Energy Fuels (NYSE:UUUU) - US Critical Minerals Production Hub

TL;DR:

‍Energy Fuels CEO Mark Chalmers discusses the company’s evolution into a vertically integrated critical minerals producer, with strategic focus on uranium and rare earth elements. He highlights the company’s unique position as a U.S.-based producer of both light and heavy rare earths, including a fully permitted heavy mineral sands project in Australia. Chalmers addresses government support, supply chain independence from China, and the operational readiness of the White Mesa Mill. He also details the exceptional uranium grades at the newly producing Pinyon Plain project and outlines how Energy Fuels is building real capacity - not just promotion - in a market where many competitors are still in development limbo.

Matthew Gordon: Mr. Chalmers, good to see you. What an exciting market. We are going to talk uranium, and we’re going to talk about the fact that you're one of the few producers in the U.S. at the moment. But I’ve got to start with rare earths. We recently saw the U.S. Department of Defense and Apple make investments into MP Materials. You had quite the stellar reaction to that. Why is that?

Mark Chalmers: Well, I think the realization is that this critical mineral focus, and the dependency on countries like China, is crucial. These minerals are necessary for modern technologies, and I think people are finally recognizing that for the last five years, we’ve been adding a number of significant, world-class assets globally that are perfectly placed to address these shortages. I think some people were confused - are we a uranium business? A rare earth business? Well, we’re a critical minerals company. We are building a strategy to commercially produce 10 or more critical elements at low cost.

Matthew Gordon: But what is it that the Department of Defense is trying to solve? What does Apple want, and why have they gone to MP Materials? And more importantly, given the share price reaction, what do people believe you can deliver?

Mark Chalmers: I think people believe that Energy Fuels has positioned itself well to potentially be in that… I don't want to say "gravy train"… but at least to gain recognition from the U.S. government, the Australian government, and the European Union for support. If you want to break dependence on China, you need to source materials from elsewhere. When people see price floors, investments, and government loans going to support these industries, they recognize that the current price of NdPr is too low for Western producers. So governments are responding.

We’ve always built our company around not needing government support, but let’s be honest, we would certainly appreciate the right support. It would also help insulate us from Chinese influence. We’re moving forward full speed ahead. People in government know who we are, appreciate what we’ve accomplished, and understand our capacity. We’re trading with a market cap of over $2 billion, with $250 million or so in working capital, and a very material revenue stream from uranium. There’s a lot going for us right now.

Matthew Gordon: Okay. Are those new shareholders right in thinking that you can do what MP Materials does in terms of product, whether it be lights or heavies? Can you replicate their processing capabilities? And geopolitically, are you as aligned as they are?

Mark Chalmers: We’ve been saying for a while now that we are building world-significant scale. With the projects we’ve acquired and the planned expansions at White Mesa, we are on the same path as MP. Right now, Energy Fuels is the third-largest publicly traded rare earth company I know of, behind MP and Lynas.

We’ve already commercially produced NdPr, and we’re currently recovering dysprosium (Dy) and terbium (Tb). What we have - and I’m very proud of this - is a heavy rare earth asset in the Donald Project in Australia. That was just announced as fully permitted. None of the others have a fully permitted, heavy-rich mineral sands project like Donald. It’s subject to financing, but it's unique.

Matthew Gordon: So dysprosium and terbium are the heavies. Why is that important? Are heavies rarer than lights?

Mark Chalmers: China has a stranglehold on heavies right now. Globally, we're heavy-light imbalanced, and heavies are essential for heat-resistant permanent magnets in electric motors. There's a bigger shortage of heavies than there is of lights like NdPr.

Donald is a heavy mineral sands project with monazite as a byproduct, but with very high grades of heavies and xenotime. We’re in a strong position. Donald is in a good jurisdiction in Australia, fully permitted, and we have a joint venture with Astron. But we get 100% of the rare earth feeds that can be processed at White Mesa.

Matthew Gordon: So I’m assuming because heavies are rarer, there’s more margin to be had?

Mark Chalmers: Yes, although just because they're rarer doesn’t always mean big margins. Competing head-on with China is difficult. But when there’s a shortage and countries like China impose export restrictions, what does price matter? You need the material.

Donald is economically attractive, with decades of mine life, a large land position, and a permit in place. We're advancing toward a final investment decision, subject to financing. It’s in a really unique position.

Matthew Gordon: Okay, sticking with the U.S. for a bit - we’ll come to Brazil and Australia in a second. But I feel there’s an expectation now. People believe you can deliver, especially if you want to secure something like a DoD contract. Where are you in that vertical integration process? What’s the endgame?

Mark Chalmers: We're finalizing feasibility studies on Donald and also White Mesa. We've already commercially produced separated NdPr. These projects are permitted, and we’re putting together documentation to show their economics, capex, opex, timelines, etc.

