DENVER, Nov. 5, 2018 /PRNewswire/ - Energy Fuels Inc.
(NYSE American: UUUU; TSX: EFR) ("Energy Fuels" or the
"Company"), today reported its financial results for the
quarter ended September 30, 2018. 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 September 30, 2018, the
Company had $51.3 million of working
capital, including $14.8 million in
cash, $27.2 million in marketable
securities and 385,000 pounds of finished goods inventory.
- Uranium production for our own account totaled 157,000 pounds
of U3O8 during the quarter, plus another
245,000 pounds of U3O8 for the accounts of
others.
- The Company had no scheduled contract sales during the quarter
and elected to complete no discretionary uranium spot sales during
the quarter, opting instead to accumulate uranium inventories from
production. The Company believes uranium prices will improve, and
it will be able to sell inventory at higher prices in the future.
As a result, revenues for the quarter were limited to $450,000, which, together with the non-cash
expenditure associated with the acquisition of the Nichols Ranch
royalties and expenditures on the Company's upcoming vanadium
programs contributed to an operating loss of $10.2 million for the quarter.
- The Company continued fulfilling alternate feed contracts,
which resulted in $450,000 of revenue
and $2.4 million of deferred revenue
during the quarter, and $3.1 million
of revenue and deferred revenue year-to-date. The Company currently
has contracts to secure a total value from alternate feed materials
of $7.1 million in revenue, deferred
revenue or uranium during the full year 2018, and continues to
pursue additional alternate feed opportunities.
- During the quarter, the Company continued preparations for its
planned November 2018 campaign to
recover up to approximately 4.0 million pounds of vanadium from
existing pond solutions at the White Mesa Mill, and commenced its
vanadium test-mining program, both aimed at allowing the Company to
capitalize on current vanadium market strength.
- During the quarter, the US Department of Commerce announced the
initiation of its investigation pursuant to Section 232 of the
Trade Expansion Act, in response to the Company's petition. The
petition seeks a remedy which would set a quota to limit imports of
uranium into the U.S., effectively reserving 25% of the U.S.
nuclear market for US uranium production, which if granted, would
be expected to strengthen uranium prices available to US
producers.
Mark S. Chalmers, Energy
Fuels' President and CEO stated:
"During the past quarter, Energy Fuels continued to pursue a
number of major opportunities that we believe will continue to
build shareholder value.
"I'm currently most excited about Energy Fuels becoming the
newest vanadium producer in the World in the next few weeks. We
believe we have four (4) million pounds of recoverable vanadium
dissolved in our pond solutions at the White Mesa Mill. Our plan is
to produce 200,000 to 225,000 pounds of V2O5
per month for a period of 16-20 months, subject to market
conditions, costs, and recoveries. This production should coincide
very well with today's strong vanadium prices, which as of today
have risen over 150% year-to-date to $26.25 per pound. We look forward to Energy Fuels
taking its place as the only primary producer of
V2O5 in North
America.
"In addition, at our request, the U.S. Department of Commerce
initiated a Section 232 investigation into uranium imports into
the United States. We proposed a
quota that would limit uranium imports into the U.S., reserving 25%
of the U.S. uranium market for U.S. uranium producers. Commerce is
currently in the midst of the investigation, which by law they must
complete by mid-April 2019. This
investigation has the potential to result in remedies that would
revitalize the domestic uranium industry and significantly bolster
U.S. energy and national security, while imposing a negligible cost
on utilities and their consumers.
"I'd also like to say a few words about how we are investing
today in future shareholder value. At the end of the quarter, we
held about 385,000 pounds of U3O8 inventory;
all U.S. origin. At today's uranium spot price of $28.00, we could have sold this material on the
spot market, and perhaps allowed the Company to realize over
$10 million in revenue for the
quarter. However, we made the conscious decision not to sell any of
our inventory, as we believe it will be worth more in the future
due to improving uranium market conditions. And, U.S.-origin
uranium could be worth considerably more if relief is granted under
Section 232. Therefore, we will continue to build unhedged uranium
inventory until the end of the year, giving us the ability to
quickly benefit from the future uranium price increases we expect.
