USA Building A Critical Minerals Hub in Utah?

An aerial shot of Energy Fuels' White Mesa Mill in Utah

I spotted a news release this week which got me excited. It could be the precursor to a big move by the US government to take back control of its Rare Earth strategy. If it is, this is huge.

Rare Earth Elements (REEs)

Most people don’t actually know what rare earths are or what they are used for.

Sounds way too technical, and not as exciting as gold, or explosive (pardon the word) as uranium. Rare Earth Elements (REE) or Rare Earth Metals (REM) are used in lights, screens, glass, as catalysts, in magnets, in batteries and steel alloys and also for critical defence uses and in the manufacture of aircraft: we will write up a more in-depth article about the who and the where. But for now, let’s keep this simple.

Anyone with any semblance of knowledge about the Rare Earths space recognises its strategic importance. They will also know that 90% of the market is controlled by China. The Chinese government has got a track record of weaponising this fact against countries who do not bend to their will on given topics. It would also be fair to say that relations between the Donald Trump / USA and the Chinese government has been strained of late. So what do you do?

Energy Fuels (NYSE: UUUU)

Step forward Energy Fuels. We spoke to them a few weeks ago following an announcement that they made about processing rare earths and radioactive material at their White Mesa Mill. It was interesting but I didn’t think much of it. Just more so-so news flow, typical of companies looking for the oxygen of publicity. That was until I saw their recent announcement about engaging Constantine Karayannopoulos & Brock O’Kelley. And a light bulb moment happened.

Energy Fuels' company logo

Just the slightest amount of digging reveals Karayannopoulos and O’Kelley are big hitters in the rare earth space. Karayannopoulos the CEO and later Chairman of MolyCorp and selling it for c.$1.3Bn. Now, he is Chairman of Neo Performance Materials (TSX: NEO). O’Kelley was in operations for Mountain Pass in the 1990s and the 2000s. Both have extensive REE processing facility design, start-up experience, operations, and downstream value-added manufacturing of advanced REE products. What Energy Fuels brings to the party is a technologically sophisticated, multi-licenced, regulated and controlled environment in the shape of the White Mesa Mill. Put all the above together and you have the beginnings of something quite exciting. Let me tell you why.

Disrupting The Chinese Monopoly

Lots of companies, and countries, have talked about competing with the Chinese in the rare earths space. None have managed. But now the same US Senators who have been beating the drum about the strategic importance of uranium, also see rare earths as critical to the safety and security America. These are the same US Senators that Energy Fuels have been courting through the entire Section 232 process. Relationships have been established and formed. Ideas have been shared. A mill that can process radioactive material, such as uranium and rare earths, in the USA, will have been on the agenda. The mill can even extract uranium from rare earths. Now things just got interesting.

Energy Fuels are clearly the leading US producer of uranium, when the taps get turned back on. They also control the economics of the other US based uranium juniors, because they own the keys to the mill. Non Energy Fuels shareholders won’t like this fact, but it has always been thus in the mining. Uranium is, and will continue to be, their core business. But make no mistake, Energy Fuels intends to make a significant contribution to the bottomline line with rare earths feed business. The potential contribution will be counted in the tens of millions.

Think it is time to start paying attention to White Mesa’s potential for multiple revenue streams, and its technical advantage as the only meaningful critical minerals hub in the USA.

Let me know what you think. Can you see rare earths being at the heart of the American Dream again?

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

An aerial shot of Energy Fuels' White Mesa Mill in Utah

Energy Fuels (NYSE:UUUU) – Does The NFWG Report Change The Game?

The Energy Fuels company logo
Energy Fuels Inc.
  • Shares Outstanding: 118M
  • Share price US$1.50 (01.05.2020)
  • Market Cap: US$176M

Interview with Mark Chalmers, President & CEO of Energy Fuels (NYSE:UUUU).

Energy Fuels is America’s premier uranium producer, and Mark Chalmers was one of two CEOs who originally petitioned the U.S. government under section 232. That petition has led to this moment: the DoE’s NFWG report that carries recommendations for the U.S. government to restore America’s competitive nuclear energy advantage.

Chalmers is very pleased. Some investors have been disappointed by the lack of detail and specifics, but Chalmers is happy with the report considering it is merely a policy document with more to come.

Will the report help the American uranium space. Will it help uranium producer, Energy Fuels. Chalmers certainly thinks so. Uranium could be in for 2H/20.

We Discuss:

  1. Nuclear Fuel Report Announcement: Opinion and Expectations
  2. Shareholder & Investor Concerns: Near-Term Impact
  3. Ur-Energy and Energy Fuels: Direct Beneficiaries or One of Many?
  4. $60 Uranium: The Process of Getting There
  5. Nuclear and Renewables on a Level Playing Field: Who Gets the Subsidies?
  6. Utilities: Time to Stop Being Used to Cheap
  7. The Future for Energy Fuels

If the uranium space is your kind of thing, why not read one of our recent uranium articles, or watch one of our latest uranium interviews?

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Energy Fuels company logo

Kazatomprom, Energy Fuels, and the Outlook for Uranium in 2020

The Kazatomprom company logo

Mr. Galymzhan Pirmatov, CEO of NAC Kazatomprom, was recently interviewed by UxC. Kazatomprom is by far the world’s largest uranium player, and Pirmatov’s strategies will be massively instrumental in the outlook for uranium in 2020 and beyond. Uranium investors will want to know what conclusions we can draw from this interview so they can make better-informed uranium investment decisions. Let’s get started.

Green uranium reacting in a glass vial with a uranium symbol and a nuclear symbol next to it

The Interview

  • Kazatomprom will NOT attempt to make up the tonnage from COVID-19 production cuts once they return to full operation.

This might be bad news for uranium bears the world over, but for bulls, this statement cements the tightening in supply we’ve seen in recent weeks. Kazatomprom expects Kazakhstan’s 2020 annual uranium production volume to decrease by up to 4,000 tU from previous expectations. With Pirmatov now confirming this production decline won’t be consolidated, uranium investors can be confident that utility companies will be acutely aware of this. They aren’t getting things all their own way anymore.

  • The production impact will affect each partner in different ways, which will vary over time.  

KazAtomProm’s disrupted production has created uncertainty in three dimensions: absolute volume, impact of time on volume, and the impact on each partner and the relationship this has with their commitments. An example of the latter would be Cameco VS Orano VS Uranium One. If KazAtomProm’s supply troubles extend beyond 3-months, multiple parties will come under significant pressure.

  • The disruption is a force majeure event under their sub-soil use contracts (ie Mining Licence).  

What exactly does this mean? It’s significant. This fact removes a pinch point that would push the Kazakh giant back into production. It gives the company licence to further reduce its production levels below the 20% corridor detailed under its mining licence. This enhances Kazatomprom’s ability to tighten the market of its own accord. This also gives the company some commercial flexibility, meaning Kazatomprom can put competitors who have JV assets that tail quickly at a major disadvantage.

Something that is important to remember is that Kazatomprom will continue to receive a portfolio of production from its various assets. This is a huge competitive advantage over uranium producers like Cameco and Uranium One, who rely on the Kazakh production from JVs, e.g. Inkai – Kazakhstan (40% Cameco: 60% Kazatomprom).

  • KAP will honour its deliver commitments and will not use this as a force majeure event.

This is exactly what we’ve already heard from Cameco. The reason? This will support short-term stability and will not drive utility companies into depletion within the next 12-months. However, from a long-term standpoint, it should tighten up the market as inventories are depleted, which can only be a positive for uranium bulls.

  • KAP holds sufficient inventory to meet “lost tonnage in the short term” but will, if necessary, purchase material in the market to meet deliveries. KAP had already planned to oversell this year (ie work down inventories as ‘its pipeline of forward commitments was expected to exceed its attributable production guidance for 2020″.

