Q2 2022 Energy Fuels Inc Earnings Call
Extraordinary progress on many fronts and I believe it's there's no question that energy fuels has clearly emerged as a clear leader.
And U S critical mineral production at a time when this has never been more important.
Today I have the Q2 highlights embedded in our updated corporate presentation.
But before I begin I just want to remind people that you are controlling the slides from your own device and ill endeavor to tell you when to advance to the next slide I don't always get accomplish that but I'll do my best.
As Michel mentioned, there will be questions at the end of the presentation and Dave Friedland, Our executive Vice President and Chief legal officer, as well as our new CFO , Tom Brock, which I'm very pleased to have him join us today will be available to answer any questions I cannot answer.
So let's get going.
This first slide.
You guys have.
Most of you have seen this and again a picture of the White Mesa Mill, which is really our flagship asset for the company.
In our critical mineral hub.
Work, we can produce uranium.
<unk> elements vanadium.
And hopefully soon medical isotopes and do our recycling.
Slide.
I may be making some forward looking statements throughout this presentation.
Basically the disclaimers are at the back of the presentation.
Next slide.
So again most of you have seen this.
Energy fuel is really is there is no peer group energy fuels, because typically you invest in a uranium only company or rare Earths company or maybe an isotope only or vanadium only company and energy fuels, we have all of these.
And in our investment strategies, but they all contain one common denominator uranium radio nuclides.
So that's the common denominator, we also have a long history recycling.
<unk> financial strength, we always pride ourselves on strong financial strength and zero debt.
Right.
Now I'll, just jumping right into the financial highlights.
We have and continue to have a robust balance sheet with around $134 million of working capital. This includes $86 4 million of cash and cash equivalents and $11 8 million of marketable securities.
It does not include the <unk> shares that are currently escrowed.
Product inventories, we have $28 $6 million of inventories of uranium in vanadium at really book value.
You adjusted those prices to current.
Commodity prices thats around 43, nearly $44 million.
For the quarter, we had 12 or $6 5 million of revenues.
We reported a net loss of $18 1 million, but the nearly $13 4 million of that was non cash market to market decrease in the value of some of our investments, which really were consolidated uranium in Virginia energy shares. So it was really if you subtract the 13th forward.
The 18 unit with about $5 million.
Vanadium sales during the half of this year we sold.
175000 pounds of <unk> hundred five and an average price of $13 44 per pound. So we made a little nice profit off of those sales are in Asia.
Next slide.
We're also excited to talk about that we entered into three new long term contracts in may for deliveries between 2023, and 2030 based quantities are 3 million pounds, but it could be as high as $4 2 million pounds, if they exercise.
Other options.
They are they have a hybrid pricing both the floors and ceilings are indexed to inflation and we also have exposure to rising uranium prices.
We're also pleased to announce that we did submit a proposal to sell uranium to the U S Department of energy to do this.
This is the first time the Doe has had a proposal to buy uranium and approximately 50 years. So this is a very important move by the U S government.
And if accepted could result in significant revenues from uranium sales this year.
Rare Earths.
We produced around 205 metric tons of mixed for carbonate containing between 30% to nearly 35% NDP are.
And we are maintaining our guidance of about 652.
1000 tons of carbonate in 2022.
Large reason that we've been under on our carbonate production is we still had shortfalls of receiving product from <unk>, but we're working through those issues.
Brazil acquisition I think this is a really important acquisition for our company because we now have a mine that contains rare earth and its a very large land package about 58 square miles.
In the Bahia state of Brazil, and it has the potential to supply significant quantities of modest like for decades to White Mesa mill.
And we continue to have numerous discussions with several other monocyte suppliers.
Next slide.
Matt.
So let's move on to some management highlights in Q2, we're very very excited that we're continuing to grow.
The expertise in the company and we appointed Dr. John <unk>.
Effective August 1st so he is only been on the job for about a week and a half at <unk>, Dr. Gary has significant experience in mining and mineral processing.
He was formerly VP of metals exploration development for Doe run.
And he also held significant roles with RMP global Newmont mining and Freeport Mcmoran and yes, his Phd and metallurgical.
