Energy Fuels - A Unique Play on US Uranium & Rare Earths

• Energy Fuels is building a leading US critical minerals portfolio focused on uranium and rare earth elements (REE) vital to clean energy and electric vehicles
• The company is the top US uranium producer with 1M lbs/yr current output and potential to scale to 6M lbs/yr to supply the domestic nuclear fleet
• Energy Fuels is pioneering a US rare earths supply chain at its White Mesa Mill in Utah and aims to be the first major domestic processor of refined REE products by 2027
• Landmark deal with the Navajo Nation enables increased uranium production while assisting with cleanup of abandoned mines, building stakeholder support
• Macro tailwinds from the energy transition, US government backing, and supply chain security concerns create a highly favorable backdrop for Energy Fuels to execute its strategy

Navajo Nation Agreement

Energy Fuels recently reached a landmark agreement with the Navajo Nation to transport uranium ore across the reservation and assist with the cleanup of legacy abandoned uranium mines in the region. CEO Mark Chalmers called it a "win-win" that addresses the Navajo Nation's concerns while enabling Energy Fuels to ramp up production from mines like Pinyon Plain in Arizona.

"We had a number of discussions with the Navajos...we wanted to make sure they understood that this was not something to be afraid of, that we've done it for years and that we are prepared to do other safeguards to make them even more comfortable," Chalmers explained. "It resulted in what I believe is a landmark agreement with the Navajos in that regard on safe transport of uranium across the reservation."

As part of the deal, Energy Fuels will transport up to 10,000 tons of ore for free from abandoned mines to its White Mesa Mill in Utah for processing and disposal. This helps address the environmental and public health legacy of the Cold War-era uranium mining boom, builds goodwill with the Navajo Nation, and provides additional ore feed for the mill. The US government has a nearly $2 billion trust fund available for further mine cleanup that Energy Fuels could tap into.

Interview with President & CEO, Mark Chalmers

Uranium Production & Market Dynamics

Energy Fuels is the leading US uranium producer with several operating and permitted mines feeding its central White Mesa Mill in Utah. The mill is currently processing about 1 million pounds of uranium per year, with a goal of increasing that to 2 million pounds in the near term and 5-6 million pounds over time through a combination of its own mines, toll milling agreements, alternate feed material, and ore purchases.

Despite a pullback in uranium prices recently, Chalmers remains extremely bullish on the market fundamentals and the need for much higher prices to incentivize production to meet growing demand:

"The fundamentals still look great for uranium. The price has come off but I think it needs to reverse itself. We'll start shipping ore from the Pinyon Plain mine in February - that's the highest grade mine out there in the United States...And we're starting up some of these other mines."

Energy Fuels' mix of production sources and the flexibility of the White Mesa Mill enables it to weather low price periods better than peers. Chalmers noted that while "it's hard and there's going to be more delays coming globally and more difficulty producing uranium...we don't have that issue" at White Mesa. Energy Fuels expects to generate $70-80 million in revenue at a 1 million lb/yr run rate depending on realized prices.

Revenue Models & Business Strategy

In addition to its own mine production, Energy Fuels employs several other uranium-focused business models to feed the White Mesa Mill and generate revenue:

• Toll milling agreements with IsoEnergy, where they pay Energy Fuels to process their ore
• Alternate feed material, which involves recycling uranium-bearing waste streams
• Ore purchase contracts from other mines in the region

This diversified approach allows Energy Fuels to be the only operating conventional uranium mill in the US and provides flexibility to capitalize on various opportunities. It also means multiple potential sources of cashflow versus relying solely on its own mines.

Chalmers sees the company generating uranium revenue "for the next few years as we ramp that up while we're getting these other rare earth assets ready to go looking out in that 27, 28 onwards."

The goal is to maintain and grow Energy Fuels' leadership in US uranium production while the rare earth elements business scales up over the next several years to provide a second major revenue stream.

Rare Earth Elements & Future Prospects

Perhaps the most exciting aspect of the Energy Fuels story is its emerging rare earth elements (REE) business. The company began processing REE at the White Mesa Mill in 2021 and quickly ramped up to commercial scale, with plans for 50% of mill capacity dedicated to REEs by 2027.

The company is currently producing a rare earth carbonate that contains approximately 32% - 34% neodymium/praseodymium (NdPr), in high demand for electric vehicle (EV) and wind turbine permanent magnets. Energy Fuels is in advanced talks with several potential customers to sell this product while also looking ahead to potentially moving further downstream.

