Energy Fuels (UUUU) - USA Critical Minerals Hub Getting Love
Energy Fuels is a leading, US-based integrated uranium producer for use in carbon-free, clean nuclear energy. The company also produces high-grade vanadium which is used in aerospace, steel, chemical industries, and battery production. The company's major vanadium production is the White Mesa Mill in Utah. Energy Fuels is emerging as the largest critical minerals producer in North America with a strong focus on uranium, rare earth metals production and processing, and vanadium production, along with recycling.
Matt Gordon caught up with Mark Chalmers, President, and CEO, of Energy Fuels. Mark previously served as an Executive General Manager of Production at Paladin Energy Ltd. Mark has a strong background in situ recovery (ISR) uranium production. He serves as a consultant for BHP Billiton, Rio Tinto, and Marubeni. He also served as the Chair of the Australian Uranium Council for a decade.
Energy Fuels is a uranium and vanadium mining, development, and production company. Its main assets are located in the western part of the United States where it owns and operates the only uranium mill in the country. The company was founded in 1987 and is headquartered in Colorado, the United States. It is listed on the New York Stock Exchange (NYSE: UUUU) and the Toronto Stock Exchange (TSX: EFR).
Energy Fuels is building a critical mineral hub encompassing multiple elements including uranium and vanadium to reduce carbon emissions for electrification in steel hardening and energy storage. The company also produces rare earth elements that are critical for use in high-density magnets. The company recently added radioisotopes to its portfolio for future cancer treatments.
The White Mesa Mill
In September, Energy Fuels formally opened its White Mesa Mill located in Utah. This is the only fully licensed and operating conventional uranium mill in the US. It features a production capacity of over 8Mlb uranium per annum. This event saw attendees from the rare earths business, uranium companies, several politicians, and representatives from the Department of Energy (DoE).
Energy Fuels is planning a comprehensive retrofit modernization of the White Mesa Mill over the course of the next 12 months. The company believes that the mill has been underutilized for the past 40 years and this will enable it to tap into the facility's full potential.
Energy Fuels is currently prioritizing the securing of feed sources for the monazite sands. Given its strong history in solvent extraction, the company is looking to build the processing and separations facility over time. The company seeks to demonstrate that it has a significant feed of monazite sands and rare earths to the market.
The company isn't looking for any subsidies on its project. It is approaching this project as a collective pursuit between industry giants to produce rare earth minerals competitively in order to meet the growing demands from the electric vehicles and renewable energy sector.
A New Foundation
Energy Fuels announced the launch of its San Juan County Clean Energy Foundation, the largest of its kind. The company deposited $1M into this foundation. This event garnered a lot of interest from the local community as it has the potential for job creation. It will also lead to the training and hiring of the local indigenous population.
The San Juan County Clean Energy Foundation will serve to reduce poverty in San Juan County, Utah, providing employment to the Native American population. The company is looking to rebrand itself as a clean energy company that provides green jobs for the future. This also helps the company confirm the ESG (Economic, Social, and Governance) norms. It will enable the company to realize the full potential of the currently underutilized White Mesa Mill.
The Uranium Market
There has been an upward trend in the uranium spot pricing market. This is due to several factors including the recent establishment of the Sprott Physical Uranium Trust (SPUT) that bought a major part of the market's uranium supply.
In August 2021, SPUT also announced the launch of its ATM (At the Market) equity program that aims to raise the trust's equity and liquidity through the purchase of physical uranium on the open market. The most recent renewal of this ATM was for $1Bn. This move has made utility buyers consider long-term contracting options to secure a consistent uranium supply.
Following the Biden administration's push towards clean energy, nuclear reactors are observing a renewed interest from the market. In the past, the uranium spot pricing was often seen as undervalued due to market movement. However, due to the recent developments, uranium suppliers are now seeing better market prices.
Energy Fuels is looking to enter multiple contracts with varied pricing mechanisms to secure revenue and become cash positive at the earliest. The company currently has a 700,000lb supply of US-origin uranium. The company finds itself in a unique position of optionality across the uranium and rare earths market.
The US utility market has observed a diversification across supply and regions. Although the United States is a relatively small uranium producer, the announcements from the SPUT are expected to improve the overall price movement. This is further strengthened by the fact that the fundamentals and support for nuclear energy are improving globally. This has enabled smaller reactors to gain momentum.
Energy Fuels' monazite plant within the White Mesa facility serves as a key differentiator as the monazite sand deposits feature high-quality recoverable rare earths contained within uranium. The company is looking to demonstrate its capabilities to the market by entering significant commercial production with a strong cash margin. It is also advancing the scoping work of the project for material separation.
The company is in talks with multiple entities including monazite producers and industry experts who are joining the company in varied capacities. The company's rare earth carbonate is being shipped to Estonia for processing. Estonia has gained significant attention from the market as Energy Fuel's supply is the most advanced when it comes to processing. What's interesting to note is that the company was able to achieve this in less than 2 years.
Energy Fuels has entered multiple deals with various entities to fill the processing capability of the White Mesa Mill. The company has a favorable milling agreement with Consolidated Uranium Inc. through divestment of its non-core assets.
The company also has a deal with RadTran to supply radioisotopes for its cancer therapeutic isotope project. Radionuclides are in short supply on a global scale and the company is looking to fill the gap as its uranium and rare earth production also provides thorium and medical isotopes as a by-product.
Additionally, the company has a deal with Hyperion Metals to process supply through the White Mesa Mill. These deals have generated multiple revenue streams for the company.
The company is looking to consider potential deals on a case-by-case basis. Energy Fuels anticipates that a combination of future contracts would enable it to become a multi-billion dollar company.
As Energy Fuel has the White Mesa Mill, it has a significant advantage over the competition as it provides the company with a facility to process and supply uranium products directly to the market.