Q1 2024 Energy Fuels Inc Earnings Call
Good morning, My name is Julie and I will be conference operator today at this.
Todd I would like to welcome everyone to the energy fuels first.
First quarter 'twenty 'twenty four conference call.
Julie: All lines have been placed on mute to prevent any background noise. After.
The speakers remarks, there will be a question and answer session. If you'd like to ask a question. During this time centric press Star then the number one on your telephone keypad, if you'd like to withdraw your question. Please press star two thank you. Mr. Childers you may begin your conference.
Mark S. Chalmers: Thank you Julie and good morning from Denver, Colorado.
This is mark <unk>, President and C O energy fuels.
Mark S. Chalmers: I am excited to discuss our Q1 results and the exceptional progress we are making on both the uranium and the rare earth fronts and I'm extremely pleased and proud to discuss this with you today over.
Over the past several years, we have been pursuing a very focused strategy on building a critical mineral company centered around uranium utilizing our uranium knowledge assets capability and expertise to a maximum.
Like any other country or excuse me company I know in the entire world.
Mark S. Chalmers: On the back of our U S leading uranium business, we are making extraordinary progress advancing our global critical minerals strategy on numerous fronts.
Mark S. Chalmers: While remaining profitable.
Q in the uranium industry can currently count being profitable at all let alone while building out a diversified critical minerals company.
We believe we'll be world significant in time.
It is highly unique that energy tools is doing more than many other companies in the uranium sector, while also advancing very quickly and efficiently.
Both our rare Earth and heavy mineral sands base business strategies.
I believe presents significant opportunity for our investors.
Today I want to remind you you will be controlling your slides from your old computer I will try to tell you when they move these forward.
Also there will be playback is available on our website shortly after the presentation.
So at the end of the presentation there'll be time for questions.
Mark S. Chalmers: And I am being joined by Dave Freeland, Our executive Vice President Chief Legal Officer, Nate been at our Chief Accounting Officer and interim CFO.
Curtis Moore, our senior VP of marketing and corporate development to assist the assist me with any questions you might have.
Mark S. Chalmers: No.
Speaker Change: Looking at this first slide.
And I Love. This slide this is taken down in San Juan County, not far from the White Mesa Mill.
And the title clean energy starts with us.
And actually clean energy on steroids, because I believe energy fuels can do more for the energy transition in just about any company I know of because of our strategy.
Next slide.
I may be making some forward looking statements. During this presentation. Those are included in page two of the presentation.
Next slide.
Our business objective is simple.
Creating a profitable high margin U S critical mineral company that I don't believe anybody else out there is doing like us because there is no playbook centered around uranium.
Producing several of the advanced materials needed for the clean energy transition.
And also handled the residuals.
Speaker Change: For example, when we're processing uranium ores or rare Earth, we saw you're obliged a lot of things like some of the medical isotopes that we're advancing particularly things like radium, 226% to two eight.
Number of our mines contain vanadium and Graham and we can cover the vanadium as part of recovery in uranium.
The best rare Earth elements.
Include uranium and other radio nuclides, so we can capitalize on and deal with.
Heavy mineral sands historically have had legacy issues with Monotype.
We can monetize the monarch lite as well as the heavy mineral sands himself.
And the monocyte becomes a byproduct of heavy mineral sands and then our long history of.
Uranium recycling recovering uranium that would be lost with disposal and everything we do.
Perfectly centered around ESG.
So we're very excited about that so next slide.
Everything we do is of high value product line.
Recovery materials needed for the clean energy transition.
Uranium.
We have been the largest producer of uranium since 2017 and produce two thirds of the uranium produced.
In the United States. If you look back 10 or 15 years, we produced approximately one third of uranium produced in the United States with Cameco being the largest producer of uranium so second only to cameco, we're restarting.
We've restarted our uranium mines, and we're increasing that ramping that up right now and I'll talk more about it in this presentation.
Earth critical elements used for the powerful electric magnates for Evs wind generation and other.
We are starting the commissioning of our S X plant our phase one Xx plant.
Today, and I will be at the mill and a few hours time after this presentation.
Heavy mineral sands that is expanding to provide it's a source of low cost monocyte at world scale, while also being able to capitalize on the titanium zirconium minerals.
But we have the only conventional vanadium plant in the United States, we can restart that when we choose to but we are currently mining uranium vanadium ores.
