Energy Fuels Announces 2017 Results
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Energy Fuels Announces 2017 Results
Lakewood, Colorado – March 9, 2018
Energy Fuels Inc. (NYSE American:UUUU; TSX:EFR) (“Energy Fuels” or the “Company”), today reported
its financial results for the year ended December 31 , 2017. The Company’s Annual Report on Form 10-K
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 & Operational Highlights:
x $31.0 million of total revenue was realized by the Company.
x At December 31, 2017, the Company had $32.4 million of working capital, including cash and cash
equivalents of $18.6 million and approximately 595,000 pounds of uranium concentrate inventory.
x Gross Profit of $8.3 million from mining and milling operations was realized by the Company.
x Gross profit margin from uranium recovery operations of approximately 27%.
x A net loss attributable to the Company of $27.8 million.
x 520,000 pounds of U 3O8 sales were completed by the Compan y at an average realized price of
$47.05 per pound. 320,000 pounds of sales were pursuant to long-term contracts at an average
price of $62.72 per pound and 200,000 pounds of sales were from spot sales at a price of $21.99 per
pound.
x 1,570,000 pounds of U 3O8 were recovered by the Company of which 624,000 pounds were for the
Company’s own account and 946,000 pounds were for the account of a tolling customer.
Mark S. Chalmers, Energy Fuels’ President and CEO stated: “2017 was another pivotal year for Energy
Fuels. Amidst continued weakness in uranium markets, we became the largest uranium producer in the
U.S., the culmination of a multi-year strategy for us.”
“In order to remain strong in these challenging uran ium markets, Energy Fuels continues to secure new
sources of alternate feed materials and to pursue opportunities in the cleanup of abandoned uranium
mines to feed the White Mesa Mill in 2018 and be yond. Vanadium also represents a very interesting
opportunity for us. Vanadium prices are up over 400% since 2016, and our White Mesa Mill has
produced over 45 million pounds during its history, which is over $500 million at today’s vanadium
prices. We are evaluating a number of very short-term opportunities to profit from recent vanadium
market strength.”
“In addition to the above, we filed a Section 232 Petition with the U.S. Department of Commerce, along
with Ur Energy, seeking an import quota that reserves 25% of the U.S. nuclear market for U.S. uranium.
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.”
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“While our focus is always on uranium, and we believe we are the best positioned company in the U.S.
to capitalize on a uranium price recovery, Energy Fuels is fortunate among our peers in that we have a
wide range of capabilities that allow us to capture diverse revenue-generating opportunities that are not
reliant on uranium price increases.”
Corporate Highlights:
On January 26, 2018, the Company announced the appointment of Mark S. Chalmers as President and
Chief Executive Officer (“CEO”) and a Director of th e Company, effective February 1, 2018. On January
31, 2018, Stephen P. Antony retired as CEO and as a Director of the Company. This followed the July 31,
2017 appointment of Mr. Chalmers as President and Chief Operating Officer (“COO”) of the Company. In
addition, on February 14, 2018, the Company announced additional management streamlining,
including (i) the appointment of David C. Frydenlund as Chief Financial Officer (“CFO”), General Counsel
and Corporate Secretary of the Company, effective March 2, 2018, following Daniel G. Zang’s departure
from the role of CFO on March 1, 2018; (ii) the appointment of W. Paul Goranson as COO; and (iii) the
appointment of Matthew J. Tarnowski as Chief Accounting Officer (“CAO”) and Controller. The Company
believes these management changes will allow the Company to realize cost savings by shrinking the size
of its executive team, while also streamlining manageme nt and maintaining a high level of continuity by
promoting individuals from within the organization.
On January 16, 2018, the Company and Ur-Energy (the “Petitioners”) announced that they had jointly
filed a Petition (the “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
National Security. 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 remedies which will set a quota to limit imports of uranium into the
U.S., effectively reserving 25% of the U.S. nuclear ma rket for U.S. uranium production. Additionally, the
Petition suggests implementation of a requirement fo r U.S. federal utilities and agencies to buy U.S.
uranium in accordance with the President’s Buy American Policy. The remedies proposed by the
Petitioners are expected to strengthen the U.S. uran ium mining industry, bolster national defense, and
improve supply diversification for U.S. utilities and their customers.
