Energy Fuels Announces Agreement for Transformational Acquisition of Base Resources , Creating a Global Leader in Critical Minerals Production with a Focus on Uranium, Rare Earth Elements and Heavy Mineral Sands
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Energy Fuels Announces Agreement for Transformational Acquisition of Base Resources ,
Creating a Global Leader in Critical Minerals Production with a Focus on Uranium, Rare Earth
Elements and Heavy Mineral Sands
• The acquisition will include Base Resources’ 100%-owned advanced, world- class Toliara heavy
mineral sands project in Madagascar (“Toliara” or the “Project”), which includes a long-life, high-
value and low cost monazite stream, produced as a byproduct of primary titanium and zirconium
production.
• Toliara monazite production to be processed at Energy Fuels’ 100%-owned White Mesa Mill (the
“Mill”) into separated rare earth element (“REE”) oxides, at low capital and operating cost, setting
a new paradigm for low-cost, globally competitive U.S.-centered rare earth oxide production.
• The transaction will also secure Base Resources’ mine development and operations team, who
have a successful track -record of designing, constructing, and profitably operating a world- class
heavy mineral sands operation in Africa.
• Energy Fuels is currently engaged in high-level discussions with various U.S. government agencies
and other offices who provide support for critical mineral projects, domestically and abroad.
• The transaction is complementary to and further strengthens Energy Fuels’ U.S.-leading uranium
production capability and plans.
• Senator Mike Lee, the Senior Senator from Utah and a member of the Senate Committee on Energy
and Natural Resources, stated: “I’m grateful to Energy Fuels for their work to ensure the United
States has a domestic critical mineral source. The acquisition of Base Resources and the Toliara
project will only further their capacity and ability to produce minerals needed for defense,
technology, and everyday life.”
• Conference call on Monday, April 22, 2024 at 8:00 am ET.
LAKEWOOD, Colo., Apr. 21, 2024 /CNW/ - Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) (“ Energy
Fuels” or the “ Company”), a leading U.S. producer of uranium, REE s, and vanadium, is pleased to
announce that it has executed a definitive Scheme Implementation Deed (the “SID”) with Base Resources
Limited (ASX:BSE) (AIM:BSE) (“ Base Resources”) pursuant to which Energy Fuels has agreed to acquire
100% of the issued shares of Base Resources (the “Transaction”) in consideration for (i) 0.0260 Energy
Fuels common shares (the “ Share Consideration”) and (ii) A$0.065 in cash , payable by way of a special
dividend by Base Resources to its shareholders (the “ Cash Consideration”, and together with the Share
Consideration, the “ Scheme Consideration”) for each Base Resources ordinary share held , for a total
equity value of approximately A$375 million1. The Transaction will be effected by way of a scheme of
1 Based on (a) Base Resource’s fully diluted ordinary shares on issue of 1,239,116,949 (including performance rights that will vest by virtue of
the Transaction), (b) a share exchange ratio of 0.0260, (c) Energy Fuels’ closing share price on April 19, 2024 of US$5.84 per share and (d)
A$0.065 per Base Resources share in cash.
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arrangement under Australia’s Corporations Act (the “Scheme”). Unless otherwise indicated in this news
release, all references to dollars or $ are references to United States dollars.
KEY TRANSACTION HIGHLIGHTS
• The Transaction will unlock significant value for both Energy Fuels and Base Resources
shareholders due to valuable and clearly identifiable synergies.
• Base Resources’ Toliara project in Madagascar is a world-class, advanced-stage, low-cost, and
large-scale heavy mineral sands project. In addition to its stand- alone, ilmenite, rutile (titanium)
and zircon (zirconium) (collectively, “Ilmenite and Zircon”) production capability, the Project also
contains large quantities of Monazite which is a rich source of the ‘ magnet’ REEs used in electric
vehicles (“EVs”) and a variety of clean energy and advanced technologies.
• Subject to receipt of further required Government of Madagascar approvals, the Monazite can be
recovered as a byproduct of Ilmenite and Zircon production at low incremental cost, thereby
adding to Toliara’s world- class Ilmenite and Zircon capability at a cost of production that the
Company expects to be globally competitive and will position Energy Fuels to be a first -tier REE
oxide producer.