And our recycling. It's the reason the mill has stood the test of time of uranium and vanadium bearing materials.
And that promotes sustainable sourcing and reducing carbon emissions.
And financial strength I believe we have the strongest balance sheet of any.
Of our peers.
There at.
And I'll talk about that more in just a second.
Next slide.
Q1, 2024 financial highlights.
Next slide.
We are profitable Q1, 2024, we're continuing our earnings we had 364 million of net income.
<unk> <unk> a share.
Including $2 million of operating income driven by our uranium business and revenue.
We sold 300000 pounds of uranium for gross profit of over $14 million.
Our strong earnings including last year with our net income.
Continues to fund the growth of our uranium business.
<unk> protection and heavy mineral sands strategies.
Meanwhile, we are ramping up uranium production as I discussed and advancing the commercial air separation capabilities as we speak.
Over <unk>.
Two 4 billion of liquidity at current commodity prices.
The working capital for March 'twenty.
March 31, 2024 was $222 million made up of $55 million of cash.
Cash equivalents of $140 million of marketable securities.
Which include uranium stocks in interest bearing securities substantial.
Speaker Change: Substantial inventories.
$28 million of inventory and 19 main product inventory.
When you adjust for current commodity prices, our product inventory goes up to about $40 million, which adds another $20 million of liquidity.
Zero debt.
And we have probably in excess of 1 billion worth of assets.
Speaker Change: We have nearly 400000 pounds of finish uranium.
And 900000 pounds of finished vanadium.
At 11 tons of finished high purity separated makes for carbonate.
We also have nearly 500000 pounds.
Of youth reiterate as raw materials at the mill ready to be processed.
Later this year. So we have substantial inventories of finished goods and raw materials.
Next slide.
Talk about some of our uranium highlights.
Next slide.
And many of you have seen these pictures before but we're ramping up to 2 million pounds of uranium production in the short term.
Speaker Change: Low cost production with limited capital required.
That's important limited capital mainly working capital.
The White Mesa mill, there in the upper left hand corner.
Currently commissioning phase one as soon as that commissioning is complete we are going to switch over to the mill and start processing uranium for the next couple of years, while we're securing other sources of Monotype.
Opinion plane in the lower left.
Speaker Change: It's currently got about 30 miners and mining high grade uranium or right now that is the highest grade uranium mine in the United States.
We're also in pre production at our ISR facility Nickels ranch in Wyoming.
And we also are mining at two of our mines and the Lasalle complex at Lasalle and Pandora and the Beaver shaft is actually three mines.
And we're mining uranium and vanadium ores as we speak.
Ramping up to 2 million pounds with limited capital and looking to the future from their next site.
So I've already talked about.
Uranium transactions of 300000 pounds.
Generated north of $25 million in revenue and average uranium sales price of $84 a pound.
Resulting in the gross profit of 14 million plus at a margin of 56%.
200000 pounds was under long term utility contracts at an average price of $75 20, or 75014 a pound.
But we also sold.
100000 pounds on the spot market at an average price of nearly a $103 per pound.
Speaker Change: Continue ramping up our.
Our uranium in vanadium mines as I mentioned.
Both in Utah and Arizona.
And Colorado with where when in time and also Nichols ranch.
Ramping it up to about one one to $1 4 million pounds of newly mined ore. So this ore will be mined and stockpiled either at the mine site or at the White Mesa mill ready for further processing later this year or into next year.
Speaker Change: Our guidance, we've given out is finished goods in 2024 of between 150000 to 500000 pounds.
We hope to be at the high end of that depends on how much or it gets delivered to the mill and what gets process at the mill into finished goods. This year, but we will be building up those inventories for processing and remember we have about 400000 pounds of inventory finished goods already.
And we will continue to prepare nickels ranch as I said and were win so when you combine our finished inventory and raw materials, we have nearly 900000 pounds either already finished.
Ready to be process at the White Mesa Mill, one week, we complete.
<unk>.
Commissioning of phase one.
Next slide.
So <unk>.
Ramping up to the 2 million pounds of annual production by 2025 will be a combination of a number of our mines, including processing low cost alternate feed materials.
Speaker Change: And also potentially or purchases from third parties with the buy and schedule.
Again, if you look over the past energy fuels has produced about a third of uranium produced in the United States, Secondly, Cameco and we plan to continue to be.
They're very significant producer of uranium in the United States.
