Energy Fuels Announces Q2-2019 Results
Energy Fuels Announces Q2-2019 Results
LAKEWOOD, CO
,
Aug. 2, 2019
/CNW/ -
Energy Fuels Inc. (NYSE American: UUUU; TSX: EFR)
("Energy Fuels" or the "Company")
today reported its financial results for the quarter ended
June 30, 2019. 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, 2019, the Company had
$42.6 million
of working capital, including
$16.6 million
in
cash,
$11.4 million
in marketable securities, 485,000 pounds of finished uranium goods
inventory, and 610,000 pounds of finished vanadium goods inventory.
Vanadium production totaled 437,000 pounds of V
2
O
5
for the quarter, and the Company
expects to continue to produce 160,000 to 200,000 pounds of V
2
O
5
per month through Q3-
2019, subject to continued successful recovery and suitable sales prices.
Uranium production totaled 19,000 pounds of U
3
O
8
during the quarter.
The Company completed no uranium sales of any significance during the quarter and continues
to add to uranium inventories.
The Company completed 98,000 pounds of vanadium sales into the steel industry during the
quarter at an average price of
$7.87
per pound of V
2
O
5
, following conversion of the Company's
V
2
O
5
product into ferrovanadium. At the current time, the Company is selling only small
quantities of vanadium, while mainly focusing on building V
2
O
5
inventory for sale in the future as
the Company expects prices to increase.
The Company had an operating loss of
$11.5 million
during the quarter, due primarily to an
impairment to inventories of
$4.9 million
as a result of low uranium prices and a decrease in
vanadium prices during the quarter; the decision not to sell any uranium product during the
quarter; and the decision to retain most of the Company's vanadium inventory for future sale.
In
April 2019
, the Company completed a test mining program at its La Sal Complex and
continued further operational readiness activities based on these encouraging results. The
Company expects to continue these activities through Q3-2019. As of June 30, 2019, the
Company had mined approximately 11,000 tons of mineralized material with an average grade
of 1.472% V
2
O
5
and 0.192% U
3
O
8
from previously mined areas. While these numbers are not
intended to represent the basis of a new resource estimate, the Company believes that the new
mining methods that were tested are likely to result in reduced costs, higher grades, and higher
value for mined material compared to historic mining methods, due to significantly improved
grade control at the mine.
On
July 12, 2019
, President
Donald J. Trump
issued a Presidential Memorandum pursuant to
Section 232 of the Trade Expansion Act of 1962 (as amended), ordering the creation of the
U.S. Nuclear Fuel Working Group (the "Working Group") to "examine the current state of
domestic nuclear fuel production to reinvigorate the entire nuclear fuel supply chain, consistent
with
United States
national security and nonproliferation goals." The Working Group has 90
days from
July 12, 2019
to complete its recommendations to the President. The Company
intends to continue supporting this initiative in Q3-2019 and believes it has the potential to result
in actions that provide meaningful support to the U.S. uranium mining industry.
On
July 13, 2019
, the Company announced that it had entered into a new processing
agreement, whereby the owner of a formerly producing uranium mine in
New Mexico
will deliver
cleanup material from the mine for processing and recovery of uranium at the Company's White
Mesa Mill. Revenues payable to the Company are expected to be between
$700,000
and
$3.5
million
. In addition, the Company will retain any uranium recovered from the material for its own
account, which is expected to total between 10,000 and 70,000 pounds of U
3
O
8
, or
approximately
$250,000
to
$1.75 million
at today's spot prices. Deliveries began in
late-June
2019
. The Company has proposed similar services to assist in the cleanup of Cold War era
abandoned uranium mines on the Navajo Nation and other lands.
On
August 1, 2019
, the Board of Directors (the "Board") of the Company appointed Mr.
Alex G.
Morrison
to serve as a director.
Mark S. Chalmers
, Energy Fuels' President and CEO stated:
"During Q2-2019, Energy Fuels continued to make important progress on a number of initiatives that
have the potential to significantly improve the outlook for both our Company and the U.S. uranium
mining industry as a whole.
"First, we were pleased that on
July 12, 2019
, President
Donald Trump
took meaningful action that
has the potential to revive the U.S. uranium industry. In early 2018, we filed a Section 232 Petition
asking the Administration to investigate uranium imports into the U.S., thereby embarking on a bold
initiative to 'make American uranium great again.' We have truly come a long way since we first filed
the Petition, and we believe this initiative has been a success, as the President recognized the
relationship between domestic uranium mining and national security. Our issue now has the attention
of the highest levels of the U.S. Government -- and probably the highest focus in several decades --
and we look forward to aggressively seeing this through to the end. I look forward to corresponding
with shareholders in the coming months as the U.S. Nuclear Fuel Working Group completes its
important work to 'reinvigorate the entire nuclear fuel supply chain,' which includes uranium mining.
