Energy Fuels (UUUU) - Investors Only Critical Minerals Hub Outside China

Energy Fuels is the leading U.S. producer of uranium – the fuel for carbon- and emission-free nuclear energy. Nuclear energy is expected to see strong growth in the coming years, as nations around the world work to provide plentiful and affordable energy while combating climate change and air pollution.

Energy Fuels is also a major US producer of vanadium and an emerging player in the commercial rare earth business where its work is helping to re-establish a fully integrated US supply chain.

We talk to Mark Chalmers, President & CEO of Energy Fuels after a very interesting few weeks for the company with a huge increase in their share price as a result of the work they are doing on the Critical Mineral hub. We last spoke to Energy Fuels in December to discuss the US Uranium reserve.

Plan for 2021: Ambitions for Critical Minerals

The plans for the Critical Minerals hub have evolved very quickly with Energy Fuels currently in talks with partners and the US government to evaluate what is happening in the marketplace and where it can insert itself.  They have a long history as a Uranium producer, in fact the largest producer in the United States and have uranium inventories. They also have the only operating uranium processing plant in the US, which also produces Vanadium as by product. By adding Rare Earths to the mix, Energy Fuels is making a big statement to the US Government that it can address some of the more erudite minerals on the US Critical Minerals List. 

Investors too are recognising that Energy Fuels is serious about building the only ‘Critical Mineral hub’ in the US. The share price has double in that last couple of months.

A Reimagined Company: A Look at the Sustainability Report

Energy Fuels has recently released their sustainability report which shows how they plan to continue to improve the environment and recycle materials that wouldn’t be recycled otherwise. They are focusing on trying to reimagine the vision of Energy Fuels, and that they are a ‘green’ job creator who can do so much more for the environment in reducing Carbon emissions and uranium clean up operations.  The entrance into Rare Earths has helped the company as people understand the need for Rare Earths to reduce Carbon emissions in addition to the need for Uranium, base load energy, and recycling.  The Sustainability Report is a first step to a new, reimagined, evolving company as Energy Fuels going forward as information for their shareholders and the market as a whole.  

Historically, when people think about Uranium they think about ‘industrial’ facilities, rather than Uranium in the context of the improvements it brings to the environment. Energy Fuels aim to roll out a greener, cleaner look to the company as they need people to understand the green element of what they do. They are not leaving the Uranium business behind as that’s all part of the plan, and they have the facilities, deposits, and ongoing projects they need to succeed.  

Delivering the Vision: Challenges & Process

Energy Fuels will have a few challenges ahead of them and will need to get the right partners and the US government on board to be able to deliver the entire supply chain. The company made an announcement regarding the Rare Earths business in April and have since signed the agreement with Chemours and are now focusing on additional supply agreements, both upstream and downstream. As investors see more of those agreements the picture becomes clearer as to how they will move forward in the Rare Earth space. The company is effectively doing the same as CNNC, and the Chinese have been doing for the last few years with the focus on Monazite, the highest grade, lowest cost feed material for producing Rare Earths but are focused on doing it in a different way. They have state-of-the art facilities for handling the tailings; and have made huge progress on the process in the last 10 months.

All the facilities are located in the United States and are regulated by the state of Utah. There are state-of-the-art disposal cells which are designed for 1,000-years. The Uranium and the nuclear industry needs rebranding to be less ‘industrial’. There are new small reactors and the buildings are very modern and clean and don’t look as ‘industrial’ as they used to.  Energy Fuels want to go forward on all fronts in a very holistic way with an exciting vision for the future of creating green jobs and reducing Carbon emissions.

Growth Going Forward: Agreement with The Chemours Company

Energy Fuels signed a 3 year agreement with Chemours in Delaware on Monazite to purchase over 2,500t per year, which is a good first step and they plan to scale it up over time. The monazite sands come from the Offerman Mineral Sand Plant in Georgia and is expected to contain about 55% REE and uranium, and will be processed at the Energy Fuels White Mesa Mill uranium plant in Utah. This agreement has allowed them to test out The Mill going from the laboratory scale to the 1t scale, then to 20t scale, and early in the new year they plan to be up to 500t.  They are able to scale it up in a very controlled way so they can understand elements like reagent consumption and recoveries. They also need other feed in addition to this Chemours agreement and have other interested parties with Monazite to consider.

Mark Chalmers, President and CEO of Energy Fuels, said, “We can make REE concentrate in short order. We can handle the radioactivity—it’s what we’ve done for 40 years.” Shipments are expected to start H1/21. Energy Fuels expects to have revenues from uranium and a mixed REE concentrate containing over 70% REEs, with about 22% of that being neodymium and praseodymium oxides used in the high-strength permanent magnets required for the electric motors used in wind turbines and electric vehicles. Chemours material’s REE content represents nearly 10% of total US REE demand. no doubt, Energy Fuels will be looking to firm up relations and increase the size of this contract, or look to significantly increase by finding additional supply partners.

The White Mesa Mill is fully constructed, operable and (most importantly) permitted to handle these materials. It would also cost a new entrant anywhere from USD$300M-$400M to build from scratch, assuming it could get a licence in the first place.  The European and Asia would seem the most obvious buyer sof its concentrates until a domestic REE separation is more firmly established. And indeed until Energy Fuels adds its own separation, metal-making and alloying capabilities.

And to that point, investors will want Energy Fuels to address the volume of Monazite contracts coming into the Mill. They need to demonstrate 2 things: the extraction technology and the processing technology further along that supply chain. The next step is separation, with the help of some of the world best experts and in so doing securing the knowledge and expertise they need. They clearly believe they have the right facility in the right place with the right people and the right sources of material to get the best and lowest cost outcome possible to be competitive in the world market.

Resources & Money Requirements: Renewed ATM Program

Energy Fuels likes to hold around USD$40M-$45M of working capital at all times, to give them the capacity for all their plans. The ATM is for maintenance capital; to keep the cash balance in the USD$40M-45M range and has lower fees (about 2%) than doing a traditional financing. They have recently refreshed it for USD$35M which gives them the capability they need. They want to make sure they have the funds to grow this opportunity alongside their Uranium and Vanadium capabilities, and will grow it in a way that’s more cost effective than others that don’t have the facilities that they have.

Relations & Involvement of the US Government 

The main focus in the US is to re-establish their abilities to produce Rare Earths quicker, faster, at lower cost than people think. Energy Fuels has good relationships with the US government, particularly through the Section 232 and the Uranium Nuclear Fuel Working Group process. Many of those people also have a big focus on the Rare Earths and understand the capability of White Mesa Mill now that they’ve opened it up for other critical materials. Energy Fuels is excited about the team they have around them both internally and externally and their positioning, balance sheet, and their ability to move forward quickly.

They have also submitted a report on the Coal-based Resources Rare Earth Project which they might be awarded and are open for any support with the US government, or other countries partnering the United States government to reduce dependency on critical materials.  That includes countries like Canada and Australia, and Europe.  

2021 should be a good year for Energy Fuels. There are no peers for Energy Fuels; working with Uranium, the Rare Earths, and Vanadium, plus the recycling that they do in the US so they are going into uncharted territory with their plans for the future. Can they build a US Critical Minerals Hub and can they do what other around the world have failed to do and be closed loop - no Chinese input. If the US government are really serious about security, then this looks possible.

To find out more, go to Energy Fuels' Website.