Speaker Change: We're looking at expanding our future uranium production with exploration.
Lineation drilling both at Nichols Ranch.
Underground delineation drilling at the opinion Planed mine, which as I mentioned is the highest grade.
Underground mine, it's the highest grade uranium mine in the United States.
We continue to advance the permits at Roca Honda shoot mountain and bullfrogs all significant projects have the potential of adding an additional 4 million pounds of uranium production per year and the coming years.
For 2020 for uranium sales I already talked in detail about Q1.
But for the remainder of 2024, we're going to continue to evaluate spot market sales opportunities.
We still potentially have another 100000 pounds under contract for this year and we may potentially make a delivery on that but we'll have to see if a utility wants to take delivery. So we will continue to use our existing inventory or raw material that we have at the mill site or alternate feed in.
These orders they get transported the mill to capitalize on a strong uranium price as much as possible.
Speaker Change: Next slide.
Let's talk about it.
Earth and heavy mineral sand highlights.
Okay.
Speaker Change: Next slide.
[laughter] Skus me.
The rare Earth element production complements our uranium production because when we're processing monocyte, we're recovering uranium and that uranium is a lot of times, we will be at very very attractive cost structures very low cost uranium like our alternate feed and <unk>.
Some of our uranium production.
Speaker Change: That we have as our uranium projects. So the combination of that are very competitive uranium protection costs like no other company because of the way we can produce uranium.
We completed the phase one separation plant in Q1.
And as I said, we're starting to commission the Sx unit today and I'll be there.
Speaker Change: The cost of building out that separation plant was approximately $16 million.
That is incredible.
It was under budget by $7 million to $9 million under budget and most companies in the rare Earth business could not even build a pilot plant for $16 million and we have built a separation plant with capability up to 1000 tons per year of N DPR, which in.
Itself is world significant.
Subject to receipt of sufficient monazite feed which we're in the process of doing.
And so again I'll talk more about that in a moment. We also expect to produce between 25% to 35 tons of separate NDP oxide as we commission the circuit and then switch over and start producing uranium with white Mesa milk. The White Mesa mill over time has never been.
And held back.
Speaker Change: Because we were doing something like four in this case processing alternate feeds or even processing.
Speaker Change: The rare Earth, we have plenty of capacity at the White Mesa mill to handle all the feed we have lined up for the immediate future.
But.
We are engineering, eight upsize phase II and phase III. So we could have completely separate separate facilities and in time. So we have the full production capacity of all our infrastructure at all times for the processing of rare Earth uranium and vanadium. So we plan.
To increase the capacity basically two times to up to 6000 tonnes of NDP our oxide per year.
And just for People's information that is the quantity of endy PR that Linus produced last year.
So world significant we'll have our own separate crack and leach facility and the ability to separate disposing in Turkey and other heavies in due course.
The phase II and phase III separation searches are still subject to final engineering design and receipt of all required permits.
Next slide.
This is a very unique slide and it shows how we are advancing an innovative <unk> supply chain.
Speaker Change: Four years ago.
Speaker Change: There would have been it's a flag for white Mesa. So look at the progress, we're making for a fully integrated rare Earth business.
While we're doing this on the back of our uranium.
<unk>.
Advancing through mining crack leach separation with a view and advancing towards metal, making and alloys.
We've had a relationship with <unk>, which we plan to continue to advance we secured the Bahia project, 100%.
We have agreement signed for the acquisition of base resources with the World class totally our project and also the quality of project in Kenya.
And we're advancing the agreements with Astral Mcdonald project in Victoria.
Next slide.
This next slide is a bit busy.
But it shows that we are building world scale for monocytes supplies. While also building a very strong portfolio of heavy mineral sand projects globally and it was not by accident.
We search the world high and low to find the best heavy minerals on projects that had monocyte and we went after them.
Look at the Bahia project with potential production in 2026.
Donald and 26 totally or potentially in 2008, when it gets all the agreements in place to go forward.
And that when you add up the potential of securing that monocyte and the heavy mineral sands revenue places us in an enviable position.
Speaker Change: Going forward.
We're also very excited about the world class totally or a project is well known in the world.
And base through the acquisition has an outstanding project team and our history of profitable HMS uranium production and many of these projects. The monocyte was never even considered an asset.
It was considered a waste stream.
And we're able to capitalize on this like no other company I know of and and.
