LAKEWOOD, CO, Sept. 12, 2016 /PRNewswire/ - Energy
Fuels Inc. (NYSE MKT: UUUU; TSX: EFR) ("Energy Fuels" or the
"Company"), a leading producer of uranium in the United States, is pleased to provide an
update on the Company's plans and activities through the end of
2018, along with production guidance for 2017. Energy Fuels'
goal is to become the largest uranium producer in the United States – which has the largest
fleet of nuclear reactors in the World and is the largest consumer
of uranium globally. In light of recent positive developments
at certain of the Company's projects, but also continued uranium
market uncertainty, the Company's Board of Directors (the "Board")
has approved a revised business plan (the "Business Plan") that
focuses on several key areas through 2018. The main emphasis
of the Business Plan is to sustain production capabilities and
uranium resources, and also to retain the Company's significant
production scalability and optionality, so that the Company is able
to quickly respond to – and benefit from – any improvements in
uranium market conditions.
Maintaining and Expanding Production
Optionality
A key element of the Company's Business Plan is continuing to
maintain and expand the Company's production optionality, including
permitted mining and processing capacity, so that the Company can
effectively respond to improved market conditions when and
as-needed. The Company believes it is currently well
positioned in this regard with: (i) the currently-producing Nichols
Ranch In-Situ Recovery ("ISR") Project in Wyoming ("Nichols Ranch"); (ii) the recently
acquired Alta Mesa ISR Project in Texas ("Alta Mesa") which is currently on care
& maintenance; (iii) the currently-producing White Mesa
conventional mill in Utah; and
(iv) the ongoing advancement of the high-grade Canyon Mine in
Arizona.
While the Company collectively has a licensed capacity of over
11.5 million pounds of U3O8 per year, based
on past production, available in-ground uranium resources,
operational capacities, and conservative long-term uranium price
forecasts, over the long-term the Company believes it has the
capability, with improved uranium prices and the receipt of
additional permits as expected, to produce 4 to 6 million pounds of
U3O8 per year on a sustained basis, not
including uranium processing for a fee on account of 3rd
parties. However, in the short-term, and for so long as weak
uranium prices persist, the Company expects to maintain production
at today's reduced levels or lower, including 950,000 pounds of
U3O8 in 2016 and 800,000 pounds of
U3O8 in 2017. Over 65% of the Company's
2016 and 2017 production is contracted at well above current market
prices for those years.
Canyon Mine (Conventional Uranium Mine in
Arizona)
The Company's ongoing evaluation of the Canyon Mine is
confirming the June 27, 2012 NI
43-101 average grades of approximately 1%
U3O8. The mine is therefore a high
priority in the Business Plan. Based on drill results from
initial core drilling at the 1st level at the Canyon
Mine (as previously reported on August 18,
2016), the Board has approved the completion of the shaft to
the planned depth of 1,470-feet below the surface, along with the
construction of two additional drill stations with significant
additional long-hole drilling to be completed over the next 6
months. The shaft is currently at a depth of 1,200-feet below
the surface, or over 80% completed based on a current planned
bottom depth of 1,470-feet. The shaft and construction of all
three levels is expected to be completed by the end of 2016, with
additional drilling and evaluation occurring into 2017.
Drill results are showing the potential to significantly
increase the size of the recoverable uranium resources within the
bounds of the previously identified geologic formation (the
"breccia pipe"). It also appears that uranium mineralization
within the breccia pipe at the Canyon Mine extends vertically for
at least 1,100-feet. This is substantially greater than the
vertical extent of the mineralization in other uranium-bearing
breccia pipes recently mined in northern Arizona. The
Company's current focus is on the upper half of this
mineralization, which includes the "Middle Zone" and the "Upper
Zone" of the deposit.
Drilling from the three planned levels will allow for a detailed
evaluation of the resources contained in the Middle and Upper Zones
of the deposit. These are expected to provide the Company
with high levels of confidence in the size, grade, and extent of
the deposit, and provide the information and data needed for a
revised resource estimate, economic evaluation, advanced mine
planning, and optimization of future underground development.
Drilling has also encountered several high-grade intercepts at
depth, indicating that the Lower Zone also contains significant
uranium mineralization that may be further explored, evaluated, and
mined in the future.