"However, Energy Fuels is much more than Section 232. We recently announced the completion of a
new processing agreement, under which we will assist in the cleanup of a formerly producing mine in
New Mexico
. We recently began taking deliveries of cleanup material at our White Mesa Mill, and
this initiative is expected to result in a total of approximately
$1.0
to
$4.25 million
of value for the
Company. On a broader perspective, this is exactly the type of work we have proposed to the U.S.
Environmental Protection Agency ("EPA") to assist in the cleanup of Cold War era abandoned
uranium mines on the Navajo Nation and other nearby lands, with the EPA holding over
$1.5 billion
set aside in trust for those purposes. It is our hope that this will be a demonstration of the White
Mesa Mill's capabilities, professionalism and responsible operations. In addition, local Native
American communities will see equipment removing contaminated soils from nearby lands, and
trucks hauling it away, thereby having the potential of creating momentum to begin the large-scale
cleanup of other sites in the region.
"We are also very happy with our vanadium production campaign; except prices failed to cooperate
during the quarter. We brought our vanadium product to market very quickly and achieved extremely
high purities. But, as it turned out, it wasn't quick enough. At the current time, we expect to continue
producing vanadium through Q3-2019, due in large part to seasonal considerations, while only
making selective sales. We are also moving forward with discussions to potentially sell our product
at premium pricing to customers who require higher purities. If vanadium prices do not make a
dramatic recovery in the next few months, we expect to build inventory to capture future price spikes
and then shut down production to save this valuable asset for later recovery.
"Finally, I'd like to welcome Mr.
Alex Morrison
to the Board of the Company. Alex is an experienced
and accomplished mining professional with many decades of experience with public companies both
large and small, with a particular focus on finance, audit, and governance, including many years with
PriceWaterhouseCoopers."
Selected Summary Financial Information:
$000, except per share data
Three months ended
June 30, 2019
Three months ended
June 30, 2018
Results of Operations:
Total revenues
$
3,071
$
26,973
Gross profit (loss)
(11,504)
7,120
Net income (loss) attributable to the company
(9,312)
7,149
Basic earnings (loss) per share
(0.10)
0.09
Diluted earnings (loss) per share
(0.10)
0.08
As at June 30,
As at December 31,
'$000's
2019
2018
Financial Position:
Working capital
$
42,600
$
52,000
Property, plant and equipment
28,193
29,843
Mineral properties
83,539
83,539
Total assets
183,592
196,766
Total long-term liabilities
43,588
43,059
Overview
Operations and Sales Outlook Overview
The Company plans to extract and recover uranium from its Nichols Ranch Project in 2019 at
reduced levels as its existing wellfields become depleted. This will continue until such time as the
incremental cost of production exceeds the value of the pounds recovered. In addition, the Company
expects to continue to extract and recover vanadium and uranium from pond solutions at its White
Mesa Mill through
September 2019
, assuming vanadium prices remain at current levels or higher. If
vanadium prices improve significantly from existing prices, the Company will evaluate continuing
vanadium production beyond that time.
As a result of current low uranium market conditions, both ISR and conventional uranium recovery
are being maintained at reduced levels until such time as market conditions improve sufficiently,
either as a result of potential relief from the Working Group study and recommendations, or through
improved uranium market fundamentals. Until such time as improvements in uranium market
conditions are observed or suitable sales contracts can be entered into, the Company expects to
defer further wellfield development at its Nichols Ranch Project. In addition, the Company will keep
the Alta Mesa ISR Project and its conventional mining properties on standby. The Company is also
seeking new sources of revenue, including new sources of Alternate Feed Materials and new fee
processing opportunities at the Mill that can be processed under existing market conditions, largely
unrelated to uranium sales prices. The Company will also continue its support of the Working Group
and will evaluate additional acquisition and disposition opportunities that may arise.
Extraction and Recovery Activities Overview
During the six months ended June 30, 2019, the Company recovered approximately 40,000 pounds
of U3O8. In the year ending December 31, 2019, the Company expects to recover approximately
50,000 to 125,000 pounds of U3O8. The Company also recovered approximately 760,000 pounds of
high-purity vanadium pentoxide ("V2O5" or "black flake") during the six months ended June 30, 2019
and expects to continue to recover approximately 160,000 to 200,000 pounds of V2O5 per month
during the third quarter of 2019, at which time the Company expects to place vanadium recovery
operations at the Mill on standby, pending improvements in vanadium prices.