We also intend to maintain our strong working capital position in
order to continue to be poised to increase uranium production in
response to a favorable section 232 determination and/or to
increase vanadium production if warranted by favorable vanadium
market conditions.
"I believe 2018 has truly represented a turning point for Energy
Fuels. Commerce initiated our 232 investigation into uranium; we
are planning to capitalize on a significant vanadium opportunity;
we are maintaining a strong working capital position; we are paying
down debt; we made the Russell 3000 Index; we acquired strategic
royalties in the State of Wyoming;
and we have enjoyed strong share price appreciation. Through these
achievements, I believe we have distinguished ourselves from other
uranium companies, and at this point, I don't believe we have any
peers with a similar ability to capitalize on the wide range of
opportunities which are unique to our company."
Additional Key Developments:
On August 14, 2018, the Company
announced the acquisition of royalties on our Nichols Ranch
Property, as well as a significant royalty on a number of
properties owned by Cameco Corporation in Northern Wyoming. Acquisition of these
royalties reduces our production costs at Nichols Ranch while also
providing potential revenue exposure to some of Cameco's properties
in the future and thus strengthens our position substantially in
Wyoming.
On September 12, 2018, the Company
announced it had repaid and retired the entire outstanding
principal balance on its Wyoming Industrial Development Revenue
Bond, totaling $8.3 million, thereby
eliminating future interest and principal payments.
On September 27, 2018, the Company
announced it was commencing vanadium production from the pond
solutions at its 100% owned White Mesa Mill, making Energy Fuels
the newest vanadium producer in the World and the only primary
producer of V2O5 in North America. The Company estimates the pond
solutions contain approximately four (4) million pounds of
recoverable V2O5, and the Company expects to
produce approximately 200,000 to 225,000 pounds of
V2O5 per month for a period of 16 to 20
months beginning in mid-November
2018, subject to market conditions, costs, and
recoveries.
On November 2, 2018, the Company
filed a new base shelf registration statement on Form S-3 with the
SEC allowing the Company to issue common shares, warrants,
subscription receipts, preferred shares, debt securities, or any
combination of such securities as units, in amounts, and at prices,
and on terms to be determined based on market conditions at the
time of sale, and as set forth in an accompanying prospectus
supplement, for an aggregate offering amount of up to US$150 million during the 25-month period that
the statement remains effective.
Mark S. Chalmers, President and
CEO of Energy Fuels continued: "In order to maintain financial
flexibility and efficient access to capital in light of the
significant opportunities in front of the Company, we renewed our
ATM program and base shelf registration statement. This financial
flexibility has allowed us to pay off our Wyoming Debt in full, to
advance our vanadium projects at the White Mesa Mill and La Sal
Complex, and to still have over $51.3
million in working capital at the end of the quarter, while
at the same time enjoying share appreciation of over 70% this year.
This also puts the Company in a stronger position to be able to
increase uranium and vanadium production quickly in the event of a
favorable Section 232 determination and as may be required in this
very hot vanadium market. It also gives us the ability to redeem
all or a portion of our convertible debentures next year, which
would eliminate all of the Company's remaining long-term debt.
Selected Summary Financial Information:
|
|
|
$000, except per
share data
|
Three months
ended
September 30,
2018
|
Three months
ended
September 30,
2017
|
Results of
Operations:
|
|
|
|
Total
revenues
|
$
451
|
$
5,499
|
|
Gross profit
(loss)
|
(263)
|
1,931
|
|
Operating
loss
|
(10,215)
|
(5,011)
|
|
Net loss attributable
to the company
|
(13,897)
|
(4,884)
|
|
Basic and diluted
loss per share
|
(0.16)
|
(0.07)
|
|
|
|
$000's
|
As at
September 30,
2018
|
As at
December 31,
2017
|
Financial
Position:
|
|
|
|
Working
capital
|
$
51,266
|
$
33,296
|
|
Property, plant and
equipment
|
30,616
|
33,076
|
|
Mineral
properties
|
83,539
|
83,539
|
|
Total
assets
|
196,781
|
185,338
|
|
Total long-term
liabilities
|
44,046
|
45,701
|
Operations Update and Outlook for year ending December 31, 2018
The Company plans to recover uranium and/or vanadium from the
following sources for the remainder of 2018 (each of which is more
fully described below):
- Nichols Ranch Project
- Alternate Feed Materials
- Pond Return at the White Mesa Mill
Uranium Recovery Activities
The Company expects to recover a total of 460,000 to 520,000
pounds of U3O8 in the year ending
December 31, 2018, of which 328,000
pounds of U3O8 were produced in the first
nine months of the year. The Company intends to publish its
guidance for 2019 after Board approval of the Company's 2019
budget, which is expected to occur in December 2018.
