Energy Fuels Announces Results for the 15 Months Ended December 31,
2013
TORONTO, ONTARIO--(Marketwired - Mar 28, 2014) - Energy Fuels
Inc. (NYSEMKT:UUUU)(TSX:EFR) ("Energy Fuels" or the "Company")
today reported its financial results for the 15 months ended
December 31, 2013. The Company's Annual Consolidated Financial
Statements, along with Management's Discussion and Analysis and its
Annual Information Form are available through its filings with the
securities regulatory authorities in Canada on the System for
Electronic Document Analysis and Retrieval ("SEDAR") and may be
viewed at www.sedar.com and in the United States on the Electronic
Document Gathering and Retrieval System ("EDGAR") which, along with
the Company's annual report on Form 40-F, may be viewed at
www.sec.gov/edgar.shtml, and on the Company's website at
www.energyfuels.com. Unless noted otherwise, all dollar amounts are
in US dollars.
As previously reported, readers should be advised that the
Company has changed its fiscal year end from September 30 to
December 31 and, accordingly, the annual results for the fiscal
period ended December 31, 2013 are for the 15 months ended December
31, 2013. The Company also completed a consolidation of its common
shares, effective November 5, 2013, on the basis of 50
pre-consolidation shares for each post-consolidation share. All
share and per share amounts in this press release are shown on a
post-consolidation basis.
Selected Summary Financial Information:
|
15 months ended |
|
12 months ended |
$000, except per share data |
December 31, 2013 September 30, 2012 |
Results of Operations: |
|
|
|
|
|
|
Total revenues |
$ |
73,248 |
|
$ |
25,028 |
|
Net income (loss) |
|
(87,325 |
) |
|
1,534 |
|
Basic and diluted earnings (loss) per share |
|
(5.61 |
) |
|
0.26 |
|
|
|
|
As at December 31, |
|
|
As at September 30, |
$000's |
|
2013 |
|
|
2012 |
Financial Position: |
|
|
|
|
|
|
Working capital |
$ |
33,480 |
|
$ |
41,934 |
|
Property, plant and equipment |
|
100,969 |
|
|
119,524 |
|
Total assets |
|
176,133 |
|
|
223,844 |
|
Total long-term liabilities |
|
31,579 |
|
|
37,921 |
Financial and Operational Highlights for the 15 Months ended
December 31, 2013:
- Generated cash flow from operations of $0.45 million for the 15
months ended December 31, 2013.
- Sold 956,668 pounds of U3O8, pursuant to term contracts at an
average realized price of $56.47 per pound.
- Sold an additional 200,000 pounds of U3O8 to an existing term
contract customer at an average price of $40.25 per pound. This
sale was completed at a premium to the spot market at the time, as
the Company provided the customer with a discount on portions of
its long-term contract deliveries in the years 2015 through 2017.
Sold an additional 40,000 pounds of U3O8 on the spot market at an
average price of $41.50 per pound.
- Vanadium sales generated $9.20 million for the 15 months ended
December 31, 2013.
- Production at the White Mesa Mill totaled 1,235,000 pounds of
U3O8, from conventional ore and alternate feed materials. The mill
also produced 1,537,000 pounds of V2O5.
- As of December 31, 2013, the Company had working capital of
$33.48 million, including cash and cash equivalents of $6.63
million and 452,000 pounds of uranium concentrate inventory.
- Raised aggregate gross proceeds of $11.35 million, through a
June 2013 $6.52 million bought deal private equity placement and an
October 2013 $4.83 million bought deal offering.
- Acquired Strathmore Minerals Corp. ("Strathmore") in August
2013, adding high-quality projects and uranium resources to the
Company's portfolio.
- Completed a 50 for 1 share consolidation in November 2013, and
a listing of the Company's common shares on the NYSEMKT in December
2013, which helped the Company access a larger pool of
institutional and retail investors and improved the overall trading
liquidity of the Company's shares.