<unk> engineering, so we're really looking forward to those skill sets being put to work right now with.
With the company and as I mentioned, Tom Brock came on effectively as CFO on Monday August eight and Tom has extensive experience in oil and gas.
Previously served as vice President and Chief Accounting Officer.
Extract oil and gas and also had work for American Midstream partners. So we're really excited about having two new executives joined the team to help US go forward with our plans and lastly.
David Friedman.
It was appointed executive Vice President and Chief Legal Officer, and corporate Secretary effective August eight. So we are building out our team we have been hiring other employees as well and we're going into absolutely a growth mode.
Slide.
So again this slide up.
Again number of you have seen it with just our footprint from Wyoming to Texas.
<unk> power is on the come back and 20% of our electricity comes from nuclear 55% of our carbon free.
Energy comes from nuclear but it's never been really more exciting to be in the uranium industry in the future of nuclear again is very bright next slide.
Again.
Our frontline of production assets, the White Mesa mill, which is really our critical mineral hub.
Ultimate on standby ISR in Texas in Nichols Ranch, ISR in Texas, and our opinion plain mine in Arizona.
Next slide.
So look at I'll talk a little bit more about the booking of these uranium sales contracts providing.
Revenues cash flows.
Starting next year.
And I think Theres a lot of tailwind that are really starting to push things along here with U S utilities.
At sustainable pricing one.
The intermediaries are starting to buy physical uranium certainly the Russian invasion of Ukraine is unfortunate that is is really putting the focus on security of supply and then when you look at some of the moves by the U S Department of energy in the U S government when it comes to rebuilding the nuclear fuel side.
<unk>.
It's all pointing in the right direction and it's been a long wait.
Energy fuels offers reliable sources of uranium in the United States. We have excellent track record of on time on budget deliveries and production and that is a major attraction to these utilities.
I've already talked about the base quantity of these three contracts being 3 million pounds.
Total up to $4 2 million pounds, and I said it was hybrid pricing with escalation for inflation, which is really creating a number of issues as I'm sure. All of you are aware in the world as a whole.
The pricing Formula maintains.
Exposure to uranium upside while also limiting downside and also as I mentioned very excited about putting a proposal to sell uranium to the dose.
With potential for revenue.
Substantial revenue this year.
Slides.
So we periodically update this market position, we still trade as a uranium company, we're still in the middle of the pack.
I always like to point out that looking at our working capital zero debt Euro.
Uranium inventories plus we have vanadium inventories that we produced we did buy it most people have bought their inventories, but there really is no peer group for energy fuels, because when you look at those those screen tick marks going to.
To the right.
All of these peers that we get measured to our uranium focused companies none of them have none of them have the ability to produce vanadium.
None of them are advancing medical isotopes and none of them have the ability to recycle like energy fuels. So I still say you get.
A significant coverage and all things critical elements when you invest in energy fuels.
Next slide.
So.
I've talked about this previously but for those that may be new to this story.
And uranium fit perfectly together and my Dear friend constantly carrying uplifts from from Neo performance.
Performance calls us potentially the missing link in the U S rare earth element production and Thats because of the way we are approaching our rare earth business coupled with uranium.
First of all monazite is very high grade and because it's naturally radioactive and has uranium and thorium, we can address at the White Mesa mill.
It also has the highest concentrations of the magnetic rare Earths, which incidentally is what drives these high efficiency electric motors and cars and wind turbines.
And White Mesa is the only facility in North America able to process monocyte recover uranium.
And also produce <unk> products.
So when you look at this next dot point here kind of looking at the timeline over the last year.
Year, or so you can see where we started processing commercially mix for carbonate.
We started pilot separation of rare Earth oxides.
And producing very high purity and DPR in March we started making the carbon that was very high grade nearly 32% to 34% and DPR in the carbonate that we've been shipping the neo in May we secured or in process of securing we haven't closed yet, but we will soon on the Bahia <unk>.
<unk> in Brazil, and we still plan to build out light separations at White Mesa mill and heavy separations in the next few years.
Next slide.
