Energy Fuels Announces Q3-2020 Results; Debt-Free with Strong Working Capital; Advancement of Uranium & Rare Earths; Webcast on November 3, 2020
Energy Fuels Announces Q3-2020
Results; Debt-Free with Strong Working
Capital; Advancement of Uranium &
Rare Earths; Webcast on November 3,
2020
LAKEWOOD, Colo., Oct. 30, 2020 /CNW/ - Energy Fuels Inc. (NYSE
American: UUUU) (TSX: EFR) ("Energy Fuels" or the
"Company") today reported its financial results for the quarter ended
September 30, 2020. The Company's quarterly report on Form 10-Q
has been filed with the U.S. Securities and Exchange Commission
("SEC") and may be viewed on the Electronic Document Gathering
and Retrieval System ("EDGAR") at www.sec.gov/edgar.shtml, on the
System for Electronic Document Analysis and Retrieval ("SEDAR") at
www.sedar.com, and on the Company's website at
www.energyfuels.com. Unless noted otherwise, all dollar amounts are
in U.S. dollars.
Highlights:
• The Company had working capital of $44.7 million at the end of
Q3-2020, representing an increase of 17% over Q2-2020.
Working capital included $28.1 million in cash and marketable
securities, plus $25.6 million of concentrate inventory and work
in progress, including 663,300 pounds of uranium concentrates
valued on our balance sheet at $23.72 per pound and 1,672,000
pounds of vanadium valued on our balance sheet at $5.11 per
pound, both in the form of immediately marketable product. As of
October 23, 2020, the spot price of uranium was $29.70 per
pound and the mid-point spot price of vanadium was $5.35 per
pound, which places a current market value on our concentrate
inventories of approximately $28.6 million. As a result of existing
inventories and planned production, the Company expects to
have between 670,000 and 700,000 pounds of finished uranium
and 1.672 million pounds of finished vanadium in inventory at the
end of 2020.
• On October 6, 2020, the Company announced it was debt-free
following the retirement of its floating rate convertible unsecured
subordinated debentures (the "Debentures"). On July 14, 2020,
the Company distributed Cdn$10,430,000 of cash to holders of
the Debentures, and on October 6, 2020, the Company
distributed a further Cdn$10,430,000 of cash to the remaining
holders of the Debentures.
• On September 21, 2020, the Company and a team from Penn
State University were selected by the U.S. Department of Energy
("DOE") to develop a design for the production of a rare earth
element ("REE") concentrate from coal-based resources. The
Company believes the REEs contained in these coal-based
resources are similar to the REEs contained in other ores the
Company is evaluating in its REE program.
• On September 14, 2020, the U.S. Department of Commerce
("DOC") announced it had obtained Russia's agreement to
extend limits on uranium imports into the U.S. from Russia
through 2040 under an extended Russian Suspension
Agreement ("RSA"). The extension to the RSA was finalized on
October 5, 2020. This was an important step toward maintaining
the long-term health of the U.S. uranium mining industry, as the
expiration of the RSA at the end of 2020 could have resulted in
unlimited quantities of Russian uranium imports into the U.S.
• On August 20, 2020, the Company announced it made a number
of changes to its management team in order to reduce costs,
flatten the organizational structure, and focus on the ongoing
growth of a new generation of U.S. uranium and REE
executives. Effective as of August 31, 2020, Mr. W. Paul
Goranson (Chief Operating Officer) left the Company to pursue
other opportunities, and Mr. Matt Tarnowski (Chief Accounting
Officer) will similarly be leaving the Company on October 31,
2020.
Mark S. Chalmers, Energy Fuels' President and CEO, stated:
"Energy Fuels made significant strides in the last quarter on our
uranium, rare earths, and other initiatives."
"On the uranium front, we were pleased to see the U.S. Department of
Commerce successfully extend the Russian Suspension Agreement.
Allowing the RSA to expire would have been a disaster for the U.S.
uranium mining industry, so extending it gives U.S. uranium producers
a chance to compete in the future. However, there is much work left to
perform in order to actually revive and expand the U.S. industry in the
short term, including funding the U.S. uranium reserve."
