Energy Fuels' Planned Acquisition of ASM in Mid-2026 Would Give the Company Control Over Every Step of Rare Earth Production

• The ASM acquisition would move Energy Fuels from midstream oxide separation into downstream metal and alloy conversion, internalizing third-party processor margin and establishing a fully integrated rare earth supply chain outside China.
• Phase 2 White Mesa targets  6,000 tpa NdPr oxide, 240 tpa dysprosium, and 66 tpa terbium provide inputs for bottom-up financial modeling anchored to disclosed operational parameters.
• ASM shareholders would hold approximately 5.8% of the combined entity post-close, representing a limited dilution profile relative to the transaction's transformational strategic scope.
• A multi-source feedstock strategy spanning Australia, Madagascar, and Brazil reduces single-source supply risk - a consideration for investors evaluating upstream durability under variable conditions.
• Four near-term events: Donald Project FID, ASM scheme vote, transaction close, and heavy rare earth commercialization - establish discrete, observable re-rating windows, subject to execution risk.

ASM's Role in the Rare Earth Value Chain

ASM operates rare earth metal and alloy conversion capabilities that sit downstream of the oxide separation step currently performed at Energy Fuels' White Mesa Mill in Utah. Where oxide separation produces an intermediate chemical product, separated neodymium, praseodymium, dysprosium, or terbium compounds, metal and alloy conversion transforms those intermediates into industrial-ready inputs for permanent magnet manufacturers.

Oxide production captures value above raw concentrate, but the processing premium remains limited by the commodity nature of the separated product. Metal and alloy conversion captures an additional margin layer, as the output meets the specifications downstream manufacturers require. Each step internalizes value that would otherwise flow to third-party tollers or offshore converters.

Mark Chalmers, Chief Executive Officer of Energy Fuels, frames the company's positioning within the broader critical minerals supply challenge:

"We are like no other company in the critical mineral space where we're building a critical mineral hub using our longstanding uranium processing capabilities but also the ability to mine and recover rare earths into oxides and potentially other value-add steps in due course."

From Midstream to Mine-to-Magnet: Completing the Value Chain

Energy Fuels' current configuration covers the upstream and midstream segments of the rare earth value chain: monazite feedstock receipt, mixed carbonate production, and separated oxide output. The Phase 2 White Mesa expansion targets extend midstream capacity to a scale relevant for institutional supply agreements. The ASM acquisition adds the downstream layer through the planned American Metals Plant (AMP): a facility designed to produce 2,000 tpa of rare earth metal and alloy in the United States. The combined configuration would span from raw monazite through to magnet-grade alloy.

Mark Chalmers describes the scale ambition:

"We're building out a two-step phase one, phase two, the size of Lynas, being able to do the scale of Lynas but with separated heavies as well."

White Mesa Phase 2 Expansion: Oxide Throughput & Margin Structure

Energy Fuels' Phase 2 White Mesa expansion targets annual production of 6,000 tpa NdPr oxide, 240 tpa Dy oxide, and 66 tpa Tb oxide, with Phase 2 designed to process 60,000 tpa of monazite feedstock. These figures provide the quantitative foundation for bottom-up revenue modeling.

The inclusion of separated heavy rare earths - dysprosium and terbium - differentiates the White Mesa expansion from most Western peers, as heavy rare earth separation remains concentrated in China. Mark Chalmers notes the technical progress:

"We are so advanced when it comes to feed processing capabilities: demonstrated that we can get to oxides that have been pre-qualified with a number of outside parties."

Revenue modeling across these three product streams requires pricing assumptions for each oxide. While rare earth spot prices carry forecast uncertainty, defined volume targets allow analysts to construct scenario ranges across conservative, base, and optimistic price decks.

Midstream to Downstream Conversion: Margin Stacking

The planned AMP introduces 2,000 tpa of metal and alloy conversion capacity. For a blended margin analysis, the relevant inputs are: oxide volume converted, conversion premium per tonne of alloy output, and variable processing cost at the downstream facility. EBITDA (earnings before interest, taxes, depreciation, and amortization) sensitivity under this framework responds to three primary drivers: oxide pricing, alloy conversion premium, and throughput utilization.