This is clearly the leveraged impact of further delays. Things will get very, very interesting if there is any extension to the 3-months.

  • Production might be disrupted into 2021 as “ramping up the mines will be a well-planned process over several months”.  

This is a little like a game of connect the dots. Connect the comments regarding sub-soil use contracts, the fact that Kazatomprom has made no effort to recover lost production, and the leveraged impact of further delays. What do you get?

  • Exploration and development work will be delayed for some time.

For anyone who has been following Kazatomprom for any meaningful period of time, they will already be aware that there has been a serious lack of investment in exploration. Why? To maintain high dividends to the company’s largest shareholder: the Kazakh sovereign wealth fund. With plummeting oil prices, this dividend has suddenly become a lot more important to them. There is a little doubt that this will have a strong impact on Kazatomprom’s production decline curve after 2025.

  • The carry trade is looking “increasingly obsolete.”

Grant Isaac endorsed this comment last week in Cameco’s Q1 conference call. This is a clear, hard-hitting message directed at the very heart of utility companies and their procurement practices. The uranium producers aren’t messing around anymore, and it appears the balance of power may finally be starting to tip. This looks like a really big moment.

All in all, there’s some really useful, bullish stuff on display here. Uranium investors need to realise that this could well be the moment to act. If they think it is, it’s time to pick some winners.

Energy Fuels (NYSE: UUUU)

One potential winner that has been discussed repeatedly on social media and investor forums in the last few days is America’s premier uranium producer, Energy Fuels (NYSE: UUUU). There have been several articles on this platform about the value proposition on offer already, but the recent interest in the company is derived from a specific strategic advantage: The White Mesa Mill. It is the only fully-permitted operating conventional uranium mill in America.

Arial Photo of White Mesa Mill, Utah
Energy Fuels’ White Mesa Mill

Fresh off the back of the NFWG report, American uranium producers have been given a boost, even if the details are yet to be ironed out. One consistent theme over the course of the last week is uranium producers with North American assets coming out and acknowledging the mill as central to their plans. TNT Mines, an ASX-listed developer, recently released a statement citing the White Mesa mill as integral to their operations. What we have all suspected is now becoming increasingly clear: the White Mesa mill gives Energy Fuels a monopoly over the district and the region. They are, quite simply, the only gig in town.

With momentum swelling into the uranium space, the bandwagon-jumping has already begun. Investors should be looking for long-term quality rather than short-term excitement if they want to see real value. As I have said in the past one of my key influences when selecting a uranium company to invest in is a management team that has been through a few uranium cycles with assets. Some investors made a lot of money during that last cycle, but a lot more investors lost money. So pick the right company and get the timing right.

Investors will need to consider their own objectives and risk profiles before jumping in with both feet. Uranium is on the move. Uranium investors can keep up to date with the latest developments at

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Kazatomprom company logo

Energy Fuels (NYSE:UUUU) – I believe in new beginnings (Transcript)

The Energy Fuels company logo
Energy Fuels Inc
  • Shares Outstanding: 115M
  • Share price US$1.78 (01.05.2020)
  • Market Cap: US$205M

Interview with Mark Chalmers, President & CEO of Energy Fuels (NYSE:UUUU).

Off the back of the promising NFWG report, Chalmers was keen to talk about what this could mean for US uranium producers and Energy Fuels. The report talks about restoring America’s competitive nuclear energy advantage. What is Chalmers’ take on the report?

Energy Fuels was one of the two American uranium CEOs (Ur-Energy was the other company) to petition under section 232 petition, he must be feeling quite pleased of himself. They managed to get a Nuclear Policy document out of the US Govt Department of Energy. Chalmers states it not very often that a sector can be this impacted by something like a report from the US government, but uranium is a unique case.

Was the document what Chalmers was expecting? He thinks it’s the boldest position the US government has taken on the nuclear fuel cycle in decades. Many uranium retail investors have been concerned at the lack of detail in the document, but Chalmers is clear: this is a policy document. There are still things that need to be filled in, but the language and narrative that is being created appear to be strong: American uranium mining and operations must be supported.

For Energy Fuels, a company ready to pull the production trigger, this latest catalyst could lead to real growth. They have 500,000lbs of material in inventory at surface, and as much as 700,000 by the end of this year, waiting to be processed at the right time, in the right price environment. If the US Govt does re-energise its nuclear industry, American uranium producers who are ready to move will benefit the most. Those are the companies that will be able to sit at the table with utility companies and negotiate long-term supply contracts. The uranium juniors that are left floundering around with lengthy permitting processes and explorative drilling will be left out in the cold.

Energy Fuels appears primed to move; its White Mesa Mill is capable of processing 2,000t of material per day. This is likely to be key to rebuilding the North American uranium industry: the only fully-functioning conventional mill in the entire country. The first step will be U308 purchases, but Chalmers is observing the situation calmly. Chalmers thinks the government needs to focus on a few producers by being selective, rather than spreading uranium budget to lots of small uranium explorers and developers.

Does America need to focus on the few to restore its uranium prestige? Chalmers states the regime of the government should be a buying schedule focussed on a limited number of ISR projects and the White Mesa Mill: the government should not be giving everyone a piece of the pie.

The spot price is up around c. US$33/lb, but Chalmers points to the price he feels is fair for “a pound of uranium produced in the western world:” US$60, or greater. This appears to be the “sustainable” figure that an industry can be rebuilt upon, though not all uranium companies will survive in such a price environment. Chalmers feels the US uranium space will continue to struggle until it hits long-term prices around US$60/lbs. Chalmers states that while Cameco may negotiate some contracts at US$40/lbs, the uranium giant will struggle unless prices rise much higher. The message is definitive: utility companies need to stop being used to dirt cheap uranium.

Moving onto specifics for Energy Fuels, what is the short-term focus? Cashed-up with 3 good assets, an experienced management team, and a great mill, Energy Fuels has a lot going for it, but what will it do to add value for shareholders? Chalmers will seek clarity from the DoE on the report and will advocate for themselves, being the producers of 35% of American uranium supply in the last 15-years. Selling inventories and working on alternate feed remain are other priorities; the rare earth elements play could be a real gamechanger.

What did you make of Chalmers? Comment below: we will respond.

We Discuss:

  1. Nuclear Fuel Report Announcement: Opinion and Expectations
  2. Shareholder & Investor Concerns: Near-Term Impact
  3. Ur-Energy and Energy Fuels: Direct Beneficiaries or One of Many?
  4. $60 Uranium: The Process of Getting There
  5. Nuclear and Renewables on a Level Playing Field: Who Gets the Subsidies?
  6. Utilities: Time to Stop Being Used to Cheap
  7. The Future for Energy Fuels

CLICK HERE to watch the full interview.

Matthew Gordon: Hey Mark, how are you doing, Sir?

Mark Chalmers: Very good, Matt, how are you?

Matthew Gordon: I’m fine, but I haven’t had the kind of couple of days that you have had since yesterday. So, we got a bit of an announcement from the US Department of Energy yesterday. How’s that been for you?

Mark Chalmers: Well, it’s been a wild, it was a wild day, that’s for sure. There was a lot of shares that transacted, I think, across the globe. You know, it’s not very often that you’re in a sector that can’t be pushed around by things like a report from the US government. But look at the interest that you know, it kind of, and how it played out in the last 2-days, everywhere in the Uranium space in the world. So you know, I’m kind of proud that at least some of our involvement, you know, may have kind of created some interest in this space.