ISR Operations
We expect Nichols Ranch to recover a total of 140,000 to 160,000
pounds of U3O8 in the year ending
December 31, 2018, of which we
recovered 115,000 pounds during the nine months ended September 30, 2018. At September 30, 2018, the Nichols Ranch wellfields
had nine header houses extracting uranium. Until such time that
improvement in uranium market conditions is observed, or suitable
sales contracts can be entered into, the Company intends to
continue to defer further development of wellfields at its Nichols
Ranch Project and to keep its Alta Mesa Project on standby through
2018.
Conventional Operations
We expect to recover 320,000 to 360,000 pounds of
U3O8 at the White Mesa Mill during the year
ending December 31, 2018 for our own
account, of which 213,000 pounds were recovered during the nine
months ended September 30, 2018. Of
this material, approximately 130,000 pounds of
U3O8 are expected to be recovered from
Alternate Feed Materials and the remainder from Pond Return. In
addition to the 130,000 pounds of uranium expected to be recovered
from Alternate Feed Materials (valued at $3.5 million), the Company expects to receive an
additional $3.6 million in cash from
processing fees, for total expected value from alternate feed
materials of $7.1 million during
2018, of which $3.1 million of
revenue and deferred revenue was recognized during the nine months
ended September 30, 2018. The Company
is continuing to pursue other alternate feed material
opportunities, including the processing of low-grade ore from third
parties in connection with various uranium clean-up requirements,
some of which may result in additional value to the Company in 2018
and/or 2019. Successful results from these uranium related
activities, along with the vanadium recovery activities discussed
below, are expected to allow the Mill to operate for the remainder
of 2018 and through 2019.
At the Canyon Project, the Company plans to continue to carry
out engineering, procurement and construction management activities
for the remainder of 2018 and into 2019, including additional bench
and pilot plant scale metallurgical test work of the uranium/copper
mineralization, as well as pursue any additional permitting actions
that may be required to recover copper at the White Mesa Mill. The
timing of our plans to extract and process mineralized material
from this project will be based on the results of this additional
evaluation work, along with market conditions, available financing,
and sales requirements.
The Company continues to selectively advance certain permits at
its other major conventional uranium projects. The Company plans to
continue the licensing and permitting of its Roca Honda Project, a
large, high-grade conventional project in New Mexico, with the Record of Decision
currently scheduled to be completed in 2019. The Company will also
continue to evaluate the Bullfrog Property at its Henry Mountains
Project. All of these projects serve as important pipeline assets
for the Company's future conventional production capabilities, as
market conditions warrant.
In addition, a number of the Company's conventional uranium
mines also have substantial vanadium resources. These mines are
discussed in the vanadium section below.
Uranium Trade Petition
In January 2018, the Company
participated in the filing of a Petition for Relief with the U.S.
Department of Commerce ("DOC") under Section 232 of the Trade
Expansion Act of 1962 (as amended) From Imports of Uranium Products
that Threaten U.S. National Security (the "Petition"). The Petition
describes how uranium and nuclear fuel from state-owned and
state-subsidized enterprises in Russia, Kazakhstan, Uzbekistan, and China potentially represent a threat to U.S.
national security. The Petition seeks a remedy which would set a
quota to limit imports of uranium into the U.S., effectively
reserving 25% of the U.S. nuclear market for U.S. uranium
production. Additionally, the Petition suggests implementation of a
requirement for U.S. federal utilities and agencies to buy U.S.
uranium in accordance with the President's Buy American Policy. The
remedies, if granted, would be expected to strengthen the U.S.
uranium mining industry, bolster national defense, and improve
supply diversification for U.S. utilities and their customers. The
Company intends to continue its support of this action for the
remainder of 2018 and during 2019.