So I've already touched on the magic ingredient <unk> modest it's a superior mineral and we think it's the right place to be for all the right reasons. It is a low cost byproduct from heavy mineral sands mines are similar to what we are purchasing.
In Brazil, but here.
So currently the feet is in the order of 50% to 60% total rare Earth oxides, which is extremely high grade high value, but most importantly, it has the high grades of the big value chains, which is the NDP are the heavies and the basket value recovered basket values over.
20000 ton if you compare that to basanite, which also has fairly high grades of <unk>, but very light on the heavies the basket values around $8500 a ton so greatest keen in where it's just like the rest of the mining industry.
And also the ability to recover those rare earth and the monotype is easier than basanite.
Next slide.
So again, the white Mesa mill.
The most advanced.
<unk>.
Story for processing <unk> and USA today.
It's the only facility as I said that is able to process and recover rare earths from monocyte that uranium, which is a problem for most it's not a problem for us matter of fact, it is a value add it is highly scalable.
We won't touch a just a fraction of the percent of the production capability of the White Mesa mill.
And it generates very little waste because when you recover 50, some percent Oreo youre taken half of that as a value added product versus half going to tailings.
Next slide.
So a bit more but here.
It puts us in a position to potentially produce maybe as high as 10000 tons of monocyte I talked about it being a very very significant land position.
And basically the monocyte is contained and goes with the heavy mineral sand mineralization, the ilmenite rutile and zircon.
We think there is really keen interest for a.
Heavy mineral sand concentrate with.
Other parties.
The mineralization is near surface. It has a lot of drill holes, we know that it has on average a nearly 3% modest.
And potential for significant.
Expansion going forward.
We also have a number of other concessions that we're looking at and some of those concessions have mining permits in place.
In the next six months, we're going to be doing substantial amount of drilling.
We have secured eight or securing a sonic drill rig we plan to drill about 100 drill holes.
<unk> 'twenty two to 'twenty three meters deep when historically the drill holes have only been around six meters deep. So we're going to drill a lot deeper and we hope to find.
Substantial quantities of additional heavy mineral sands below the six meters is what we acquired the property or acquiring the property on six meter depth, but we'll see how that goes.
So we're drilling nearly four times deeper which are much more.
The duty and sophisticated drill rig and we plan to turn that into an ni 43 101 in due course so.
Watch this space, we're very excited about securing the here.
Next slide.
So again.
Some of you. Many of you have seen this slide how we built out the supply chain at small commercial scale very quickly with our relationship with <unk> and.
And Neil.
We were able to do that quicker than most people thought was possible, but we are absolutely going forward with full integration in the United States, but we plan to continue to have a very strong relationship with Neil we need monocyte and Bahia is a big part of that puzzle, but I still hope and plan.
Have other updates over the course of the next few months with other sources of monocyte, hopefully coming to the White Mesa mill.
Next slide.
This pictures and I always say this most people declare victory on the rare Earth business when they have a beaker of Earth and we declare victory at least initially when we ship it out and bulky bags to Neil at commercial scale. So.
Again.
Advancing very quickly.
Slide.
So where do we sit in the kind of with the rare Earth public companies, we still kind of in the middle when it comes to market cap, but it is still our goal to chase E&P in line is and even look even though luke is advancing towards production, but with the focus.
Mainly on Monocyte, we think there is substantial upside to become a multibillion dollar company in due course, and so that is still absolutely what we're focused on while producing uranium and perhaps vanadium.
So speaking of vanadium I mentioned, we did have sales of.
Nearly 600000 pounds of vanadium at $11 44.
Which was somewhere in the order around $7 million of an ATM at 11 44, it will the price of Indians back to $8 a pound. So we caught a wave which is exactly per the plan of having inventories.
Inventories available for sale when the price of the Navy moves because when it moves it moves up SaaS and it moves down fast. So we're still excited about our vanadium capabilities, we still have the ability and we still have over 1 million pounds to sell when the time's right.
And we still have the ability to go back into vanadium.
<unk> with <unk>.
Recycling from our tailings solutions when we decide we want to do that next slide.
Medical isotopes from thorium and uranium again this was fairly new to the strategy, but it is exciting and we're getting a lot of attention from a lot of people.