Matthew Gordon: Well, it has certainly done that. I mean, since the moment you submitted the section 232 petition through to now, I guess the Uranium space has been holding its breath, unfortunately, almost figuratively, and literally in some cases, holding its breath and trying to work out what was going to happen. That finished then of in the middle of last year, the nuclear fuel working group then put its head, or heads together to try and come up with a recommendation that it did yesterday. So, this discussion document and recommendation was talking about how to restore America’s competitiveness in the nuclear fuel, and I think, nuclear fuel advantage, they used, but the competitiveness globally. It was a very bold document in terms of the macro, but was it what you were expecting?

Mark Chalmers: Well, look, we are pleased with the document, Matt, and you know, it’s probably the boldest position the US government has taken on the front end of a nuclear fuel cycle in decades. Okay. It doesn’t have a lot of details in it, but I think you have got to go back to the fact that it is a policy document. Okay. You know, there’s still things that have to be filled in here but there was some very strong language about the importance of the whole nuclear fuel cycle including Uranium mining and how Uranium mining had to be supported and needed assistance. So, look, as I said, we’re pleased with the document. Yes, would we all like more details? Yes, we would, but you know, we’re proud that we had a significant role in getting the United States government to take a policy position that hadn’t been taken for decades. So yes, we’re happy with the document but we are awaiting more details.

Matthew Gordon: Okay. I know you have just come off of a call with shareholders and people listening in this afternoon, what were the kinds of questions that you were fielding? Were people concerned that this document has done nothing for you? That there’s no clarity about what it means for Energy Fuels? What were they concerned about?

Mark Chalmers: Yes, look, I think that you know, initially, some that reviewed the report thought it didn’t have a lot of detail in it and they were disappointed with that but I do think that once we kind of explained to people that it’s a policy position, it’s a stepping stone, a very significant stepping stone, they become more comfortable with that. You know, I think that some of the questions are just, well, so how does it all work? And we say, well, we don’t know yet, but we think that it’s focused on keeping the front end alive and prosperous. But it’s also not trying to overdo it too. I think that there’s a focus, or will be a focus, and again, I’m speculating a little bit that, you know, it should be focused on proven existing producers, existing infrastructure but it also says that they will review it periodically to make sure that they are achieving the objectives. So, it’s really kind of a policy roadmap for the whole front of the fuel cycle; recognising you need all the steps in that process: Uranium mining, conversion and enrichment. But you also need a healthy nuclear fleet to have all those legs covered. And that was the purpose of nuclear field working group. It was a more holistic approach than the section 232.

Matthew Gordon: No, I mean, that’s for sure, but with that macro picture that they’ve painted, and we will focus on what it means domestically firstly, it means that they’re trying to get actually get their house in order for the first time in 30 to 40-years. And they do talk about taking China and Russia head on, and I get all of that. It’s a very ambitious program. Those ambitious programs cost money, they take time, a huge amount of planning and working out the economics of these things. So, me as an investor, people watching as investors thinking, well, what does that mean for US mining companies today? And I think some of them have latched on to the phrase, or the line that was used – direct purchase starting 2020. Is that going to be beneficial to you? Do you understand what it means?

Mark Chalmers: Well, look, we don’t entirely know what it means, but we think that 2020, we don’t think that was an accident. The budget package that was submitted by the president for the 10-year program was starting in 2021, so we’re asking and still advocating for immediate action, perhaps through some executive process, you know, that may be available to the president. And in our case, and probably in your energy’s case, matter of fact, I know in their case, our two companies have inventory and we would like to be able to sell that inventory at a premium price this year in 2020. You know, we think that’s the best way to stimulate those particularly existing producers because we have held that inventory because, you know, it didn’t have fair value in the marketplace. And you know, that could give us a huge boost in the near term. So, we hope for purchases as a first step, but we’ll see. We don’t know.

Matthew Gordon: It also refers to, at least to US producers, I mean, Ur-Energy and yourselves are the petitioners, do you think that they are referring to you specifically or was that just a throwaway phrase? Could be anyone?

Mark Chalmers: It looked good. I don’t think it’s specific to the two companies. It says at least two, it could be more than that. But I do think that when you look at the nuclear fuel stockpile and the demand that that would have, I don’t believe it’s been meant to be split 8 or 10 ways, for 8 or 10 producers. I think it needs to be fairly selective, focused on a few producers. I think that it certainly should be focused on some ISR production. But I also think it should be focused on White Mesa as the only conventional mill in the United States and the fact that not only is it the only conventional mill, it is the only primary Vanadium facility, production facility and that the other benefits that that project has now, or potentially could have in the future.

Matthew Gordon: Okay. So when you talked to us a moment ago about a premium, are you talking about a premium to today’s price, presumably if you’re, if you’re looking for a number, what number are you picking?

Mark Chalmers: Well, look at the spot price is up to about USD$33/lbs today, I believe, which is certainly much improved from that USD$24/lbs, $25/lbs, but it’s still not high enough to provide for sustainable production. You know, we have always said and continue to say that the fair price of a pound of Uranium produced in the Western world is USD$60/lbs or greater. That’s a sustainable price for proven low-cost producers. Many companies cannot produce Uranium for that, as a matter of fact, a lot of them cannot produce Uranium for that in a sustainable way. So, look, we think it should have a sixty handle on it plus, we think USD$65/lbs is sort of the real number.

We can produce Uranium for less than that. You know, some of our projects, like the Canyon mine can be much, much lower than that but you know, we have had these assets for a number of years and we don’t want to hydrate them and not get the margin that we deserve on these assets, and the money that has been spent on those assets over the course of many, many years. So, you know, even companies like Cameco, you know, they don’t talk up with, you know, with four handles on a lot of their production. They might sign some contracts within the forties if they can trade into them. So yes, we need sustainable Western world costs and values on the inventory.

Matthew Gordon: Okay. So, if you are to get that, you need to be part of a dialogue, part of a process where there’s some form of negotiations and explanation as to why you need the price that you want. Our conversations like that are already in the works because I’m looking at this policy document. I think that’s a great phrase that you used earlier; it is a policy document. It’s going to need to engage stakeholders, you being one of them, Uranium miners being one of them. Have they set those up? I mean, how quickly are things going to move into motion? Have you any idea that they’re even going to do that?

Mark Chalmers: Yes, look, I think that getting this document out kind of sets the stage for going into more details, you know, so it hasn’t really started yet. Personally, from our company’s perspective, we like the concept of a buying schedule, which is how the United States bought Uranium for like 30 years. It was very successful. They just basically set a price and they said you know, any company, now you start talking about 2 or more companies, but any company that can provide Uranium at a price can participate. We think that’s the fairest way of doing it. Even though, as I said earlier, we don’t think it should be split, you know, 10 ways because it’ll dilute it too much. But we think that a commitment by the government over several years to purchase Uranium, it’s the equivalent of a contract where those that can deliver. And I think that is a very straightforward, very simple way to make sure that the money spent goes to those that can deliver.

You know, there’s people out there that say they can produce economically in the United States for USD$40/lbs. We can do that. We can do that with production from Canyon or we can do that from alternate feed. We could probably do it from our ISR facilities, but with no margin. So, the best way for the government set it up is to just set a price at what’s available and let people compete for it. Okay. Some people don’t want to compete. We’re fine with that.

Matthew Gordon: They also talk about creating a level playing field between nuclear energy and renewable energy. I mean, do you think that applies to the Uranium miners or was that more to do with the reactor side of things? I mean, who is going to be picking up the subsidies? Because I assume they’re not going to stop subsidising renewable energy. So where are the subsidies going to be distributed to? Who is going to be the beneficiary?

