LAKEWOOD, CO, Nov. 3, 2016 /PRNewswire/ - Energy Fuels Inc.
(NYSE MKT:UUUU; TSX:EFR) ("Energy Fuels" or the "Company"),
today reported its financial results for the quarter ended
September 30, 2016. The
Company's quarterly report on Form 10-Q has been filed with the
U.S. Securities and Exchange Commission ("SEC"), and may be viewed
on the Electronic Document Gathering and Retrieval System ("EDGAR")
at www.sec.gov/edgar.shtml, on the System for Electronic Document
Analysis and Retrieval ("SEDAR") at www.sedar.com, and on the
Company's website at www.energyfuels.com. Unless noted
otherwise, all dollar amounts are in US dollars.
Financial and Operational Highlights:
- $8.7 million of total revenue was
realized by the Company.
- Gross Profit of $3.0 million from
mining and milling operations was realized by the Company,
resulting in a 34% Gross Profit margin.
- 150,000 pounds of U3O8 sales were
completed by the Company pursuant to a long-term contract at an
average realized price of $58.00 per
pound.
- The Company recovered a total of 350,000 pounds of
U3O8, during the quarter
including 90,000 pounds from Nichols Ranch and 260,000 pounds
from conventional sources.
- At September 30, 2016, the
Company had $30.6 million of working
capital, including cash and cash equivalents of $17.5 million and approximately 570,000 pounds of
uranium concentrate inventory.
- A net loss of $8.2 million was
realized by the Company, including a $1.4
million impairment of inventory and $6.3 million of development, permitting, and land
holding costs primarily related to wellfield construction at the
Nichols Ranch ISR Project and continued shaft-sinking and
evaluation at the Canyon Project.
- On August 2, 2016, the Company
announced a significant maiden resource estimate for its Alta Mesa
ISR Project ("Alta Mesa") in South
Texas, in a technical report prepared in accordance with
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects ("NI 43-101"). According to the technical report,
Alta Mesa contains 1.6 million tons of Measured and Indicated
Mineral Resources with an average grade of 0.111%
eU3O8 containing 3.6 million pounds of
uranium, along with 7.0 million tons of Inferred Mineral Resources
with an average grade of 0.121% eU3O8
containing 16.8 million pounds of uranium. Alta Mesa includes
a fully-licensed and constructed ISR processing facility which is
currently on care and maintenance.
- The Company has moved 300,000 pounds of contract deliveries
previously scheduled for 2017 to November
15, 2016. As a result, the Company is now expected to
complete 850,000 pounds of contract deliveries during FY-2016 and
320,000 pounds of long term contract deliveries during
FY-2017. In consideration for moving these contract
deliveries, the Company provided the customer with a small
discount, which will be satisfied by the Company delivering
additional uranium to this customer priced at the published
October 2016 month-end spot uranium
price.
- The Company is also under contract to sell 200,000 pounds of
uranium on December 1, 2016.
The pricing for this sale will be based on a weekly average of the
published spot uranium prices for the 5 weeks prior to the
delivery.
- The Company is continuing to pursue significant cost cutting
initiatives, including a reduction in scope of certain development
initiatives, the sale or abandonment of certain non-core properties
and the sale of excess mining equipment and other assets. In
addition, at its meeting on November 3,
2016, the Board of Directors decided to reduce their total
compensation by 20% and receive one-third of their compensation in
cash and two-thirds in restricted share units, thereby resulting in
a 33% total reduction in cash compensation.
Project Development Highlights:
- Shaft-sinking and evaluation activities continue at the Canyon
Project. The shaft, which is expected to be constructed to a
total depth of 1,470 feet, is currently at a depth of approximately
1,250 feet. The underground core and percussion drilling
program to further evaluate the Canyon deposit
continues.
- On August 18, 2016, the Company
reported that it had intercepted several large and high-grade areas
of uranium mineralization within the Company's Canyon Mine,
including 8.5-feet of mineralization with an average grade of 6.88%
eU3O8, 48.0-feet of mineralization with an
average grade of 1.02% eU3O8, and 35-feet of
mineralization with an average grade of 1.39%
eU3O8.
- On October 27, 2016, the Company
reported that it had discovered an extensive system of high-grade
copper mineralization within the Company's Canyon Mine, with
exploration results to date, based on five core holes representing
313 feet of total interception length, averaging 8.75% Cu and one
intercept hitting five-feet of 31.69% Cu. As a result, the
Company has expanded the current evaluation of the Canyon Mine to
include copper and other minerals. The Company expects to
complete a new resource estimate for the Canyon Mine in
Q1-2017.