Many companies that received government aid haven’t proven themselves yet - we have. Our endgame is to secure financing, whether commercial, U.S. or Australian government backed, to get these projects up and running. Floor pricing or backstops would be a real boost. MP isn’t moving forward without those supports. Our strategy is among the most cost-competitive in the world, but having non-recourse financing or pricing support early on helps massively.

Matthew Gordon: So what about qualification standards - purity, recovery, throughput? Are you meeting those?

Mark Chalmers: We’ve sent NdPr oxide to customers like POSCO, and it meets spec. For heavies, our lab-scale separations are ongoing, it takes time. But the key is: we’re doing it now. We're producing NdPr, dysprosium, and moving into terbium. We’ve got solvent extraction capabilities and a permitted project. You can see the oxides, the monazite bags, everything from input to output.

We're also working with Barr Engineering on a phase two separation plant to produce 6,000 tonnes per year of NdPr. A lot of others haven't done anything yet - they’re making promises. We’re delivering.

Matthew Gordon: Let’s talk Donald, Chemours, Bahia, Toliara- lots of optionality. How does sequencing work for getting feed into White Mesa?

Mark Chalmers: Phase 1 rare earth separation and the uranium plant are both operational - we switch between them. We’re planning campaigns: rare earths, then uranium, then back. Once Phase 2 is constructed, we’ll have separate, simultaneous operations.

Our strategy gives us cash flow now to fund the next phase - so Phase 1 gets us to Phase 2. Even Phase 1 is globally significant. But this step-wise development is key. We're generating cash while expanding.

Matthew Gordon: There’s clearly momentum. Big players like Apple and Meta are moving upstream. Financing seems to have changed - what’s your take?

Mark Chalmers: I think it shows they’re panicking a bit, trying to secure positions before others do. This reminds me of the 1970s, when utilities took direct stakes in uranium projects. Now it’s tech companies looking upstream for security of supply.

It bodes well. The demand for base-load energy and critical minerals is real. We're capitalizing on that. But our focus remains: low-cost uranium production, low-cost rare earth production, and we’ll evaluate additional opportunities as they emerge.

Matthew Gordon: How are you feeling technically? Does your team have the ability to deliver? Or will you need to build it out?

Mark Chalmers: Our technical team can absolutely deliver. We've proven ourselves in uranium and rare earths at our current scale. For Phase 2, we brought in Barr Engineering to help with the BFS - some of that’s regulatory. But we’ve de-risked much of the process over the last five years. Our scale-up is manageable - 5-7x - nothing compared to others trying 20-30x scale-ups that fail.

We’re in a better position than anyone outside of China.

Matthew Gordon: Okay, let’s talk uranium before your shareholders get upset. Starting with Pinyon Plain - could you have imagined those grades?

Mark Chalmers: Pinyon Plain - wow. I built it 38 years ago. It got caught up in litigation, twice in the Supreme Court. We always knew it was the highest-grade breccia pipe in the region, but these recent drill and production results exceeded my expectations.

We’ve got a great transport agreement with the Navajo Nation, a strong relationship with them, and Pinion Plain is likely the best breccia pipe mined in that region, possibly ever. The grades are so high that they materially reduce costs. Expect a lot of positive news flow in the years ahead.

Matthew Gordon: Are you doing work to extend it? Will it last longer than you thought?

Mark Chalmers: Yes. The grades are 2-3x what we expected. We’ve identified two zones, Main and Juniper, with lots of upside potential. We believe exploration success will extend mine life beyond original expectations. Watch this space.

We’re also seeing production complemented by La Sal and alternate feed. Our guidance hasn't changed, but higher grades help reduce costs significantly. And others are struggling with cost overruns - we’re not.

Matthew Gordon: So why not just wait, like others are doing?

Mark Chalmers: Because it’s easier to talk about uranium production at cocktail parties than to actually do it. I’ve been doing this nearly 50 years. A lot of companies are in trouble - they don’t have the skills to build and operate projects economically. That’s already becoming obvious.

We’ve resolved the Navajo transport issue, we’re producing. A lot of others haven’t even started. History shows there will be failures - there were plenty last cycle. It’s coming again.

Matthew Gordon: Projects like Anfield and others need to start producing to validate tolling agreements. But there’s a bottleneck in the U.S. - little movement on tolling. What’s the path forward?

Mark Chalmers: Let’s see who can put up or shut up. We’re confident we’ll deliver - our goal is always to overdeliver.

There will be failures, and they’re coming. But we’ve proven we can do this. We’re not pretenders. We're building a company, not a promotion. We’ve got the infrastructure, cost structure, and support, whether from governments or financial markets, to deliver.

Matthew Gordon: I agree. Strong fundamentals matter. And it feels like the market recognizes what you’ve built. There’s still a long way to go and some funding required, but there's a plan, a strategy, and the technical know-how to execute.

Mark Chalmers: Absolutely. It’s been busy, but very satisfying. Our shareholders who’ve stuck with us through thick and thin are being rewarded. We’re trading now as both a uranium and rare earths company. Let’s keep putting the pieces together and keep going.