- As previously reported, as a result of the drop in both the
spot and term U3O8 prices from July 1, 2013 through September 30,
2013, and the Company's expectation to place its Pinenut mine on
stand-by in July 2014, the Company tested its plant, property and
equipment for impairment and recognized an impairment loss of
$60.26 million in the quarter ended September 30, 2013.
Corporate Highlights for the 15 Months Ended December 31,
2013
The 15 months ended December 31, 2013 brought both opportunities
and challenges to Energy Fuels, as it continued to build its
uranium resource portfolio and strengthen its position as the
leading conventional uranium producer in the United States. During
this period, Energy Fuels produced over 1.2 million pounds of U3O8
from its White Mesa Mill, which is the only conventional uranium
mill operating in the United States. This production accounted for
approximately 25% of all United States production in 2013. The
Company also added a number of high-quality projects and uranium
resources to its portfolio, most notably from its acquisition of
Strathmore. The Strathmore acquisition included the Gas Hills and
Juniper Ridge projects in Wyoming and the Roca Honda Project in New
Mexico. The Roca Honda Project is one of the largest and highest
grade uranium deposits in the United States, 40% of which is held
by joint venture partner, Sumitomo Corporation of Japan. In
addition, the Company was listed on the NYSEMKT, entered into a
Strategic Relationship Agreement with Korea Electric Power
Corporation ("KEPCO"), and completed two equity financings, raising
aggregate gross proceeds of over $11 million.
Energy Fuels continued to process both conventional ore and
alternate feed materials at its White Mesa Mill during the 15
months ended December 31, 2013. In addition, the Company continued
ore production at its Arizona 1 and Pinenut mines in northern
Arizona, and delivered uranium into its existing term contracts
with realized prices at a significant premium to the current spot
price. However, the Company also responded to what continues to be
a challenging uranium market environment, by placing three of its
mines on standby in late 2012, and placing shaft sinking operations
at the Canyon mine on standby in November 2013. In addition, the
Company expects to place all ore production and mineral processing
at the White Mesa Mill on standby status by mid-2014.
As described in the Energy Fuels' Outlook for the Year Ending
December 31, 2014 ("FY-2014") section below, Energy Fuels intends
to continue to maintain its mill and mining projects in a state of
readiness, and to continue to advance permitting on key projects,
for the purpose of allowing the Company to resume mining and
increase uranium production, as market conditions warrant. Energy
Fuels will also continue to deliver into its existing term
contracts utilizing production, inventories, and spot
purchases.
"In 2012 and 2013, Energy Fuels established itself as a major
U.S. uranium producer," stated Stephen P. Antony, President and CEO
of Energy Fuels. "Though we intend to reduce production in 2014,
placing production on standby later this year, we will continue to
maintain our optionality by being able to increase production as
market conditions warrant. We believe our demonstrated U.S.
production capabilities will become all the more strategic in the
years to come, as World events are now proving the essential need
for secure, reliable energy supplies. Energy Fuels also showed it
has the flexibility to seize opportunities and respond to changing
market conditions. Our acquisition of Strathmore was just such an
opportunity, as we now have the largest NI 43-101 compliant uranium
resource base in the U.S., among producers or near-producers.
Finally, we are continuing to move our large-scale, base-load
projects forward, including the Sheep Mountain, Roca Honda and
Henry Mountains projects. Although current uranium economics remain
challenging, we remain optimistic about the long-term fundamentals.
We will continue to respond proactively to these dynamic market
conditions."
Corporate Highlights since December 31, 2013
As previously announced, on March 3, 2014, the Company completed
the replacement of its $28.17 million regulatory bonding portfolio
with equivalent bonds from other surety providers, releasing to the
Company $12.34 million of previously restricted cash.
Energy Fuels' Outlook for the Year Ending December 31, 2014
("FY-2014")
During 2013, the spot price of uranium dropped to and remained
at approximately $35.00 per lb. U3O8. In addition, the long term
U3O8 price dropped to and remains at approximately $50.00 per pound
(see Market Outlook for the Year Ending December 31, 2014 below).