Uranium in.
In a very opportunistically and economic way at low cost structures.
We're also looking at purchasing additional monocyte concentrates through offtake in time.
Next slide.
Speaker Change: Just some preliminary.
Rare Earth economics, we expect to be globally competitive.
I talked about the phase one separation plant of up to 1000 tons of NDP our oxide per year.
At a 16 million dollar investment.
We had when we have completed a class for pre feasibility study to increase the NDP, our separation and crack at Leach capacity at the mill. This is the standalone at 30000 tonnes, a monazite per year.
But if you go back to the previous slide you will see that we're securing in time, we believe when we close all these agreements and get these projects up and running up to 50000 tons of monocyte secured to our account.
So the face of the original phase II pre feasibility at 3000 tonnes of N D. P R per year.
Speaker Change: Showed a capital investment about $350 million.
And the cost of producing a kilogram if N DPR of around $30 per kilogram.
Speaker Change: And I wanted to mention that it really depends on the economics of the rare Earth business and the separation and advancing integration of rare Earth products really in our case depends on what the cost of securing the monazite is because we know we can be world competitive if we have low.
<unk> cost sources, a monazite in folks look at the program, we're putting in place.
We're building up our position to be and receive low.
Cost monocyte and also have revenues from the H M S business.
So we're updating the PFS.
Speaker Change: Between 40 to 60000 tons of monocyte that would probably be on the upper end.
To have the capability as we get these projects online to produce up to 6000 tonnes of N DPR per year, which is the size of lineups.
Speaker Change: And just for information Linus has a market cap of 4 billion U S dollars, even in a period, where rare earth prices have been low and on top of that have the ability to.
Recover the DIY in the TB separated oxides per year.
So.
This is exciting stuff. We are also doing pilot scale testing on recovery and separating out the DIY in the TB right now and again that is one of the really exciting and powerful things that we can do all this work at our site.
White Mesa when most companies have to go out to laboratories and wait in line for months.
To do their testing we can do it right now real time next slide.
Speaker Change: So we'll talk briefly about vanadium medical isotope highlights next slide.
Okay.
So we're continuing to advance the potential recovery of radio isotopes from existing processing streams I know I've mentioned this in the past that we have R&D license that allows us to recover radium two to six.
Speaker Change: We also expect to complete the engineering on a pilot for <unk>.
<unk> to recover radiant <unk> six for testing by end users later this year or during this year.
Medium sales are basically on hold to tell vanadium prices increase, but we do have large inventories of vanadium and we have the ability to recover vanadium out of our tailings solutions and also building up sources of future vanadium with the mining of our dip.
Deposits at the Lasalle complex.
Next slide.
So.
Talk about recycling and commitment to community, which is very important to us next slide.
We continue to be very proud of the San Juan Clean Energy Foundation that we set up a few years ago with our initial contribution of $1 million into the foundation and an ongoing commitment to fund the foundation with 1% of the annual revenues from the White Mesa Mill.
We've made grants of north of $300000 to date supporting existing and new programs in education environment Health wellness.
Economic development and native American priorities.
And this is an outstanding program. If you have an ever done. So you can go on the website, the San Juan County, Clean Energy Foundation website and look at the great things that we're doing with our stakeholders and in the community.
The mill recycling programs are.
Speaker Change: Particularly recovery of uranium, which we will be doing this year reduces carbon emissions and the world's finite resources that would be able to recycle them using the white Mesa mill is incredible.
And all of this as we've done at our state of the art facilities and tailings facilities at the highest global standards out there.
Next slide.
Speaker Change: Now this is my last slide.
And this is an exciting slide for a number of reasons.
Because look at the things that we're doing and accomplishing.
We're restarting the mill to have finished uranium production guidance was $1 50 to 500000 pounds. This year, but remember we have inventory and we plan to push that as hard as we can to capitalize on potential.
Potential future spot sales.
We have no further contract sales this year expected, except for that potential 100000 pounds with one of our customers.
We're ramping up the ore production as I indicated at our existing mines to that $1, one to $1 4 million pounds per year rate and that order will be going to the mill to be ready to be processed and matter of fact, some of it is going to the mill right now.
So we're increasing to that 2 million pounds per year, using a combination of our mines alternate feed and potential third party.
Purchases of uranium with limited capital and doing it right now with proven assets that we know what the cost structures are.