- On August 15, 2016, the Company
reported that it has intercepted several large and high-grade areas
of mineralization within the Company's Nichols Ranch ISR Project,
including one hole with 5-feet of mineralization with an average
grade of 2.4% eU3O8.
Financings & Liquidity Highlights:
- On September 20, 2016, the
Company announced the completion of a $15.0
million (gross) bought-deal offering (the "Offering"),
including full exercise of the over-allotment option.
Pursuant to the Offering, the Company issued 8,337,500 common
shares, along with 4,168,750 warrants with an exercise price of
$2.45 per share.
- On August 4, 2016, the Company
reported that the holders of its floating-rate convertible
unsecured subordinated debentures (the "Debentures") approved
amendments to the Debentures at a special meeting of the Debentures
held on August 4, 2016. The
amendments extended the maturity of the Debentures from
June 30, 2017 to December 31, 2020, reduced the conversion price
from Cdn$15.00 to Cdn$4.15 per common share of the Company, and
certain other amendments as described in the press release dated
August 4, 2016.
Stephen P. Antony, Energy
Fuels' President and CEO stated: "During the last
quarter, Energy Fuels continued to execute its business plan in a
difficult uranium market. We are particularly pleased with
the actions we took during the third quarter, where we strengthened
our balance sheet through a $15
million financing and extended the term of our convertible
debentures, expanded the high-grade uranium resources at our
Nichols Ranch ISR Project in Wyoming, and made some very exciting
discoveries at our Canyon Mine in Arizona, including large areas of very
high-grade uranium and copper mineralization.
"Our uranium recovery activities are also showing excellent
results, as we extracted 90,000 pounds of uranium from eight
header-houses at the Nichols Ranch ISR Project and packaged 260,000
pounds from conventional sources. As a result, we are
increasing our previous uranium recovery guidance for 2016 from
950,000 pounds to 1,035,000 pounds and increasing our contract
sales guidance from 750,000 pounds to 1,050,000 pounds.
Although spot uranium prices are now down 45% for the year, the
long-term fundamentals for the space remain positive. We
don't know when uranium prices will recover, but we believe they
will at some point in the future. And when the uranium
recovery occurs, we believe it has the potential to happen
quickly. In the meantime, Energy Fuels is fortunate to have
some protection from persistent low uranium prices, including
fixed-price uranium sales contracts for a portion of our
production, the potential of copper recovery at our Canyon Mine,
and processing revenues at our White Mesa Mill, and we are taking
the necessary steps that we believe will allow our shareholders to
benefit from future uranium market improvement."
Selected Summary Financial Information:
|
|
|
$000, except per
share data
|
Three months
ended
September 30, 2016
|
Nine months ended
September 30, 2016
|
Results of
Operations:
|
|
|
|
Total
revenues
|
$
|
8,702
|
$
|
33,704
|
|
Gross
profit
|
2,982
|
10,123
|
|
Net loss
|
(8,245)
|
(27,551)
|
|
Basic and diluted
loss per share
|
(0.14)
|
(0.51)
|
|
|
|
$000's
|
As at September
30,
2016
|
As at December
31,
2015
|
Financial
Position:
|
|
|
|
Working
capital
|
$
|
30,641
|
$
|
35,131
|
|
Property, plant and
equipment
|
38,859
|
29,069
|
|
Mineral
properties
|
92,625
|
91,031
|
|
Total
assets
|
206,332
|
192,280
|
|
Total long-term
liabilities
|
43,518
|
38,937
|
Overview
The Company has recovered approximately 630,000 pounds of
U3O8 during the nine months ended
September 30, 2016 and expects to
recover approximately 405,000 pounds of U3O8
for the final three months of the year, as further described
below. Additionally, the Company expects to produce 800,000
pounds in the year ending December 31,
2017.
ISR Uranium Segment
We have extracted and recovered approximately 265,000 pounds of
U3O8 from our Nichols Ranch Project for the
nine months ended September 30, 2016
and expect to extract and recover approximately 70,000 pounds of
U3O8 from our ISR segment for the final three
months of the year. Additionally, the Company expects to
produce 350,000 pounds in the year ending December 31, 2017 from Nichols Ranch.
At September 30, 2016, the Nichols
Ranch wellfields had eight header houses extracting uranium. The
Company plans to complete a ninth header house by the end of 2016.