We signed this strategic alliance agreement with Red trend.
We're focused on these alpha emitting isotopes, which are in short supply. So it's still early days, but it is moving quickly hopefully have further updates in due course, but don't look at this and watch it because it is a very exciting new area for our company.
Next slide.
Just a bit more on our financial strength with our strong working capital position.
Our uranium inventories in our vanadium inventories and again.
We carry the uranium on the books about $24, a pound and vanadium at about $6 a pound. So when you look at the current price of uranium vanadium you can see at current prices, where we get a nice lift if we decided to liquidate those those those inventories right now we're still planning to produce between 100 201.
20000 pounds of uranium from alternate feeds this year, which will take us up to around 800000 pounds at year end, assuming we don't sell any of the inventory.
And I just want to continue to highlight that.
We have zero debt.
Next slide and final slide and I'll open it up for questions.
No. There really is no company like energy fuels with exposure to several critical minerals, which as I indicated never been more critical than they are today uranium we have.
Really unmatched ability to respond with low cost U S uranium production from our proven assets and paid for assets, we have more production facilities and capacity and experience than any other U S company. The rare Earth again, moving forward very very quickly very excited and we see.
The key element here, we've pretty much technically gone through all the steps to get through separations.
High confidence we can do that we are doing it right now.
We just need the monocyte and so we're building up that story and as I said hope to report more in due course vanadium.
Still again, a smaller part of our business model, but it's important.
Element of our business model I talked about the medical isotopes watch this space the recycling and our strong financial strength.
I'll always have strong financial strength and remember what I always say, we will be aggressive, but not reckless. So now I'd like to open it up for any questions.
On this call we'd like to ask us.
Thank you ladies and gentlemen, we will now begin the question and answer session.
Should you have a question. Please press star followed by the one on your Touchtone phone.
You will hear three tone prompt acknowledging your request and your questions will be pulled in the order the RBC.
It was still declining from the polling process. Please press star followed by the two.
You are using speaker please.
Please lift the handset before pressing entities one moment. Please for your first question.
First question comes from Heiko.
<unk>.
H C. Wainwright. Please go ahead.
Hi, Mark and team that set of Marcus Giannini, calling in for Heiko. Thanks for taking my questions.
There was a sentence in your release that we've found intriguing, stating having recently secured three long term uranium contracts with major U S utilities companies beginning to perform the work needed to recommence production, one or more of its minds and ISR facilities, starting as soon as 2023, So I guess.
Just out of curiosity, how much work are you planning to do this year are you able to quantify your expenditures for that.
And do you need a lot of labor for this and are you, having a hard time finding workers by any chance given that.
Current situation.
Yes.
We're working at.
Three or four of our projects right now getting ready for production, we haven't designated which projects we're going to start up first.
But we are doing quite a bit of work and look at in terms of how much are we spending.
Im just pulling the number out of my backside, but maybe up to five or six or $7 million that kind of expenditure a lot of these projects is set for a number of years.
And they need some work we have hired people to do that work.
And I'm going to say, it's in the order of around 20 people 15 20 people too.
The focus on getting these projects back into production or being ready to go into production. The contracts that we've signed again 2023 is the start of one or two of those contracts.
<unk>.
Just sort of getting the flywheel turned up but yes.
Watch this space, we are planning to have at least one mind open.
And advancing for new production.
That hasnt happened, yet, but yes, there is work being done at several projects getting ready for production because we'd like to build on that contract portfolio.
Going forward and open up several months.
Okay perfect. Thanks for the clarification.
And lastly, you have over 1 million pounds of vanadium left you sold some for an average of $13 44.
Cents per pound in the first half, but then stopped giving pricing you.
Do you have a.
Fixed some where you would restart sales are a moving target more or less depending on the balance sheet that month.
How much lead time do you need for these sales given logistics.
Yeah, we look at it.
Thing about vanadium is very slippery.
Yes, we don't really have any intent to sell any vanadium at $708 a pound.
But to sell it we can probably sell it in a week when the price at the right.
Right levels, and so but when you look at the current price at $8 and you saw a little spike and we cut.