Finally, the drill results are increasing the Company's level of
confidence that production costs from the Canyon Mine are expected
to be low-cost and competitive with the best underground uranium
mines globally, including mines in Canada, based on industry-published cost
estimates. As a result, the Canyon Mine is likely to take a
more significant production role in the short- to medium-term, as
the Company currently believes this will be the lowest cost source
of primary uranium production in the Company's portfolio.
Continued development and mining at the Canyon Mine will
depend on the results of the planned delineation drilling, revised
resource estimate, economic and other evaluations, and uranium
market conditions.
Nichols Ranch and Alta Mesa (Producing ISR Project in Wyoming)
Although the Canyon Mine is expected to take a more significant
role in the Company's plans, the Nichols Ranch and Alta Mesa operations also remain extremely
important to the Company. These projects represent two other
important aspects of the Company's optionality due to their
potential to increase production relatively quickly as markets
recover with relatively low upfront and sustaining capital
requirements and operating costs.
As previously announced, the Company expects to produce
approximately 300,000 lbs. of U3O8 in 2016 at
Nichols Ranch. In addition, the Company expects to continue
to produce approximately 350,000 lbs. of U3O8
per year in 2017 and beyond at Nichols Ranch, unless uranium market
conditions warrant increasing annual production to levels higher
than today's reduced levels. As reported on August 15, 2016, recent drilling at Nichols Ranch
has encountered significant high-grade intercepts in the soon to be
completed Header House 9 wellfield. These intercepts were
much higher than previously expected by the Company, and are
expected to contribute to maintaining current production levels,
while also deferring some wellfield development and associated
capital costs.
Alta Mesa, which includes over
200,000-acres of land and a fully permitted and constructed ISR
processing plant, will remain on care and maintenance until uranium
prices recover. On August 2,
2016, the Company announced a maiden National Instrument
43-101 resource of 1.6 million tons of Measured and Indicated
Mineral Resources with an average grade of 0.111%
U3O8 containing 3.6 million pounds of
uranium, along with 7.0 million tons of Inferred Mineral Resources
with an average grade of 0.121% U3O8
containing 16.8 million pounds of uranium. Based on past
production from this project, the Company expects Alta Mesa to be among the lowest cost sources of
uranium production in its portfolio when market demand
increases.
Upon observing a sustained improvement in market conditions, the
Company projects having the ability to increase combined production
from Nichols Ranch and Alta Mesa to
approximately 1.2 million lbs. of U3O8 per
year – or more – within 6 to 12 months' time with additional
wellfield development and minimal other capital expenditures. While
this increased production is not currently planned for 2016 or
2017, the Company will monitor market conditions and actively seek
to sell this material at prices that justify these levels of
production.
White Mesa Mill (Conventional Mill in Utah)
As previously announced, the Company also expects to produce
approximately 650,000 lbs. of U3O8 from the
White Mesa Mill in 2016. This includes the 460,000 lbs. of
U3O8 from processing stockpiled material
previously mined from the Company's now-depleted Pinenut mine,
along with 165,000 lbs. of U3O8 from
processing stockpiled alternate feed materials. In addition,
the Company has also been producing uranium from a new source at
the Mill through the recycling of water from the Mill's tailings
management system. This water contains dissolved uranium that
was not recovered in earlier processing activities ("Pond
Returns"). For 2016, the Company expects to recover a total
of approximately 25,000 lbs. of U3O8 from
Pond Returns at the Mill.
In 2017, the Company expects to produce approximately 450,000
lbs. of U3O8 at the White Mesa Mill,
including 150,000 lbs. of U3O8 from alternate
feed materials and 300,000 lbs. of U3O8 from
Pond Returns. Uranium production for 2018 at the White Mesa
Mill has not yet been determined. However, the Company
expects to maintain the Mill in a position to be able to
potentially process further alternate feed materials, as well as
potentially process material produced from the Canyon Mine or other
conventional sources in 2018, if market conditions warrant.
Selective Advancement of Permits
The final component of the Company's optionality strategy
concerns the selective advancement of certain permits at other of
the Company's major uranium projects. The Company plans
to: (i) continue the licensing and permitting of the Jane
Dough ISR Wellfields, which are adjacent to Nichols Ranch; (ii)
continue the licensing and permitting of the Roca Honda Project, a
large, high-grade conventional project in New Mexico; (iii) maintain required permits at
the Company's standby projects including Alta Mesa, the Hank ISR Project, the La Sal
Project, and the Daneros Project, and; (iv) complete certain other
well-advanced permits on the Sheep Mountain Project in Wyoming, the Daneros Project expansion, and
the La Sal Project expansion. All of these projects serve as
important pipeline assets for the Company's future ISR and
conventional production capabilities.
