Energy Fuels helping to restore US rare earth production

Energy Fuels helping to restore US rare earth production

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Largest producer of uranium in the US Leading producer of vanadium used in batteries, steel, and chemical industries Recovering rare earth elements (REEs) at White Mesa mill in Utah What Energy Fuels does: Energy Fuels Inc (TSE:EFR) (NYSEMKT:UUUU), headquartered in Colorado, is a fully integrated producer of both uranium and vanadium, and owner of the only operating conventional uranium mill at White Mesa in Utah. It supplies uranium (U3O8) to major nuclear utilities and can also produce vanadium from some projects as market conditions allow. The firm's White Mesa mill has a licensed capacity to produce over eight million pounds of uranium a year, and can generate vanadium when market conditions warrant. The mill is also licensed for the production of other minerals, including tantalum, which has made it onto the US government's 'critical minerals' list. The White Mesa mill is also operating under a new processing deal to assist in the cleanup of a formerly producing, Cold war era abandoned uranium mine in New Mexico. Energy Fuels has started to recover both light and heavy rare earth elements (REEs) at the mill, as well as uranium from certain natural ores and alternate feed materials. Meanwhile, the group's Nichols Ranch ISR Project is in operation and has a licensed capacity of 2 million pounds of U3O8 per year. It is currently producing and has generated over 1.2 million pounds of uranium since 2014. The Alta Mesa ISR project is currently on standby Energy Fuels also has one of the largest NI 43-101 uranium resources in the US and several uranium and uranium/vanadium mining projects on standby and in various stages of permitting and development. How is it doing: The company revealed that ended its first quarter with US$60.4 million in working capital as it gears up to expand its rare earths capabilities this year. Energy Fuels reported that it holds around $28 million worth of inventory, including 690,800 pound of uranium and 1,672,000 pounds of vanadium – both “immediately marketable,” according to a statement. During the quarter ended March 31, 2021, the company reported revenue of $353,000 and a net loss of $10.91 million, compared to a net loss of $5.66 million for the first quarter of 2020, which Energy Fuels attributed primarily to an increase in its share price that resulted in a non-cash mark-to-market increase in warrant liabilities of $3.50 million. Development expenditures also rose by $2.69 million compared to 1Q 2020 due to its rare earths program ramp up. In April, Energy Fuels announced a non-binding memorandum of understanding (MOU) with Hyperion Metals Limited (ASX:HYM), in which Hyperion would send natural monazite sands from its Titan Project in Tennessee to Energy Fuels for processing. Energy Fuels said it plans to produce mixed rare earth element (REE) products at its White Mesa Mill in Utah from the monazite sands it receives. In addition to producing mixed REE carbonate, Energy Fuels is also evaluating the potential to develop US separation, metals, alloys, and other downstream REE capabilities at the White Mesa Mill or nearby. The company added it hopes to increase its supply of monazite feed to approximately 15,000 tons per year for this initiative.  Energy Fuels also revealed recently that it has teamed up with Neo Performance Materials (TSE:NEO) on a new US and European rare earth production initiative. The program will produce value-added rare earth products from natural monazite sands, which is a byproduct of heavy mineral sands mined in the southeastern US. Energy Fuels will process the monazite sands into a mixed rare earth carbonate in Utah to use as feedstock for Neo’s rare earth separation facility in Estonia. The firm is also evaluating the potential to develop separation facilities in the US. In December 2020, Energy Fuels announced that it is set to become the first US company in more than 20 years to produce a marketable mixed rare earth element (REE) concentrate ready for separation on a commercial scale. This comes after the company reported that it has entered into a three-year supply agreement with The Chemours Company to acquire a minimum of 2,500 tons per year of natural monazite sands from the Offerman Mineral Sand Plant in Georgia. Energy Fuels has started to process the monazite sands at White Mesa, while also recovering the contained uranium, which it believes represents an important step toward re-establishing a fully integrated US REE supply chain. The goal is to process at least 15,000 tons of monazite per year for the recovery of REEs and uranium, which would represent about 2% of White Mesa’s throughput capacity. Energy Fuels expects to gradually ramp-up production of an intermediate REE product called "mixed REE carbonate." This product will then advance to REE separation, which is the next stage in the REE value chain. Upon successful ramp-up, the company plans to commercially produce an REE product at a stage more advanced than any other US company. Energy Fuels plans to sell its mixed REE carbonate to Neo Performance which will process the material at its facility in Europe and manufacture separated REE products available to US and European markets.  Energy Fuels currently is in negotiations with various parties to procure sources of monazite sands that can potentially be processed on a commercial scale at the Mill for the recovery of REE concentrate and uranium. In addition, it is carrying out ongoing discussions on the possible sale of REE concentrate produced at the Mill to an REE separation facility. What the broker says: In a note following the 1Q results, analysts at Noble Capital said that while processing REE carbonate could generate “tens of millions” in cash flow, separating REE elements could be even more profitable. “We estimate that REE carbonate might sell for $50,000 per tonne with cost of goods representing 75% of revenues depending on the quality of the Monazite. Such an estimate would imply $30 million generated by Energy Fuels for producing 2,000-3,000 tonnes of REE carbonate as per guidance. That number would grow to $75 million if the company meets targets to eventually process 15,000 tonnes of Monazite (6,000 tonnes of REE carbonate).” Noble has a ‘Market Perform’ rating on the stock, which is currently trading 5% higher at US$5.51 in New York and up 3.9% at C$6.66 in Toronto as of Friday morning. Inflection points: Commercially produce an REE product more advanced than any other US company Update on government budget proposal Uranium/vanadium price moves What the boss says: “While nearly all current and future nuclear reactors are fueled by uranium, other clean energy and advanced technologies, including electric vehicles renewable energy and batteries, require other critical minerals that Energy Fuels produces," CEO Mark Chalmers told shareholders recently.  "A robust market for responsibly produced, American clean energy products and technologies, made by American workers, is possible in the US ... Energy Fuels' White Mesa Mill in Utah can help this vision become a reality. To say these are exciting times for our company would be the understatement of my lifetime." Contact Angela at angela@proactiveinvestors.com Follow her on Twitter @AHarmantas  

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