And we know we can accomplish that because we've done it for decades.
And also at the same time, increasing our long term production profile by up to an additional 4 million pounds per year through the projects that we have mainly sheep mountain of Roca Honda and bullfrog.
Now that's a lot just in the uranium space alone.
And doing that while at the same time bolting on.
The rare earth elements and the heavy mineral sands with the commissioning of phase one.
The increased the engineering phase II phase III at two X, what we had planned.
Drilling at the here.
In Brazil coming up with a resource later this year or early next year.
And advancing the Donlin project with Astral and acquisition of base resources, which also puts us in the heavy mineral sand in a big way and secures low cost supplies of monocyte at world scale.
While being profitable.
We are busy folks and people some people don't understand what we're doing but watch our advancements we are not slowing down.
So everything we do is focused on long term.
Sustainable profitability.
And energy fuels were not a promotion.
Viewers, and we're making great progress and I really appreciate our shareholders and I appreciate and happy to talk to anybody else.
Wants to consider becoming a shareholder we're always available to.
To talk about the advancements of our company and our strategy. So I will complete it.
The presentation at this time and now open the floor for <unk>.
Any questions.
Thank you ladies and gentlemen should you have a question. Please press star one.
To withdraw your question. Please press star two.
Please for your first question.
Your first question comes from Matthew <unk> from B Riley. Please go ahead.
Good morning, and thank you for taking my questions.
Matthew: Also you had a big announcement last week with the Russian enrichment band passing the Senate at a high level could you maybe provide some additional color on how you expect this to impact your business in the U S uranium production chain more broadly.
Well I think.
It certainly.
<unk> the bipartisan support for re shoring, our uranium production capabilities and the priority being placed on having the integration in the uranium business.
So it certainly.
Significant help and I think it's going to take some time to get all this in place I mean, we've got a lot of catch up because it was a national priority looking back 2030 years ago, We got a lot of catching up to do so we plan to be ready and able to help fulfill.
<unk> production in the United States right now.
Curtis more is on the line Curtis do you have any other comments to that that you'd like to add.
Yes, not so much I mean, it's just I think firstly, it's wonderful that we're not going to be spending any more money to Russia.
Through our nuclear industry.
And yes, no. It's a U S utilities have been shifting off of Russian supply over the last several years.
Which is to their to their credit.
This was a very important step mainly to unleash some some funding out there I think $2 $7 billion to help restore domestic nuclear fuel capabilities, which is just going to increase demand for our youth wait three await product here in the United States. So this was extremely important move and I think that energy fuels is.
Probably in one of the better positioned to take advantage.
Great I appreciate that color and just one more for me you have mentioned for several months now that bringing on Whirlwind and Nichols Ranch will bring you over 2 million pounds of mine production I was wondering if you could potentially drill down into that number a little more.
If I recall correctly nickels ranch has a nameplate capacity of 2 million pounds kind of alone. So basically if uranium pricing performs really well heading into 2025 do you have.
Kind of what's the Optionality here to kind of push those assets further if you have it.
Speaker Change: Well I mean, we can we can get to the 2 million pounds. When you start going above 2 million pounds. It just a function of how much additional investment that you make.
With regards to things like satellites in additional well fields pushing these mind. So when I talk about this goal of getting to this first wrong of about 2 million pounds. This is with limited capital mainly working capital. So it's just a function of investment to push it past the $2 million in time.
Speaker Change: When we start talking about three 4 million pounds of uranium production, we've got to start spending pretty substantial capital I mean, I'm talking like increments of 100 $100 million or so for about every million pounds or so somewhere in that order. So the $2 million is really kind of a threshold with limited capital and again.
That'll be made up of newly mined ore from our conventional mines.
Production from Nicols Ranch alternate feed and potential some third party purchases. So it's approximate 2 million pounds. We can go above that but to really go way higher like the double that we have to start making substantial capital investments to go higher.
Got it. Thank you Super helpful and best of luck moving forward.
Your next question comes from Joseph Reagor from Roth.
Please go ahead.
Hey, Mark Thanks for taking my questions.
I guess first thing is on your inventories.
You guys have little under 400000 pounds of uranium little under 1 billion pounds of vanadium.
What do you guys think about.
What level you'd like to keep up those inventories or is it just a function of pricing that would allow you to sell that as an option into the market.
You know over the remainder of this year and maybe long term.
Yeah, well Joe.