However, until such time that improvement in uranium market
conditions is observed or suitable sales contracts can be entered
into, the Company intends to defer development of the tenth header
house at its Nichols Ranch project and to keep the Alta Mesa
Project on care and maintenance.
Permitting of the Jane Dough Property, which is adjacent to
Nichols Ranch, is continuing and is expected to be completed in
advance of our need to begin wellfield construction. Also, the Hank
Project is fully permitted to be constructed as a satellite
facility to the Nichols Ranch Plant.
Conventional Uranium Segment
The White Mesa Mill has recovered approximately 365,000 pounds of
U3O8 during the nine months ended
September 30, 2016 primarily from
alternate feed materials and milling of previously mined ore from
the Pinenut Mine. The Company expects to complete milling the
previously mined ore from the Pinenut Mine and certain alternate
feed sources during the final three months of the year, producing
an additional 335,000 pounds of U3O8 by
year-end.
The Company expects to recover approximately 450,000 pounds of
U3O8 during the year ending December 31, 2017 at the White Mesa Mill,
including approximately 300,000 pounds of
U3O8 from dissolved uranium not recovered
from previous processing in the mill tailings management system
("Pond Return") and approximately 150,000 pounds of
U3O8 from alternate feed sources. In
addition, during 2017, the Company expects to earn a fee for
processing additional quantities of alternate feed material at the
White Mesa Mill, returning all finished uranium product to the
generator of the feed material. The processing fee earned by
the Company is expected to cover the Company's processing cost and
provide the Company with a reasonable margin.
Once the recovery activities discussed above are concluded
(expected to be in the second half of 2017), the Company expects to
place uranium recovery activities at the White Mesa Mill on standby
until additional mill feed becomes available. The Mill will
continue to dry and package material from the Nichols Ranch Plant
and continue to receive and stockpile alternate feed materials for
future milling campaigns. Each future milling campaign will
be subject to receipt of sufficient mill feed that would allow the
Company to operate the Mill on a profitable basis and/or recover a
portion of its standby costs.
Evaluation, Permitting and Standby Activities
The Company is continuing shaft sinking activities at the Canyon
Project, along with underground drilling to further evaluate the
deposit. Through evaluation activities completed to date, the
Company has identified zones of high-grade uranium and copper
mineralization within the deposit. The best uranium
intercepts include 8.5-feet of mineralization with an average grade
of 6.88% eU3O8, 48.0-feet of mineralization
with an average grade of 1.02% eU3O8, and
35-feet of mineralization with an average grade of 1.39%
eU3O8. Five core holes with a total
intercept length of 313-feet have averaged 8.75% Cu and one
intercept hitting 5-feet of 31.69% Cu. In addition,
analytical results demonstrate the existence of silver, zinc, and
other minerals in the deposit. The Company is evaluating the
potential for recovering copper and other minerals at its White
Mesa Mill as value-added byproducts along with the recovery of
uranium. The timing of the Company's plans to extract and
process mineralized materials from this project will be based on
the results of this additional evaluation work, along with market
conditions and available financing.
The Company is selectively advancing certain permits at other of
the Company's major conventional uranium projects. The
Company plans to continue the licensing and permitting of the Roca
Honda Project, a large, high-grade conventional project in
New Mexico, maintain required
permits at the Company's conventional standby projects including
the La Sal Project, and the Daneros Project and 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 conventional production capabilities, as market conditions
warrant. The Company will also continue to evaluate the
Bullfrog Property at its Henry Mountains Project.
Sales
During the nine months ended September 30,
2016, the Company has completed sales under its existing
contracts of 550,000 pounds of U3O8.
The Company also sold 50,000 pounds of U3O8
to a utility based on spot prices at the time of the contract.
The Company is expecting to complete additional sale of 550,000
pounds of U3O8 during the three months ending
December 31, 2016. We had
previously forecasted total sales for the year ending December 31, 2016 of 800,000 pounds of
U3O8. The additional 350,000 pounds of
sales are expected to result from moving 300,000 pounds of
deliveries under one of our contracts from the year ending
December 31, 2017 to the three months
ending December 31, 2016
(representing the final delivery under this contract). In
consideration for moving these contract deliveries, the Company
provided the customer with a small discount, which will be
satisfied by the Company delivering additional uranium to this
customer priced at the published October
2016 month-end spot uranium price. The Company also
contracted to sell 200,000 pounds of U3O8 on
December 1, 2016 and 200,000 pounds
in each of the years ending December 31,
2017 and 2018, with each delivery being priced at the
average spot price per pound of uranium for the five weeks prior to
the date of delivery with a small discount. The Company
expects to complete these sales from U3O8
already in inventory or expected to be recovered from its planned
activities discussed above.
