Overview

Energy Fuels( TSX:EFR, NYSE:UUUU) has been the largest producer of uranium and vanadium in the United States and an emerging producer of rare earth elements (REEs). The company’s portfolio of assets positions it to contribute meaningfully to some of the most important challenges faced by the world today – climate change and energy security. Uranium remains the core business for Energy Fuels, contributing nearly 89 percent of revenue in the first nine months of 2023. However, the company is rapidly expanding its REE capacity, and expects to have the installed capacity to produce 1,000 tonnes of NdPr oxide in early 2023.

Energy Fuels is the only uranium producer with both conventional production and in-situ recovery (ISR) in the US. Its 100-percent-owned White Mesa Mill is the only conventional uranium mill in the country with a licensed capacity of over 8 million pounds (Mlbs) of U3O8 per year. The company also owns the Nichols Ranch Uranium Recovery Facility in Wyoming, which is a fully permitted uranium ISR facility with a licensed capacity of 2 Mlbs of U3O8 per year. The Nichols Ranch Project is currently being maintained on standby.

Energy Fuels has a number of other uranium mine projects which are ready to start production, including Pinyon Plain Mine in Arizona (pre-production), La Sal Complex in Utah (pre-production), the Whirlwind Mine (pre-production), and three large-scale projects in the permitting stage (Sheep Mountain, Roca Honda and Bullfrog). Importantly, the infrastructure at these conventional mines is already in place, allowing for a quick restart with minimal capital expenditure. These mines, once ready, could add roughly 1.5 Mlbs of uranium production per year. With Nichols Ranch’s ISR project also on standby, Energy Fuels has a clear path to substantially grow its US uranium production.

With the uranium supply market expected to be in deficit over the next few years, prices are likely to continue to trend higher. For 2023, UxC, a leading market research firm, projects a 52-Mlb deficit with global demand at 195 Mlbs and supply at 143 Mlbs. The deficit is expected to further jump to 113 Mlbs by 2025. As a result, spot uranium prices have skyrocketed, reaching more than US$80/lb, the highest it’s been since 2008. The prices are likely to remain firm as the uranium supply/demand balance remains tight. With uranium prices trending higher, Energy Fuels is in a strong position to leverage its licensed, low-cost uranium production capabilities and extensive mineral resources in the US.

In addition to its core uranium business, Energy Fuels is building out its rare earth element (REE) production and processing at the White Mesa Mill. The company is advancing phase 1 of the project focused on producing 800 to 1,000 metric tons (MT) of neodymium-praseodymium (NdPr) oxide per year, which will be in operation in Q1 2024. At the current spot price of $69.79 per kilogram, sales could approach $70 million. The company expects the NdPr production to grow further nearly three times upon completion of phase 2 in 2026/27, along with the addition of “heavy” REE production in phase 3 (2027/28), implying annual sales from REE to be more than several hundred million.

Vanadium and medical isotopes present another long-term growth opportunity for Energy Fuels. White Mesa Mill is a significant US producer of vanadium (V2O5), and the only primary producer in the US. No vanadium production is currently planned for 2023, though the company continually monitors its inventory and vanadium markets to guide future potential vanadium production. It currently holds 0.9 Mlbs in inventory and aims to selectively produce and sell into the market based on the strength of price. The company also continues to evaluate the potential to recover medical isotopes from its existing uranium and vanadium process streams. These isotopes are required for emerging cancer therapies.

Sustainability is a key part of the company’s focus. It is committed to recycling naturally bearing uranium and vanadium materials. White Mesa Mill has a separate circuit for processing alternate feed materials, thereby promoting sustainable sourcing, reducing carbon emissions and saving resources.

Energy Fuels has US$162.5 million in working capital. This includes US$54.5 million cash and equivalents, US$70.6 million marketable securities (mostly short-term treasury bills), US$27.6 million inventory and no debt. Factoring in current commodity prices, the value of existing inventory rises to US$49.1 million. Further, the company benefits from a management team with a record of building and operating both conventional and ISR uranium mines globally.

