Energy Fuels Secures Court Approval for Base Resources Acquisition

• The Federal Court of Australia has granted its approval for Energy Fuels' acquisition of Base Resources, marking a significant milestone in the company's strategic expansion plans with the transaction's completion.
• With all regulatory hurdles now cleared, the transformative acquisition is set to close on October 2024.
• This strategic move is poised to transform Energy Fuels from a primarily uranium-focused company into a world-leading producer of rare earth elements, titanium, and zirconium, diversifying its portfolio and strengthening its position in the clean energy supply chain.
• The acquisition has successfully obtained all required regulatory approvals across multiple jurisdictions, demonstrating strong confidence in the merger's potential and its compliance with international standards.
• Energy Fuels also successfully commissioned its rare earth element separation circuit and is now strategically shifting its focus back to uranium production for the remainder of 2024, showcasing the company's operational flexibility and diverse capabilities.

Energy Fuels Inc. (AMEX:UUUU) is a leading US-based critical minerals company at the forefront of the clean energy transition. As the largest uranium producer in the United States, Energy Fuels mines uranium and produces natural uranium concentrates for major nuclear utilities, contributing to carbon-free nuclear energy production.

The company has recently expanded its portfolio to include advanced rare earth element (REE) materials, with production of mixed REE carbonate beginning in 2021 and commercial quantities of separated REEs in 2024. Energy Fuels also produces vanadium and is exploring the recovery of radionuclides for cancer treatments. With its corporate offices in Lakewood, Colorado, and key uranium production centers in Utah and Wyoming, Energy Fuels is strategically positioned to play a crucial role in securing domestic supply chains for critical minerals.

Court Approval Marks Final Step in Transformational Acquisition

In a significant development for Energy Fuels and its investors, the Federal Court of Australia has granted approval for the company's proposed acquisition of Base Resources Limited. This court order, issued on September 12, 2024, represents the final regulatory hurdle before the transaction can be completed.

Mark S. Chalmers, President and CEO of Energy Fuels, expressed his satisfaction with the court's decision, stating:

"I am very pleased that the Court has approved Energy Fuels' combination with Base Resources. This approval is the final approval required before closing, which is expected to occur on October 2, 2024."

The acquisition, initially announced on April 21, 2024, will see Energy Fuels acquire 100% of the issued shares of Base Resources. Under the terms of the scheme of arrangement, Energy Fuels will issue 0.026 Energy Fuels Common Shares for every Base share held, while Base will pay a special dividend of AUD $0.065 per Base share.

Strategic Importance of the Acquisition

The acquisition of Base Resources is set to be a game-changer for Energy Fuels, positioning the company as a global leader in critical minerals production. The deal brings several key assets under Energy Fuels' control, most notably the world-class Toliara Project in Madagascar.

Chalmers highlighted the strategic importance of this acquisition, saying:

"We look forward to developing the world-class Toliara Project with Base's experienced team as a major step in our development of a world-class critical minerals company at a time when geopolitics is making domestic supply chains more important than ever."

The Toliara Project, along with Energy Fuels' existing Bahia Project in Brazil and the recently announced joint venture for the Donald Project in Australia, is expected to significantly boost the company's production of titanium (ilmenite and rutile), zirconium (zircon), and rare earth elements (monazite).

Investor Implications: Strengthened Position in Critical Minerals

For investors, this acquisition represents a substantial expansion of Energy Fuels' capabilities and market position. The company is set to transform from a primarily uranium-focused entity to a diversified critical minerals powerhouse, well-positioned to capitalize on the growing demand for materials essential to the clean energy transition.

The addition of the Toliara Project, in particular, is expected to provide Energy Fuels with a cornerstone source of monazite, a valuable rare earth mineral. This long-term, large-scale supply of monazite will feed into the company's White Mesa Mill in Utah, enhancing its ability to process and produce rare earth oxides and other advanced REE materials.

Shareholder & Regulatory Approval: Vote of Confidence

The path to this transformational acquisition has been marked by strong support from both shareholders and regulatory bodies. At a special meeting held on September 5, 2024, Base Resources shareholders overwhelmingly approved the transaction, with 99.88% of votes cast in favor and 93.18% of shareholders present voting in support.

This resounding approval far exceeded the required thresholds, demonstrating strong shareholder confidence in the strategic rationale and potential value creation of the merger. Furthermore, all necessary regulatory approvals have been obtained, including clearances from the Competition Authority of Kenya, Foreign Investment Review Board of Australia, and the Malagasy Competition Council

These approvals underscore the transaction's compliance with international regulatory standards and its potential benefits across multiple jurisdictions.