The Company is currently monitoring market conditions for
additional sales opportunities. Selective additional spot
sales may be made as necessary to generate cash for operations and
development activities.
In 2017, the Company expects to complete deliveries of 520,000
pounds of U3O8 under four contracts,
including 320,000 pounds under three long-term contracts and
200,000 pounds under the spot contract discussed above. Of
these deliveries, 120,000 pounds represent the final deliveries
under one of these contracts. The 2017 deliveries under our
contracts are 100,000 pounds lower than previous guidance, as we
accelerated the delivery of 300,000 pounds from 2017 to the three
months ending December 31, 2016 and
added 200,000 pounds of sales under the spot contract, all as
discussed above. Selective additional spot sales may be made
as necessary to generate cash for operations and development
activities.
The Company also continues to pursue new sources of revenue,
including expansion of its alternate feed business.
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". The Company's Debentures are listed on the Toronto
Stock Exchange under the trading symbol "EFR.DB."
Conversion from IFRS to U.S. GAAP: As
previously announced, effective January 1,
2016, the Company became a 'U.S. domestic issuer' for SEC
reporting purposes and is therefore required to prepare its
financial statements in accordance with United States Generally
Accepted Accounting Principles ("U.S. GAAP"). All prior
financial statements and selected financial data have been
converted from International Financial Reporting Standards ("IFRS")
into U.S. GAAP for all periods required to be presented in the
financial statements and selected financial data.
Additional Non-US GAAP Financial Performance
Measures: The Company has included the additional
non-US GAAP measure "Gross Profit" in the financial statements and
in this news release. Management noted that "Gross Profit"
provides useful information to investors as an indication of the
Company's principal business activities before consideration of how
those activities are financed, sustaining capital expenditures,
corporate and exploration and evaluation expenses, finance income
and costs, and taxation.
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 Statement 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
Company being a leading integrated uranium mining company supplying
U3O8 to major nuclear utilities; any
expectations regarding copper or uranium exploration results,
quantities or grades at its Canyon Mine or Nichols Ranch Project;
the expectation to complete a new resource estimate for the Canyon
Mine; the Company's resource estimates and exploration targets,
including expected tons and grade, at Alta Mesa; the ability
of the Company to successfully perform its alternate feed
contracts, including the ability to meet its expected processing
costs and margins; production and sales forecasts; the Company's
expectations as to longer term fundamentals in the market and price
projections; the Company's ability to be able to restart or
increase production as market conditions warrant, or otherwise
benefit from any future market improvements; expected timelines for
the permitting and development of projects; the ability of the
Company to recover copper and other minerals at its White Mesa Mill
as value-added byproducts; the success of the Company in pursuing
new sources of revenue, including expansion of its alternate feed
business; the Company's expectations as to expenditures and cost
reductions; the Company's ability to preserve its cash resources
and maintain its resource base; and any other statements
regarding Energy Fuels' future expectations, beliefs, goals or
prospects. 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: the
Company being a leading integrated uranium mining company supplying
U3O8 to major nuclear utilities; any
expectations regarding copper or uranium exploration results,
quantities or grades at its Canyon Mine or Nichols Ranch Project;
the expectation to complete a new resource estimate for the Canyon
Mine; the Company's resource estimates and exploration targets,
including expected tons and grade, at Alta Mesa; the ability of the
Company to successfully perform its alternate feed contracts,
including the ability to meet its expected processing costs and
margins; production and sales forecasts; the Company's expectations
as to longer term fundamentals in the market and price projections;
the Company's ability to be able to restart or increase production
as market conditions warrant, or otherwise benefit from any future
market improvements; expected timelines for the permitting and
development of projects; the ability of the Company to recover
copper and other minerals at its White Mesa Mill as value-added
byproducts; the success of the Company in pursuing new sources of
revenue, including expansion of its alternate feed business; the
Company's expectations as to expenditures and cost reductions; the
Company's ability to preserve its cash resources and maintain its
resource base; and the other factors described under the caption
"Risk Factors" in the Company's Annual Report on Form 10-K dated
March 15, 2016, which is available
for review on EDGAR at www.sec.gov/edgar.shtml, on SEDAR
at www.sedar.com, and on the Company's website at
www.energyfuels.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. The Company
assumes no obligation to update the information in this
communication, except as otherwise required by law.
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 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.