Mark Chalmers: I’m not completely clear on that. I think they certainly made a point of having a fair and balanced fuel market for the nuclear reactors for, in some cases they’ve had to try to unfairly compete against renewables with some of the subsidies there. And look, we’re not really, you know, I’m not a believer in subsidising industries that shouldn’t survive. But, you know, that’s why I kind of go back to this Western world. You know, the report is very focused on computation with state owned enterprises. If you look at, you know, in the sixties, many of us that were producing, had contracts with utilities just even a year or two ago that were USD$60/lbs or greater because utilities were willing to pay that five or six or seven, 8-years ago. Okay. So that was the fair price of Uranium at the time before Fukushima, or just after Fukushima. So look, you have got to kind of look at it in the context of the market, the extra inventory that was available after Fukushima, you know, everything had kind of geared up, and focus on the true value of what is a fair price and in jurisdictions that have the regulatory framework, safety frameworks and whatnot, to produce Uranium responsibly.

Matthew Gordon: Okay. Okay. Is there a little bit of you that is glad that this is finally over? You know, this is the report, this is how they have chosen to respond to the market and now you can let the market decide the supply-demand fundamentals, decide how Uranium gets priced?

Mark Chalmers: Yes, look, we see this as a big step in the right direction, Matt. It is not the only step, as you said, there’s going to be a lot of work behind the scenes on, you know, the devil’s in the details as they say. So, we know there’s a lot of work to do here, but we are glad they have released a report, and it echoes what we have been saying for several years now.

Matthew Gordon: Right, so the US government gets it. So, that’s fantastic. But I’m trying to wonder, well, I’m wondering what it means now for utility buyers. It gives them maybe some comfort that there is a plan in place, potentially. I know it’s got to get through Congress. It’s got to get financing approvals and so forth, but it is going through a process, they have finally set out a policy document, so that’s great. But what are utility buyers now thinking in terms of this massive burgeoning gap between supply and demand numbers? We have been going through some of the UxC numbers, trade tech numbers, estimates, which are bouncing around the market about what that gap is, but whichever number you listen to, it’s big. So, when do we think we’re going to start seeing utilities recognising that they are going to just have to step up to the plate and actually pay more for Uranium?

Mark Chalmers: You know, I think it is important to sort of separate some of the recommendations in this report from the commercial market, for example, the nuclear fuels stockpile is US government material. It is basically unobligated material that they can use for their purposes, not necessarily in power generation, but they could use it for power generation. You know, I think that one of the issues that we have been addicted to; foreign Uranium, particularly state-owned enterprise Uranium, a lot of utilities have gotten addicted to the low price. And you know, I think that’s dangerous. And they’ve done that for a number of years. I think that certain things like the Russian suspension agreement, which is mentioned in the report is currently being renegotiated. That’s becoming more focused on enrichment capabilities and I think that that’s where the utilities want the cheapest product they can get enriched.

And so, you know, it all is sort of separate but not separate. So, I don’t know when the utilities, and I understand utilities, some of these plants are struggling, you know, and small amounts of money, you know, are difficult. But you know, we think that they need to have a portion of their product coming from Western producers and right now that is really not the case. You know, there’s some residual contracts that are out there, but they’re going to be falling off in the next year or two completely. And we cannot just say we’re going to get the cheapest producers, these state-owned enterprises, primarily in Russia, and Kazakhstan, Uzbekistan, and growing in China.

Matthew Gordon: Okay. So, they’re addicted to cheap prices and they’ve got an aging reactor fleet, which is, I can see it, you know, those are not good things. But how do you think they are looking? We will come back to the policy document. They haven’t got the reassurances that they want, that they’re going to receive subsidies for their aging fleet either, so that is going to affect the decision making, surely?

Mark Chalmers: Well, look, I think some of the stronger statements in the report were support for FERC to try to level the playing field for them and everything. And I think that’s fantastic. I think it’s great. I don’t want any of their reactors to go out of business because of the price of fuel. Now, the price of fuel is not the big issue for these reactors, you know, I mean, sure, it’s a piece, a very small piece, but a lot of it is the markets that they are operating in. The natural cost of natural gas is so low and there’s a lot of different factors, so, it’s a lot bigger than the front end of the nuclear fuel cycle. It’s just a small piece of it. But I understand it is a piece and if they can manage that to the best of their abilities, they’re going to try to do that. But it should not be at the expense of losing the front end of the fuel cycle.

You know, I think that, again, you know, with the words in the report, the government is saying, we need all of this. We need mining, conversion, enrichment and a healthy nuclear generating fleet as well. So, the beauty of the report is it’s holistic and it’s saying we need it. You know, it’s proven fact that there is no such thing as a sustainable nuclear fuel cycle in any country without a level of government support. And a lot of that support disappeared over the last couple of decades because it ceased to be a priority. This report is making it a priority again. So, again, I wish all the best for the utilities, but let’s not get addicted to cheap.

Matthew Gordon: Okay. You have said that to me before. I know you believe it. What’s the next thing you’re going to do? Next week, what is the focus for you as a business? So, there are things there that you can control and there are things that you cannot. And again, we have talked on a few occasions before, you have got money in the bank, you timed that right. You have got an experienced management team, you have got three good assets, you have got a great mill, so you have got all a lot of things going for you. But what are you going to focus on next week so you can turn to your shareholders and say, right, my number one priority for you is, what?

Mark Chalmers: You have heard me say this multiple times; we are first and foremost a Uranium producing company. So, we’re going to try to get more clarity out of the DOE report. That’s kind of the next steps. You know, we’re certainly going to be advocating that we think that our history of producing nearly 35% of the Uranium in the United States over the last 15-years should give us attention for the right reasons, but we are still going to be multitasking these other aspects of our business as well too, but at a lesser focus than Uranium business central.

Hopefully, the price of Uranium will continue up to go up. I think there are some really positive signs on the settling out of supply demand issues globally. You know, in a perfect world, everybody can float, their boat will float because of the right reasons on the front steps of the nuclear fuel cycle, right on through the whole process. But so, we’re going to try to, you know, and we’re not building our company around just the government because we have more things to our business than others: most others are 100% focussed on Uranium. So, you know, we will get more certainty. We will start to look at how we can capitalise on immediate relief from the government, selling the inventories and preparing for filling a significant portion of the national stockpile.

We will continue working on our alternate feed land clean-up and then the rare earths. We are still getting huge interest. I know people kind of go, well, why are they getting into rare earths? But you know, this is exciting for us. This is exciting for us. And I’m hoping to show people that we’re building another complete and, hopefully, a significant business in the future for our shareholders, but we will always be first and foremost a Uranium producer.

Matthew Gordon: Okay. Got it. So just on that, because we talked last week about the rare earth components, which again, you know, it took everyone by surprise. What sort of calls are you getting? Are you getting inbound calls from railroad companies saying, can you process? You’re getting inbound phone calls from investors going, what are you doing? What kind of calls are you handling?

Mark Chalmers: A little bit of both, but we’re getting a lot of inbounds from rare earth experts. We’re getting inbound calls from people that have projects around the world. You know, and one of the key inbounds, and I said this on one of my last interviews with you is that dealing with the Uranium forum and radioactive products has been a substantial impediment for a lot of these rare earth companies over decades, and to find out that all sudden you have a facility that’s been around for 40-years and has experience in doing that and has a lot, not all our permits to do a lot of this processing, is out there and open for business people go – you’re connecting the dots.

Now, in the last few days, you have heard that the Department of Energy has released some funds to other companies that are more advanced in rare earths, or you know, as their core business, you know Linus out of Australia got a grant from the government, Mountain Pass Minerals got a grant from the government. I think these are fairly small: I don’t know the exact magnitude, but no, I think they’re, I’m just guessing around USD$5M or something, to design, you know, at least some initial concepts on facilities.