Sold seven or $8 million of vanadium at $13. That's exactly the kind of strategy that we're trying to to execute so we'll sell it when it makes sense and we will hold it when it doesn't make sense to sell it.
Alright perfect.
Is it from me Thanks again for taking my questions.
Our pleasure.
Thank you.
Once again, ladies and gentlemen, if you do have a question. Please press star one at this time.
The next question comes from Puneet <unk>.
Capital. Please go ahead.
Hi, Thanks for taking my question.
I feel lining here about evaluating installing a smaller light separation circuit.
What needs to happen for you to get that going in the next 18 to 24 months can you expand a little bit more on that.
Yes.
Well, because we're separating in the lab at lab scale and we're also doing commercial separation of the lanthanum removal step.
We've gained a lot of expertise and knowledge about that next step of separation.
Now.
White Mesa is a solvent extraction facility.
And we have been doing solvent extraction for uranium in vanadium for four decades, So we're very comfortable with that.
One of the concepts is that.
We could perhaps do some separations of rare earths in our existing solvent extraction building. That's the concept. It is a very large building we have the potential maybe adding a second or maybe a third floor with additional upsize separation cells Sxl's David.
What we are using the laboratory.
But maybe smaller than what we would be using in our full scale commercial separation facility, which we were planning on being in the order of about 10000 tons of <unk>. So.
<unk>.
It's kind of a new idea, but it's absolutely not out of the question that we might be able to do that.
Very quickly because we are licensed to do solvent extraction and we're currently doing solvent extraction of rare Earth.
Why not look at another intermediate step.
So I guess, that's probably the most.
Most flavor I can give on it at the moment, but it is absolutely not another question that.
In a period of.
12 to 18 months that we could be taken the next step and.
And we think that it would be quite interesting. If we do that we haven't really decided yet 100% if we're going to do it but we're going to definitely consider it.
Okay, I think it would be interesting just for the market to see that.
Yes, thanks for that color.
Thank you. The next question comes from Marshall for Rob.
<unk> financial please go ahead.
Yes, Thank you for taking my call and congratulations Mark.
The.
Progress Youre, making in these various areas.
Question is one of them on the U S government's RFP for uranium.
<unk> announced any kind of timetable for making any contract award.
Curtis Moore, who is probably on this call I don't know if youll jump in or not I think a couple of months.
Yes, two months I think it was mentioned that we would expect to hear something back by September 30.
<unk>.
And would that be for deliveries this calendar year.
Yes, it would be I believe the RFP mentioned that deliveries would have to I believe occur within 60 days after an award.
So that would certainly get within 2022.
Yeah, Okay. Thank you and then.
On.
The.
Sure.
You mentioned no debt and I remember seeing I think in the press release there was in the financial statements. It showed some long term debt something like $13 million.
Explain that please.
Yes look at I think most of that is our reclamation liabilities that are not funded.
I.
I don't have the exact numbers, but about half of reclamation liabilities.
Liabilities.
Our cash back, but then we have some bonds or other.
Reclamation liabilities.
Tom Brock do you have anything to add to that.
So youre exactly on point there Mark.
So thats what it is its reclamation liabilities.
Half of those are backed by cash of plus or minus half.
Okay. Thank you very much.
Thank you.
Thank you.
There are no further questions at this time please continue.
Alright, well look at again.
Our pleasure.
We're reaching for the stars here, we're going big but not reckless as I said earlier.
We do not see anything standing in the way of us expanding our business plan as we're doing now.
In leaps and bounds in the coming years, we've got a secure.
That various steps along the way it doesn't happen easily or for free.
But we're very excited where we're taking this company and we hope to continue to provide.
Really significant updates to the market as we advance and appreciate the fact that people that are shareholders of the company.
We want to value creation for our shareholders and go forward. We're also very excited about the progress that we're making with our foundation in San Juan County are clean San Juan County, Clean Energy Trust of the advances that we're making.
In the local communities.
The new jobs were creating and the local communities.
We're very excited about all things energy fuels and again appreciate your support and interest in our company. Thank you very much.
Ladies and gentlemen, this does concludes the conference call for today you May now disconnect your line and have a great day.
[music].