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viewEnergy Fuels Inc.

Energy Fuels is a key player in bid to develop US uranium independence and has exciting rare earths plans

Snapshot

The company supplies uranium (U3O8) to major nuclear utilities and can also produce vanadium from some projects as market conditions allow

Energy Fuels Inc. -

Quick facts: Energy Fuels Inc.

Price: 1.99 CAD

TSX:EFR
Market: TSX
Market Cap: $249.87 m
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  • The largest producer of uranium in the USA
  • Leading producer of vanadium used in batteries, steel, and chemical industries
  • Getting into the rare earths business

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.

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.

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, the group's 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.

How is it doing:

In summer 2019, US President Donald Trump announced he was creating a US Nuclear Fuel Working Group (NFWG), 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.

In February this year, 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.

Energy Fuels 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.

The group has a strong cash position in readiness for when opportunities arise.  The group ended the first quarter of 2020 with over $48.4 million of cash, marketable securities, and uranium and vanadium inventories.

For the first quarter of 2020 to end March, the group also revealed a narrowing loss and a robust inventory of uranium and vanadium. The net loss for the three months period came in at $5.6 million, which was a more than 50% reduction year over year from its $12.1 million loss in the first quarter of 2019.

During the quarter, Energy Fuels recovered roughly 5,900 pounds of uranium and 67,000 pounds of high-purity vanadium pentoxide. Looking ahead, the company said it still expects to recover between 125,000 and 175,000 pounds of uranium in 2020.

In its full-year results to December 31, 2019, Energy Fuels revealed that it generated over 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, however, vanadium output stopped during the fourth quarter, due to a fall in price.

In April this year, Energy Fuels announced plans to enter the rare earth element (REE) sector, via the fully-licensed White Mesa mill, saying the asset could play an important role in bringing the REE supply chain back to the US from China.

It has hired Australian public research organization ANSTO to assist in testing, mineralogy, flowsheet development and pilot plant engineering at the mill to help advance the initiative.

On May 21, the group said it had struck consulting agreements with two rare earth element (REE) industry experts - Constantine Karayannopoulos and Brock O'Kelley - to aid in the development and implementation of commercial and technical REE strategies for its new US rare earth program.

Earlier in May, Energy Fuels also revealed a deal with GeoInstruments Logging to buy all of its prompt fission neutron (PFN) technology and equipment, including related intellectual property (IP),  a move which further solidifies Energy Fuels' position as “the leading uranium miner” in the USA.

Energy Fuels reckons PFN is 'critical' to successful uranium production particularly from 'many in situ recovery deposits' (ISR). PFN is able to more accurately detect and define uranium content and location versus traditional downhole gamma measurements.

What the broker says:

Following Energy Fuels first-quarter results, Noble Capital Markets repeated its 'market perform' rating on the uranium producer despite lower-than-expected revenue.

Noble's analysts said they share Energy Fuels' optimism in President Trump's $150 budget proposal to fund a strategic uranium reserve.

"We have revised our 2020 estimate to a loss of ($0.23) per share from ($0.15) per share to reflect, in part, lower revenue," they said in a note to clients.

"It is difficult to forecast forward earnings given a wide range of outcomes based on potential actions arising from NFWG recommendations which will also have a bearing on the company's plans.

"While the budget proposal to fund a uranium reserve is encouraging, more details are needed to assess the financial impact to Energy Fuels," the analysts added.

Inflection points:

  • US Nuclear Fuel Working Group recommendations
  • Uranium/vanadium price moves
  • Rare earth business developments

What the boss says:

Energy Fuels CEO Mark Chalmers spoke to Proactive in April and said there was a lot going on currently at the company and also highlighted its strong financial position.

On the rare earths potential plan for the White Mesa mill, he added: "We already have all the permits to handle the low-level, radioactive materials that are common with the rare earths and that is an impediment for processing for many companies so we're very excited about it. We're not trying to take away the focus on uranium but it's a very interesting spot. The US government has taken a very keen interest in it, recognizing that we're too dependent on China."

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