On May 17, 2017, the Board appointed Messrs. Benjam in Eshleman III and Robert W. Kirkwood to serve
as Directors of the Company pursuant to the Board’s power to increase the size of the Board by up to
one-third in number between annual meetings of shareholders. Messrs. Glenn Catchpole and Ron
Hochstein did not stand for re-election as Direct ors at the Company’s Annu al General Meeting of
Shareholders, and therefore ceased to be Directors effective May 17, 2017. Effective June 12, 2017, Mr.
Ames Brown resigned as a Director of the Company.
Project Highlights:
On August 23, 2017, the Company announced a new resource estimate for uranium and copper at the
Canyon Mine. In total, the Canyon Mine is estimated to contain 139,000 tons of Measured and Indicated
Mineral Resources with an average grade of 0.88% U 3O8 containing 2,434,000 pounds of uranium, along
with 18,000 tons of Inferred Mineral Resources with an average grade of 0.38% U3O8 containing 134,000
pounds of uranium, meaning that the total uraniu m resources increased by approximately 1 million
pounds of U 3O8 over the previous resource estimate. In the zone of the resource containing both
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uranium and copper, the estimate defines 11,939,000 pounds of copper contained in 101,000 tons of
Measured and Indicated Mineral Resources (non-additive to the above uranium resource tonnages) with
an average grade of 5.93% Cu. The Canyon Mine is a fully-permitted and substantially-developed
uranium/copper mine located in Northern Arizona.
On March 23, 2017, the Company received the final amendment to the Source Material License the
“License Amendment”) from the U.S. Nuclear Regulatory Commission (“NRC”) for the expansion of the
Nichols Ranch ISR Project (“Nichols Ranch”). Once all thirteen (13) wellfields are in production at Nichols
Ranch (nine are currently in production), the License Amendment allows the Company to expand
production into the twenty-two (22) adjacent Ja ne Dough wellfields. The NRC approval followed the
final U.S. Environmental Protection Agency (“EPA”) and Wyoming Department of Environmental Quality
(“WDEQ”) approvals of the aquifer exemption, which the Company announced on February 17, 2017.
On January 1, 2017, the U.S. Bure au of Land Management (“BLM”) issued a Final Environmental Impact
Statement (“EIS”) and Record of De cision (“ROD”) for the Company’s Sheep Mountain Project, a large
conventional uranium project located in central Wyoming. The Company now holds all of the major
government approvals needed to commence mining at the Sheep Mountain Project, as the Company
continues to evaluate options for processing the considerable quantities of uranium resources that may
be mined at the project.
On February 23, 2018, the BLM and U.S. Forest Service (“USFS”) issued their Decision Record, Final
Decision Notice and Findings of No Significant Impa ct (“FONSI”) for the La Sa l Mines Complex Plan of
Operations Amendment, approving the expansion of the Company’s 100%-owned La Sal Complex of
uranium/vanadium mines (the “La Sal Complex”). Th e La Sal Complex is a series of several past
producing uranium/vanadium mines, currently on standby status, along an 11-mile mineral trend
located in northeast San Juan County, Utah, including the Energy Queen, Beaver/La Sal and
Pandora/Snowball mines, and the Redd Block and Pine Ridge properties. At the same time, the BLM also
issued the EA, Decision Record, and FONSI for the expansion of the Company’s Daneros Mine. The BLM-
approved Mine Plan of Operations Modification allows for expanded mining operations, the reclamation
of historic mining disturbances, and the implementation of additional operational and emission controls.
On January 19, 2018, the Utah Department of Environmental Quality renewed the Company’s White
Mesa Mill license for another ten years, after whic h another application for renewal will need to be
submitted. During the review period for each application for renewal, the Mill can continue to operate
under its then existing license until such time as the renewed license is issued. The Mill’s license was
initially issued in 1980 and was also renewed in 1987 and 1997.