What we're what we're looking at is as we said we're mining. This this this newly mined ore shipping it to the mill.
We're going to look at how we can maximize these higher prices to maintain our profitability to the best of our ability so.
Next year I mean, this year, we have potentially another 100000 pounds could put into a somewhat.
Some of our long term contracts next year. We also have long term contracts, but we certainly don't have all that uranium are committed for this year next year. So so Joe we're going to we're going to push it as hard as we can but a lot of it may be just timing and.
And because we have such significant inventories coming to the mill.
Speaker Change: We may run down our inventories a bit just to get the best result for our shareholders. As we go forward and that's really kind of quasi self fund ourselves not quasi self funded but based on the back of the uranium business. So Curtis do you have any other comments from a uranium market perspective.
No I don't think so I think that that had said I mean, it's.
Yes, no there seems to be some really good things happening in uranium markets and the pricing seems to be headed in the right direction, I think Russian uranium bad and additional things happening out there bodes well for us.
Spot prices.
I think that inventory is going to be a important part of our our plans going forward this year.
Okay, and then any comments on the vanadium market what are you guys seeing there.
It's been pretty soft Joe.
And.
We.
Look at what's happening to the vanadium market and when the price goes up we sell some product.
It's an interesting vanadium is an interesting one because it is very spiky and so what we're doing is when we processed vanadium and put it into inventory.
We'll just hold that until we see a spike in vanadium prices. So we have had some people reach out to us for.
Of interest for vanadium for some of these vanadium flow batteries.
And we're hopeful that we can get some long term.
Interest for purchasing that at prices higher than the current prices I think is five or $6 a pound right now.
And if I could if I could add there I mean, you know vanadium prices. We've found it just to be closely tied to global global economic forecast.
<unk> used for vanadium as steel and so when there is good.
Economic forecast for for construction for vehicles for infrastructure.
Infrastructure and things like that you'll see vanadium prices go up when the when the outlook a little bit more uncertain like maybe it is right now vanadium prices are weak, but again, we just see every three four or five years, there's a spike in vanadium prices and so that's it's very hard to time that and so it's beneficial to carry inventory so you're ready for it.
Then as you sell it into the strengthening markets, we have the ability to produce it pretty quickly.
As we bring our Lasalle mines online, we're going to also be processing in producing vanadium.
So I think it's just it's just a good kind of option that we have that we can capitalize on every few years.
Okay. Thanks, and then.
On the capital spending front, we spent about $7 3 million in first quarter.
You guys thinking for the full year on the Capex side.
A lot of that.
Joe is where we're capitalizing some of our uranium development and also.
We're capitalizing some of the uranium production that we havent turned into.
Finished goods yet so Nate.
I think it's around with 40 million or something can you correct me with estimate on what our capital spend looks like including what we're capitalizing for production.
Yeah, No that's exactly right we should see.
Similar.
And throughout the rest of the year, but ramping up.
Approximately 40 billion throughout the year, although we have been capitalizing some of the development of our.
Opinion play in mind and some of the other activities. So that's that's the activity that youre seeing.
Okay Alright.
Alright, thanks for the guidance as our turnover.
Your next question comes from Mike Heim.
Michael Carl Heim: From Nobel Financial markets. Please go ahead.
Alright, Thanks, and the question was kind of partially answered with the question on inventory, but let me just re ask it for confirmation it sounds to me like you kind of feel like you need to have more uranium inventory before we say.
More long term contracts is that the case or is it still the case that the utilities are still stuck on the trying to buy things on spot.
No.
I don't think we I mean, we think that our inventory is all work in progress Michael.
As I said, we're already over mining on our current contract portfolio.
So.
We still are looking at and considering additional long term contracts.
A number of the utilities like the fact that we can be in production sooner faster without capital.
Significant capital and financing the capital.
Right now so we.
Yeah, we're not going to I mean, we're just going to we're just going to be opportunistic when it looks like we.
We evaluate what inventory we have with inventories being produced at the mines would alternate feed we have.
And go from there, but but we don't necessarily I mean, we like to have some inventory just because it gives you a little breathing room. If for some reason you have some sort of production disruption for a short period of time, but but we're confident we know our assets well, we know our ability to deliver for those assets.
We're not gonna have large inventories just to cover that.
Okay, and if I could if I could jump in as well Mark real fast that you'll remember most long term contracts. They don't have deliveries that start for a couple of years so and.