• Once in production, t he Monazite from Toliara will provide a large portion of the raw materials
needed for Energy Fuels’ rapidly expanding and world-competitive REE oxide production facility at
the Mill. Since 2021, Energy Fuels has proven its technical capabilities, speed- to-market, and
competitiveness in a manner that is not being accomplished by any other facility in North America,
first by processing Monazite to produce a mixed REE carbonate at the Mill, which it has been selling
into the commercial REE market since 202 1, and now by the commissioning of its Phase 1 NdPr
separation facility at the Mill.
• Energy Fuels is currently engaged in high- level discussions with numerous U.S. government
agencies and other offices who provide financial support for critical mineral projects with in the
U.S. and internationally, which may include grants , low-interest debt, non- or limited-recourse
debt, loan guarantees, and other support vehicles.
• Energy Fuels is also releasing an AACE International (“AACE”) Class 4 Pre-Feasibility Study (not a
Pre-Feasibility Study subject to or intended to be compliant with National Instrument 43-101 (“NI
43-101”) or Subpart 1300 of Regulation S-K (“S-K 1300”)) dated April 22, 2024, prepared by Roger
Mason, Engineering Manager, WSP USA Environment & Infrastructure Inc. , indicating globally
competitive capital and operating costs for its planned Phase 2 expanded REE oxide production at
the Mill (the “ Mill PFS”), which will be filed on the Electronic Document Gathering and Retrieval
System (“ EDGAR”) at www.sec.gov/edgar , and will be available on the System for Electronic
Document Analysis and Retrieval Plus (“SEDAR+”) at www.sedarplus.ca, and on the Company’s
website at www.energyfuels.com.
• With the Mill’s unique, globally competitive, U.S.-based REE production capability, Energy Fuels is
uniquely positioned to unlock significant value from Toliara’s low-cost Monazite production, in a
manner that the Company believes no other facility in the U.S. is capable of at this time.
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• Monazite from Toliara will also provide material quantities of low-cost uranium production at the
Mill over the life of the Project, which will supplement Energy Fuels’ U.S. -leading uranium
production capacity.
• This addition of a low-cost source of REE raw materials to Energy Fuels’ globally competitive U.S.
REE production infrastructure, along with a sustainable low-cost source of uranium production, is
expected to be highly accretive to Energy Fuels’ shareholders on a net asset value per share basis,
with potential to unlock significant further upside.
• As part of this Transaction, Energy Fuels will also access Base Resources’ proven leadership and
heavy mineral sands operations team, which has an exceptional record of responsible asset
development, construction, commissioning and profitable production in Africa. The Base
Resources team will not only continue to oversee the development and operation of Toliara but
will also enhance Energy Fuels’ heavy mineral sands teams in Australia and Brazil, thus allowing
the Company to maximize the value of all projects to the Company’s shareholders.
• The offer is unanimously recommended by Base Resources’ Board of Directors and Base Resources
has also received voting intention statements from each of Base Resources’ two major
shareholders, confirming that they each intend to vote in favor of the Scheme 2. Those two
shareholders respectively hold 26.5% and 24.8% of Base Resources’ shares. In addition, each of
Base Resources’ directors, holding (in aggregate) an additional 1.2% of Base Resources ’ shares,
has confirmed their intention to vote in favor of the Scheme2.
• Energy Fuels will host an investor webcast and conference call on April 22, 2024 at 8:00 a.m.
Eastern Time (10:00 p.m. Australian Eastern Standard Time).
Mark S. Chalmers, President and CEO of Energy Fuels stated: “The acquisition of Base Resources and the
Toliara project represents a monumental leap forward for the Company, as we continue to execute on a
truly revolutionary REE, uranium and critical mineral combined strategy. For the past four- plus years,
Energy Fuels has innovated a new way to produce critical minerals, that we believe is more cost
competitive than traditional approaches, by leveraging our uranium processing expertise and
infrastructure to develop a secure, U.S.-centric REE oxide supply chain.
