In the news release, Energy Fuels Announces Q2-2020 Results
& Webcast on August 8, 2020;
Retires Debt, Improves Balance Sheet, Resumes Uranium Production
& Rare Earth Progress, issued 31-Jul-2020 by Energy Fuels Inc. over CNW, we are
advised by the company that an incorrect date was used in the
headline regarding the Webcast. It should read "Energy Fuels
Announces Q2-2020 Results & Webcast on August 5, 2020; Retires Debt, Improves Balance
Sheet, Resumes Uranium Production & Rare Earth Progress" rather
than "August 8, 2020" as originally issued. The complete, corrected
release follows:
Energy Fuels Announces Q2-2020 Results & Webcast on August 5,
2020; Retires Debt, Improves Balance Sheet, Resumes Uranium
Production & Rare Earth Progress
LAKEWOOD, CO, July 31, 2020 /PRNewswire/ - Energy Fuels
Inc. (NYSE American: UUUU) (TSX: EFR) ("Energy Fuels" or the
"Company") today reported its financial results for the
quarter ended June 30, 2020. 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 U.S. dollars.
Highlights:
- At June 30, 2020, the Company had
$28.3 million in cash and marketable
securities, plus $24.7 million of
concentrate inventory, including 575,000 pounds of uranium valued
on our balance sheet at $23.05 per
pound and 1,675,000 pounds of vanadium valued on our balance sheet
at $5.11 per pound, both in the form
of immediately marketable product. As of July 31, 2020, the spot price of uranium was
$32.35 per pound and the mid-point
spot price of vanadium was $5.30 per
pound, which places a current market value on our concentrate
inventories of approximately $27.5
million. As a result of existing inventories and planned
production, the Company expects to have between 640,000 and 690,000
pounds of finished uranium and 1.675 million pounds of finished
vanadium in inventory at the end of 2020, assuming no change to
production or sales guidance.
- The Company had an operating loss of $6.5 million during Q2-2020, versus a loss of
$7.8 million in Q1-2020, narrowing
the Company's quarter-on-quarter loss by 17%.
- The Company had working capital of $38.04 million at the end of Q2-2020,
representing an increase of 8% over Q1-2020.
- On June 11, 2020, the Company
announced the partial cash redemption of its floating rate
convertible unsecured subordinated debentures (the
"Debentures"). On July 14,
2020, the Company distributed Cdn$10,430,000 in cash to holders of the
Debentures as of July 8, 2020. This
amount represents the redemption of one-half of the total
Debentures outstanding, and as a result, the Company has only
Cdn$10,430,000 (US$7,780,780, based on the US-Canada exchange
rate on July 31, 2020) aggregate
principal amount of the Debentures outstanding, which are due on
December 31, 2020.
- On April 13, 2020, the Company
announced its entry into the U.S. rare earth elements
("REE") market. The Company believes its fully licensed and
constructed White Mesa Mill ("Mill"), which is the only
uranium mill operating in the U.S. today, can play a key role in
bringing the REE supply chain back to the U.S. Many REE ores
contain recoverable quantities of uranium, and the Mill has a
40-year history of responsibly processing ores for the recovery of
uranium and other metals. On May 21,
2020, the Company announced that it had entered into
consulting agreements with two REE industry experts (Constantine Karayannopoulos, then Chairman of
Neo Performance Minerals ("Neo"), and Brock O'Kelley) to aid in the development and
implementation of commercial and technical REE strategies for the
new U.S. REE program Energy Fuels is pursuing. On July 7, 2020, Mr. Karayannopoulos was appointed
President and CEO of Neo, positions he held previously with Neo.
Neo is currently one of the World's leading producers of advanced
industrial materials, including rare earth-based engineered
products, for multiple global markets. As a result of his new
executive roles with Neo, his consulting agreement with the Company
will end on August 6, 2020. On
July 31, 2020, the Company entered
into a non-exclusive Letter of Intent with Neo, under which: (i)
Mr. Karayannopoulos and other Neo personnel will continue to assist
Energy Fuels in developing commercial and technical aspects of the
Company's REE strategy, including the potential production of a
rare earth oxide concentrate at the Mill that can be sold to REE
separation facilities; and (ii) the Company and Neo will work
together toward potentially creating a longer term mutually
beneficial relationship, which may involve commitments to buy and
sell all or a portion of the REE concentrate produced at the Mill
or other commercial arrangements.
- On April 23, 2020, the U.S.