The Company has entered into no uranium sales commitments for 2019 thus far. Therefore, all 2019
uranium production is expected to be added to existing inventories. All V2O5 production is expected
to be sold on the spot market or maintained in inventory.
ISR Activities
During the six months ended June 30, 2019, we extracted and recovered approximately 40,000
pounds of U3O8 from the Nichols Ranch Project. In the year ending December 31, 2019, the
Company expects to produce approximately 50,000 to 70,000 pounds of U3O8 from Nichols Ranch.
As of June 30, 2019, the Nichols Ranch wellfields had nine header houses extracting uranium. Until
such time as improvement in uranium market conditions is observed or suitable sales contracts can
be procured, the Company intends to defer development of further header houses at its Nichols
Ranch Project. The Company currently holds 34 fully-permitted, undeveloped wellfields at Nichols
Ranch, including four additional wellfields at the Nichols Ranch wellfields, 22 wellfields at the
adjacent Jane Dough wellfields, and eight wellfields at the Hank Project, which is fully permitted to
be constructed as a satellite facility to the Nichols Ranch Plant. The Company currently expects to
continue running the Nichols Ranch Project through the end of 2019. However, if market conditions
do not improve significantly by that time as a result of the Working Group recommendations or
otherwise, the Company expects to place this project on standby in early 2020.
The Company expects to continue to keep the Alta Mesa ISR 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, 2019, the Company produced 760,000 pounds of high-purity
V2O5 from its Mill Pond Return program, as well as captured 7,700 pounds of U
3
O
8
in the mill
circuit. The Company is currently producing at full production rates of 160,000 to 200,000 pounds of
V
2
O
5
per month and approximately 6,500 pounds of U
3
O
8
per month under this program. The
Company expects to continue to recover vanadium and uranium at these rates during the third
quarter of 2019, at which time the Company expects to place this program on standby, pending
improvements in vanadium prices and taking into account seasonal considerations. Despite currently
low vanadium prices, the Company plans to continue this program through the end of the third
quarter of 2019, rather than place it on standby at this time, for two reasons: first, vanadium
recoveries from Pond Returns are highest in the warm summer months, due to the higher
concentrations of dissolved vanadium in the solutions as a result of the normal evaporative process
during the warm summer months and other chemical reasons, thereby enabling us to produce
vanadium at the lowest cost possible, with the marginal cost of production not including fixed Mill
overhead currently at or near spot V
2
O
5
prices; and secondly, the Company believes the price of
vanadium is likely to increase at some point in the future, and running the program through the end of
the third quarter will provide the Company with a significant quantity of V
2
O
5
produced that can be
sold opportunistically as future price volatility occurs. One of the benefits of the Mill's vanadium Pond
Return program is that it can be stopped and restarted relatively quickly in response to changes in
vanadium market conditions.
If vanadium and uranium recovery operations from the current Mill Pond Return program are put on
standby at the end of the third quarter of 2019, as expected under current vanadium pricing
conditions, the Company plans to utilize the resulting available Mill capacity by processing stockpiled
Alternate Feed Materials in the fourth quarter of 2019.
Conventional Standby, Permitting and Evaluation Activities
During the six months ended June 30, 2019, the Company continued its test-mining and
refurbishment program targeting vanadium at the fully-permitted La Sal Complex located on the
Colorado Plateau. We completed the test-mining by the end of
April 2019
, and continued to pursue
enhanced operational readiness targeting future commercial production. The goal of the program
was to evaluate different mining approaches in previously mined-out areas 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. During this program, the
Company refurbished the La Sal and Pandora mines within the La Sal Complex and extracted
approximately 11,000 tons of mineralized material. The Company expects to continue readiness
activities through the third quarter of 2019. In addition, the Company completed a surface and
underground drilling program at the La Sal Complex during the quarter ended
June 30, 2019
in order
to potentially expand the known uranium and/or vanadium resources available to mine.
During 2019, the Company plans to continue carrying out engineering, metallurgical testing,
procurement and construction management activities at its Canyon Project, including additional
bench and pilot plant scale metallurgical test work of the uranium/copper mineralization, and to
continue pursuing any additional permitting actions that may be required to potentially recover
copper at the White Mesa Mill. The timing of the Company's plans to extract and process
mineralized materials from this project will be based on the results of this additional evaluation work,
along with market conditions, available financing, sales requirements, and/or permits required for
copper recovery at the Mill.