But there are various phases of these projects, of these steps and we think that we were maybe a little late there, but we still have a facility that can do a lot of these things that they need to do anyways. So, look, it has been significant, and I don’t blink when I say that. When I say significant, we’re excited about it. And as I said, we don’t think it gets in the way of our core business. We have got a very large facility. We have got a lot of land. We have got a supportive jurisdiction and we have been doing it for years. You know, I think I told you we have, we have already taken low level material from Mountain Pass for Uranium, from Cabot, Fan Steel. There are other rare earths and there are a few in the queue for the future. So we have been pretty close to it already with the material that we have taken from other sources for the Uranium values.

Matthew Gordon: No, I have to say that I did like that story. I liked that you came up with that idea for a new revenue stream, because we speak to a lot of rare earth companies who talk about, you know, trying to get the railroads stranglehold that China has, in a way, but they’re struggling to get all the components in place to be able to get their business up and running. So no, I think, well done on that one. Interesting to see how you get on with that.

Mark Chalmers: If you go to the World Nuclear Association’s website, and that is a great website. I go to it a lot. There’s a section there on Uranium in rare earths on the World Nuclear Association’s website. So, we’re not jumping off the track here. I mean, this is known, and we’re just planning to capitalise it in a bigger, greater way than we have in the past. So, you know, when you look back to these dependencies on China and Russia and critical minerals and critical materials and all that, just all sudden the band is playing pretty loud here. And if we are still first and foremost a Uranium company, and we can complement this with even something that’s on the World Nuclear Association’s website as a source of Uranium; I’ve said this to you before, why not?

Matthew Gordon: Why not? Why not indeed. Well, look, I know you have got a bit of work there. You were quite clear last time we spoke, you have got a bit of work to do around the economics and trying to understand the process, the options available to you. But as soon as you start understanding those numbers do let us know. I think it is a very exciting space. It’s a very high margins space. It’s a space where there’s a lot of people trying to get their economics to work and I think you could be an important part of that, a nice cog to help them as well. So yes, stay in touch about that one, for sure.

Mark Chalmers: Well, I’m definitely going to let you know, Matt, because you know, I mean, we have got a reasonably sized organisation, but I’ve taken very personal interest in this. I want the market to see that we’re going to do this in a smart way, and we will align with the right kinds of people with the right expertise to show that this is not a flash in the pan. This is a long-term focus that we think can really help the bottom line again, for our shareholders.

Matthew Gordon: Okay. Well Mark, I’m going to let you go because I know you have got a lot of calls lined up, but well done. I think people don’t realise what you have done, that you have got a policy document out of the US government for your industry, which is no mean feat. We just need to see how it is going to benefit the industry, but also benefit you this year. Keep pounding those doors and let us know if something interesting comes up. Okay,

Mark Chalmers: Will do Matt

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

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Energy Fuels (NYSE: UUUU) – The White Mesa Mill: A Trump Card Investors Shouldn’t Ignore

The Energy Fuels company logo
Energy Fuels Inc
  • Shares Outstanding: 115M
  • Share price US$1.81 (29.04.2020)
  • Market Cap: US$208M

We’ve conducted and watched a lot of interviews recently in the relatively small, but extremely passionately held and followed uranium space.

Green uranium reacting in a glass vial with a uranium symbol and a nuclear symbol next to it

Passion Or Mania?

Sometimes, for some investors, the word passionate is interchangeable with the word maniacal.

What we have noticed, and have had discussions with institutional investors about, is how this passion (mania) can sometimes negatively affect investment decision making. We will come onto that later in this article.

Another thing that is quite often interchangeable is the statements from the CEOs of junior uranium explorers: “We have uranium in the ground and when the spot price returns our share price is going to through the roof!  We need a little bit more G&A funding while the market returns. Trust me. Just wait.”  I paraphrase, but you get the idea.

Clearly, not all uranium CEOs can be right. The truth of the matter is that the uranium market outlook is irrelevant for some of these companies because they’ll be going underwater even if the uranium spot price hits US$100/lb. Let me put it another way: just as when the gold price is high, like it is now, not all gold explorers and developers feel the benefit. The same is true for uranium.

Uranium: A Complex Space

The uranium industry also has the unwanted accolade of being extremely political.

East VS West still lingers in the mind. The rise and fall of nuclear powerhouses used to signify the nuclear arms race; now, it signifies the energy business. The US continues to fall behind China and Russia in the construction, supply and, in some cases, operation of nuclear reactors for a new wave of nuclear energy demand from all around the world. We are big supporters of the macro story for nuclear energy and therefore the uranium industry, but we are also conscious that we need to make money on our investments.

nobody has understood the inventory levels globally for the past 2-3 years

Share price stagnation has become endemic in the uranium industry. With the spot price of U3O8 only now creeping past the US$30/lbs mark, and with meaningful price discovery unlikely until Q4/20, investors in both uranium juniors and established producers have been left frustrated for the last 2-3 years. Some see the recent mine closures due to the COVID-19 pandemic as the final nail in the coffin for the utility buyers’ strategy. This remains to be seen. We do not understand the inventory levels out there.

A nuclear power station

It is now clear nobody has understood the inventory levels globally for the past 2-3 years. Even the best market commentators, fund managers, and uranium CEOs have been left scratching their heads as to why this clear, macro-driven supply-demand story has been able to defy the odds and cold hard logic. So, whilst it is fun to speculate on the timing, the wisest heads have hunkered down and, in some cases, doubled down on the uranium thesis, retreating from the chattering classes online. There is nothing to do but wait.

The Undeniable Macro Story

The uranium macro story is one that resonates.

There is an appreciation of the statistics pertaining to greenhouse gas emissions and climate change, and the reality is somewhat reassuring: the world will need much more uranium in the near future. Some 450 nuclear reactors in over 30 countries are hungry for uranium. Industry commentator and CEO of Bannerman Resources, Brandon Munro, recently stated that around 50% of total future energy production by 2050 would come from nuclear in an interview with us.

However, this does little to help investors today who are operating in a void. Should they cut their losses and bail, or do they continue playing the waiting game that may be increasingly detrimental to their individual investment strategies, financial security, and even their sanity?

We are told the only people who truly know when uranium will see a surge of demand for new material are utility companies, who have been depleting and replenishing their unknown level of reserves at a highly secretive rate. Speculation about their inventory is rife, with data and hard facts low on the ground. Catalysts have been aplenty, yet failed to even slightly affect the equities markets for the last 3-years. Truth be told, no-one has got this right….yet. So, with the closure of Cameco’s facility at Cigar Lake for an indeterminate period, KazAtomProm’s 3-months shutdown, Rossing and Husabs’ closure in Namibia, and the reduced output in Q1/20 from BHP’s Olympic Dam, could this be the moment uranium investors have been waiting for?

There is one particular piece of knowledge uranium investors MUST come to terms with.

Not All Boats Will Float on A High Tide

Sorry to keep beating this drum.

A sinking ship

There is a chance the uranium company you are currently invested in is going to lose your money. Can you remember why you invested in it? Do those reasons still hold up? Why that company VS its peers? We believe that some uranium companies that we have studied and spoken to will not survive without partnerships being formed and money being injected (money they can’t seem to find), in addition to some luck. Some have inherently flawed models, inexperienced teams, insufficient cash or access to leverage, lacklustre assets, a deficiency of options, and really aren’t positioned to ever get into production!

There is still an undoubtedly exciting upside for the Uranium market, although we are dubious that it will reach the c. $140/lb spot price heights that some are pushing; in fact, in a recent interview, Rick Rule himself expressed his skepticism, as did Brandon Munro in his CRUX Investor interview.

Back to basics

Elaborate ideas are always nice, but pragmatic optimism is usually more rewarding. Last year we had an article written on our platform by regular contributor, a Curious Investor.

Energy Fuels, America’s premier uranium producer (and a potential producer of vanadium), impressed us with its fundamentals: an experienced team who have been there and done it before, sufficient cash to see them through until uranium price discovery, a set of good assets, and the bonus White Mesa Mill, which could give them a strategic advantage, perhaps even a monopoly, over other juniors in the region.