Asset Acquisition and Disposition Highlights:
On November 13, 2017, the Company announced it had entered into an agreement with Excalibur
Industries to acquire and extinguish royalties on its Nichols Ranch Proj ect, as well as acquire and hold
royalties on nearby operating and permitted ISR uranium projects owned by Cameco Corporation, for
approximately $3.5 million in shares of the Company that will be priced upon closing of the transaction,
subject to certain adjustments. The Company expects the transaction to be completed by mid-2018.
On November 2, 2017, the Company announced that it had entered into an agreement to sell certain
non-core uranium properties in Wyoming to Uranium Energy Corp. (“UEC”) for $5.39 million, including
$2.94 million in cash and $2.45 million in shares of UEC that will be priced upon the closing of the
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transaction. The disposed properties are adjacent to UEC’s Reno Creek Project. The Company expects
the transaction to be completed by mid-2018.
Selected Summary Financial Information:
Operations and Sales Outlook Overview:
The Company plans to extr act and/or recover uranium from the following sources in 2018 (each of
which is more fully described below):
x Nichols Ranch Project
x Alternate Feed Materials
x Pond Return at the White Mesa Mill
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, largely unrelated to uranium sale s prices, as well as evaluating the possibility of
recovering vanadium from existing pond solution s at the White Mesa Mill . The Company will also
continue its support of the Section 232 Trade Peti tion, and will evaluate additional acquisition and
disposition opportunities that may arise.
Extraction and Recovery Activities Overview
The Company recovered approximately 1,570,000 pounds of U 3O8 during the year ended December 31,
2017, of which 624,000 pounds were for the account of the Company and the remainder was for the
account of third parties under various alternate feed toll processing and other arrangements. The
Company expects to produce 460,000 to 520,000 pounds of U 3O8 in the year ending December 31, 2018
for its own account.
$000, except per share data
Year ended
December 31,
2017
Year ended
December 31,
2016
Year ended
December 31,
2015
Results of Operations:
Total revenues 31,046 $ 54,552 $ 61,351 $
Gross profit 8,336 13,737 23,734
Net loss attributable to the company (27,766) (39,413) (82,217)
Basic and diluted earnings (loss) per share (0.39) (0.70) (2.46)
$000's
As at December 31,
2017
As at December 31,
2016
Financial Position:
Working capital 33,296 $ 24,023 $
Property, plant and equipment 33,076 37,582
Mineral properties 83,539 92,625
Total assets 185,338 196,457
Total long-term liabilities 48,175 46,487
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ISR Activities
We extracted and recovered approximately 259,000 pounds of U 3O8 from Nichols Ranch for the year
ended December 31, 2017. The Company expects to produce approximately 140,000 to 160,000 pounds
of U3O8 in the year ending December 31, 2018 from Nichols Ranch. At December 31, 2017, 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 defer development of further header houses at its Nichols Ranch Project and to keep the Alta
Mesa Project on standby.
Conventional Extraction and Recovery Activities
The White Mesa Mill recovered approximately 1,312,000 pounds of U 3O8 during the year ended
December 31, 2017, primarily from alternate feed materials and from dissolved uranium in the Mill’s
tailings management system not recovered from prev ious processing activities (“Pond Return”). Of
these 1,312,000 pounds of U 3O8, 366,000 pounds were for the account of the Company and the
remainder was for the account of third parties unde r various alternate feed toll processing and other
arrangements. During the year ending December 31, 2018, the Company expects to recover
approximately 320,000 to 360,000 pounds of U3O8 at the White Mesa Mill for its own account. All of this
uranium is expected to be from alternate feed materials and Pond Return.
In addition, during 2018, the Company expects to re cover additional uranium for the account of third
parties under various alternate feed toll processing and other arrangements, returning all finished
uranium product from those activities to the generators of the feed materials. The fees from those toll
processing and other arrangements are expected to cover the Company's processing costs relating to
those activities and to provide the Company with a reasonable margin.
