About Energy Fuels

Energy Fuels is a U.S. producer of many critical minerals. Energy Fuels is the largest uranium (U3O8) producer in the United States. They produce the most advanced rare earth element (REE) product in the U.S. today (high-purity mixed REE carbonate). Energy Fuels produces vanadium (V2O5) when market conditions warrant, and the company is making strides in creating a new U.S. supply chain for medical isotopes needed for emerging cancer therapies. Energy Fuels also recycles certain materials for the recovery of uranium, vanadium, and potentially medical isotopes.

Energy Fuels has more uranium production capacity and experience than any other U.S. company, along with a growing portfolio of long-term uranium sales contracts with U.S. nuclear utilities. The company expects to resume production at a number of its uranium mines and facilities to fulfil these contracts. On REE’s, Energy Fuels is moving more quickly than any other U.S. company, and it expects to be in production of high-value separated REE oxides and other products in the next 3 years.

Summary

Energy Fuels’ core competency is receiving, handing, managing, and producing products from naturally radioactive raw materials. This is the common thread connecting uranium, rare earths, vanadium, medical isotopes, and recycling.

Energy Fuels is a proven U.S. producer of uranium with an exceptional past track record of production, sales and deliveries. Uranium markets have improved in recent years to enable the company to resume production and sales, as early as 2022.

Surging demand for electric vehicles (EVs) is creating surging demand for certain REE’s, including neodymium (Nd), praseodymium (Pr), terbium (Tb), and dysprosium (Dy), which are used in powerful permanent magnets to power EVs. The best minerals with high concentrations of these magnetic REE’s (including a mineral called “monazite) are also naturally radioactive, due to the presence of uranium, thorium, and other radionuclides. Energy Fuels has the current licenses and capabilities to process these minerals, and produce advanced REE materials.

Energy Fuels is currently the largest producer of uranium in the U.S., and the company expects to resume production, reaching approximately 2 million pounds of U3O8 per year in the next 2-3 years. At a sales price of $65/lb., that is $130 million of annual revenue. The company also expects to process up to 15,000 MT of monazite (containing up to 7,500 MT total REE oxides) in the next 3 years. At current REE prices, one MT of monazite contains recoverable REE’s (and uranium) worth about $25,000, which would total $375 million of revenue. Vanadium, recycling and medical isotopes have the potential to make material contributions to the company’s bottom line.

Thesis

Energy Fuels appears to sit on the cusp of several “game-changing” opportunities, due to its existing licenses, facilities and capabilities.

Uranium markets have been very depressed for the past 10+ years. However, prices have risen significantly recently enabling the company to begin signing long-term supply agreements with U.S. nuclear utilities at supportive pricing. So far, the company has booked up to 4.2 million pounds of U3O8 sales through 2030, and they are in discussions to add to that figure.

However, REE’s could be the real opportunity. Energy Fuels only became aware of their potential role in REE’s in 2020. Since then, the company has moved aggressively to the point that they are producing commercial quantities of an advanced REE material today. And, the company is quickly moving to install REE separation infrastructure at one of its facilities (the White Mesa Mill in Utah). It will likely take about 3 years to complete licensing, design, and construction, along with an investment of approximately, $150 - $200 million. However, this investment is justified, due to the magnitude of value that can be unleashed ($375 million of revenue per year, with attractive margins expected).

Strong balance sheet; No debt; Access to capital

In Q1-2022, Energy Fuels had $137 million of working capital. The company has sold approximately $5 million of vanadium inventories this year, and hopes to sell approximately 200,000 pounds of U3O8 into a new strategic uranium reserve program administered by the U.S. government. The company is also acquiring a large land position in Brazil for $27 million cash with monazite mineralization expected to provide 3,000 – 10,000 tonnes of monazite per year as feed for the company’s emerging REE business.

To get to 2 million pounds of production per year, the Company believes it has the balance sheet to mostly self-fund the approximately $50 million of development and upfront capital needed to get their standby projects back into production.

To install REE separation capabilities, the company expects to require $150 - $200 million. This could be raised through equity or debt.

The company also utilizes an “at-the-market” (ATM) program to finance operations and raise capital from time to time when equity market conditions warrant.

Summary of Main, Projects

The White Mesa Mill (Utah): This is Energy Fuels’ “flagship” asset. Located in southeast Utah, it is the largest uranium production facility in the U.S. (8+ million pounds of annual capacity), the only conventional uranium mill in the U.S., and the location where the company produces (or will produce) REEs, vanadium, and medical isotopes.

Nichols Ranch ISR (Wyoming): This is a fully licensed and constructed in situ recovery (ISR) facility located in northeast Wyoming, that is currently on standby. It has an excellent production history, along with several licensed, in-ground uranium resources that could be produced in the coming years.

Alta Mesa ISR (Texas): This is a fully licensed and constructed in situ recovery (ISR) facility located in south Texas, that is currently on standby. It has an excellent production history, along with several licensed, in-ground uranium resources that could be produced in the coming years.

Pinyon Plain (Arizona): This is a fully licensed and substantially constructed high-grade conventional uranium mine located in northern Arizona. It is likely the lowest cost uranium mine in the U.S. Ore will be shipped to the White Mesa Mill for processing into U3O8.

La Sal (Utah): This is a series of six existing, interconnected uranium/vanadium mines located in southeast Utah. These mines have recently been rehabilitated, and are ready to quickly resume production.

Sheep Mountain (Wyoming), Roca Honda (New Mexico), Bullfrog (Utah): These are Energy Fuels’ large, longer-term uranium mines. They are in various states of permitting and can go into production within 5-6 years of a production decision. Each can produce in excess of 1 million pounds of U3O8 per year.

Bahia (Brazil): This is a 58-square mile land position Energy Fuels is in the process of acquiring. It is a well-known deposit in the heavy mineral sand (HMS) sector, containing ilmenite, rutile and zircon (titanium and zirconium minerals) at surface, along with large quantities of REE-bearing monazite. The property has existing mining and exploration permits in place. Drilling to date has only been completed to the water table, though there is no reason to believe mineralization does not continue well into the water table.

REE exploration potential

Energy Fuels has considerable exploration and resource expansion potential for the Bahia REE-project. Over 3,500 shallow drill holes have confirmed excellent HMS and monazite mineralization. However, no SK-1300, NI 43-101, or other compliant resource report has been completed for the property. The company expects to begin sonic drilling on the property to complete a new resource report. The company also expects to perform the necessary steps to get the property into production in the next 2-3 years, just in time for REE separation.

Risks

  • Uranium and REE markets are currently strong. Decarbonization, electrification, and market fundamentals are expected to keep these markets strong.
  • The ability to license, finance and construct REE separation infrastructure.
  • The ability to commence production at the Bahia project.
  • Normal mining and processing risks.
  • Many analysts follow the company, so under the efficient market hypothesis, it is currently fairly valued.
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