On July 18, 2018, the DOC
initiated its investigation. Pursuant to Section 232 of the Trade
Expansion Act, starting on July 18,
2018, the Secretary of the DOC has 270 days to prepare a
report to the President of the United
States. Following receipt of the Secretary's report, the
President then has 90 days to act on the Secretary's
recommendations, and if necessary take action to "adjust the
imports of an article and its derivatives" and/or pursue other
lawful non-trade related actions to address the threat. It should
be noted, however, that there can be no certainty of the outcome of
the Petition, and therefore the outcome of this process is
uncertain.
Vanadium Recovery Activities
Beginning in November 2018, the
Company expects to commence recovering vanadium from existing
tailings pond solutions, which result from past mineral processing
operations, at the White Mesa Mill in a manner similar to the way
the Company has recovered uranium from those same solutions. Based
on bench scale analyses, the Company believes it may be able to
recover up to 4.0 million pounds of solubilized vanadium from the
Mill's tailings and evaporation ponds at a potential rate of
200,000 to 225,000 pounds of V2O5 per month.
This recovery of vanadium, assuming a successful ramp-up to
commercial-scale production, would be expected to continue through
2019 and into 2020, given favorable costs, recoveries, and
then-prevailing market conditions.
The Company is also currently engaged in a test-mining program
at its La Sal Complex to evaluate different approaches that
selectively target high-grade vanadium zones, thereby potentially
increasing productivity and mined grades for vanadium and
decreasing mining costs per pound of V2O5 and
U3O8 recovered. This test mining campaign is
expected to continue through the remainder of 2018 and into 2019
for as long as useful information continues to be developed and/or
market conditions warrant. The early results of this test mining
are very encouraging.
The Company is also reviewing the economics of processing
certain previously mined uranium/vanadium ore stockpiles, as well
as the recovery of vanadium alone or in combination with uranium
from other potential vanadium-bearing streams, as market conditions
may warrant.
Uranium Readiness Activities
The Company is also evaluating various uranium-readiness
activities it can undertake at this time to enhance its position to
benefit from expected improvements in uranium market conditions as
a result of what the Company believes to be positive uranium market
fundamentals, or as a result of potential remedies from the
Company's Section 232 Petition. These activities may include:
improvements in the flow rates at the Company's Nichols Ranch
project to allow for increased maximum production levels at that
facility; exploration drilling at the Company's Alta Mesa project to further delineate resources
in currently licensed areas, which would allow for more pounds to
be included in near-term wellfield development; and accelerated
permitting and development activities at certain of the Company's
other uranium and uranium/vanadium mines. The Company expects to be
able to provide further details on these potential activities in
December 2018, following the Board's
approval of the Company's 2019 budget.
Sales and other revenue update and outlook year ending
December 31, 2018
While no deliveries of U3O8 occurred
during Q3-2018, in the nine months ended September 30, 2018, the Company completed a total
of 550,000 pounds of U3O8 sales at a
weighted average price of $50.94 per
pound.
In the final three months of the year, the Company expects to
complete one delivery of 100,000 pounds of
U3O8 under a contract where the price is
based on the average spot price per pound of uranium for the five
weeks prior to the date of delivery.
All of the Company's current uranium production is 100%
unhedged, and all uranium sales in 2019 and beyond will be made on
the spot market or pursuant to new long-term contracts to the
extent such contracts may be available on satisfactory terms. While
the Company does not currently forecast the need to complete any
spot sales in 2019 for cash generation purposes, uranium
inventories, along with expected uranium production in 2019, are
expected to provide the Company with the flexibility to complete
spot sales in 2019 if market conditions warrant.