"On the REE front, we are making excellent progress. We are
currently conducting pilot-scale testing on ore sources at the White
Mesa Mill, which is confirming our ability to produce an on-spec rare
earth concentrate at a commercial level, along with the uranium from
the ore. We are also in discussions with various parties in North
America regarding rare earth/uranium ore sources for the Mill and
potential purchase of our finished rare earth concentrate. We hope to
provide updates on commercial aspects of this initiative in the coming
weeks, including details about the timing and scale of potential
commercial production. We are also pleased to have been selected by
the U.S. Department of Energy to work with a team from Penn State
University to develop a design for the production of an REE
concentrate from coal-based resources. This demonstrates DOE's
recognition of the importance of the White Mesa Mill in helping the
U.S. re-establish its domestic REE supply chain. We are particularly
excited about this in light of the President's October 1, 2020 Executive
Order on Critical Minerals, in which he declared a state of emergency
to address America's overreliance on critical minerals, including
uranium, vanadium and REEs, from foreign adversaries."
"On the financial front, Energy Fuels was proud to announce on
October 6 that we had paid off all of our debt, and that the Company is
debt-free for the first time since 2012. This is a significant
achievement, distinguishing us from many of our peers in the uranium
and natural resource sectors. Having no debt reduces our costs and
allows us to better weather market volatility. Coupled with our strong
working capital position of $44.7 million at September 30, having no
debt provides us with a clean slate from which to increase uranium
production when warranted and to continue our rare earth and other
initiatives."
Selected Summary Financial Information:
$000, except per share data
Nine months ended
September 30, 2020
Nine months ended
September 30, 2019
Results of Operations:
Total revenues $ 1,274 $ 5,164
Gross profit (loss) (370) (6,866)
Operating profit (loss) (23,624) (30,458)
Net income (loss) attributable to the
company (22,699) (28,279)
Basic and diluted loss per share (0.19) (0.30)
$000's
As at September 30,
2020
As at December 31,
2019
Financial Position:
Working capital $ 44,683 $ 20,534
Property, plant and equipment 24,299 26,203
Mineral properties 83,539 83,539
Total assets 188,912 175,720
Total long-term liabilities 20,904 22,475
Webcast on Tuesday, November 3, 2020 at 4:00 pm ET (2:00 pm
MT)
To join the webcast, please dial 1-888-390-0541 (toll free in the U.S.
and Canada). The viewer-controlled webcast slides can be accessed
through the following link:
Energy Fuels Q3-2020 Results – Webcast Link
A link to a recorded version of the proceedings will be available shortly
after the webcast by calling 1-888-390-0541 (toll free in the U.S. and
Canada) and entering the code 303725#. This recording will be
available until November 17, 2020.
Outlook
Operations and Sales Outlook Overview
Subject to market conditions, the Company plans to extract and/or
recover limited amounts of uranium from its Nichols Ranch Project in
2020, which was placed on standby in the first quarter of 2020 due to
the depletion of its existing wellfields. In addition, during 2020 the
Company expects to recover uranium at the White Mesa Mill from in-
circuit uranium inventories extracted from the recent vanadium Pond
Return campaign, from Alternate Feed Materials and from other Pond
Return activities. The vanadium Pond Return campaign conducted in
2019 was brought to a close in early 2020.
Both ISR and conventional uranium recovery is expected to be
maintained at reduced levels, as a result of current uranium market
conditions, until such time when market conditions improve
sufficiently.
The Company is also seeking new sources of revenue, including new
sources of Alternate Feed Materials and new fee processing
opportunities at the White Mesa Mill that can be processed under
existing market conditions (i.e., without reliance on current uranium
sales prices). The Company is also evaluating opportunities to
potentially recover REEs at the White Mesa Mill, and will also continue
its support of U.S. governmental activities to support the U.S. uranium
mining industry. In addition, the Company is in discussions with
several parties to potentially sell certain of its non-material properties,
although, there are not currently any binding offers, and there can be
no assurance at this time that a sale will be completed. The Company
will evaluate additional acquisition and disposition opportunities that
may arise.
Extraction and Recovery Activities Overview
During the nine months ended September 30, 2020, the Company
recovered approximately 163,000 pounds of U3O8, which falls within
the Company's previously published guidance of 125,000 to 175,000
pounds of U3O8 for the year ending December 31, 2020. The
Company also recovered approximately 67,000 pounds of high-purity
vanadium pentoxide ("V2O5" or "black flake") during the nine months
ended September 30, 2020 from its vanadium Pond Return campaign,
which was suspended during the first quarter of 2020.
The Company has strategically opted not to enter into any uranium
sales commitments for 2020. Therefore, subject to general market
conditions, all 2020 uranium production is expected to be added to
existing inventories, which are expected to total between 670,000 and
700,000 pounds of U3O8 at year-end. Both ISR and conventional
uranium extraction and/or recovery is expected to continue to be
maintained at reduced levels until such time that improvements in
uranium market conditions are observed or suitable sales contracts
can be entered into. All V2O5 production is expected to be sold on the
spot market if prices rise significantly above current levels, but
otherwise maintained in inventory.