Recently, we spoke with CEO, Mark Chalmers.  We wanted to talk to him about his company’s current situation. First, we’d like to take a look at Energy Fuels’ White Mesa Mill; ‘if you own the mill, you own the region’ is a common quotation. As one of three mills capable of processing uranium in the US, and the only one that is operating, not too many people would argue with Chalmers’ assertion that Energy Fuels is well-placed for when the market turns.

That said, some criticism has been thrown as Chalmers for the strong talk about the conditions under which he would allow US uranium producers to use his mill, and also about the age of the mill. Firstly, in the same position, I’d be surprised if other CEOs didn’t demand the same terms. Plus, he is looking out for his shareholders.

As for the age of the mill, it reminds me of a classic car sale a few years ago. The car sold for c. US$3M. It was a stunning looking car from the 1930s. Then, the buyer complained that there was only one original part in the car and that he had been duped and wanted his money back. There was indeed only one original piece traceable to the car, but it had been maintained and restored several times over the past 80 years. It looked great and ran like clockwork. Mills go through continual maintenance all of the time. We’d be surprised if there was one original part left. White Mesa is vast. It operates, and probably always will, at less than half capacity.

The facts and numbers:

Energy Fuels’ White Mesa Mill:

Arial Photo of White Mesa Mill, Utah
  1. The mill has a licenced capacity of 8Mlbs pa of uranium.
  2. The age of the mill is much discussed (as per above), but again Chalmers doesn’t believe this is an issue. Keeping the mill operational is low cost according to Chalmers. Regular maintenance keeps things ticking. Could it be more efficient? We’d like to know.
  3. It has a peak historical operational capacity of 5Mlbs pa. Chalmers claims the company was and is limited by a lack of feedstock. Tolling is probably the solution but agreeing on a price and terms with other US uranium producers, or aspiring producers, is a hot topic.
  4. Historically, the owner of a mill typically holds the upper hand on pricing for tolling but uranium is a very political and emotive topic, so will there be pressure for Energy Fuels to play ball on pricing? Who knows? Chalmers doesn’t seem to think so.
  5. The mill can generate income independent of uranium and vanadium prices.
  6. In addition to licences to process uranium and vanadium ores, Energy Fuels has around 18 licences to allow them to process additional feeds that are not primary ores. Energy Fuels has received material from producers for several decades, including low-level tolled uranium from Cameco amongst many others. They are currently accepting feed from a uranium mine in New Mexico.
  7. Energy Fuels’ profits from alternate feed are fairly consistent but are not constant. Historically, the company has made anywhere between US$5-15M from alternate feed/clean-up operations. Given enough feed, Energy Fuels could exceed US$15M per year in revenue. The company tries to expand its feed resource by taking part in additional mine clean-ups in the region.
  8. When operational, White Mesa Mill has recycled 4-500,000lbs of uranium per year on average.
  9. White Mesa Mill needs a certain critical mass to be in an optimal state. This is said to be around 1.5-2Mlbs of primary ores per annum, with the capability for an increase proportional to the company’s primary ore levels. The economics of scale mean commercial operations would be best served at 6-8M lbs per annum. It is worth noting this capacity has not been achieved in many years.
  10. The mill is designed to process c. 2000t per day, but investors will want to see this output manifest in reality before they trust the numbers wholeheartedly. Chalmers has stated the mill will not come into play until at least 100,000t of feed is available.
  11. White Mesa Mill has a large enough capacity to process all feedstock “within the region.” This appears to make White Mesa Mill the only gig in town and may give Energy Fuels a unique trump card.
  12. In terms of the toll fee for feedstock from other uranium producers, Chalmers has been explaining to the market how the mill could provide a JV opportunity for the last year. Historically, Energy Fuels would end up with c. 50% of proceeds from tolled ores. These charges would be for processing, marketing, and then sale either to the U.S government, or utility companies via contracts or alternate purchasing arrangements. While this may have been fruitful historically, it remains to be seen whether an arrangement like this can be constructed in the here and now. Possible new arrangements include ores of a high-enough grade being processed for free, and some ores being sold by the producers themselves, rather than Energy Fuels, for a fee. In the past, there were private companies who could turn a good profit off ore tolling, but it remains to be seen whether this is true of today’s market. Will White Mesa Mill pay its way? We’re hearing quite a lot of ‘back in my day’ rhetoric, but we want to see how this applies in a new bull market. Options are one thing, but action is quite another.
  13. Conversations regarding JVs are happening regarding the mill, but there are no concrete arrangements yet. There are several producers interested, but they are currently hunkered down in negative cash flow, so we will see how things develop. The mill becomes much less profitable if market conditions aren’t economically viable, and this is a worry. Low-grade ores from clean-up contracts can only generate so much revenue. Alternate feed can’t be Energy Fuels’ primary source. Based on Q3 financial results, Energy Fuels earned anywhere from US$700,000 up to US$3M for their role in the New Mexico clean up contract.
  14. During its 38-year operating history, the Mill has produced over 45 million pounds of vanadium – or over US$500 million of vanadium at today’s prices.
  15. Energy Fuels is currently in discussions with the Navajo Nation EPA regarding clean-up operations of abandoned uranium mines in operation from 1944 to 1986. ‘Nearly 30 million tons of uranium ore were extracted from Navajo lands under leases with the Navajo Nation,’ and this appears to be a problem White Mesa Mill can help solve.

Energy Fuels’ ISR Facilities

  1. Sitting in situ, Energy Fuels has 100% ownership of both Nichols Ranch ISR Mine & Plant, and Alta Mesa ISR Mine & Plant.
  2. Nichols Ranch has a total licensed capacity of 2 million pounds of uranium per year.
  3. Alta Mesa has a total operating capacity of 1.5 million pounds of uranium per year.

While all these production capacities look impressive, we still haven’t seen if they can be made economic in the market. Only time will tell.

Latest news at Energy Fuels’ mine resources and other assets

The permitting process is continuing at the Roca Honda Project, which is claimed to be able to provide up to 2.7 million pounds of annual uranium production with a 9-year mine life.

However, Chalmers himself admits the completion of permitting is still several years away. Does this mean Roca Honda will be irrelevant in the next bull cycle? Is this true of many of Energy Fuels’ assets? It’s no good having so many strong, high-grade assets if they won’t be ready in time for the company to produce and sell anything.

Chalmers is right in saying that when you have fully constructed, fully permitted mines and production facilities, it costs money to keep them in compliance and good standing. We imagine it has been a battle to keep Energy Fuels’ many costs down, while also keeping as many assets as possible ready to fire at the right moment. We understand Energy Fuels’ status as the most strongly positioned U.S uranium producer, but we wonder if keeping hold of all these assets will benefit the company in the long run.

As far as vanadium goes, the spot price has dropped c. 25% since the start of 2019. Energy Fuels is putting most of its vanadium into inventory. They have produced around 1.5M lbs of high-purity vanadium (c. 99.7%). A small amount has been sold, and they are targeting premium markets than can afford the extra expenditure to acquire such a high-grade resource. While Energy Fuels has shown it is capable of churning out vanadium, the macro story of vanadium appears even more long term than that of uranium. Energy Fuels is painting the picture of itself as a slow burner, but one that could satisfy investors who can live without short-term returns. Is the company telling the market it is stockpiling vanadium the wisest play? We shall see.

General Figures

Chalmers has previously said the spot price needs to be at US$55/lb before Energy Fuels can get moving, and it needs to be at US$65/lb before new acquisitions and growth can take place.

This is clearly some way off, but what would a price like this mean under ideal market conditions? Chalmers sees Energy Fuels becoming a US$1B+ market cap company, meaning the company could be at least a four-bagger for patient investors. Chalmers bases this valuation off Energy Fuels’ portfolio and their long-term production capacity.

