Energy Fuels (UUUU) - Uranium Producer Working with US Dept of Energy - Article | Crux Investor (2024)

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 U.S. producer of vanadium and an emerging player in the commercial rare earth business where its work is helping to reestablish a fully integrated U.S. supply chain.

With a truly unique portfolio, Energy Fuels has more production capacity, licensed mines and processing facilities, and in-ground uranium resources than any other U.S. producer. It boasts diverse cashflow-generating opportunities, including vanadium production, uranium recycling and rare earth processing.

We spoke recently with Mark Chalmers, President and CEO of Energy Fuels, regarding the booming business that he and his company are experiencing. He shared with us numerous insights that may be valuable for current and potential investors.

Company Overview

Energy Fuels, Inc., headquartered in Lakewood, Colorado, USA, is a leading American producer of uranium and vanadium, which are needed for carbon- and emission-free nuclear energy. In addition, Energy Fuels is an emerging producer of rare earth element (REE) products, critical to many modern technologies.

They have a number of projects and facilities including the Pinyon Plain Mine, the Alta Mesa ISR Mine; the La Sal complex; the Henry Mountains Complex; the Hank, Roca Honda, and Jane Dough Projects, and others.

Current resource summary for Energy Fuels is:

Uranium (U308): 12.5 M lbs. Measured; 72.9 M lbs. Indicated; 49.9 M lbs. Inferred

Vanadium (V205): 25.6 M lbs. Measured; 4.7 M lbs. Indicated; 8.5 M lbs. Inferred

Copper: 1.2 M lbs. Measured; 10.7 M lbs. Indicated; 0.6 M lbs. Inferred

Energy Fuels has over 106 M fully diluted shares outstanding and is listed on the American Stock Exchange under the symbol UUUU.

Leadership at Energy Fuels

Assisting Chalmers at the helm are David Frydenlund, CFO; and Curtis Moore, Vice President Marketing and Corporate Development. They are assisted by a board of eight including Chairman of the Board J. Birks Bovaird, Benjamin Eshleman III, Bruce Hansen, Barbara Filas, Dennis Higgs, Robert Kirkwood, Alex Morrison as well as the CEO Chalmers.

Energy Fuels: Uranium Company or an REE Firm?

We started off our discussion with Chalmers asking about the contrast between his uranium business, in which they are historically a major player, versus the REE activity that they are attempting to break into. He told us that it’s really a difficult question to answer. At some point he believes that people will start to see the value in their REE business, which will give them additional lift. As far as uranium goes, they are right in the middle of the pack with the rest of the companies, and everybody is getting good business activity now, he shared.

The uranium side of the business has exploded over the last year or so. Chalmers believes that society is really looking to break away from a carbon-based energy track, not only in the US but globally. For example, he said, the EU is looking more positively at nuclear recently. It’s overdue, he believes, considering that the f*ckushima incident is already 10 years behind us. It’s really an exciting time in the uranium business, he said.

The Political Mood In The US Regarding Uranium

We asked him about the political mood in the US particularly regarding nuclear energy and related areas, noting that Biden has been recommending some $14 Bn toward nuclear infrastructure and energy development as part of a proposed $6 trillion spending package.

There has been movement on the political front, Chalmers said. Energy Fuels has been doing several things with the US Department of Energy (DOE) and with Penn State, he told us. They just received their second award from the DOE focused on REE recovery from coal-based resources, he said.

The Uranium Market

The uranium side of the business has exploded over the last year or so. Chalmers believes that society is really looking to break away from a carbon-based energy track, not only in the US but globally. For example, he said, the EU is looking more positively at nuclear recently. Tell us about your view of the current uranium market, we asked the CEO. He replied that it’s been bullish but they are not just sitting back riding the wave. Internally, they are reviewing their uranium projects, both conventional and injection-solution recovery (ISR) for potential restarts. For example, at the Pinyon Plain Mine in Arizona, they are looking at detailed plans to increase production concurrent with the best economic outcome.

We brought up the recent agreement announced by Sprott and Uranium Participation Corporation (UPC) and asked if he thought that would advance uranium price discovery. He told us that it is a catalyst because now a lot of investors are buying into the uranium market. The Sprott deal essentially mops up a lot of physical uranium, he told us. It certainly has focused attention on the sector, he continued.

We asked the CEO about the company’s conversations with the utilities. He told us they go on all the time. He believes that currently utilities are “addicted to cheap uranium” and will continue to buy cheap uranium while that can. Price change will come, and when it does it will happen quickly, Chalmers predicted. Then we’ll see people’s heads spinning, he said.

So why does the price need to move, we asked. He said that from his perspective, uranium stocks are priced as if the metal was fetching over $50. Couple that with poor economic outcomes for uranium companies if the price remains in the low $30 range – even for Cameco – and it dictates a move up coming soon, he foresees.

Those with proven experience in the uranium space will benefit, he said. The fast talkers and wannabes may have a more difficult time, he mused.

REE’s and Energy Fuels

We then moved on to the REE business component of Energy Fuels. We shared with the CEO that we get a lot of questions about these unique and desirable elements.

He responded that they look at REEs in a highly holistic manner. They are trying to view the whole picture: feedstock, crack leach separation, metals and alloys. And in each of these areas, they are drilling down into the details. Their main feedstock focus is on monazite sands, which contain large concentrations of REE. Their monazite sand is currently coming from two producers: Chemours and Hyperion and they are looking for more sources. The company loves monazite sand, because it has two byproducts of value, uranium and thorium, both of which add materially to the company bottom line, he told us. And the company is happy also, he said, because there are some monazite sand producers globally looking for options on where to sell their product.

Further down the REE value chain, the company produces REE concentrate at the White Mesa Mill, a fully licensed conventional uranium mill in Utah. They currently have a business relationship with NEO, a major player in the REE industry, to advance separation technology. The phone keeps ringing regarding potential business ventures, he told us. They are even getting calls from automobile manufacturers, who need REEs for their electric vehicle manufacturing plans.

Indeed, Chalmers believes that the demand for REEs will increase five-fold over the next ten years. China is going to continue to play a major role. There’s still room for other players. Some players, such as MP Materials, are taking a different tack: they’re focused on basinite, not monazite, and selling most of their product to China. As for Energy Fuels, it will continue to focus on monazite, the CEO said.

Moving Forward

We then asked how much and how long it will take to develop a stand-alone separation unit at Energy Fuels. He replied that they already have a scoping study on that part of the plan with the French company Carester. No matter how they run the numbers based on various input parameters such as feed, cracking, leaching, transport and separation, they look to have a very robust scenario and think that the envisioned monazite plant will be a real winner.

With monazite sand business, the main products are neodymium and praseodymium (NDPR), which comprises about 60 to 65% of the REE value for Energy Fuels, he said. But the byproducts, especially uranium and thorium add value too, he repeated.

Moneywise, the CEO believes that $50 M will be required to get the uranium side producing at large scale. The restarting of quiescent projects will not take much working capital, he continued. They believe that they will need $200 to 250 M for REE separation business. Chalmers told us that this is a lot less than what other people are citing, usually in the $300 to $800 M range to do the same thing.

Closing Thoughts

Chalmers closed the conversation with some great balance sheet numbers. He said the company is debt free. Additionally, they have about $100 M in working capital, cash working capital and inventory, so they are well-positioned for success, he told us. The company intends to continue to be “doers and deliverers” in the uranium and REE space, he summarized.

To find out more, go to the Energy Fuels Website