“At the same time, we plan to maintain our leadership and profitability in our core U.S. -based uranium
business without diminishing our uranium capabilities or uranium growth potential in any way . In fact ,
Toliara will provide a steady, low-cost source of uranium for the Company over the life of the Project.
“To date, we have secured long-term sources of REE concentrate through offtake (Chemours), and direct
ownership (the Company’s 100% owned Bahia Project in Brazil once developed, and potentially 100%
ownership of Base Resources’ Toliara project, and further potential offtakes through a joint venture being
negotiated with Astron Corporation Limited (the Astron Donald Project in Australia)). Toliara is expected
to be the cornerstone source of feedstock supply to the Mill, with the scale to provide an average o f
21,800 tonnes of rare earth-bearing Monazite per year at a cost that we believe will be at or below other
2 In the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the
best interests of shareholders.
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leading global REE producers, including those in China.
“Energy Fuels has proven its REE processing capabilities at our Mill in Utah, as we have commercially
produced a high-purity mixed REE carbonate since 2021. We recently completed construction of and are
currently commissioning the Phase 1 REE separation circuit at the Mill, designed to produce up to 1,000
tonnes of NdPr oxide per year, which would be sufficient to supply enough ‘magnet’ REE oxides to produce
500,000 to 1 million EVs per year. We have also released the Mill PFS announcing what we believe to be
globally competitive capital and REE production costs. Based on these highly compelling economics and
the expected consummation of the Base Resources and Astron transactions, Energy Fuels is also planning
to update the Phase 2 REE separation infrastructure for the Mill to expand our production capacity to
4,000 to 6,000 tonnes of NdPr oxide per year, along with 150 - 225 tonnes of Dy oxide and 50 - 75 tonnes
of Tb oxide per year, which would supply enough ‘magnet’ REE oxides to power 3 to 6 million EVs per
year. This would put Energy Fuels in the REE oxide production capacity category of the other major
‘western’ REE suppliers.
“We plan to supply REE oxides to U.S., European and Asian EV, wind energy and other clean energy
manufacturers, along with emerging commercial REE metal -making, alloying, and magnet -making
facilities now under development in the U.S. We also plan to be a reliable supplier to the U.S. defense
industry, which could include offtake for other REE oxides, besides the ‘magnet’ oxides, contained in
Monazite. This acquisition, along with the Mill’s current and planned REE separation capability, will go a
long way in establishing a ‘western’ REE supply chain. Energy Fuels is also in high -level discussions with
numerous U.S. government agencies and offices that support critical mineral projects, and we look
forward to advancing these discussions as we continue to build our REE business.
“The transaction will not only secure a world-class project for Energy Fuels at a highly attractive acquisition
price compared to the fundamental value of the Project but will also secure a mine development and
operations team with a successful track -record of designing, constructing, and profitably operating a
world-class heavy mineral sands operation in Africa.”
Tim Carstens, Managing Director of Base Resources, commented: “This t ransaction reflects the
exceptional quality of the Toliara project and the efforts of the Base Resources team over several years to
advance the project towards construction readiness. The combined company will have the financial and
technical capability to not only build Toliara into one of the best critical mineral projects in the world, but
also to develop an integrated value chain for the rare earth elements that are essential to the gl obal
energy transition. Shareholders of Base Resources will receive both a compelling and immediate premium,
and the opportunity to further participate in the market recognition and development of a company with
a unique diversified position in the critical minerals landscape.”
ABOUT TOLIARA
The Toliara project is a world-class, advanced-stage, large-scale critical mineral deposit underpinned by
the Ilmenite, Zircon and Monazite-rich Ranobe deposit in southwest Madagascar.
On September 27, 2021, Base Resources released the outcomes of its updated and enhanced Definitive
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Feasibility Study (“DFS2”)3 for the Toliara project, which calculated an after-tax NPV10 (10% discount rate)
of $1 billion, after-tax IRR of 23.8%, undiscounted life -of-mine free cash flows of $5.9 billion, and initial
capital expenditures of $520 million to achieve first production. According to DFS2, the Ranobe deposit’s
estimated Ore Reserves of 904 million tonnes at 6.1% heavy mineral, are sufficient to support an initial
38-year mine life4. These results are based on the production of Ilmenite and Zircon alone.