Energy Fuels continues to believe that the current spot price of
U3O8 is below the economic cost to produce U3O8 from many currently
operating uranium mines around the world, and is well below the
economic cost to develop the new uranium mines which the Company
believes will be required to fuel the projected global growth in
nuclear energy. Low uranium prices have adversely impacted uranium
production and development plans globally. As a result, it should
be expected that prices will need to rise to higher, sustained
levels to support the new mines that will be required to meet
increasing demand.
As of December 31, 2013, Energy Fuels held 452,000 pounds of
U3O8 in inventory. Energy Fuels has U3O8 term supply contracts in
place with average realized sales prices projected to be $58.42 per
pound U3O8 in FY-2014. This represents a 67% premium to the current
spot price of $34.70 per pound. These long term contracts provide
some protection to the Company against further reductions in the
spot price of uranium over the next several years, since the
Company's term contract prices are currently at their floors. The
Company has contracted to purchase U3O8 in the spot market for sale
into one of these contracts, which, along with Energy Fuels'
significant U3O8 inventories and scheduled production, provides the
Company with operational flexibility to meet its contract delivery
requirements during 2014 and beyond. The Company's inventories and
spot purchases also reduce the Company's need for near-term U3O8
production. This will allow the Company to place its Pinenut mine
on stand-by in July 2014 and production at its White Mesa Mill on
standby beginning in August 2014. While on standby, the Company
will continue to accept alternate feed materials and maintain the
White Mesa Mill in a state of readiness to be able to restart
mineral processing activities when a production decision is
made.
The Company's ability to replace produced U3O8 with purchased
U3O8 for deliveries under one of its term contracts creates value
for Energy Fuels by allowing the Company to purchase U3O8 at prices
lower than its production cost, and to realize significant margins
between the spot purchase price and the contract sale price. This
allows the Company to extend the life of its mines into the future
by preserving its U3O8 resources, reducing operational risk
associated with production operations, and enabling the Company to
implement additional significant cost-cutting measures.
At the same time, Energy Fuels will continue to position itself
to realize the economic benefits of anticipated improvements in the
price of U3O8, through select development and permitting
expenditures and care and maintenance activities. Energy Fuels has
a number of projects with large U3O8 resources, including the Henry
Mountains Complex and the Roca Honda Project, which, in a higher
U3O8 price environment, have the potential to provide large,
base-load quantities of uranium resources to the White Mesa Mill
and the opportunity to produce U3O8 with greater operating
efficiency. In addition, the Company has extensive U3O8 resources
in Wyoming which it expects will result in a second major
production center for the Company, as market conditions warrant.
The Company intends to continue permitting activities on these
projects during FY-2014.
As outlined below, Energy Fuels provides the following updated
outlook for FY-2014. The Company intends to closely monitor actual
and forecasted U3O8 prices, and may change operating plans under
actual or expected market conditions, as necessary. Accordingly,
the outlook provided herein may differ materially from actual
results:
- FY-2014 Uranium Sales: The Company forecasts FY-2014 sales to
be approximately 800,000 pounds of U3O8, all of which will be sold
into three existing long-term contracts. 300,000 pounds has been
contracted for purchase in the spot market for sale into one
contract. Energy Fuels expects to realize an average sales price of
$58.42 per pound of U3O8 during FY-2014. This average realized
price per pound will not be subject to any decrease resulting from
declines in future U3O8 spot and/or term prices as each contract is
at the minimum floor price. If uranium spot and/or long-term prices
rise to certain levels during FY-2014, the price mechanisms
contained within the Company's contracts provide the opportunity to
capture a significant portion of such price improvements over the
remaining terms of the contracts.
- Production for FY-2014: The Company expects to produce
approximately 500,000 pounds of U3O8 during FY-2014, from both
conventional ore (350,000 pounds) and alternate feed materials
(150,000 pounds). Conventional ore processing is expected to resume
during the second quarter of FY-2014 to process all ore mined
through the middle of FY-2014 from the Arizona 1 and Pinenut mines,
at which point both conventional ore and alternate feed processing
is expected to be placed on standby in August 2014.