The downstream metal and alloy facility would generate additional revenue on top of oxide sales, rather than replacing them - most of the oxide output would still be sold as oxide. Because processing fees tend to be more stable than commodity prices, the earnings contribution from conversion is less exposed to market swings than a pure mining operation. Financial models that account for both streams - oxide sales and alloy conversion - will produce a more complete picture of the combined company's earnings potential than oxide-only projections.

Feedstock Security: Monazite Pipeline & Supply Chain Resilience

Monazite sand carries a naturally higher concentration of NdPr and heavy rare earth elements relative to bastnäsite deposits that dominate primary rare earth mining. This compositional advantage is compounded by the cost structure: monazite is extracted as a byproduct of heavy mineral sand (HMS) operations targeting titanium and zirconium, meaning rare earth content is recovered at incremental rather than primary mining cost.

Global Pipeline Diversification

Energy Fuels' monazite supply pipeline spans three jurisdictions: the Donald Project in Victoria, Australia; the Vara Mada and Toliara deposits in Madagascar; and the Bahia Project in Brazil, which is 100% owned by Energy Fuels and currently at the exploration and permitting stage, with a resource estimate expected to be completed in 2026. This geographic distribution mitigates single-source supply risk and demonstrates feedstock security to potential financing counterparties and offtake customers.

Mark Chalmers characterizes Toliara's competitive position:

"I see this as the lowest-cost undeveloped heavy mineral sand and monazite deposit in the world, long life, large scale."

A multi-source feedstock configuration improves the credibility of throughput assumptions used in financing discussions, potentially reducing the cost of capital for expansion phases.

Capital Structure & Dilution - Transaction Parameters

Under the proposed scheme structure, ASM shareholders would receive Energy Fuels shares representing approximately 5.8% of the combined entity post-close, as disclosed in the January 20, 2026 acquisition announcement. In the context of mining sector mergers and acquisitions, this represents limited dilution relative to the strategic scope of the transaction. Transformative acquisitions in the sector frequently involve equity issuances of 15% or more of the acquirer's share count.

The transaction structure also includes a cash settlement of A$0.50 per ASM option under a concurrent option scheme, eliminating derivative overhang and avoiding dilutive scenarios that arise when in-the-money options are exercised into a rising equity. Goldman Sachs and Co. LLC is advising Energy Fuels; MA Moelis Australia and Moelis and Company LLC are advising ASM - confirming that the deal structure has been subject to institutional financial scrutiny on both sides. The combined effect signals disciplined deal structuring.

Execution Track Record - Sequential M&A as a Strategic Pattern

Energy Fuels' completion of the Astron Corporation joint venture in June 2024 and the Base Resources acquisition in October 2024 show a consistent pattern of building out the rare earth supply chain one step at a time, rather than making speculative or overlapping bets.

White Mesa Mill's more than 40 years of operating history in San Juan County, Utah, is a material asset with permitted processing facilities with long track records that would take decades and significant regulatory effort to establish. That operating history reduces the execution risk associated with expanding the facility's rare earth throughput, compared to a company proposing to build equivalent infrastructure from scratch.

Financial Buffer for Rare Earth Expansion

Energy Fuels' Pinyon Plain uranium mine carries a management-guided production cost of approximately $23 to $30 per pound of uranium oxide (U3O8). With the company reporting realized uranium sales of $72.38 per pound as of September 30, 2025, the operating margin at Pinyon Plain is substantial. Mark Chalmers quantifies the cash flow contribution:

"If you're selling at $75 a pound plus, you've got a really nice margin. If you multiply that times a million and a half pounds or two million pounds, that's a lot of cash coming into the company while we do these other steps."

Energy Fuels is planning to mine in excess of 2 million pounds of U3O8 during 2026, providing a defined production base against which that margin applies.

Balance Sheet Strength

As of September 30, 2025, Energy Fuels held approximately $298.5 million in working capital and approximately 2.1 million pounds of uranium in combined finished and work-in-progress inventory, alongside approximately 905,000 pounds of finished vanadium pentoxide (V2O5). The company also completed a $700 million convertible note offering in October 2025 at a coupon of 0.75% and a conversion price of $20.34 per share. Mark Chalmers describes institutional reception to the transaction:

"I had a number of investors say that was the big event for Energy Fuels for the year — being able to raise that quantum at those kind of terms."