Nuclear Fuel Working Group ("NFWG") released its "Strategy
to Restore American Nuclear Energy Leadership" (the
"Report"). In the report, the U.S. government commits to
reviving and strengthening the U.S. uranium mining industry. The
Report provides a number of policy recommendations, including
direct government purchases, supporting Department of Commerce
efforts to extend the Russian Suspension Agreement ("RSA")
to prevent dumping of Russian uranium in the U.S. (and "the
consideration of further lowering the cap on Russian imports under
future RSA terms"), enabling the U.S. Nuclear Regulatory Commission
to deny imports of fabricated nuclear fuel from Russia, and streamlining regulatory reform and
land access for uranium.
- On May 6, 2020, the Company
announced it had entered into an agreement to acquire Prompt
Fission Neutron (PFN) borehole logging technology and equipment for
total consideration of $500,000 cash,
of which $150,000 was paid in Q2 2020
and the remainder was paid on closing of the acquisition, which
occurred on July 31, 2020. This
acquisition gives the Company control over this important in
situ recovery ("ISR") technology in the U.S. PFN is
critical to successful uranium production from many ISR deposits,
as it more accurately measures downhole in situ uranium ore
grade versus traditional methods.
Mark S. Chalmers, Energy
Fuels' President and CEO, stated:
"Energy Fuels continued to consolidate our position as the clear
leader in U.S. uranium production in Q2-2020, and we made
significant progress in diversifying into rare earth element
production.
"On the uranium front, we resumed limited uranium production at
our White Mesa Mill in Blanding,
Utah from alternate feed materials and pond returns, and we
expect to produce between 125,000 and 175,000 pounds of uranium
companywide in 2020. Assuming current production and sales
guidance, we expect to continue to build and hold between 640,000
and 690,000 pounds of uncommitted uranium in inventory at the end
of 2020. Uranium spot prices are up 30% so far this year, as
COVID-related production suspensions at major global uranium mines
have created a widening gap between supply and demand and a strong
potential for higher prices in the future. This means a higher
realizable value for our uranium inventory. There is also good
progress being made on uranium in the U.S. government. Our allies
in Congress and the Trump Administration are pushing hard to fund
$150 million per year to create the
U.S. uranium reserve. While progress with the U.S. government can
be slow and uneven at times, there is bipartisan support for the
creation of the uranium reserve, and we are optimistic this program
will be funded and implemented. In addition, the U.S. government
and Russia are negotiating an
extension of the Russian Suspension Agreement, which is expected to
lower imports of Russian uranium into the U.S. over the long-term.
Energy Fuels is heavily engaged in this process, and we are
encouraged that the U.S. Department of Commerce appears committed
to negotiating an agreement that will provide concrete benefits to
the U.S. uranium mining sector. Adding to our leverage to
increasing uranium prices, Energy Fuels also now owns the PFN
borehole logging technology that most U.S. ISR uranium producers
will need to use in order to resume and expand production. Not only
will we be able to utilize this technology to ramp up production
from our own ISR facilities, we have also secured the ability to
monetize this technology with other U.S. ISR producers.
"Energy Fuels has also made significant strides in entering the
rare earth market. There is a lot of interest in rare earths at the
current time, and we believe Energy Fuels is more advanced than
other companies in the U.S. with respect to producing a salable
rare earth concentrate. We are currently performing test work,
which we believe will be highly scalable and will allow us to
produce a rare earth concentrate sooner, and at a significantly
lower cost, than other U.S. initiatives garnering considerable
attention right now. We have also engaged several rare earth
industry experts to assist us in these endeavors, and we have
entered into a non-exclusive Letter of Intent with Neo Performance
Materials under which Neo will provide technical and commercial
assistance to the Company, and both companies will work together
toward potentially creating a longer term mutually beneficial
relationship. We are moving very quickly on our rare earth
initiative with an eye toward generating cash flow within the next
12 months.
"Finally, Energy Fuels is focused on managing our balance sheet.
As discussed above, we have significant product inventories
providing immediate leverage to rising commodity prices. And we are
proud to have the ability to address our existing debt on our own
terms, and that we expect to be debt free by the end of 2020. Debt
can be difficult for mid-sized and junior uranium miners to
service, and extremely burdensome for developers and explorers.
Debt can devastate shareholder value if projects or markets do not
perform as expected. In contrast to many other uranium companies
which are currently incurring substantial long-term debt, Energy
Fuels shareholders will not be exposed to that risk."