- FY-2014 Mining Activities: Mining at the Pinenut mine is
expected to continue into the middle of FY-2014, at which point the
mine is expected to be placed on standby, unless improvements in
market conditions warrant continued production. Mining at the
Arizona 1 mine was placed on standby in the first quarter of
FY-2014 due to the depletion of its currently economic resources.
The Company is currently completing drilling in the Arizona 1 mine
to determine if additional economic mineralization exists.
- FY-2014 Project Permitting: During FY-2014, the Company expects
permitting activities to total approximately $1.5 million,
primarily at the Sheep Mountain, Roca Honda and Henry Mountains
projects.
Market Outlook for the Year Ending December 31, 2014
Over the medium- to long-term, nuclear power capacity and
generation are growing, while uranium production will likely
struggle to meet this growing demand. As a result, it should be
expected that prices will need to rise to higher, sustained levels
to support the new mines that will be required to meet increasing
demand. However, in the short-to medium term, there is uncertainty
about uranium prices as a result of ample worldwide uranium
inventories, due in large part to secondary sources of supply, such
as remaining excess commercial inventories, inventories held by
governments, reprocessing of spent fuel, re-enriching tails and
similar activities, as well as the slower-than-expected restart of
Japan's nuclear reactors. As a result of current market conditions,
many producing uranium mines have been placed on standby, and
uranium development projects are being delayed around the
World.
Despite the current uncertainty, long-term demand fundamentals
in the uranium sector remain strong. World net electricity
consumption is expected to increase by 69% by 2035, according to
the World Energy Outlook 2013, a report issued by the International
Energy Agency. As a result of high fossil fuel prices, energy
security concerns, improved reactor designs and climate change
concerns, new nuclear capacity is expected to be a significant part
of meeting this growth in electricity demand. According to the
World Nuclear Association, as of February, 2014, there are 434
nuclear reactors operable worldwide in 30 countries, generating
374.3 gigawatts of electricity. Of perhaps greater significance, 70
nuclear reactors are under construction in 14 countries including
49 under construction in China, India, South Korea and Russia.
Overall, there are 483 new reactors on order, planned or proposed
around the World. The 70 reactors under construction are expected
to require over 100 million pounds of U3O8 for initial cores and an
additional 38 million pounds of U3O8 annually once they are in
operation, and those that are on order, planned or proposed are
expected to require approximately 268 million pounds of uranium per
year. Contrasting this with expected 2014 global reactor demand of
just over 171 million pounds clearly illustrates the growth
potential of the uranium business.
Although long-term fundamentals remain strong, Energy Fuels
believes the near-to medium- term uncertainty in the market could
lead to continued sluggishness in the price of uranium. According
to price data from The Ux Consulting Company, LLC ("UxC"), the spot
price of uranium dropped $9.00 per lb., from $43.50 per pound on
January 1, 2013 to $34.50 per pound on December 31, 2013. The UxC
long-term price indicator dropped $6.00 per pound from $56.00 per
pound to $50.00 per pound during the same period. The current UxC
spot and long-term prices are $34.70 and $50.00, respectively. In
March 2014 UxC published its "Uranium Market Outlook - Q1 2014". In
this report UxC reduced its annual price projections for the period
from 2014 to 2025 compared with their Q4 2013 report (published in
December 2013). The Company is currently evaluating the revised
forecast, along with other industry forecasts, to determine the
Company's expectation of future uranium prices. In the event the
Company concludes that a significant deterioration in expected
future uranium prices has occurred, the Company may adjust its
operations, in addition to assessing whether an impairment
allowance may be necessary, which, if required, could be
material.
Although current uranium market conditions remain challenging,
Energy Fuels remains optimistic about the long term fundamentals.
