Energy Fuels' Rare Earth & Uranium Businesses Offer a Unique Way to Play the Global Energy Transition

• Energy Fuels has commissioned a commercial-scale rare earth separation plant at its White Mesa Mill in Utah, the only facility in the world that can process uranium, vanadium, and rare earths in a single building
• Energy Fuels is acquiring monazite resources and heavy mineral sands expertise through deals with Chemours, Astron, and Base Resources to secure rare earth feedstock for decades
• Energy Fuels aims to produce half of the U.S.'s rare earth needs and become a vertically integrated rare earth and uranium producer
• Rare earth prices have likely bottomed and should rise as electric vehicle demand rebounds
• The U.S. government recognizes the importance of a domestic rare earth supply chain and is poised to support companies like Energy Fuels that are making significant progress

Rare Earth & Uranium Supply with Integrated Model

The global transition to clean energy drives unprecedented demand for critical minerals like rare earth elements, essential for electric vehicle motors, wind turbines, and defense applications. At the same time, Russia's invasion of Ukraine has highlighted the importance of domestic uranium supply for energy security. One company, Energy Fuels (NYSE: UUUU), is uniquely positioned to capitalize on both trends through its integrated rare earth and uranium business model.

Pioneering Rare Earth Processing

Energy Fuels recently achieved a major milestone by commissioning a commercial-scale rare earth separation plant at its White Mesa Mill in Utah. The plant can process 2,500 tons of rare earth oxides annually, including the valuable magnet materials neodymium and praseodymium (NdPr). Remarkably, White Mesa is the only facility in the world that can process uranium, vanadium, and rare earths under one roof. This multi-commodity capability provides operational flexibility and cost advantages.

The plant's modular design allows for easy expansion. "The next step is, our team at White Mesa is saying, 'We commissioned Phase 1, let's do Phase 2 right now.' They're ready to do the next step," explains Energy Fuels President & CEO Mark Chalmers. Phase 2 will quadruple production capacity to meet growing demand.

Securing Rare Earth Supply

Energy Fuels' "Achilles heel" has been securing enough rare earth feedstock to keep the plant running at full capacity. The company is solving this through several deals and acquisitions.

Energy Fuels has signed agreements with Chemours to process monazite sands from their U.S. operations. It acquired the Bahia project in Brazil, which is moving towards a resource estimate. And most significantly, Energy Fuels is in the process of acquiring a major stake in Base Resources, an experienced mineral sands producer."If we close the Base deal and get the project constructed, combining those three projects will give us around 50,000 tons a year of monazite – 5,000 to 6,000 tons of NdPr. And what's exciting is that it provides us with monazite resources well over a couple of million tons, so you're talking multi-decades of secured supply," says Chalmers.

By acquiring these heavy mineral sands assets and expertise, Energy Fuels is positioning itself as a leading global rare earth producer. "We're pushing the scale of Lynas right now," Chalmers notes, referring to the $7 billion rare earth processing leader.

Government Support

The U.S. government recognizes the strategic importance of establishing a domestic rare earth supply chain to counter China's dominance. Department of Defense funding jumpstarted MP Materials' Mountain Pass mine in California. Still, much more supply will be needed, especially the high-value heavy rare earths that Energy Fuels is focused on.

The recently passed Inflation Reduction Act (IRA) provides incentives for electric vehicle manufacturing and aims to onshore critical mineral supply chains. While Energy Fuels hasn't asked for government money yet, it is making the Department of Energy and others aware of its significant progress."We are starting to explore what kind of assistance they could provide," explains Chalmers. "We've had discussions with a number of their groups that provide funding, whether it be in the United States or in developing countries or places like Australia. Right now, we're just making sure they understand the material progress we're making. The request is coming in time."

Rare Earth Market Outlook

After a turbulent few years, the rare earth market looks poised for sustained growth. Demand should rebound as electric vehicle sales accelerate globally and geopolitical tensions highlight the risks of over-reliance on China. The U.S. and Europe are providing incentives to shore up domestic manufacturing and supply chains.