Selected Summary Financial Information:
$000, except per
share data
|
Six months
ended
June 30, 2020
|
Six months
ended
June 30, 2019
|
Results of
Operations:
|
|
|
Total
revenues
|
$
|
788
|
$
|
4,741
|
Gross profit
(loss)
|
(718)
|
(4,943)
|
Net income (loss)
attributable to the
company
|
(13,844)
|
(21,439)
|
Basic and diluted loss
per share
|
(0.12)
|
(0.23)
|
|
|
|
$000's
|
As at June 30,
2020
|
As at December
31,
2019
|
Financial
Position:
|
|
|
Working
capital
|
$
|
38,043
|
$
|
20,534
|
Property, plant and
equipment
|
24,742
|
26,203
|
Mineral
properties
|
83,539
|
83,539
|
Total
assets
|
188,125
|
175,720
|
Total long-term
liabilities
|
23,251
|
22,475
|
Webcast on Wednesday, August 5,
2020 at 11:00 am ET
(9:00 am MT)
To join the webcast, please dial 1-888-664-6392 (toll free in
the U.S. and Canada). The webcast
slides can be accessed through the following link:
Energy Fuels Q2-2020 Results – Webcast Link
A link to a recorded version of the proceedings will be
available shortly after the webcast by calling 1-888-390-0541 (toll
free in the U.S. and Canada) and
entering the code 758012#. This recording will be available until
August 19, 2020.
Outlook
Operations and Sales Outlook Overview
In response to the Congressional appropriations for the creation
of a U.S. uranium reserve, the potential extension of the Russian
Suspension Agreement, and/or implementation of policy
recommendations contained in the Working Group's report, the
Company is evaluating activities aimed towards increasing uranium
production at all or some of its production facilities, including
the currently operating White Mesa Mill, the recently operating
Nichols Ranch ISR Facility, and the Alta Mesa ISR Facility, La Sal
Complex and Canyon Mine, which are all currently on standby, as
market conditions may warrant.
Subject to any actions the Company may take in response to U.S.
government actions or market conditions, the Company plans to
extract and/or recover limited amounts of uranium from its Nichols
Ranch Project in 2020, which was placed on standby in the first
quarter of 2020 due to the depletion of its existing wellfields. In
addition, during 2020 the Company expects to recover uranium at the
White Mesa Mill from in-circuit uranium inventories extracted from
the recent vanadium Pond Return campaign, from Alternate Feed
Materials and from other Pond Return activities. The vanadium Pond
Return campaign conducted in 2019 was brought to a close in early
2020.
Subject to any actions the Company may take in response to U.S.
government actions, both ISR and conventional uranium recovery is
expected to be maintained at reduced levels, as a result of current
uranium market conditions, until such time when market conditions
improve sufficiently.
The Company is also seeking new sources of revenue, including
new sources of Alternate Feed Materials and new fee processing
opportunities at the White Mesa Mill that can be processed under
existing market conditions (i.e., without reliance on current
uranium sales prices), and is evaluating opportunities to
potentially recover REEs at the White Mesa Mill. The Company will
also continue its support of U.S. governmental activities to
support the U.S. uranium mining industry and will evaluate
additional acquisition and disposition opportunities that may
arise.
Extraction and Recovery Activities Overview
During the six months ended June 30,
2020, the Company recovered approximately 83,000 pounds of
U3O8, all of which were for the account of
the Company. In the year ending December 31, 2020, the Company
expects to recover a quantity of uranium within its previously
published guidance of 125,000 to 175,000 pounds of
U3O8. The Company also recovered
approximately 67,000 pounds of high-purity vanadium pentoxide
("V2O5" or "black flake") during the
six months ended June 30, 2020 from
its vanadium Pond Return campaign, which was suspended during the
first quarter of 2020.
The Company has strategically opted not to enter into any
uranium sales commitments for 2020. Therefore, subject to any
actions the Company may take in response to U.S. government actions
and general market conditions, all 2020 uranium production is
expected to be added to existing inventories. All
V2O5 production is expected to be sold on the
spot market if prices rise significantly above current levels, but
otherwise maintained in inventory.
ISR Activities
During the six months ended June 30,
2020, the Company extracted and recovered approximately
6,000 pounds of U3O8 from its Nichols Ranch
Project, which was placed on standby during the first quarter of
2020, due to the depletion of its existing wellfields. This amount
of uranium production falls within the Company's published guidance
of approximately 6,000 pounds of U3O8 from
Nichols Ranch during the year ended December
31, 2020.
As of June 30, 2020, the Nichols Ranch wellfields had nine
header houses that previously extracted uranium, which are now
depleted. The Company currently holds 34 fully-permitted,
undeveloped wellfields at Nichols Ranch, including four additional
wellfields at the Nichols Ranch wellfield, 22 wellfields at the
adjacent Jane Dough wellfield, and eight wellfields at the Hank
Project, which is fully permitted to be constructed as a satellite
facility to the Nichols Ranch Plant.