The Ranobe deposit also contains large quantities of Monazite, which is a rich source of the ‘magnet’ REEs;
neodymium and praseodymium (“ NdPr”), Dysprosium (“ Dy”) and Terbium (“ Tb”), used in EVs and a
variety of clean energy and advanced technologies, that can be recovered as a byproduct of Ilmenite and
Zircon production at the Project.
In response to rising demand for REEs, on December 14, 2023, Base Resources released a Pre -Feasibility
Study for Toliara5 on the production of Monazite through the concentration of the existing waste stream
from the DFS2 mineral sands processing facilities (the “Monazite PFS”). Based on the combined outcomes
of DFS2 and the Monazite PFS, Toliara has an overall after-tax NPV10 (10% discount rate) of $2.0 billion,
after-tax IRR of 32.4%, undiscounted life of mine free cash flow s of $10. 7 billion, and initial capital
expenditures of $591 million, which included additional incremental capital expenditures of $71 million
for Monazite production, over the 38-year mine life . As the Monazite is an add -on to the stand -alone
Ilmenite and Zircon production and would be produced through concentration of the waste stream from
processing of the mined Ore Reserves, the Mineral Resources and Reserves at the Project did not change.
The Monazite PFS thus demonstrated that world-class Monazite production capability can be added to
Toliara’s already stand-alone, world-class Ilmenite and Zircon production capability at a low incremental
cost of production , thereby allowing the Monazite production to withstand low or variable REE oxide
markets.
Toliara is expected to be Energy Fuels’ cornerstone source of Monazite supply, providing a long-term and
large-scale supply of Monazite (21,800 tonnes per annum (“tpa”) average Monazite production), to the
Mill for processing into REE oxides and other advanced REE materials , along with the recovery of
contained uranium. As the Monazite will be a very low-cost byproduct of Toliara’s primary Ilmenite and
Zircon production, the total cost of production of REE oxides at the Mill is expected to be low -cost and
globally competitive.
Processing Monazite from Toliara will also add approximately 75,000 lbs of low-cost uranium production
3 The financial information relating to the Ranobe deposit’s mineral sands is based on the definitive feasibility study prepared on September 27,
2021. This study constituted a “Feasibility Study” for the purposes of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves, 2012 Edition ("JORC") and the Ore Reserves underpinning this study were estimated in accordance with JORC.
The results from this study and the estimated Ore Reserves may not be comparable to (as the case may be) data or estimates under either NI 43-
101 or S-K 1300– see note below under “Qualified Person”.
4 The JORC estimate of Ore Reserves is presented for informational purposes only. A qualified person has not done sufficient work to classify
these estimates as current NI 43-101 or S-K 1300 estimates of mineral resources, mineral reserves, or exploration results. Energy Fuels is not
treating these estimates as a current estimate of mineral resources, mineral reserves, or exploration results – see note below under “Qualified
Person”.
5 The production and financial information relating to the Ranobe deposit’s monazite is based on the pre-feasibility study prepared on December
14, 2023. This study constituted a “Pre-Feasibility Study” for the purposes of JORC and the Mineral Resources underpinning this study were
estimated in accordance with JORC. The results from this study and the estimated Mineral Resources may not be comparable to (as the case may
be) data or estimates under either NI 43-101 or S-K 1300 – see note below under “Qualified Person”.
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(at an incremental cost of approximately $8 per pound) per year at the Mill, totaling approximately 3
million pounds of recovered U3O8 over the life of the Project. This will provide a reliable low-cost stream
of uranium production at the Mill that will be able to withstand lower uranium prices and will supplement
Energy Fuels’ U.S.-leading uranium production capacity from other mines and sources.