As Japan begins to restart its reactors, new nuclear units come
online worldwide, and uranium production and project deferrals
persist, the supply of uranium for new and existing nuclear units
may become less certain, providing additional stimulus to potential
increases in the price of uranium. The timing and pace of the
uranium market recovery will be dependent on a number of factors,
including the pace of new reactor startups around the World, the
timing and scope of the restart of Japan's nuclear reactors, the
development of new mine projects, the performance of existing mine
projects, levels of secondary supplies, and the timing of utilities
re-entering the market for new long-term contracts.
In this challenging market, Energy Fuels will continue to
position itself to take advantage of the expected growth in the
industry while maintaining its ability to respond to dynamic market
conditions.
Stephen P. Antony, P.E., President & CEO of Energy
Fuels, is a Qualified Person as defined by National
Instrument 43-101 and has reviewed and approved the technical
disclosure contained in this document.
About Energy Fuels: Energy Fuels is currently
America's largest conventional uranium producer, supplying
approximately 25% of the uranium produced in the U.S. in 2013.
Energy Fuels operates the White Mesa Mill, which is the only
conventional uranium mill currently operating in the U.S. The mill
is capable of processing 2,000 tons per day of uranium ore and has
a licensed capacity of over 8 million lbs. of
U3O8. Energy Fuels has projects
located in a number of Western U.S. states, including a producing
mine, mines on standby, and mineral properties in various stages of
permitting and development. The Company's common shares are listed
on the Toronto Stock Exchange under the trading symbol "EFR" and on
the NYSEMKT under the trading symbol "UUUU".
Cautionary Note Regarding Forward-Looking Statements:
This news release contains certain "Forward Looking
Information" and "Forward Looking Statements" within the meaning of
applicable Canadian and United States securities legislation, which
may include, but is not limited to, statements with respect to the
future financial or operating performance of the Company and its
projects and with respect to the market outlook, including: the
quality of its projects; the Company's ability to resume mining and
increase uranium production as market conditions warrant; the
Company's U.S. production being or becoming more strategic in the
years to come; the Company's ability to or success in moving its
large scale projects forward as expected; the Company's
expectations as to long term fundamentals in the market and price
projections; the Company's expectations that prices will need to
rise to support new mines needed to meet increasing demand; the
Company's ability to maintain its White Mesa Mill and other assets
in a state of readiness to be able to restart operations as
required; the ability of the Company to develop a strategy that
could result in a second production center in Wyoming; production
and sales forecasts; and expected permitting and other
expenditures. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" "does not expect", "is expected", "is likely",
"budget" "scheduled", "estimates", "forecasts", "intends",
"anticipates", "does not anticipate", or "believes", or variations
of such words and phrases, or state that certain actions, events or
results "may", "could", "would", "might" or "will be taken",
"occur", "be achieved" or "have the potential to". All statements,
other than statements of historical fact, herein are considered to
be forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements express or implied by the
forward-looking statements.
Factors that could cause actual results to differ materially
from those anticipated in these forward-looking statements include:
risks associated with estimating production, forecasting future
price levels necessary to support production, and the Company's
ability to increase production in response to any increases in
commodity prices; risks inherent in the Company's and industry's
forecasts or predictions of future uranium prices; risks of delays
in obtaining permits and licenses that could impact expected
production levels or increases in expected production levels;
government and third party actions with respect to supplies of
secondary sources of uranium; fluctuations or changes in the market
prices of uranium and the other factors described under the caption
"Risk Factors" in the Company's Annual Information Form dated March
26, 2014, which is available for review on the System for
Electronic Document Analysis and Retrieval at
www.sedar.com. Forward-looking statements contained herein are
made as of the date of this news release, and the Company
disclaims, other than as required by law, any obligation to update
any forward-looking statements whether as a result of new
information, results, future events, circumstances, or if
management's estimates or opinions should change, or otherwise.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, the reader is cautioned not to place undue reliance on
forward-looking statements.
Energy Fuels Inc.Curtis MooreInvestor Relations(303) 974-2140 or
Toll free:
1-888-864-2125investorinfo@energyfuels.comwww.energyfuels.com
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