The Company is not aware of any other uranium junior which, upon
completion of the above referenced permits (expected in 2018 or
before), will have Energy Fuels' depth or diversity of future
production potential from multiple projects ready to go into
production if uranium markets improve, as the Company expects.
Sale of Surplus Land and Other Assets
The Company has also initiated a significant program to reduce
costs and monetize additional non-core assets, including the sale
of certain non-core land holdings and surplus equipment (mostly
mining equipment). This initiative alone is expected to
result in an estimated $2.0 –$4.0
million cash benefit to the Company over the next 2½ years.
Continued Corporate Streamlining
Based on the Business Plan described above, the Company has
embarked upon a program to further reduce certain other costs in
order to enhance the sustainability of the organization until
uranium markets recover. At the same time, the Company
intends to ensure that required skill sets, including mining,
processing, permitting, and other areas of expertise, are
maintained at appropriate levels that will allow the Company to
aggressively and quickly capture the benefits of future
improvements in uranium market conditions. This includes a
number of initiatives, including a wage and salary freeze,
reductions in general and administrative expenses, a mandate for
Management to actively seek other cost reductions and efficiencies,
and the potential for compensation adjustments.
Optimization of Operations
Finally, the Company has launched a new initiative designed to
reduce capital and operating costs at all of its uranium production
locations. The Company is targeting a reduction in operating
costs of 5% to 20% per pound, over time. The Company has
engaged a team of metallurgical experts to complete a comprehensive
1st Phase review of all the Company's processing
operations, including operations at the White Mesa Mill, Nichols
Ranch, and Alta Mesa. These
experts have a proven track-record of delivering cost savings,
innovation, and efficiencies at numerous other conventional and ISR
uranium projects globally. The following non-comprehensive
list of areas will be reviewed:
- Reduced reagent consumptions, including reagent recycling
- Increased uranium recovery
- The potential recovery of copper resources identified at the
Canyon Mine
- Ore sorting
- Improved operating practices
- Mechanized mining at the conventional mines
- Water jet mining
Conclusion
In closing, Stephen P. Antony,
President and CEO of Energy Fuels stated: "In light of
today's uncertain uranium market, Energy Fuels is intently focused
on preserving, and in the case of Canyon, enhancing the value of
the Company's uranium assets. We feel that the Company is
well placed in the global uranium sector with multiple, 100%-owned
production opportunities, which collectively have the potential to
produce a large quantity of low-cost uranium in diverse ways in an
improved market. Moreover, the Company is working diligently
to strike the correct balance between growing our production
capabilities, maintaining visibility in global uranium markets,
advancing high-priority development and permitting activities, and
sustaining the financial health of the Company. We believe
our new Business Plan will upgrade and improve the quality of our
portfolio of, producing, and permitted assets, while also
maintaining and improving Energy Fuels' sustainability, so our
shareholders are in a position to benefit from the expected uranium
market recovery."
About Energy Fuels: Energy Fuels is a
leading integrated US-based uranium mining company, supplying
U3O8 to major nuclear utilities. Energy
Fuels holds three of America's key uranium production centers, the
White Mesa Mill in Utah, the
Nichols Ranch Processing Facility in Wyoming, and the Alta Mesa Project in
Texas. The White Mesa Mill is the only conventional uranium
mill operating in the U.S. today and has a licensed capacity of
over 8 million pounds of U3O8 per year.
The Nichols Ranch Processing Facility is an ISR production center
with a licensed capacity of 2 million pounds of
U3O8 per year. Alta Mesa is an ISR production center currently
on care and maintenance. Energy Fuels also has the largest NI
43-101 compliant uranium resource portfolio in the U.S. among
producers, and uranium mining projects located in a number of
Western U.S. states, including one producing ISR project, mines on
standby, and mineral properties in various stages of permitting and
development. The Company's common shares are listed on the
NYSE MKT under the trading symbol "UUUU", and on the Toronto Stock
Exchange under the trading symbol "EFR".
Stephen P. Antony, P.E., President & CEO of Energy
Fuels, is a Qualified Person as defined by Canadian
National Instrument 43-101 and has reviewed and approved the
technical disclosure contained in this news release, including
sampling, analytical, and test data underlying such
disclosure.