ISR Activities
During the nine months ended September 30, 2020, the Company
extracted and recovered approximately 6,000 pounds of U3O8 from its
Nichols Ranch Project, which was placed on standby during the first
quarter of 2020, due to the depletion of its existing wellfields. This
amount of uranium production falls within the Company's published
guidance of approximately 6,000 pounds of U3O8 from Nichols Ranch
during the year ended December 31, 2020.
As of June 30, 2020, the Nichols Ranch wellfields had nine header
houses that previously extracted uranium, which are now depleted.
Until such time as improvement in uranium market conditions is
observed or suitable sales contracts can be procured, the Company
expects to defer development of further header houses at its Nichols
Ranch Project.
The Company expects to continue to keep the Alta Mesa Project on
standby until such time as improvements in uranium market conditions
are observed or suitable sales contracts can be procured.
Conventional Activities
Conventional Extraction and Recovery Activities
During the nine months ended September 30, 2020, the Company
produced 67,000 pounds of high-purity V2O5 from its Mill Pond Return
program and 163,000 pounds of uranium from Alternate Feed
Materials and Pond Return activities. During 2020, the Company
expects to recover approximately 170,000 to 200,000 pounds of U3O8
at the White Mesa Mill from in-circuit uranium inventories extracted
from the recent vanadium Pond Return campaign, from Alternate
Feed Materials and from other Pond Return activities. In addition,
there remains an estimated 1.5 to 3 million pounds of solubilized
recoverable V2O5 inventory remaining in the Mill's tailings
management facility awaiting future recovery from Pond Return as
market conditions may warrant, placing the Company in a unique
position to restart vanadium production quickly.
The White Mesa Mill has historically operated on a campaign basis
whereby uranium and/or vanadium recovery is scheduled as mill feed,
cash needs, contract requirements, and/or market conditions may
warrant. The Company currently expects that planned uranium
production from Alternate Feed Materials, Pond Return, and the
receipt of uranium-bearing materials from mine cleanup activities will
keep the Mill in operation through the remainder of 2020. The
Company is also actively pursuing opportunities to process new and
additional Alternate Feed Material sources and new and additional
low-grade ore from third parties in connection with various uranium
clean-up requirements. Successful results from these activities would
allow the Mill to extend the current campaign through 2020 and
beyond. In addition, if improvements in uranium market conditions are
observed, or conventional mines are ramped up in response to U.S.
government actions to support domestic uranium mining and/or
recommendations of the U.S. Nuclear Fuel Working Group, the
Company would expect to be able to keep the Mill operating over a
considerably longer period of time. The Company is also evaluating
the recovery of REEs at the White Mesa Mill, which if successful could
allow the Company to keep the Mill operating into the future.
Conventional Standby, Permitting and Evaluation Activities
During the nine months ended September 30, 2020, standby and
environmental compliance activities continued to occur at the Canyon
Project. Subject to general market conditions, during 2020, the
Company plans to continue carrying out engineering, metallurgical
testing, procurement and construction management activities at its
low-cost Canyon Project.
The Company is selectively advancing certain permits at its other
major conventional uranium projects, such as the Roca Honda
Project, a large, high-grade conventional project in New Mexico. The
Company will also maintain required permits at the Company's
conventional projects, including the Sheep Mountain Project, La Sal
Complex, and Tony M, Whirlwind and Daneros mines. In addition, the
Company will continue to evaluate the Bullfrog Property at its Henry
Mountains Project. Expenditures for certain of these projects have
been adjusted to coincide with expected dates of price recoveries
based on the Company's forecasts. The Company is also in
discussions with several parties to potentially sell the Tony M,
Daneros and other non-material properties. The Company will only
sell these properties if sufficient cash and/or equity consideration is
received. All of these projects potentially serve as important pipeline
assets for the Company's future conventional production capabilities,
as market conditions warrant.
Sales
During the nine months ended September 30, 2020, the Company
completed no uranium sales. The Company currently has no
remaining contracts, and therefore all existing uranium inventory and
future production is fully unhedged to future uranium price increases.
During the nine months ended September 30, 2020, the Company did
not complete the sale of any vanadium. The Company expects to
continue to sell finished vanadium product, when justified, into the
metallurgical industry, as well as other markets that demand a higher
purity product, including the aerospace, chemical, and potentially the
vanadium battery industries. The Company expects to sell to a diverse
group of customers in order to maximize revenues and profits. The