Company Highlights

Energy Fuels is one of the largest producers of uranium and vanadium in the United States, and an emerging producer of rare earth elements (REEs), all of which are key inputs in the production of clean energy.The company is currently ramping-up uranium production with a goal to achieve 2 million pounds of uranium production in the short-term.The company’s White Mesa Mill, located in Utah is the only conventional uranium and vanadium recovery facility operating in the US, having a licensed capacity of over 8 million pounds of U3O8 per year. In addition, the company also owns multiple uranium/vanadium properties which are in pre-production or on standby, plus three large-scale projects that are in permitting stage and have potential to produce more than 4 million pounds of additional U3O8 per year.Energy Fuels is building the first fully integrated REE supply chain in the US. The White Mesa Mill has the licenses and capability to handle and process radioactive materials in the REE-bearing monazite sands and produce advanced REE products.The company expects to have the capacity to produce up to 1,000 tonnes of NdPr oxide in early 2024, enough for the magnets needed to power up to 1 million electric vehicles per year.The acquisition of the Bahia Project (Brazil) in February 2023 ensures the availability of low-cost REE-bearing monazite sands to the White Mesa Mill for decades.The company’s products have the key ESG attributes needed to address climate change. Uranium is the key fuel for zero-carbon baseload nuclear energy; vanadium is suitable for grid-scale batteries; REEs for clean energy technologies such as EVs and wind power generation.

Key Projects

White Mesa Mill, Utah

White Mesa Mill, located near Blanding, San Juan County, Utah, is the only conventional uranium, vanadium and REE recovery facility operating in the US, with a licensed capacity of over 8 Mlbs of U3O8 per year. In addition to uranium, the Mill has a separate vanadium by-product recovery circuit, and will soon have a separate NdPr separation circuit. When in full operation, the mill employs approximately 150 people, which is reduced to approximately 110 people when the vanadium circuit is not being operated.

The White Mesa Mill has a separate circuit for processing alternate feed materials, which are other uranium-bearing materials, not derived from conventional ore. Recycling materials back into the market contributes to Energy Fuels’ commitment to sustainability.

The mill is also currently producing rare earth carbonate from REE-bearing monazite sands. In 2021, the company began utilizing the mill to process rare-earth-bearing materials at commercial scale from a monazite feed source. Since then, the company has been producing rare earth carbonate products that have been sold to the market.

In early 2023, the company began modifying and enhancing its circuits at the Mill (phase 1) to be able to produce separated REE oxides. Phase 1 is expected to be completed and fully commissioned in Q1 2024, and will have the capacity to produce roughly 800 to 1,000 MT of NdPr oxide per year. It is then planned for a further increase to 3,000 MT by 2026/27 (phase 2). A phase 3 program to produce heavy separated REE products, such as dysprosium, terbium and potentially other advanced REE materials, is expected to be completed by 2027/28.

The input (REE-bearing monazite sands) needed to produce these REEs is supplied by the Bahia Project (Brazil), which was acquired by Energy Fuels in February 2023, along with other heavy mineral sand (titanium/zirconium) mines. A sonic drilling program is currently underway at the project aiming to further delineate the rare earth, titanium and zirconium mineralization.

Nichols Ranch, Wyoming

Nichols Ranch is an ISR uranium mine located in the productive Powder River Basin district of Wyoming, with a total licensed capacity of 2 Mlbs of U3O8 per year. Energy Fuels acquired this key production asset in 2015 through its acquisition of Uranerz Energy Corporation.

The project is currently on standby and restoration, pending market conditions improving sufficiently to resume production. The company will need to incur capital expenditures to develop additional wellfields, as all existing wellfields are now depleted.

The Nichols Ranch ISR project has measured and indicated mineral resources of nearly 7 Mlbs of uranium and inferred resource estimate of 1.3 Mlbs of uranium.

Pinyon Plain Project, Arizona

The Pinyon Plain mine is a development-stage high-grade uranium mine located in Arizona. Acquired by Energy Fuels in 2012, the mine is currently in the pre-production stage with ongoing work including installing surface ventilation fans, secondary egress equipment and other underground development work. The mine hosts measured and indicated uranium resources at 0.7 Mlbs at average grades of 0.95 percent U3O8.

La Sal Complex, Utah

The La Sal Project is an existing complex comprising seven individual underground uranium mines and properties in eastern Utah, including the Beaver, Pandora, La Sal, Energy Queen and Redd Block Project. As of September 30, 2023, the company was performing rehabilitation and development work on its La Sal Project. This additional work will make the La Sal Project “mine ready” should market conditions warrant reopening of the mine.