Base Resources has a proven leadership and mineral sands operations team with an exceptional record of
responsible and profitable production at its now winding down heavy mineral sands project in Kwale
County, Kenya, all of whom are expected to join the Energy Fuels management team upon completion of
the Transaction. The Base Resources team will continue to manage Toliara and will enhance Energy Fuels’
teams in Australia and Brazil, thus allowing the Company to maximize the value of all projects to
shareholders.
Although the Toliara project holds a mining permit that allows production of Ilmenite , Rutile and Zircon,
development at the Project was suspended by the Government of Madagascar pending negotiation of
fiscal terms applying to the Project . With the recent adoption of a new Mining Code in Madagascar and
Base Resources and the Government of Madagascar making sound progress on fiscal terms negotiations,
the Company believes the suspension will be lifted, and required legal and fiscal stability achieved, during
2024. Aspects intended to facilitate the inclusion of Monazite on the Project’s mining permit as soon as
reasonably practicable after fiscal terms are agreed are included in the scope of current negotiations.
However, there can be no assurance as to the timing of completion of fiscal terms negotiations and lifting
of the current suspension, the timing for achieving sufficient legal and fiscal stability or the timing for
approval of the addition of Monazite to the mining permit. If such approvals are not obtained, or obtained
on terms less favorable than expected, this could delay any final investment decision in relation to the
Project or prevent or otherwise have a significant effect on the development of the Project or ability to
recover Monazite from the Project.
Highlights of Toliara’s economics are presented below:
Unit Monazite
PFS1,3
Mineral
Sands DFS22,3
Combined
Mineral Sands
+ Monazite3
NPV10 (discount rate of 10%),
Post-Tax, Real US$ millions 999 1,008 2,006
NPV8 (discount rate of 8%)
Post-Tax, Real US$ millions 1,281 1,385 2,666
IRR % 78.6% 23.8% 32.4%
Initial (Stage 1) Capex US$ millions 71 520 591
Construction Period (Stage 1) Months 29 27 27
Stage 2 Capex US$ millions N/A 137 137
Construction Period (Stage 2) Months N/A 21 21
Capital Payback Period (Stage
1 + 2) Years 1.0 4.5 3.6
Life of Mine (LOM) Years 38 38 38
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LOM Free Cash Flow US$ millions 4,733 5,922 10,655
LOM Operating Costs +
Royalty US$/t ore mined 0.98 3.78 4.92
LOM Operating Costs +
Royalty US$/t produced 1,089 88 112
LOM Revenue US$/t produced 8,648 306 477
LOM Cash Margin US$/t produced 7,559 218 365
LOM Revenue: Cost of Sales
Ratio Ratio : 1 7.9 3.5 4.3
Notes:
1) Note the Monazite PFS (14 December 2023) contemplates selling the Monazite from the Toliara project to a third party at world
Monazite prices. In contrast, the combined company would transport the Monazite to the Mill for additional processing and
separation. The numbers in this table do not reflect any downstream processing or margins at the Mill.
2) The DFS2 is dated 27 September 2021.
3) The Monazite PFS and DFS2 constituted a “Pre -Feasibility Study” and “Feasibility Study” (respectively) for the purposes of JORC .
Additionally, the Monazite PFS was based on Mineral Resources, and DFS2 was based on Ore Reserves, which, in each case, were
estimated in accordance with JORC. The results from these studies and such estimates may not be comparable to data or estimat es
under either NI 43-101 or S-K 1300 – see note below under “Qualified Person”.
MILL SYNERGIES
On April 2 2, 2024, Energy Fuels will release its Mill PFS projecting globally competitive capital and
operating costs for planned expanded REE oxide production at the Mill. The Mill is currently
commissioning its Phase 1 NdPr separation facility, which has been constructed within the Mill’s existing
solvent extraction building and is designed to process up to 10,000 tpa of Monazite to produce up to 1,000
tpa of NdPr oxide.
The economics detailed in the Mill PFS are for the Phase 2 expansion of REE separation capacity in one or
more additional facilities at the Mill, capable of processing 30,000 tpa of Monazite to produce
approximately 3,000 tpa of NdPr oxide. The Mill PFS shows globally competitive capital expenditures of
$348 million for the 30,000 tpa Phase 2 separation facility and an average processing cost of $29.88/kg
NdPr. This analysis does not include any capital or operating costs associated with the recovery of Dy and
Tb or any revenues associated with the sales of those “heavy” REE oxides.