Cautionary Note Regarding Forward-Looking
Statements: Certain information contained in this
news release, including any information relating to: the Company
being a leading producer of uranium in the U.S.; the goals
of the Company's business plan, including the goal to become the
largest uranium producer in the United
States; production optionality and scalability and the
ability of the Company to respond to and benefit from changes in
uranium prices; the Company's licensed capacity and expected
long-term production capability; expected production plans and
levels for 2016 and 2017; expectations regarding shaft sinking and
delineation drilling at the Canyon Mine, including any expectations
regarding potential increases in mineralization, resources;
expected costs of production at the Canyon Mine and other
facilities; expectations regarding future wellfield and other
capital costs at the Company's facilities; expected advancement of
permits; the success of and proceeds from expected sales of surplus
land and other assets; the Company's plans regarding corporate
streamlining and the success thereof; the Company's plans and
targets regarding optimization of operations and the success
thereof; and any other statements regarding Energy Fuels'
future expectations, beliefs, goals or prospects; constitute
forward-looking information within the meaning of applicable
securities legislation (collectively, "forward-looking
statements"). All statements in this news release that are
not statements of historical fact (including statements containing
the words "expects", "does not expect", "plans", "anticipates",
"does not anticipate", "believes", "intends", "estimates",
"projects", "potential", "scheduled", "forecast", "budget" and
similar expressions) should be considered forward-looking
statements. All such forward-looking statements are subject
to important risk factors and uncertainties, many of which are
beyond Energy Fuels' ability to control or predict. A number
of important factors could cause actual results or events to differ
materially from those indicated or implied by such forward-looking
statements, including without limitation factors relating to: the
Company being a leading producer of uranium in the U.S.; the
goals of the Company's business plan, including the goal to become
the largest uranium producer in the
United States; production optionality and scalability and
the ability of the Company to respond to and benefit from changes
in uranium prices; the Company's licensed capacity and expected
long-term production capability; expected production plans and
levels for 2016 and 2017; expectations regarding shaft sinking and
delineation drilling at the Canyon Mine, including any expectations
regarding potential increases in mineralization, resources;
expected costs of production at the Canyon Mine and other
facilities; expectations regarding future wellfield and other
capital costs at the Company's facilities; expected advancement of
permits; the success of and proceeds from expected sales of surplus
land and other assets; the Company's plans regarding corporate
streamlining and the success thereof; the Company's plans and
targets regarding optimization of operations and the success
thereof and other risk factors as described in Energy Fuels'
most recent annual report on Form 10-K and quarterly financial
reports. Energy Fuels assumes no obligation to update
the information in this communication, except as otherwise required
by law. Additional information identifying risks and
uncertainties is contained in Energy Fuels' filings with the
various securities commissions which are available online at
www.sec.gov and www.sedar.com. Forward-looking statements
are provided for the purpose of providing information about the
current expectations, beliefs and plans of the management of Energy
Fuels relating to the future. Readers are cautioned that such
statements may not be appropriate for other purposes. Readers
are also cautioned not to place undue reliance on these
forward-looking statements, that speak only as of the date
hereof.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred
Resources: This news release contains
certain disclosure that has been prepared in accordance with the
requirements of Canadian securities laws, which differ from the
requirements of U.S. securities laws. Unless otherwise
indicated, all reserve and resource estimates included in this news
release have been prepared in accordance with Canadian National
Instrument 43-101 – Standards of Disclosure for Mineral Projects
("NI 43-101") and the Canadian Institute of Mining, Metallurgy and
Petroleum ("CIM") classification system. Canadian standards,
including NI 43-101, differ significantly from the requirements of
U.S. securities laws, and reserve and resource information
contained in this news release may not be comparable to similar
information disclosed by companies reporting only under U.S.
standards. In particular, the term "resource" does not equate
to the term "reserve" under SEC Industry Guide 7.
United States investors are
cautioned not to assume that all or any of Measured or Indicated
Mineral Resources will ever be converted into mineral
reserves. Investors are cautioned not to assume that all or
any part of an "Inferred Mineral Resource" exists or is
economically or legally minable. Energy Fuels does not hold
any Reserves as that term is defined by SEC Industry Guide 7.
Please refer to the section entitled "Cautionary Note to United
States Investors Concerning Disclosure of Mineral Resources" in the
Company's Annual Report on Form 10-K dated March 15, 2016 for further details.
SOURCE Energy Fuels Inc.