Subject to any actions the Company may take in response to U.S.
government actions, the Company expects to continue to keep the
Alta Mesa Project on standby until such time as improvements in
uranium market conditions are observed or suitable sales contracts
can be procured.
Conventional Activities
Conventional Extraction and Recovery Activities
During the six months ended June 30,
2020, the Company produced 67,000 pounds of high-purity
V2O5 from its Mill Pond Return program and
77,000 pounds of uranium from Alternate Feed Materials. During
2020, the Company expects to recover approximately 120,000 to
170,000 pounds of U3O8 at the White Mesa Mill
from in-circuit uranium inventories extracted from the recent
vanadium Pond Return campaign, from Alternate Feed Materials and
from other Pond Return activities. In addition, there remains an
estimated 1.5 to 3 million pounds of solubilized recoverable
V2O5 inventory remaining in the tailings
management facility awaiting future recovery from Pond Return as
market conditions may warrant, placing the company in a unique
position to restart vanadium production quickly.
The White Mesa Mill has historically operated on a campaign
basis whereby uranium and/or vanadium recovery is scheduled as mill
feed, cash needs, contract requirements, and/or market conditions
may warrant. The Company currently expects that planned uranium
production from Alternate Feed Materials, Pond Return, and the
receipt of uranium-bearing materials from mine cleanup activities
will keep the Mill in operation through all or most of 2020. The
Company is also actively pursuing opportunities to process new and
additional Alternate Feed Material sources and new and additional
low-grade ore from third parties in connection with various uranium
clean-up requirements. Successful results from these activities
would allow the Mill to extend the current campaign through 2020
and beyond. In addition, if improvements in uranium market
conditions are observed, or conventional mines are ramped up in
response to U.S. government actions to support domestic uranium
mining and/or recommendations of the Working Group, the Company
would expect to be able to keep the Mill operating over a
considerably longer period of time.
Conventional Standby, Permitting and Evaluation Activities
During the six months ended June 30,
2020, standby and environmental compliance activities
occurred at the Canyon Project. Subject to any actions the Company
may take in response to U.S. government actions and general market
conditions, during 2020, the Company plans to continue carrying out
engineering, metallurgical testing, procurement and construction
management activities at its low cost Canyon Project.
The Company is selectively advancing certain permits at its
other major conventional uranium projects, such as the Roca Honda
Project, a large, high-grade conventional project in New Mexico. The Company will also maintain
required permits at the Company's conventional projects, including
the Sheep Mountain Project, La Sal Complex, and Tony M, Whirlwind
and Daneros mines. In addition, the Company will continue to
evaluate the Bullfrog Property at its Henry Mountains Project.
Expenditures for certain of these projects have been adjusted to
coincide with expected dates of price recoveries based on the
Company's forecasts. All of these projects serve as important
pipeline assets for the Company's future conventional production
capabilities, as market conditions warrant.
Sales
During the six months ended June 30,
2020, the Company completed no uranium sales. The Company
currently has no remaining contracts, and therefore all existing
uranium inventory and future production is fully unhedged to future
uranium price increases.
During the six months ended June 30,
2020, the Company did not complete the sale of any vanadium.
The Company expects to continue to sell finished vanadium product,
when justified, into the metallurgical industry, as well as other
markets that demand a higher purity product, including the
aerospace, chemical, and potentially the vanadium battery
industries. The Company may also retain vanadium product in
inventory for future sale, depending on vanadium spot prices and
general market conditions.
The Company also continues to pursue new sources of revenue,
including additional Alternate Feed Materials and other sources of
feed for the White Mesa Mill, in addition to evaluating the
potential to recover REEs at the Mill.
The Company's Plans in Response to U.S. Government
Actions
As stated above, in response to U.S. government actions to
support domestic uranium mining, the Company is evaluating
activities aimed towards increasing uranium production at all or
some of its facilities, subject to general market conditions. No
decisions on any project-specific actions have been made at this
time.
Continued Efforts to Minimize Costs
The Company will continue to seek ways to minimize the costs of
maintaining its critical properties in a state of readiness for
potential improvements in market conditions, and is evaluating
whether additional cost-cutting measures may be warranted at this
time as a result of general market conditions.