The Company is selectively advancing certain permits at its other major conventional uranium
projects. The Company plans to accelerate the licensing and permitting of the Roca Honda Project,
a large, high-grade conventional project in
New Mexico
, with the Record of Decision currently
scheduled to be completed in 2021. The Company will also maintain required permits at the
Company's conventional projects, including the Sheep Mountain Project and the Daneros Project. 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, 2019, the Company completed no uranium sales of
significance. The Company currently has no remaining contracts and is therefore fully unhedged to
future uranium price increases.
The Company continued V2O5 shipments during the six months ended June 30, 2019 with initial
quantities being allocated for conversion to ferrovanadium ("FeV"), which was sold into spot
metallurgical markets on a selective basis. At the current time, the Company is selling only small
quantities of vanadium, while mainly focusing on building V2O5 inventory for sale in the future as
prices are expected to increase. During the six months ended June 30, 2019, the Company
completed sales of 150,000 pounds of vanadium at an average price of
$12.83
per pound. 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 expects to sell to a diverse
group of customers in order to maximize revenues and profits. The Company is continuing to
produce a high-purity vanadium product of 99.6%-99.7% V2O5. The Company believes there may
be opportunities to sell certain quantities of this high-purity material at a premium to reported spot
prices. The Company may also retain vanadium product in inventory for future sale, depending on
vanadium spot prices at the time of production.
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.
Trade Petition and United States Nuclear Fuel Working Group
The Company looks forward to the United States Nuclear Fuel Working Group's study and
recommendations. The Company believes this initiative has the potential to result in actions that
could provide meaningful support to the uranium mining industry, including all or some of the
remedies proposed in the Company's Petition. It should be noted, however, that there can be no
certainty of the outcome of the Working Group's study and recommendations. No action could be
taken or remedies granted, and any actions taken may not result in a meaningful or material remedy
to the uranium mining industry. Therefore, the outcome of this process is uncertain.
Appointment of
Alex G. Morrison
as Director
On
August 1, 2019
, the Board of Directors (the "Board") of the Company appointed Mr.
Alex G.
Morrison
to serve as a director 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. Mr. Morrison is
an accomplished mining professional with strong management, technical, governance and financial
skills in the precious and base metals industries. He also has significant hands-on experience in
financial reporting, capital raising, audit, and deal-making. He is currently a board member of Taseko
Mines Ltd, Gold Resources Corporation, and Gold Standard Ventures. He previously served as a
director for Pershing Gold Corporation and Detour Gold Corporation. From 2007 to 2010, Mr.
Morrison served as Vice President and Chief Financial Officer for Franco-Nevada Corporation, and
from 2002 to 2007, he served for Newmont Mining Corporation as Vice President, Information
Technology, Vice President, Operations Services, Group Executive, Operations Services, and Group
Executive, Internal Audit. Mr. Morrison also has 13 years of experience with
PriceWaterhouseCoopers, where he provided business advisory, financial audit, and operational
audit services to a diverse group of mining clients.
Mark S. Chalmers, 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.
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 in operation and has a licensed capacity of 2 million
pounds of U3O8 per year. The Alta Mesa ISR Project is currently on standby. 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 Note 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; 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; any expectations regarding vanadium opportunities,
the Company's program for the recovery of vanadium from pond solutions, or the Company's
ability to sell any of its vanadium product at a premium to spot prices or otherwise; the ability to
quickly and inexpensively adjust vanadium production in response to evolving market conditions;
the ability to generate cash flows during periods of elevated vanadium prices; the expected results
from the vanadium test-mining program; 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
; the outcome of the U.S. Nuclear Fuel
Working Group study, including the nature of any recommendations by the Working Group to the
President of
the United States
; whether or not the President will act on any such recommendations
and, if so, the nature of the action and remedy; and the expected benefits of any such 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," "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; any expectations regarding vanadium opportunities, the Company's program for the
recovery of vanadium from pond solutions, or the Company's ability to sell any of its vanadium
product at a premium to spot prices or otherwise; the ability to quickly and inexpensively adjust
vanadium production in response to evolving market conditions; the ability to generate cash flows
during periods of elevated vanadium prices; the expected results from the vanadium test-mining
program; 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
; the outcome of the U.S. Nuclear Fuel Working Group study,
including the nature of any recommendations by the Working Group to the President of
the United
States
; whether or not the President will act on any such recommendations and, if so, the nature of
the action and remedy; the expected benefits of any such remedies; 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.
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For further information:
Investor Inquiries: Energy Fuels Inc., Curtis Moore, VP - Marketing and
Corporate Development, (303) 974-2140 or Toll free: (888) 864-2125,
[email protected], www.energyfuels.com
CO: Energy Fuels Inc.
CNW 23:06e 02-AUG-19