Upon completing our review of the company’s current situation, Energy Fuels has demonstrated something to us: even for the uranium producer with the strongest standing in the U.S, the future has elements of uncertainty. If this is the case, imagine what the future looks like for other uranium juniors and producers the world over. This is an industry that is going to have a few winners and many, many losers. Energy Fuels has provided some numbers to back up its claims, but there are many variables before these figures can be realised. Energy Fuels looks like one of the best bets in the sphere of uranium investment, but investors should act with caution before entering a market with pronounced risks and an abundance of companies consigned to failure.

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Energy Fuels company logo

Energy Fuels (NYSE: UUUU) – America’s Premier Uranium Producer Enters Rare Earth Elements Space

The Energy Fuels company logo
Energy Fuels Inc.
  • Shares Outstanding: 115M
  • Share price US$1.90 (23.04.2020)
  • Market Cap: US$218.5M

Uranium has been lying in a coma for what seems like an eternity, and uranium investors across the land have been becoming increasingly frustrated.

A nuclear power station

We have all been hoping a white swan moment will make the uranium space finally show some signs of life. Two weeks ago, uranium giant, Cameco, announced its shutdown of Cigar Lake would be extended for an indeterminate period. This tightening of uranium supply came after KazAtomProm’s operational update, which stated that annual production would fall by up to 4,000t uranium from previous expectations.

However, while the U3O8 spot price has risen somewhat, from US$23.50/lbs to c. US$32/lbs, uranium securities have only been mildly rallied by events. It doesn’t seem we are quite on the trajectory for bullish long-term uranium prices just yet.

Despite the current state of the uranium space, the uranium macro story has always been coherent and convincing. 441 nuclear reactors operate around the world; they are, and will always be, hungry for uranium. Many uranium commentators including regular Crux contributor, Brandin Munro, have remarked that this significant, COVID-19-induced disruption to the uranium supply chain has exposed the fragility of international uranium supply.

The reality is that utility companies will only have to change their purchasing habits when they decide their inventories are too depleted. We regularly hear whispering that this is the case, but are yet to see anything concrete. When uranium does go, it’s likely to be quick. Exploration companies are very likely to miss this cycle, and so are those that need a billion-dollar investment and don’t have licences in place.

To this extent, explorers who have an elongated path to production become a lot less investable. The most easily understood uranium companies are existing producers who are well-funded, with good infrastructure, and will be ready when the market moves. These are the companies that are going to secure supply contracts with utility companies. These are the companies that will make investors money. These will be the winners in this uranium cycle.

Energy Fuels: A Uranium Winner

One of these companies is NYSE-listed Energy Fuels, America’s premier producer of uranium and potential producer of vanadium. Another is a TSX-listed uranium producer with assets in West Africa, and income from a zinc JV with Befesa Silvermet, Global Atomic Corp.

In this article, we’re going to look at Energy Fuels. The company has recently made an announcement that further solidifies its status as one of our favourite uranium stories.

Energy Fuels' White Mesa Mill

One of the most important aspects of strong uranium stories is a company’s ability to successfully mitigate risk. One such method is via commodity diversification. Energy Fuels has already managed to mitigate risk with multiple cash streams: vanadium, tolled milling, and cleanup operations.

On April 13, Energy Fuels released news that it is entering an additional space, with an additional potential revenue stream: rare earth element (REE) processing. We decided the time was right to sit down with CEO, Mark Chalmers, and discuss the positive impact this could have on the Energy Fuels story.

Rare Earth Elements – Transformative Economics?

The first thing Chalmers made clear to us is that this is a serious commercial venture, intended to make a significant difference to Energy Fuels’ economics.

Last year, a contributor explored Energy Fuels as an investment proposition on our platform. He identified the White Mesa Mill as a potential gamechanger; we happen to agree. In our opinion, the White Mesa Mill (the only uranium and vanadium mill in operation in the US) is the ace up Energy Fuels’ sleeve. While it can obviously process uranium and vanadium, it is also able to process rare earth elements. It makes clear sense for Energy Fuels to monetise this ability to add value for shareholders and de-risk its business model.

A periodic table with rare earth elements (REEs) highlighted in orange.

Energy Fuels believes the fully licensed and constructed White Mesa Mill will be integral to bringing the rare earth element supply chain back to the U.S. from China. We recently heard from Hexagon Energy Materials (ASX: HXG) CEO, Mike Rosenstreich, and he explained how momentum is building behind these ideas in numerous powerful circles.

However, despite this new venture, Chalmers was keen to emphasise that Energy Fuels’ primary focus remains on uranium and vanadium. The company simply believes it can leverage its existing licenses, infrastructure and capabilities at the mill to add REEs to the production list. It’s an undeniably smart play, and it’s the sort outside of the box thinking that uranium companies need in this still uncertain market. Sweat the assets.

Digging Into The Details

However, like us, investors will want to hear more detail before getting overexcited. What exactly is the White Mesa Mill capable of?

We’ve previously covered Energy Fuels’ mill economics for uranium and vanadium: the two ores it is primarily licenced to treat. What many uranium and vanadium investors won’t know is that over the last 20-years, Energy Fuels has received material from a variety of alternate feed streams, and the company has the appropriate permits for these streams. While the majority of these are low-level natural uranium streams, the company has licences for 17 other streams, and can also recover uranium as a by-product from rare earth producers.

The White Mesa Mill is huge: it is capable of processing 2,000t per day. Will there be any issues separating the ore into different categories? Chalmers insists the mill will be operated on a batch basis; there shouldn’t be any hiccups. Material from numerous different streams will be generated, collected, stored, collated, then processed.

What about logistics? The feed arrangements themselves are still in their early days. This is perhaps the one area of the arrangement we’d like a little more clarity on, but only time will tell. We need to give Energy Fuels time to shore up these arrangements and present us with something concrete. However, one thing is clear: Chalmers is primarily looking at this business model from a toll processing standpoint, the same model Energy Fuels already employs successfully. Does the company have the infrastructure in place to pull this off? Luckily, courtesy of existing facilities for uranium, vanadium, and other feed streams, Energy Fuels has ample tailings storage for additional REE waste. The company is ready to get this play off the ground.

More Reasons To Be Positive

Chalmers then provided more positive news. Members of the US government have encouraged Energy Fuels, and are on board with this rare earth elements play. Being state-backed is always a massive advantage and gives Energy Fuels a competitive edge.

Rare Earth Elements lighting up in a periodic table

The company already has over 500,000lbs of material in inventory, just waiting to be processed at the right time, in the right price environment. This brings us neatly back to the point I made earlier in this article: Energy Fuels has much greater control of its production timescale than other uranium producers. There is little work to do to get into production, so the company can batten down the hatches for as long as necessary and can move the very second the uranium prices change. Other companies will rely on luck to hit the uranium cycle at the right moment. Energy Fuels will need to see prices head towards US$50/lb or even US$60/lb (the same figure Cameco is asking for). Another important factor to keep in mind is that as the uranium spot price rises, so does the value of the existing inventory. That’s growth with zero expenditure necessary. They have possibly seen another US$10M added to their inventory since last week alone.

Current Operations

Right now, Energy Fuels is prioritising desk work; a company this advanced doesn’t have the major fieldwork concerns of its junior peers.

Right now, Chalmers explained the management team is working on optimisations: specifically, mineralogy and pilot testing to ensure that when the time is right, Energy Fuels can move swiftly to enter at a profitable point in the resurrected uranium market.

Chalmers has a level of pragmatism we don’t see in many inexperienced junior management teams. He knows what he doesn’t know; he’s been involved in uranium mining for long enough. His company should have the scale and infrastructure necessary to attract strategic partners and the best minds in the uranium, vanadium, and rare earth elements spaces to propel the company forward.

