Energy Fuels (UUUU) - US Uranium Reserve Talks & REE By-Products

US Nuclear Security is top of the agenda again. Mark Chalmers, President & CEO of Energy Fuels, shares his thoughts about the new news about the $150M US Uranium Reserve included within proposed funding measures and allocations outlined in the FY21 draft from the Senate Committee on Appropriations. Ultimately these funds are to purchase 1.7-1.9Mlbs U3O8 for US security.

Energy Fuels has chosen to pay off the company's debt. And White Mesa Mill yet again becomes a focal point as Energy Fuels announces a rather attractive by-product of milling uranium from monazite ore. They are now able to extract Rare Earths. The exciting part of this conversation is the potential contribution to the bottom line, and more importantly, a REE team is being assembled. In the context of conversations that the company has already had with the US Dept of Energy and US Dept of Defence, the Rare Earth component could signify a very profitable revenue stream in the very near future. We suspect long term contracts on the monazite are not far away. 

The US Uranium Reserve

The latest news from the US of the proposed $150M US uranium reserve aims to clear up some policy uncertainty hanging over the uranium mining sector to help domestic producers of the fuel for nuclear power reactors. The money, if approved by Congress, is for the purchase of uranium from US producers and would lessen dependence on uranium imports, which currently comprise a vast majority of US supply. Owners and operators of US nuclear power reactors purchased the equivalent of about 48Mlbs of uranium in 2019. The aim of this proposed reserve is to challenge the global expansion of nuclear power development by Chinese and Russian companies and enable the production of more US uranium.

There has been bipartisan support for the Uranium reserve, and Energy Fuels was the main flag bearer through the Section 232 Petition and the subsequent Nuclear Fuel Working Group, which has put a little bit of buzz back into US Uranium junior stocks. The US needs nuclear power to combat emissions and blackouts experienced this Summer, which may be why US the Democrats are coming on board. 

US Uranium production Assets - Energy Fuels Corporate Presentation Nov'20

Energy Fuels - debt and cash reserves

The fact that Energy Fuels has chosen to pay off the company debt now suggests a desire to retain control of their own destiny and work on their own terms. It was maturing on 31st December 2020 and was costing them USD$1.3M/pa in interest. This differentiates them in a market where pre revenue companies are building up mountains of debt. Chalmers points to the last uranium cycle where debt crushed even the biggest uranium companies.

It's worth reminding ourselves that Energy Fuels still has cash, or working capital, of about USD$45M, which is particularly healthy in relation to its peers. The idle capacity at White Mesa mill and the large inventory that can come back on at any time and with their constructed and proven facilities for uranium and vanadium puts them at a huge advantage.

The White Mesa Mill

The White Mesa Mill is the only fully-licensed and operating conventional uranium mill in the United States. It has a licensed capacity of +8Mlbs of uranium per year and is central to the highest-grade uranium mines and deposits in the United States.

Monazite ore is a high-value, high-grade natural REE & uranium ore. Energy Fuels plans extract uranium and also to commercially produce a REE Concentrate by product from monazite ore sources. So the uranium will be recovered - and the radionuclides removed which will then produce a REE Concentrate ready for separation using existing infrastructure & technologies at the Mill. Rare Earths are used as components in many high technology devices, including smart phones, televisions, computer monitors, electric cars and wind generators. 

The Department of Energy and Department of Defence are interested in Rare Earths, and have become concerned about the dependency on China for Rare Earths and other critical materials. The Chinese are currently processing Monazite CNC, recovering Uranium and have the by-product of Rare Earths. This is the aim of Energy Fuels at White Mesa too. It is recognised that Monazite is a favourable feed for production of Rare Earths, such as magnetic elements like NDPR.

Multiple companies want to White Mesa as an outlet for processing their ore. White Mesa has become critical infrastructure in the US uranium space and now that they can also process the Uranium-bearing Monazite ore for the Rare Earths as a by-product, there is increased upside. Investors are starting to wonder if Energy Fuels can build a team to replicate the success at Mountain Pass.

Energy Fuels is hoping to make an announcement in the next couple of months regarding their Rare Earths by-product at the White Mesa Mill.

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