Timeline & Next Steps

With the Federal Court of Australia's approval secured, the transaction is now on a clear path to completion. Key dates for investors to note include:

• September 13, 2024: Expected to be Base's last day of trading on the Australian Stock Exchange (ASX)
• October 1, 2024: Special dividend (AUD$0.065 per share) expected to be paid to Base shareholders
• October 2, 2024: Anticipated closing date of the transaction

Investors should be aware that the closing remains subject to routine conditions and the final court approval.

REE Market Dynamics: A Positive Outlook

In addition to the strategic benefits of the acquisition, Energy Fuels is positioned to benefit from favorable market conditions in the rare earth elements sector. Chalmers noted:

"I am also very pleased to see that the recent improvements in REE prices are continuing, with the price of NdPr now at approximately $59.60 per kilogram."

This upward trend in REE prices bodes well for Energy Fuels' expanded operations in this sector, potentially enhancing the economic value of its REE production capabilities.

Operational Progress: REE Separation & Uranium Production

While the Base Resources acquisition has been a major focus, Energy Fuels has also made significant operational strides in its existing business lines. The company successfully commissioned an REE separation circuit at its White Mesa Mill during Q2 and Q3 of 2024. This "Phase 1" circuit has the capacity to produce up to 1,000 metric tons of separated NdPr per year.

During the commissioning phase, Energy Fuels recovered, dried, and packaged approximately 40 tonnes of high-purity, on-spec separated NdPr, with an additional 10 to 20 tonnes estimated to be in circuit. This production of 50-60 tonnes exceeded the company's original guidance by over 40%, demonstrating its operational efficiency and technological capabilities.

Shifting Focus to Uranium Production

With the REE separation circuit successfully commissioned, Energy Fuels is now pivoting its focus back to uranium production for the remainder of 2024. The company has set a production target of 150,000 to 500,000 pounds of U₃O₈ from stockpiled alternate feed materials and conventional ore.

This strategic shift allows Energy Fuels to maintain its position as a leading U.S. uranium producer while simultaneously developing its critical minerals capabilities. The company's ability to balance multiple product lines showcases its operational flexibility and diverse revenue streams.

Energy Fuels' core mining operations continue to progress smoothly. Ore production and underground development at its Pinyon Plain and La Sal mines are reported to be on schedule and on budget, indicating effective operational management and cost control.

Challenges & Considerations

While the acquisition of Base Resources and the operational progress paint a positive picture for Energy Fuels, investors should be aware of potential challenges:

• Toliara Project Development: The development of the Toliara Project is subject to negotiation of fiscal terms with the Madagascar government and the receipt of certain government approvals. A current suspension on activities at the project needs to be lifted before development can proceed.
• Market Volatility: The prices of rare earth elements, uranium, and other critical minerals can be volatile. While current trends are favorable, investors should be prepared for potential market fluctuations.
• Geopolitical Factors: As a company operating in multiple countries and dealing with critical minerals, Energy Fuels may be subject to geopolitical risks and changing international regulations.
• Integration Challenges: The acquisition of Base Resources, while strategically sound, may present integration challenges that could impact short-term performance.

Key Takeaways

Energy Fuels' acquisition of Base Resources marks a pivotal moment in the company's evolution, transforming it into a diversified critical minerals powerhouse. With a strong position in uranium production, an expanding rare earth elements business, and the addition of world-class mineral sand projects, Energy Fuels is well-positioned to capitalize on the growing demand for materials essential to the clean energy transition.

The company's operational progress, evidenced by the successful commissioning of its REE separation circuit and ongoing uranium production, demonstrates its ability to execute complex projects and adapt to market demands. The strong shareholder and regulatory support for the Base Resources acquisition further validates the strategic rationale behind this transformational move.

For investors looking at Energy Fuels, the company presents a compelling opportunity to gain exposure to multiple critical mineral markets through a single, well-managed entity. The diversification of revenue streams, coupled with the potential for significant growth in the rare earth elements and mineral sands sectors, positions Energy Fuels as an attractive option for those seeking to invest in the future of clean energy and advanced materials.

However, investors should also be mindful of the challenges ahead, including project development risks, market volatility, and geopolitical factors. As with any investment in the mining and critical minerals sector, thorough due diligence and a long-term perspective are advisable.

In conclusion, Energy Fuels' strategic moves, operational progress, and market positioning make it a noteworthy player in the critical minerals space. As the clean energy transition continues to gather momentum, companies like Energy Fuels that can provide secure, domestic sources of essential materials are likely to play an increasingly important role in global supply chains. For investors willing to navigate the inherent risks of the sector, Energy Fuels offers a unique opportunity to participate in this critical aspect of the energy transition.