Upon completion of the Transaction, Energy Fuels plans to update the DFS2 and the Monazite PFS and re-
issue those reports in a form that compl ies with NI 43 -101 and S -K-1300, and that also updates and
incorporates the results of the Mill PFS to expand Phase 2 production capacity from a 30,000 tpa Monazite
process plant capable of produc ing approximately 3,000 tpa of NdPr oxide to a 40,000 - 60,000 tpa
Monazite process plant capable of producing approximately 4,000 - 6,000 tpa of NdPr oxide, along with
Dy and Tb oxides.
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The details of the Mill PFS are presented below:
Unit NdPr Production at the Mill1
Capital Costs to Construct Phase 2
Separation Facility at the Mill US$ millions 348
Operating Cost $/kg NdPr US$ 29.88
Plant Capacity2 Monazite tpa 30,000
Notes:
1) The Mill PFS addresses the production of NdPr alone from processing Monazite. It does not address or attribute any costs or value to
the significant quantities of Dy and Tb that will also be recovered from the Monazite at the Mill. This will be updated in the future to
also address Dy and Tb production from Monazite.
2) The Mill PFS assumes a Phase 2 separation facility capacity of 30,000 tpa of Monazite. With the planned Monazite production from
the Company’s Bahia Project in Brazil, the planned acquisition of Toliara, the potential acquisition of an interest in the Astron Donald
Project, and other potential Monazite acquisitions, Energy Fuels plans to update the Mill PFS based on an increased Monazite
throughput of 40,000 – 60,000 tpa, which would generate 4,000 - 6,000 tpa of NdPr, 150 - 225 tpa of Dy, and 50 - 75 tpa of Tb. The
Phase 2 separation facility is subject to completion of engineering design and receipt of any required permits and licenses.
See the Mill PFS, which will be available on the Company’s website at www.energyfuels.com and on SEDAR
and EDGAR, for important information about its scope, key assumptions, qualifications and risks.
TRANSACTION OVERVIEW AND TIMELINE
Under the terms of the Scheme, if approved, each Base Resources shareholder will receive (i) 0.0260
Energy Fuels common shares and (ii) A$0.065 in cash, payable by way of a special dividend, representing
an implied price of A$0.30 per Base share4.
The Scheme Consideration represents a premium of 173% to the Base Resources’ 20-day volume weighted
average price up to and including April 19, 2024 of A$0.11. Immediately following implementation of the
Scheme, Energy Fuels and Base Resources shareholders will own approximately 83.6% and 1 6.4%6 of
Energy Fuels post-closing, respectively.
The Scheme is subject to customary closing conditions, including: (a) approval by at least 75% of the
number of votes cast, and more than 50% of the number of Base Resources shareholders present and
voting, at the meeting of the shareholders of Base Resources to approve the Scheme (the “ Scheme
Meeting”); (b) approval by the Federal Court of Australia; (c) the Independent Expert concluding that the
Scheme is in the best interests of Base Resources shareholders ; (d) certain government and regulatory
approvals, including the Foreign Investment Review Board of Australia, Malagasy Competition Council,
the TSX and the NYSE American; (e) no material adverse change or prescribed event to Base Resources or
Energy Fuels; and (f) other customary closing conditions.
The SID also contains customary deal protection mechanisms, including a “no shop” and “no talk”
provision, “matching rights” and “notification rights” for Energy Fuels, subject to customary exceptions,
and a termination fee payable by Base Resources in certain circumstances in the amount of 1% of the
Transaction Value (or US$2.4 million). The SID also provides for a reverse break fee in the same amount
payable by Energy Fuels in certain circumstances.
6 Based on Base fully diluted ordinary shares on issue of 1,239,116,949 (including performance rights that will vest by virtue of
the Transaction), Energy Fuels undiluted common shares on issue of 163,651,897 and a share exchange ratio of 0.026.