And so and we're ramping up to producing you know around 2 million pounds of uranium per year.
We have not.
Secured contracts for anywhere near that at this point, so we still have significant uncovered.
Future production to enter into long term contracts and we're certainly talking to utilities on that front.
How should we view the ramp up their production is there kind of a steady scale or is it two things really jump when you hit a certain.
What I want to say a certain.
Point of certain achievement level.
Well I think I think that the way you should look at it is that it.
If we're saying where we're mining.
One one to $1 4 million pounds of newly mined ore.
That will become steady state in time.
On average.
And you add.
Michael Carl Heim: Getting to that one and a half to 2 million pounds at Curtis talked to that's going to happen fairly quickly over the next year or so.
And then depending as.
You know what the grain pricing as soon as we are advancing these other projects will just start kicking them in time as well. So we want to and we like to have sort of a base load of long term contracts that underpin our operations and but also like to be able to put product out in the market in an opportunistic way like we do.
Did in Q1.
Okay alright, thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question press Star one.
Next question comes from Graham.
Tanaka Tanaka capital management. Please go ahead.
Congratulations on your progress so far I'm wondering if you could give us a little bit of guidance of what your revenues could be.
Sure.
Uranium prices strengthened further just to give us a range of sort of minimum maximum.
As that.
If say if prices get up well over $100, a pound et cetera, how much higher could you ramp faster could you ramp production sales and therefore revenues, perhaps giving you a range of revenue guidance for the full year.
Yeah, Hey, Graham good to have you ask question.
Graham as we've said we can get to.
That one and a half to 2 million pounds quite quickly so depending on what uranium prices gives you an idea of the of the revenue.
Speaker Change: When you look at sort of the blended price of our production costs and whatnot I mean, you could kind of see that we had the significant margin. So I think it was our basis was around 37% to $40 per pound as we mined additional uranium from various sources and including our alternate feed.
I'm, just going to say a blended price of around.
$50, a pound or something as we had ramping this up.
But as we go pass it to me and as I said.
Speaker Change: You could you can kind of assume that.
Speaker Change: To get to three three the happening in pounds are going to have to spend $100 million or so of capital investments so to get beyond <unk>.
<unk> <unk>, two and a half or 3 million pounds per year.
Going to need a few years.
Speaker Change: Get beyond that so I don't know if that provides any flavor.
But.
Speaker Change: That's just sort of the realities of the timing getting all the permits in order getting infrastructure now we have the infrastructure to get to that to me and to me and plus a bit.
But then it's going to take some more time to go beyond that.
Alright, so I understand it will take time and some capital to build a two to three to five 3 million, but what's your ability to ramp production.
I'm just wondering.
And a faster ramp scenario on prices.
But a higher prices.
Rice's were to firm up.
What could your revenues this.
Speaker Change: This year I'm, just trying to get a feeling for the first quarter to the rest of this.
Speaker Change: Year.
Yes.
Speaker Change: Well this year, depending on how we sell inventories and ramp up.
Speaker Change: When we sold three.
300000 in the first quarter.
I'm, just going to speculate that it could be around $100 million. Okay of revenues this year.
If everything clicks together.
Go through there this year.
And that would be kind of roughly at what average price range kind of yes.
I gave some indication that we carrying the uranium on our books.
Little North of 30, it depends on the blended price, but just say in the order of that $40 to $50 somewhere in that order.
Sorry, 40 to $50 would be your cost per pound.
In that order.
Okay. So in other words to get to $100 million I'd have to do the math.
$90 million, how many thousand.
Pounds.
I'm just trying to figure out.
The price would be it has to be taken.
Revenues thanks.
Yes.
<unk>.
Speaker Change: And in the order of a million mean, two pounds something on that order.
Okay, one to one 2 million pounds and at a okay I got it so.
Okay now I understand that thank you and.
On the on the railroad a lot.
A lot of what you do in terms of how fast you ramp that production is going to be a function of.
Capacity I'm sorry of <unk>.
Rices.
That you can.
Realized and I was wondering how much of a price increase you're going to need to see in the markets to really ramp up the production.
Production and sales.
Yeah well.
On the rare Earth front, I mean, right now our focus is going to be on securing the molecules, which we think we're putting our foot on these projects that I mentioned.
You know, it's going to take some development time right now too.