The Company is also actively pursuing opportunitie s to process new and additional alternate feed
sources, low grade ore from third parties in connection with various uranium clean-up requirements and
further recovery of Pond Return, as well as evalua ting the possibility of recovering vanadium from
existing pond solutions at the White Mesa Mill. Successful results from these activities would allow the
Mill to extend the 2018 campaign into 2019 and beyond.
Conventional Evaluation, Permitting and Standby Activities
The Company has completed shaft sinking at the Cany on Project, along with underground drilling to
further evaluate the deposit. On October 10, 2017, the Company filed an NI 43-101 report updating its
resource estimate for the Canyon Project. The updat ed resource estimate significantly increased the
pounds of uranium contained in the Canyon Project over previously reported estimates. It also upgraded
a large portion of the resources from the Inferred resource category to the Measured and Indicated
resource categories, and quantified significant copper resources. The Company believes it has identified
reasonable options for processing these copper reso urces at its White Mesa Mill as a by-product with
uranium. If successful, the recovered copper would provide a credit that would effectively lower the
U3O8 production cost per pound at the mine.
During 2018, the Company plans to complete the construction of the main mine sump at the Canyon
Project before mid-year 2018, after which time a ll field activities will have been completed. The
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Company plans to continue to carry out engin eering, metallurgical testing, procurement and
construction management activities in 2018, in cluding additional bench and pilot plant scale
metallurgical test work of the uranium/copper mi neralization, as well as pursue any additional
permitting actions that may be required to recover copper at the White Mesa Mill.
The Company is selectively advancing certain permits at its other 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, with the Record of Decision currently now scheduled to be
completed in 2019. The Company will maintain required permits at the Company’s conventional standby
projects including the La Sal Project and the Dane ros Project. 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 fu ture conventional production capabilities, as market conditions
warrant. A number of the Company’s conventional mines also have substantial vanadium resources
which the Company is currently evalua ting, particularly with the recent increases in vanadium prices to
over $13 per pound.
Cost Cutting Measures
During 2017, the Company engaged in significant cost-cutting measures. We reduced our total number
of employees from 195 in 2016 to an estimated 108 for 2018, representing a reduction of approximately
45% since 2016. Further, since 2016, the Company has streamlined its executive management team,
including recently announced management changes, by reducing the number of its senior executive
officers from six to three, representing a reductio n of 50%, and a significant reduction in general and
administrative expenses. The Company has also significantly reduced its land holding costs, while
maintaining its core properties and resource base. Finally, since the beginning of 2016, the Company has
sold or entered into agreements to sell surplus equipment and other assets as well as non-core mineral
properties, including the recent sale of our Reno Creek Property in 2018, for total proceeds to the
Company of approximately $6,440,000. The Company will continue to pursue additional cost cutting
initiatives, including further reductions in the scope of certain development initiatives, the potential sale
or abandonment of certain non-core properties and the sale of excess mining equipment and other
assets.
Sales
During the year ended December 31, 2017, the Company completed sales under its existing contracts of
520,000 pounds of U 3O8, including 320,000 pounds under three long-term contracts and 200,000
pounds under a spot contract. Of these deliveries, 120,000 pounds represent the final deliveries under
one of these contracts.
The Company has four remaining contracts, which require deliveries of 650,000 pounds of U 3O8 in 2018
at pricing expected to average approximately $48.00 per pound based on the fixed prices contained in
three of the contracts and current forecasts of spot prices and price inflation in the other contract. In
Q1-2018, the Company amended its remaining long-term contracts with one customer so that all
remaining deliveries of 400,000 lbs. under the contracts will occur in April 2018 at a fixed price of $61.30
per pound; including moving 200,000 lbs. of deliveries originally scheduled for 2019 and 2020 up to April
2018. The Company also has a contract for the delivery of 50,000 lbs. in Q1-2018 at a fixed price of
$24.75 per pound and a contract for the delivery of 200,000 lbs. in 2018 with pricing at a 0.5% discount
to the spot price at the time of delivery. As a result of the amendments, the Company will have no
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further long-term contractual obligations following its 2018 deliveries. All uranium sales after 2018 will
therefore be at spot prices and unhedged, unless the Company enters into new long-term contracts at
satisfactory prices in the future.