"I'm ready to call it the bottom. I don't think there's a lot of room for prices to go down from here," comments Constantine Karayannopoulos, CEO of Neo Performance Materials and an industry veteran and advisor to Energy Fuels. "By the end of the year, I expect to see higher prices that will lift equity values and make it easier for everybody to raise money and implement their plans."

Experts Say Energy Fuels Poised to Capitalize on Global Rare Earth Market Growth

Constantine Karayannopoulos sees many tailwinds converging in Energy Fuels' favor: "A combination of the rational raw material strategy together with the material science and processing capabilities of White Mesa and the growing demand that is inevitable – we're getting into the next decade of massive growth for rare earth demand, and Energy Fuels' strategy makes all the sense in the world."

Karayannopoulos provides valuable insights into the global rare earth market and Energy Fuels' competitive position.

Lessons from China & Europe: The Importance of an Integrated Supply Chain

Karayannopoulos highlights the success of China and Europe in establishing rare earth supply chains. China has dominated global production by leveraging its low-cost reserves and state support to build a mine-to-magnet supply chain. Recognizing its vulnerability, Europe has taken steps to develop its rare earth industry, with government incentives playing a key role.

White Mesa Mill: Energy Fuels' Secret Weapon in the Rare Earth Race

The U.S. is now playing catch-up, but Energy Fuels is leading the charge. Karayannopoulos points to the unique advantages of Energy Fuels' White Mesa Mill in Utah. White Mesa is a former uranium processing facility with the infrastructure, expertise, and licenses to handle the radioactive byproducts associated with rare earth production. This gives Energy Fuels a significant head start compared to other U.S. companies looking to enter the market.

Karayannopoulos believes the rare earth market is at an inflection point. Prices have been under pressure recently due to excess supply and slower-than-expected demand growth. However, he sees this as unsustainable, with many producers operating at or below breakeven costs. As demand picks up from the electric vehicle and wind energy sectors, Karayannopoulos expects prices to rebound, providing a tailwind for Energy Fuels.

U.S. Government Support: A Tailwind for Domestic Rare Earth Producers

Another factor working in Energy Fuels' favor is the U.S. government's focus on securing critical mineral supply chains. Karayannopoulos expects more government support for domestic rare earth production, through direct funding, tax incentives, or other policy measures. Energy Fuels, with its integrated mine-to-magnet strategy and proven processing capabilities, is well-positioned to benefit from these initiatives.

Looking ahead, Karayannopoulos sees a bright future for Energy Fuels. The company's strategy of acquiring low-cost rare earth resources and expanding processing capacity positions it as a major player in the global market. And with the White Mesa Mill providing a cost advantage and barrier to entry, Energy Fuels has the potential to generate strong margins and shareholder returns.

For investors, Karayannopoulos' insights provide valuable context for assessing the rare earth opportunity. As demand grows and supply tightens, companies like Energy Fuels that have invested in building a domestic supply chain should benefit. And with the U.S. government likely to provide additional support, the sector could see increased investor interest in the years ahead. Of course, risks remain, including the potential for further price volatility and competition from Chinese suppliers. However, for investors who believe in the long-term growth potential of electric vehicles and clean energy, gaining exposure to the rare earth supply chain is becoming increasingly important. With its unique assets and integrated model, Energy Fuels offers a compelling way to play this trend.

Jack Lifton, a 60-year veteran of the rare earth industry, provides a frank assessment of the current state of the U.S. rare earth market and the government's role in shaping its future.

U.S. Government's "Beauty Contest" Approach Falls Short

Lifton is blunt in his criticism of the current approach, which he sees as the government picking winners in a "beauty contest" rather than supporting the development of a sustainable domestic industry. He argues that the U.S. needs multiple players across the rare earth supply chain, not just one or two companies, to meet the growing demand from the electric vehicle and clean energy sectors. In particular, Lifton highlights the importance of heavy rare earths, which are critical for high-performance magnets used in EVs and wind turbines. He notes that the U.S. has limited experience producing these materials, with MP Materials' Mountain Pass mine in California historically focused on light rare earths. In contrast, Energy Fuels is one of the few companies pursuing heavy rare earth production, giving it a strategic advantage.