The company is less likely to need to issue new shares to fund its rare earth expansion - which means existing shareholders are less likely to see their ownership stake diluted while the integration plays out.

2026 Catalyst Calendar & Risks

Energy Fuels is targeting a Donald Project FID as early as Q1 2026, per public guidance in the company's February 2026 corporate presentation. The ASM scheme meeting is expected in late May or early June 2026, with transaction close targeted for late June 2026, subject to ASM shareholder approval, Federal Court of Australia sanction, approval by Australia's Foreign Investment Review Board, and NYSE and TSX listing approval for Energy Fuels shares. Commercial production of heavy rare earth oxides at White Mesa is planned as early as Q4 2026, following the conclusion of the current uranium processing run.

Scaling a processing technology from pilot stage to full commercial output does not always go smoothly - Energy Fuels will need to demonstrate that the alloy conversion process performs at volume, not just in controlled test conditions. Rare earth oxide prices are thinly traded and difficult to forecast with precision, and NdPr demand is tied in part to electric vehicle adoption rates, which introduces exposure to EV market cycles that are outside the company's control. The Vara Mada and Toliara projects in Madagascar carry jurisdictional risk that is qualitatively different from the Australian and US components of the pipeline and should be treated as a real factor in probability-weighted scenario analysis.

The Investment Thesis for Energy Fuels

• Completion of the ASM acquisition would create one of the only vertically integrated Western rare earth supply chains, from monazite feedstock through to metal and alloy output, serving Western defense and clean energy customers seeking to reduce dependence on Chinese processors.
• Phase 2 White Mesa expansion targets of 6,000 tpa NdPr oxide alongside separated Dy and Tb production provide throughput scale sufficient for institutional modeling, replacing qualitative scarcity narratives with quantifiable revenue scenarios.
• Heavy rare earth separation capability adds a scarcity premium to the production profile, as dysprosium and terbium supply remains heavily concentrated in Chinese supply chains and is subject to export restriction risk.
• Limited dilution at approximately 5.8% post-close preserves shareholder leverage to re-rating potential without the cap table overhang that typically characterizes transformative mining acquisitions.
• A $298.5 million working capital position, $700 million in convertible notes at institutional-grade terms, and existing uranium and vanadium inventory reduce the probability of equity-dilutive financing during the rare earth expansion period.
• The uranium segment at Pinyon Plain, with management-guided production costs of $23 to $30 per pound against realized sales above $70, provides a margin buffer that funds rare earth development without requiring premature monetization of rare earth assets.
• Sequential execution across the Astron joint venture, Base Resources acquisition, and ASM transaction demonstrates structured consolidation rather than opportunistic deal-making, lowering the perceived integration risk discount typically applied to mining sector acquirers.

If the Australian Strategic Materials (ASM) acquisition closes as planned, Energy Fuels would move from being primarily a uranium producer that also separates rare earth oxides, to a company that controls the full production chain, from raw mineral sand through to the metal and alloy inputs that magnet manufacturers actually buy. The key question for investors at that point is no longer whether Energy Fuels can separate rare earths, which White Mesa has demonstrated it can do, but whether the company can run downstream metal conversion at commercial scale, keep feedstock flowing from multiple countries, and generate the kind of consistent earnings that would support a higher valuation. The milestones due across 2026 - the Donald FID, the ASM shareholder vote, transaction close, and first heavy rare earth sales - each offer a concrete checkpoint against which that progress can be measured.

TL;DR

Energy Fuels' planned mid-2026 acquisition of ASM would complete a fully integrated rare earth supply chain, adding downstream metal and alloy conversion to its existing uranium and oxide separation capabilities at White Mesa Mill. Phase 2 expansion targets 6,000 tpa NdPr oxide plus separated dysprosium and terbium — heavy rare earths where Chinese dominance creates strategic scarcity value. With only ~5.8% post-close dilution, $298.5 million in working capital, a $700 million convertible note facility, and strong uranium margins at Pinyon Plain underwriting development costs, four discrete 2026 milestones — Donald FID, ASM scheme vote, transaction close, and first heavy rare earth sales — offer investors measurable re-rating checkpoints.

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