Trade Petition
In January 2018, the Company particip ated in the filing of a Petition fo r Relief with the U.S. Department
of Commerce under Section 232 of the Trade Expansion Act of 1962 (as amended) From Imports of
Uranium Products that Threaten U.S. National Security. The Company intends to continue its support of
this action during 2018. 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.
John White, P.E., 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.
About Energy Fuels: Energy Fuels is a leading integrated US -based uranium mining company, supplying U 3O8 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 U 3O8 per year. Alta Mesa is an ISR production center currently on care and maintenance.
Energy Fuels also has the largest NI 43-101 compliant uran ium 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 pe rmitting 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.
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 notes that “Gross Profit” pr ovides useful information to investors as an indication
of the Company’s principal business activities before cons ideration of how those activi ties are financed, sustaining
capital expenditures, corporate and exploration and evaluation expenses, finance income and costs, and taxation.
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: production and sales forecasts; the expected completion of transactions; whether all or
a portion of any copper resource at the Canyon Project can be recovered at the White Mesa Mill or elsewhere;
scalability, and the Company’s ability and readiness to re-start or expand any of its existing projects to respond to
any improvements in ur anium market conditions; the expectation that the Company will earn a reasonable margin
on any of its alternate feed material or other proc essing activities; any expect ations regarding vanadium
opportunities; the ability of the Company to secure any new sources of alternate feed materials or other processing
opportunities at the White Mesa Mill; any expectations regarding feeding the White Mesa Mill in 2018 and beyond;
the ability of the Company to manage its activities and asse ts conservatively under current market conditions while
maintaining its uranium resource base and recovery c apabilities; any expectations regarding benefits from
management streamlining; the ability of the Company to enter into suitable sales contracts in the future; expected
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timelines for the permitting and development of projects; mineral resource estimates; the Company’s expectations
as to longer term fundamentals in the market and price proj ections; the Company’s expectations as to expenditures
and cost reductions; expectations to become or maintain its position as a leading uranium company in the United
States; and the outcome of the Department of Commerce Se ction 232 investigation, including whether or not the
Secretary of Commerce will make a recommendation to the President and the nature of the recommendation;
whether or not the President will act on the recommendation and, if so, the nature of the action and remedy; and
the expected benefits of the proposed remedies. 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 forwar d-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. Factor s that could cause actual results to differ materially
from those anticipated in these forward-looking statemen ts include risks associated with: production and sales
forecasts; the expected completion of transactions; whether all or a portion of any copper resource at the Canyon
Project can be recovered at the White Mesa Mill or el sewhere; 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; the
expectation that the Company will earn a reasonable margin on any of its alternate feed material or other
processing activities; any expectations regarding vanadium opportunities; the ability of the Company to secure any
new sources of alternate feed materials or other processi ng opportunities at the White Mesa Mill; any expectations
regarding feeding the White Mesa Mill in 2018 and beyond; the ability of the Company to manage its activities and
assets conservatively under current market conditions whil e maintaining its uranium resource base and recovery
capabilities; any expectations regarding benefits from m anagement streamlining; the ability of the Company to
enter into suitable sales contracts in the future; expected timelines for the permitting and development of projects;
mineral resource estimates; the Company’s expectations as to longer term fundamentals in the market and price
projections; the Company’s expectations as to expenditu res and cost reductions; expectations to become or
maintain its position as a leading uranium company in the United States; and the outcome of the Department of
Commerce Section 232 investigation, including whet her or not the Secretary of Commerce will make a
recommendation to the President and the nature of the recommendation; whether or not the President will act on
the recommendation and, if so, the nature of the action and remedy; the expected benefits of the proposed
remedies; 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 accu rate, 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 a ssumes 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
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