Lifton also points to the challenge of handling the radioactive byproducts associated with rare earth processing, which has been a barrier to entry for many companies. With its expertise in uranium handling and its licensed White Mesa Mill facility, Energy Fuels is uniquely positioned to overcome this hurdle.

Looming Rare Earth Supply Crunch as EV Demand Soars

Lifton sees a looming supply crunch as demand for rare earth magnets grows exponentially. He estimates that the U.S. alone could require 40,000 tons of rare earth magnets annually to support a fully electrified vehicle fleet, up from just a few thousand tons today. Lifton argues that the U.S. must develop multiple domestic sources of rare earth supply to meet this demand. The government has a critical role to play in supporting this buildout. Lifton notes that the Department of Defense has been the primary funding source for rare earth projects to date, given the strategic importance of these materials. However, he believes that other agencies, such as the Department of Energy, will need to increase their support to create a sustainable domestic industry.

Opportunities & Risks for Investors in the Rare Earth Sector

For investors, Lifton's insights highlight the challenges and opportunities in the rare earth sector. While the U.S. is playing catch-up to China and other nations, the growing demand for rare earth magnets presents a significant market opportunity. Companies like Energy Fuels, with a head start in developing a domestic supply chain, are well-positioned to benefit. However, investors should also be aware of the risks, including the potential for further government intervention and the challenges of scaling up production to meet demand. As with any emerging industry, there will likely be winners and losers, and picking the right companies to invest in will require careful due diligence.

Lifton's perspective underscores the importance of rare earths to the global energy transition and the need for a coordinated effort to develop a secure and sustainable domestic supply chain. As the U.S. government and private sector work together to meet this challenge, investors who position themselves correctly could benefit from this critical industry's growth.

Uranium Upside

While much of the discussion focused on rare earths, Energy Fuels remains the largest U.S. uranium producer, with several operating and standby mines. Uranium prices have surged on supply disruption concerns and the push for carbon-free baseload power."

The uranium business is hot," notes Chalmers. Energy Fuels will run its rare earth plant for another month and then switch back to uranium production "for the next few years while we continue to build out our story on both the supply and the scale-up of the rare earth plant." This optionality to produce both uranium and rare earths provides a unique advantage.

Investment Thesis for Rare Earths & Uranium

• Demand growth: Rare earth magnet and uranium demand is set to grow robustly this decade, driven by electric vehicles and carbon-free energy
• China risk: Geopolitical tensions and supply chain concerns favor non-Chinese rare earth production
• Vertical integration: Energy Fuels is one of the only companies pursuing mine-to-magnet vertical integration, securing feedstock and moving downstream
• Proven processing: Energy Fuels' White Mesa Mill has demonstrated rare earth separation capabilities at commercial scale and is licensed to handle uranium and thorium
• Jurisdiction: Energy Fuels' U.S. asset base provides a stable operating environment and positions it for government support
• Unique model: Energy Fuels' rare earth and uranium businesses offer diversification and operational synergies
• Valuation upside: The market is not fully valuing Energy Fuels' rare earth potential yet, providing an attractive entry point

Energy Fuels presents a differentiated investment opportunity exposure to two of the most critical mineral supply chains – rare earths and uranium. The company's integrated mine-to-magnet strategy, anchored by the one-of-a-kind White Mesa Mill, positions it as a leading domestic supplier to the electric vehicle, renewable energy, and defense industries. With a proven management team, a growing asset base, and a head start on the competition, Energy Fuels appears poised to create significant shareholder value in the years ahead as the U.S. brings critical supply chains onshore.

While the road ahead is long, Energy Fuels has made remarkable progress. "You're the winner," exclaimed Jack Lifton.

"The only American company that has this production of rare earth products as professionally and with deep understanding is Energy Fuels."

With the wind at its back and a focused execution plan, Energy Fuels offers a compelling way to play the global energy transition.