To get all that in place. Meanwhile, the uranium business is really hot and we can capitalize on that and it also allows us time to get our phase II phase III and ramp that up over the next two or three years.
Graham We think we're gonna be world competitive and we're going to be low cost curve on the rare Earth front.
Cause of the strategy that we're executing.
So I mean really to look at material rare Earths protection.
You'd be looking at 26, 27, 28 out in that timeframe in terms of being able to fully capitalize and do the value add that we plan to do at the White Mesa mill, but when you add up the <unk>.
Scale of what we're talking about you can see that it is world material compared to any other company that you added up to including China.
No yes, that's congratulations by the way on lining up so much supply of monocyte.
It's pretty pretty quickly and that was great.
So getting back to the uranium what kind of.
Funding might be available.
For you from the U S legislation.
Im quite sure what the Spa.
Spending a couple of billion dollars by the U S government and the industry infrastructure means does that mean low cost loans, possibly for engine fuels or grants or what.
Curtis.
Yes, yes, no problem, Yeah, Hey, Graham this is Curtis more again.
So most of that most if not all of that money is for domestic conversion enrichment capacity not for mining however.
There is currently a big bottleneck and conversion.
Russia, essentially being kicked out of the western market.
And so that actually limits the ability of conversion facilities to take our material. So you've seen things like conversion prices are up like 10, 12 X or something like that over the last couple of years and enrichment prices are up a similar amount, but <unk> seen uranium prices I mean, they are strong but they are only up say three extra or maybe maybe forex over the last five years.
And so by increasing conversion capacity that will increase the demand or at least the amount of your three ways that they can take from guys like us from from Western producers. So.
That's what that money is mainly for.
But it's going to we think it's going to have a big impact on on uranium prices, just because it's going to increase demand for our material because of that debottlenecking of the conversion.
The conversion function.
Does that makes sense.
Thank you very much thanks, and good luck. Thanks. Thank you.
Thank you Graham.
And there are no further questions at this time I will turn the call back over to Mark for closing remarks.
Well first of all thank you for those that are joining the conference call and for those questions.
Again, I understand that our strategy is different from others.
And the fact, we're building this diversified critical mineral hub centered around uranium and there is no playbook. There is no playbook nobody has done this before and that makes it difficult for some people to understand what we're doing but again if you go back to that last slide.
Fueling our focus and guidance on uranium and rare Earth and you look at our actions you look at our actions, where we're producing uranium.
Speaker Change: Examining our ability to produce and expand that in time.
Then you look on the rare Earth front I mean, when you look at those three projects that we either have secured or in the process of securing or we're trying to get all the final agreements and close these opportunities I hope that provides people with an idea of the scale we are talking about.
It is significant it has significant scale and right now.
We still get valued as a uranium producer and in fact, probably penalized because uranium producer while building out this rare or supply chain at.
World Class scale, and what we believe will be low low cost structures because of the unique attributes that we bring to the table in the types of deposits that were out there looking to secure so.
I can say is that energy fuels, I believe and I might be a little bias and I go back to page two of our forward looking statements is outstanding at uranium investment and rare Earth investment, but you cannot compare us to just the rare earth business or just the uranium business you cannot compare us.
We really don't have a peer group, but if you believe in the energy transition.
And the focus on reducing carbon emissions.
Look at what we do when we tell people, we're going to do something we do it that is how we operate we're not promoters mining.
Mining uranium is difficult, it's very difficult I have been mining uranium for 48 years, we know how to do this these assets are proven.
And on the other side, we're securing these feeds through a very focused strategic way, we're looking at high quality acquisitions.
And the base acquisition is a perfect example of the type of assets, we're trying to secure that our world class long term multi decade projects.
They can help with that diversification at scale again over the long term and having that diversified cash flow creates other opportunities over time. So I mean look at the fact that in four years as we built our uranium production and at the same.
In time look at the speed that we're operating in advancing the rare Earth I think it is absolutely extraordinary and that's what we're focused on we're not trying to be status quo. We're not trying to repeat what everybody else is doing your aim space, we're trying to be a standout and look for extraordinary opportunities.
To build a world material critical mineral hubs. So thank you very much look forward with future updates, but we are moving fast and we have the balance sheet. We have the team and we're acquiring the assets and we have a very significant asset base to build a very significant company go.
Going forward <unk>.
Have a great day.
Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you.
[music].