La Sal hosts inferred mineral resources of 4.3 Mlbs of uranium and 17.8 Mlbs of vanadium at average grades of 0.26 percent U3O8 and 1.08 percent V2O5.

Sheep Mountain Project, Wyoming

The Sheep Mountain project, also located in Wyoming, includes an open-pit operation (the Congo pit), as well as the existing Sheep Mountain underground mine. The project is in Jeffrey City, Wyoming, and is easily accessible via airport and road. The project is currently on standby, pending evaluation of the processing options for the Sheep Mountain Project and improvement in market conditions.

The project has a resource estimate of approximately 4.2 million tons of measured and indicated resources at an average grade of 0.11 percent U3O8, including 18.4 Mlbs of probable mineral reserves. The pre-feasibility study estimates the project can produce up to 1.5 Mlbs of U3O8 annually over a 15-year mine life.

Roca Honda Project, New Mexico

The project is in McKinley County in New Mexico, covering an area of 4,440 acres. It is located within trucking distance of the White Mesa Mill and as such, materials mined from the project are to be processed at the White Mesa mill. The project is adjacent to General Atomics’ Mount Taylor mine and could see similar success. The Roca Honda Project is in the advanced stage of permitting.

The project has measured and indicated resources estimated at 1.8 million tons, with an average grade of 0.48 percent U3O8 containing 17.6 Mlbs U3O8, and inferred mineral resources estimated at 1.5 million tons of U3O8 with an average grade of 0.46 percent U3O8 containing 13.8 Mlbs U3O8. Once operational, it could produce up to 2.7 Mlb U3O8 annually with a nine-year mine life.

Bullfrog Project, Utah

The project is located in eastern Garfield County, Utah, covering 2,344 acres. The property is 100 percent owned by the company and was acquired in 2012. There is no existing infrastructure on the Bullfrog Property.

The project has measured and indicated resources estimated at 1.56 million tons, with an average grade of 0.29 percent U3O8 containing 9.1 Mlbs U3O8 and inferred mineral resources estimated at 0.41 million tons of U3O8 with an average grade of 0.25 percent U3O8 containing 2.0 Mlbs U3O8. The project is currently in the permitting stage.

Management Team

Mark S. Chalmers – President and CEO

Mark Chalmers brings a wealth of experience in mining and mineral processing to his position. Prior to his promotion to CEO in 2018, he served as president and chief operating officer of Energy Fuels. Chalmers is an expert in ISR uranium production and has managed the Beverley Uranium Mine owned by General Atomics (Australia) and the Highland Mine owned by Cameco Corporation (USA). Additionally, he has consulted several large players in the uranium supply sector, including BHP, Rio Tinto and Marubeni. He has served as the chair of the Australian Uranium Council for 10 years. He holds a Bachelor of Science in mining engineering from the University of Arizona and is a registered professional engineer.

Tom Brock – Chief Financial Officer

Tom Brock has more than two decades of executive leadership experience in the energy industry. Brock is skilled in raising money, M&A, technical accounting and SEC financial reporting matters. Prior to joining Energy Fuels in 2022, Brock served as the vice-president and chief accounting officer at Extraction Oil & Gas. He holds a degree in accounting from New Mexico State University and is a certified public accountant licensed in the State of Texas.

Curtis Moore – VP of Marketing & Corporate Development

Curtis Moore is involved in overseeing product marketing, public relations, investor relations and government relations, as well as M&A, strategy and legal matters. He has been working with Energy Fuels for over 15 years in various leadership positions. Before Energy Fuels, Moore worked in diverse fields, including multi-family real estate development, government relations and public affairs, production homebuilding, and private law practice. He earned a Juris Doctor degree and a Master of Business Administration from the University of Colorado, Boulder. Additionally, he holds a dual bachelor’s degree in economics-government from Claremont McKenna College.

J. Birks Bovaird – Chairman of the Board

J. Birks Bovaird has served as an independent director of several public resource companies including GTA Resources and Mining (TSXV:GTA) and Noble Mineral Exploration (TSXV:NOB). He brings extensive experience in corporate financial consulting and strategic planning. He holds an ICD.D designation.

*This article was written in collaboration with Couloir Capital.