About Energy Fuels: Energy Fuels is a
leading U.S.-based uranium mining company, supplying
U3O8 to major nuclear utilities. The Company
also produces vanadium from certain of its projects, as market
conditions warrant. Its corporate offices are in Lakewood, Colorado near Denver, and all of its assets and employees
are in the United States. Energy
Fuels holds three of America's key uranium production centers: the
White Mesa Mill in Utah, the
Nichols Ranch in-situ recovery ("ISR") Project in Wyoming, and the Alta Mesa ISR Project in
Texas. The White Mesa Mill is the
only conventional uranium mill operating in the U.S. today, has a
licensed capacity of over 8 million pounds of
U3O8 per year, and has the ability to produce
vanadium when market conditions warrant. The Nichols Ranch ISR
Project is on standby and has a licensed capacity of 2 million
pounds of U3O8 per year. The Alta Mesa ISR
Project is also on standby and has a licensed capacity of 1.5
million pounds of U3O8 per year. In
addition to the above production facilities, Energy Fuels also has
one of the largest NI 43-101 compliant uranium resource portfolios
in the U.S. and several uranium and uranium/vanadium mining
projects on standby and in various stages of permitting and
development. The primary trading market for Energy Fuels' common
shares is the NYSE American under the trading symbol "UUUU," and
the Company's common shares are also listed on the Toronto Stock
Exchange under the trading symbol "EFR." Energy Fuels' website is
www.energyfuels.com .
Cautionary Notes: This news release contains
certain "Forward Looking Information" and "Forward Looking
Statements" within the meaning of applicable United States and Canadian securities
legislation, which may include, but are not limited to, statements
with respect to: production and sales forecasts; costs of
production; scalability, and the Company's ability and readiness to
re-start or expand any of its existing projects to respond to any
improvements in uranium market conditions or in response to any
government actions to support U.S. uranium mining; any expectations
regarding vanadium opportunities, the Company's program for the
recovery of vanadium from pond solutions, remaining dissolved
vanadium in tailings facility solutions, future production
opportunities, or the Company's ability to sell any of its vanadium
product at a premium to spot prices or otherwise; the ability of
the Company to secure any new sources of alternate feed materials
or other processing opportunities at the White Mesa Mill; expected
timelines for the permitting and development of projects; the
Company's expectations as to longer term fundamentals in the market
and price projections; expectations to become or maintain its
position as a leading uranium company in the United States; any expectation as to how
the NFWG's recommendations may be implemented and the timing of
implementation; any expectation with respect to timelines to
production; any expectation that the Company may be able to sell
its uranium and vanadium inventories at potentially higher prices
in the future; any expectation that Congress will make the
requested appropriations; any expectations as to the Company's
ability to implement any additional cost-cutting measures;
any expectation that the Company may have the opportunity to
process uranium-bearing ores for the recovery of REEs, at all or on
commercial terms; any expectation that the Company will be able to
recover REEs and/or uranium from such ores on a commercial basis;
and any expectation that the Company and Neo may create a longer
term mutually beneficial relationship. 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," "budgets," "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:
production and sales forecasts; costs of production; scalability,
and the Company's ability and readiness to re-start or expand any
of its existing projects to respond to any improvements in uranium
market conditions or in response to any government actions to
support U.S. uranium mining; any expectations regarding vanadium
opportunities, the Company's program for the recovery of vanadium
from pond solutions, remaining dissolved vanadium in tailings
facility solutions, future production opportunities, or the
Company's ability to sell any of its vanadium product at a premium
to spot prices or otherwise; the ability of the Company to secure
any new sources of alternate feed materials or other processing
opportunities at the White Mesa Mill; expected timelines for the
permitting and development of projects; the Company's expectations
as to longer term fundamentals in the market and price projections;
expectations to become or maintain its position as a leading
uranium company in the United
States; any expectation as to how the NFWG's recommendations
may be implemented and the timing of implementation; any
expectation with respect to timelines to production; any
expectation that the Company may be able to sell its uranium and
vanadium inventories at potentially higher prices in the future;
any expectation that Congress will make the requested
appropriations; any expectations as to the Company's ability to
implement any additional cost-cutting measures; any
expectation that the Company may have the opportunity to process
uranium-bearing ores for the recovery of REEs, at all or on
commercial terms; any expectation that the Company will be able to
recover REEs and/or uranium from such ores on a commercial basis;
any expectation that the Company and Neo may create a longer term
mutually beneficial relationship; and the other factors
described under the caption "Risk Factors" in the Company's most
recently filed Annual Report on Form 10-K, 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.
It should further be noted that the NFWG's recommendations
for direct government purchases of uranium are subject to
appropriation by the Congress of the
United States, and there can be no certainty of the outcome
of the NFWG's recommendations. Therefore, the outcome of this
process remains uncertain.
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SOURCE Energy Fuels Inc.