About Energy Fuels: Energy Fuels is a leading
integrated US-based uranium mining company, supplying
U3O8 to major nuclear utilities. Its
corporate offices are in Denver,
Colorado, and all of its assets and employees are in the
western United States. 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 standby. Energy Fuels also has the largest National Instrument
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 also produces vanadium as a by-product of
its uranium production from certain of its mines on the Colorado
Plateau, as market conditions warrant. 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 STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This news release contains certain "Forward Looking
Information" and "Forward Looking Statements" within the meaning of
applicable securities legislation, which may include, but is not
limited to, statements with respect to: production, revenue
and sales forecasts; any expectation that the Company will maintain
a strong working capital position; any expectation that the
Company's acquisition of royalties may reduce operating costs at
the Company's Nichols Ranch project; any expectation that
the Company plans to commence vanadium production from existing
pond solutions at the White Mesa Mill and any expected vanadium
recoveries from such solutions; any expectation that high-grade
vanadium associated with lower grade uranium exists in the
La Sal mine complex or in any
other mines, and the extent to which it may exist; any expectation
relating to potential increases in productivity and mined grades
for vanadium and decreases in mining costs at the La Sal Complex or
any other mines; any expectation that the Company may be able to
capitalize on current high vanadium prices; any expectation that
the Company will be the only primary producer of
V2O5 in North
America; the ability of the Company to secure any new
sources of alternate feed materials, land clean-up materials, or
other processing opportunities at the White Mesa Mill; whether all
or a portion of any copper resource at the Canyon project can be
recovered at the Mill or elsewhere; optionality, and the Company's
ability and readiness to re-start or expand any of its existing
projects to respond to any improvements in uranium or vanadium
market conditions; any expectations regarding keeping the White
Mesa Mill in operation through 2018 and 2019; expected timelines
for the permitting and development of projects; the Company's
expectations as to longer term fundamentals in the market and price
projections and any expectations that uranium prices may improve;
any expectations as to expenditures and cost reductions; any
expectations with respect to the repayment of outstanding
indebtedness; any expectations of the Company becoming or
maintaining its position as a leading uranium or vanadium company
in the United States; any expected
benefits from inclusion in the Russell indexes; any expectations
with regard to the outcome of the Section 232 investigation,
including any expectation that any remedy granted may strengthen
uranium prices available to US producers; any expectation that the
Company will clear the base shelf prospectus with the SEC or on the
terms filed; any expectation about any future appreciation of the
Company's shares; and any expectations as to the outcome of the
Company's uranium readiness evaluations and any activities it may
undertake. 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: production, revenue and sales forecasts;
any expectation that the Company will maintain a strong working
capital position; any expectation that the Company's
acquisition of royalties may reduce operating costs at the
Company's Nichols Ranch project; any expectation that the
Company plans to commence vanadium production from existing pond
solutions at the Mill and any expected vanadium recoveries from
such solutions; any expectation that high-grade vanadium associated
with lower grade uranium exists in the La
Sal mine complex or in any other mines, and the extent to
which it may exist; any expectation relating to potential increases
in productivity and mined grades for vanadium and decreases in
mining costs at the La Sal Complex or any other mines; any
expectation that the Company may be able to capitalize on current
high vanadium prices; any expectation that the Company will be the
only primary producer of V2O5 in
North America; the ability
of the Company to secure any new sources of alternate feed
materials, land clean-up materials, or other processing
opportunities at the White Mesa Mill; whether all or a portion of
any copper resource at the Canyon project can be recovered at the
Mill or elsewhere; optionality, and the Company's ability and
readiness to re-start or expand any of its existing projects to
respond to any improvements in uranium or vanadium market
conditions; any expectations regarding keeping the White Mesa Mill
in operation through 2018 and 2019; expected timelines for the
permitting and development of projects; the Company's expectations
as to longer term fundamentals in the market and price projections
and any expectations that uranium prices may improve; any
expectations as to expenditures and cost reductions; any
expectations with respect to the repayment of outstanding
indebtedness; any expectations of the Company becoming or
maintaining its position as a leading uranium or vanadium company
in the United States; any expected
benefits from inclusion in the Russell indexes; any expectations
with regard to the outcome of the Section 232 investigation,
including any expectation that any remedy granted may strengthen
uranium prices available to US producers; any expectation that the
Company will clear the base shelf prospectus with the SEC or on the
terms filed; any expectation about any future appreciation of the
Company's shares; any expectations as to the outcome of the
Company's uranium readiness evaluations and any activities it may
undertake; and the other factors described under the
caption "Risk Factors" in the Company's Annual Report on Form 10-K
dated March 9, 2018, 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.
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SOURCE Energy Fuels Inc.