"We've been sending out the RE carbonate for qualification with a number of groups around the world. And it's coming back with very favorable responses that it meets their specification and they like the material," said Chalmers. "Meanwhile, we're advancing that for a DFS (definitive feasibility study) at the White Mesa Mill for the Phase 2, which is building a plant that's effectively the same size as Lynas is in in Malaysia."

This Phase 2 expansion would enable Energy Fuels to process roughly 10,000 tons of mixed REE concentrate per year, similar to the world's largest ex-China rare earth processor Lynas Corporation. Notably, Energy Fuels is the only company in the US that currently produces an REE concentrate free of radioactive contamination - a key differentiator.

If Energy Fuels can ink deals with EV makers, wind turbine manufacturers, or the US government to sell its RE carbonate - with line of sight to separated oxides - it would be a major coup for the company and the US critical minerals supply chain. Successful execution could make Energy Fuels a key cog in weaning the West off Chinese dominance of the rare earths sector.

Critical Minerals & Government Relations

Both uranium and rare earths are considered critical minerals vital to US economic and national security. Energy Fuels believes it is extremely well-positioned to be a leader in both and gain the support of the US government. Chalmers stated:

"We are telling the new administration that Energy Fuels can do more to fix the United States' critical mineral shortage in their term, working together."

Energy Fuels has the only operating uranium and rare earth processing facilities in the US at White Mesa, in addition to a world-class portfolio of mining assets.

The company is engaging the Department of Energy's Office of Fossil Energy & Carbon Management and the Department of Commerce to provide uranium and rare earths as the government looks to shore up domestic supply and reduce reliance on geopolitical rivals like China and Russia. Bipartisan support for re-establishing US critical mineral production bodes well for Energy Fuels' strategy and growth prospects.

While Chalmers acknowledged investor frustration with the uranium price languishing recently, he remains confident that "now is Energy Fuels' time to really roll here." The pieces are coming together for the company to be a leading producer of clean energy materials and rare earths. Chalmers concluded:

"When you look at the 10 plus critical elements that we can currently produce or will be producing, with the assets that we've secured, we are in outstanding position to solve a lot of the country's critical minerals issues - and that's a pretty powerful statement."

If Energy Fuels can deliver, early investors stand to reap the rewards.

The Investment Thesis for Energy Fuels

• Status as the leading US uranium producer with 1 million lbs/yr of production scaling up to 2-6 million lbs
• Optionality on rising uranium prices as the market rebalances
• Emerging rare earth elements production with potential to sell to major Western end-users
• Dominant US critical minerals portfolio and processing infrastructure at the White Mesa Mill
• Geopolitical tailwinds as deglobalization supports domestic supply chains

Despite this unique collection of assets and revenue streams, Energy Fuels trades at a discount to its uranium producer peers based on price to net asset value (P/NAV). The market is giving virtually no credit for the company's rare earth elements business, which could drive a significant re-rating as it finalizes offtake agreements and grows into cash flow.

Energy Fuels provides the most direct exposure to the US uranium sector, a secular growth story based on expanding nuclear power's role in the global push for carbon-free 24/7 electricity generation. The company's unparalleled asset base, proven management team, and relationships with the US government and Navajo Nation de-risk the story for investors. Energy Fuels belongs on the radar of investors looking to capitalize on deglobalization, energy security, and the energy transition.

The Macro View

The investment case for Energy Fuels rests on the confluence of several powerful macro forces. Globally, the energy transition is driving adoption of carbon-free energy like nuclear power and renewable energy like wind. Both depend heavily on critical minerals - uranium for nuclear fuel and rare earth elements for permanent magnets. This sets up structural demand growth.

At the same time, Western governments are rushing to re-shore and "friend-shore" critical mineral supply chains after decades of offshoring to geopolitical rivals. Relying on China for 80%+ of rare earth elements and Russia (pre-war) for 20% of US uranium supply is no longer tenable. The US is pursuing an all-of-the-above strategy to stimulate domestic production through Defense Production Act funding, the new Inflation Reduction Act, and other initiatives. This will direct unprecedented capital toward Energy Fuels' core markets.

These generational tailwinds form the backdrop for Energy Fuels' asset base and growth plans. The company is in pole position to be the leading US supplier of both uranium and rare earths - the building blocks of a clean energy economy. Agreements like the recent one with the Navajo Nation and collaborations with the US government reduce execution risk.

In summary, Energy Fuels offers a unique way to play the energy transition, resource nationalism, and the geopolitical importance of critical minerals. With one of the best management teams in the business and the potential to scale into a multi-asset cash flow machine, the company is significantly undervalued at current levels. Market and macro developments are aligning to make Energy Fuels a timely portfolio addition for risk-tolerant investors.