants are awaiting more details on the program and the release of recommendations from the US Nuclear Fuel Working Group which could advocate additional forms of relief," Noble analysts' said.
Noble said it had revised its 2020 estimate to a loss of $16.9 million, or $0.15 per share, compared to a previous estimated loss of $12.8 million, or $0.12 per share, to reflect lower sales but noted these forecasts were "likely" to change once the proposed purchasing program is approved and details are known.
"I am extremely proud of what Energy Fuels achieved in 2019, despite unforeseen setbacks, and what it means for our future," CEO Mark S Chalmers told investors in the group's results statement.
"While these achievements have not yet manifested in higher share prices or on our financial statements, I am excited for the new and developing opportunities in front of us and the unmatched optionality our company's business strategy represents to shareholders."
- Update on government budget proposal
- Uranium/vanadium price moves
What the broker says:
Following the company’s recent announcement that it had successfully produced rare earth element (REE) concentrate on a pilot scale at its White Mesa Mill, Noble Capital analyst Mark Reichman believes commercial production could begin in 2021, reiterating his Market Perform rating on the stock.
“Energy Fuels moved its rare earth strategy from concept to reality in a period of months and it underscores the versatility of the White Mesa Mill and its role in the domestic critical minerals supply chain. While we would appreciate greater visibility towards profitability, the company's move into the rare earth space is timely and dovetails with public policy priorities to reduce reliance on foreign sources of critical minerals and strengthen domestic supply chains,” he wrote in a note to clients.
The Noble Capital analyst added that Energy Fuels would produce concentrates while also recovering uranium from the ore, saying that the rare earth elements found in the concentrate include Cerium, Lanthanum, and high value magnet metals Neodymium and Praseodymium (NdPr) oxide, which is used in electric vehicles.
What the boss says:
"By using existing infrastructure and technologies at the Mill to recover the uranium and the REEs from monazite sands, we are able to avoid the years of permitting and development, along with the tens, or even hundreds, of millions of dollars of capital that others would be faced with. Assuming the company is able to secure adequate quantities of monazite sands, we expect to be in a position to produce commercial quantities of REE Concentrate by early 2021," Energy Fuels CEO Mark Chalmers said in a statement.
He added, “successful testing at scale also demonstrates the importance of the White Mesa Mill in helping the U.S. re-establish its domestic REE supply chain."