Energy Fuels Hits Commercial Rare Earth Production, Focuses Ramping up Uranium Production in 2024

• Energy Fuels achieves commercial production of separated NdPr rare earth elements that meet specifications
• NdPr production validates rare earth processing capabilities; company planning major expansion in rare earth output
• The company is focused on shifting to ramping up uranium production in second half of 2024 to fulfill utility supply contracts
• Building integrated rare earth supply chain with heavy mineral sand acquisitions in Brazil and Madagascar
• Energy Fuels is well positioned as leading US producer of uranium, vanadium, and rare earths critical for clean energy

About Energy Fuels

Energy Fuels Inc. (NYSE:UUUU) (TSX:EFR) is a leading US-based uranium and critical minerals company. As the top uranium producer in the United States, Energy Fuels supplies uranium to major nuclear utilities for carbon-free electricity generation. The company operates the only conventional uranium mill in the US, the White Mesa Mill in Utah, which has a capacity of over 8 million pounds of U3O8 per year. Energy Fuels also owns the Nichols Ranch ISR uranium project in Wyoming.

In addition to uranium, Energy Fuels has recently become a major emerging player in rare earth elements (REEs). The company began producing a mixed REE carbonate in 2021 and just achieved a milestone with the commercial production of separated REE products that meet specifications in 2024. Energy Fuels is also a vanadium producer when market conditions are favorable. The company is headquartered near Denver, Colorado and holds a large portfolio of uranium assets throughout the US.

Rare Earth Production Milestone Validates Processing Capabilities

On June 10, 2024, Energy Fuels announced it achieved commercial production of separated neodymium-praseodymium (NdPr) at its White Mesa Mill that meets customer specifications. This NdPr is used in the permanent magnets that are essential for electric vehicle motors and other clean energy applications. Importantly, this marks the first time in decades that a US company has commercially produced separated rare earths from monazite.

Energy Fuels' rapid success in bringing its Phase 1 rare earth separation circuit to full capacity underscores its rare earth processing capabilities. The company completed construction of the circuit for only $16 million, well under the original $25 million budget. It also encountered no major startup complications, a testament to the solvent extraction expertise of the White Mesa Mill team.

With this accomplishment, Energy Fuels has confirmed the return of separated rare earth production, as well as the technical know-how, back to the United States. The company produced 25-35 tonnes of NdPr in Q2 2024 and is also recovering uranium from the monazite feedstock supplied by Chemours.

Major Expansion Planned for Rare Earth Production

Based on the resounding success of its Phase 1 circuit, Energy Fuels is now pursuing an ambitious expansion of its rare earth separation capabilities. The company is evaluating increasing NdPr production to 4,000-6,000 tonnes per year, which would make it one of the largest separated rare earth producers outside of China. Energy Fuels also plans to produce significant quantities of dysprosium (Dy) and terbium (Tb), the heavy rare earths used in high-strength permanent magnets.

To facilitate this expansion, Energy Fuels is conducting pilot-scale separation testing for Dy and Tb and will design new solvent extraction circuits optimized for these elements. Upon completion, Energy Fuels would become the only company in the Western Hemisphere capable of commercial production of separated Dy and Tb products.

The expansion of the separation circuits will be contingent on securing customer agreements and/or government support. However, Energy Fuels' proven rare earth processing abilities put it in a prime position to obtain this backing. The company aims to solidify its position as a leading domestic supplier of the critical magnet rare earths essential for EVs, wind turbines, defense applications and other clean technologies.

Shifting Focus to Uranium Production Ramp-Up

With its rare earth separation success, Energy Fuels is now pivoting to an aggressive uranium production campaign. The company expects to process stockpiled ores and alternate feed materials to produce 150,000 to 500,000 pounds of U3O8 in 2024, with further increases slated for 2025.

Energy Fuels will be supplying uranium into its existing portfolio of long-term contracts with US nuclear utilities. The company also intends to leverage the currently strong uranium market conditions to layer in spot sales and additional contracts. The White Mesa Mill's substantial production capacity of over 8 million pounds per year provides Energy Fuels with the flexibility to capitalize on improving fundamentals in the uranium sector.

This renewed focus on uranium comes at an opportune time for the company and its investors. Countries worldwide are increasingly turning to nuclear energy to provide baseload carbon-free power to complement intermittent renewable sources. The US government has also taken steps to revitalize the domestic nuclear fuel cycle, including establishing a strategic uranium reserve. As a leading US uranium producer with extensive existing assets and experience, Energy Fuels is ideally situated to benefit from the nuclear power resurgence.

Building an Integrated Rare Earth Supply Chain

In parallel with its rare earth processing and uranium production, Energy Fuels is securing its own low-cost monazite feedstock through heavy mineral sand acquisitions. This vertical integration will give the company greater control over its rare earth input costs and supply.

In February 2023, Energy Fuels acquired the Bahia Project in Brazil. In June 2024, the company entered into a joint venture to develop the Donald Project in Australia. Energy Fuels is also in the process of acquiring Base Resources and its flagship Toliara Project in Madagascar. Each of these projects has significant quantities of monazite in addition to titanium and zirconium minerals.

Material monazite deliveries from these new projects could begin as soon as 2026. As they ramp up, Energy Fuels has the potential to become one of the world's largest separated rare earth producers. By developing its own monazite resources, the company is building a world-class vertically integrated rare earth supply chain independent of Chinese material.

Conclusion

With its array of uranium, rare earth, and heavy mineral assets, Energy Fuels presents a unique opportunity for investors to gain exposure to critical minerals vital for the clean energy transition. The company's industry-leading positions in both US uranium and rare earths provide diversification and multiple avenues for growth.

Energy Fuels has demonstrated its rare earth processing prowess and is now aggressively expanding its separated rare earth production capabilities. These high-purity rare earth products carry substantially higher margins than the mixed rare earth carbonate Energy Fuels previously sold. The planned ramp-up in uranium production also capitalizes on robust market fundamentals and the company's long-term utility contracts.

By pursuing vertical integration, Energy Fuels is mitigating supply risks and securing access to low-cost monazite, the crucial feedstock underpinning its rare earth strategy. As the only US company with both heavy mineral resources and rare earth processing technology, Energy Fuels can maximize value capture across the supply chain.

The company's experienced management team has a track record of execution, bringing its Phase 1 rare earth circuit online ahead of schedule and below budget. With a strong balance sheet and proven operational expertise, Energy Fuels is well equipped to deliver on its ambitious plans.

In the coming years, Energy Fuels investors can look forward to expanding rare earth production and sales, a return to large-scale uranium output, and the advancement of the company's world-class heavy mineral projects. With its leading positions in critical US uranium and rare earth supply chains, Energy Fuels offers significant exposure to the accelerating global energy transition. As governments prioritize security of supply and increasingly look to the US for critical minerals, Energy Fuels is strategically positioned to meet this growing demand as a leading domestic producer.