Chalmers’ Take On The Uranium Market

We were also keen to hear Chalmers take on the current uranium market.

With lots of uranium companies talking about US$40/lbs as a target, Chalmers doesn’t think US$40/lbs will be enough for many companies to produce economically, including uranium-giant Cameco. While there are some dirt cheap projects in Kazakhstan that could be profitable, the rest of the world will need a higher uranium spot price: north of US$50/lbs, closer to US$60/lbs to take “full loading on cost.” We heard similar from the father of the uranium space, ex-Paladin CEO, John Borshoff, in a recent interview with us.

Green uranium reacting in a glass vial with a uranium symbol and a nuclear symbol next to it

Strategically, Kazatomprom would like the price to stay down so they can maintain the uranium monopoly that prompted the triggering of Section 232 last year. Chalmers added that the inflated Kazakh currency has also given them a cost advantage.

Will these supply disruptions and a tightening in uranium inventories finally shake utility companies up? Chalmers seems to think so; after all, “there is less uranium out there than people think.”


All in all, this looks like a prudent move and there is little to fault them on, other than wanting more clarity on what it could mean for the company’s financials, and, ultimately, its shareholders.

Chalmers is showing time and time again that he is making sensible decisions that take many investors by surprise, just like he did with the US$16.6M raise in February. With the benefit of hindsight, that looks like cheaper money in these current market conditions. Let’s hope Chalmers can keep this up, as Energy Fuels’ share price saw big gains this week and finally appears to be heading back in the right direction. Let’s hope uranium is too.

While you’re here, and if the uranium space is your kind of thing, why not read one of our recent uranium articles, or watch our latest uranium interview?

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Energy Fuels company logo

Energy Fuels (NYSE: UUUU) – Finding Value When The Market Has Lost Its Mind

The Energy Fuels company logo
Energy Fuels Inc.
  • Shares Outstanding: 115M
  • Share price US$1.90 (23.04.2020)
  • Market Cap: US$218.5M

In this series, we take a look at some of the stocks I think the market has severely undervalued during the COVID-19 crisis. Discount stocks can mitigate some of the risk for investors; that’s if they know what to look for.

Green uranium reacting in a glass container

Energy Fuels – A Uranium Gem

Today, I’m looking at America’s leading producer of uranium (and potential producer of vanadium), Energy Fuels (NYSE:UUUU).

We’ve written several articles detailing the potential of Energy Fuels in the past. For those new to the story, it might be worth checking them out of some context. In addition, there are numerous Energy Fuels interviews on the Crux Investor platform. CEO, Mark Chalmers, has kept us informed on all the latest developments in the story, including a controversial event in mid-February; will investors now be looking back at this much more favourably?

Strong Fundamentals

Several months ago, in an article from one of our contributors, the three most important considerations for uranium investors were considered, with reference to Energy Fuels. There was also a bonus point that some uranium investors may not have thought about before.

A Strong, Experienced Management Team

If a management team hasn’t dealt with uranium before, from permitting, to construction, to production, to sale, then you can walk away now.

Uranium requires specific expert knowledge, given the many problematic idiosyncrasies of the space. One such example is the situation with uranium sales; namely, negotiating long-term contracts, and transporting the radioactive material from a mine to the consumer. These are just two difficult processes that require proven experience, and Energy Fuels’ management team has been there and done it for decades. These look like safe hands. Don’t let companies learn on the job with your money.

What continues to strike me is the general lack of any discussion of the uranium market, itself.  All of the juniors are optimizing and “polishing up their single proposed projects” but what is lacking is an understanding of just how the uranium works (or doesn’t work) and the crucial role of term contracts.  As we have discussed previously in interviews with Brandon Munro, the spot price is a nice indicator of near-term market balance and can be a source of “signaling” of future conditions, but the linkage is weak and can be misleading.

We have been trying to provide a bit of enlightenment regarding the role of term contracts, as well as the process itself, which can be time-consuming especially for junior companies that are not known to the utility fuel managers (one result is the likelihood of a series of small volume agreements until a producer proves it can deliver its product on-time and on-budget).

A vast majority of the juniors are run by either technical/operational types pulled from outside of the industry or financial types that are experienced in raising funds.  Their activities tend to be biased accordingly. Energy Fuel’s experience tells us they won’t have these issues.

An Impressive Portfolio Of genuine Assets

We find Energy Fuels’ portfolio impressive. Energy Fuels has ‘more production capacity, licensed mines and processing facilities, and in-ground uranium resources than any other U.S. producer.

Energy Fuel’s 100% ownership of many promising mines across Arizona, Utah, New Mexico and Wyoming gives them a long list of valuable assets, not to mention a large inventory sitting at surface. While the vanadium market hasn’t exactly been favourable in recent times, the diversification the management team has achieved at Energy Fuels could help mitigate risk, and low-cost environmental clean-up and uranium recycling services, the recently announced rare earth elements processing capability and revenue stream, and potential involvement in the EPA clean-up of Cold-War-era uranium mines, are further examples of Energy Fuels’ multifaceted nature. All of their eggs certainly aren’t in one basket. There is a lot more than uranium at work here, unlike many other producers.

A Bonus?

Energy Fuels’ White Mesa Mill has been discussed at length by Chalmers in an interview with Crux Investor.

Energy Fuels' White Mesa Mill
Energy Fuels’ renowned White Mesa Mill

It is the only fully licensed and operating conventional uranium mill in the United States. This gives Energy Fuels something of a monopoly over the region: their mill is the only gig in town. The old adage is that he who controls the mill controls the district. In this case, this is the only operational mill in the entire United States of America. That puts them in the driving seat for processing of U308 and vanadium in the region, the district, and, perhaps, further afield. Other uranium companies have to march to Energy Fuels’ drum beat or be left out in the cold. Companies will have to pay Energy Fuels for use of their mill or face expensive shipping expenses to mills in foreign countries. Energy Fuels will also have control of the timescale of other companies’ uranium production. If I am a shareholder of UUUU, I’m going to like that news. If I’m invested in one of the companies needing to negotiate a toll mill fee, I’m probably less excited and possibly irritated.

The mill itself has a licenced capacity of 8Mlbs pa of uranium. The most it has operated at is 5Mlbs pa. It can also process multiple lines of ore (c. 17); these are licenced too. The reality is that is likely to only operate at 2Mlbs pa unless they do some meaningful upgrades.

Energy Fuels appears smartly positioned to get into production quickly when the uranium price turns, and might be the reason they made the move to raise money in the market when they did.

Sufficient Capital To Survive The Uranium Bear Market

Even before COVID-19 reared its head, uranium companies were pretty desperate for capital.

Institutional funding was incredibly sparse. With the vast majority of uranium companies now in care & maintenance, including Cameco’s producing asset, Cigar Lake, uranium companies have no cash flow from uranium sales. Until price discovery happens, and the price moves towards US$50/lbs, uranium companies will struggle to survive. Energy Fuels is one of the few uranium producers that still has cash flow, mainly in the form of environmental clean-up operations. The other that springs to mind is Global Atomic; I’ll be talking about that company in the near future.

uranium yellowcake
A photo of yellow cake uranium, a solid form of uranium oxide produced from uranium ore. Yellow cake must be processed further before it is made into nuclear fuel. Courtesy of Energy Fuels Inc.

With COVID-19’s impact on global markets, capital is now incredibly expensive, even more so than before for uranium companies. In mid-February, Energy Fuels announced an agreement with Cantor Fitzgerald & Co; the ‘innovative global financial services firm‘ agreed to purchase, on a bought deal basis, US$16.6M of common shares of the company at a price of US$1.47 per share. At the time, many investors were confused, and even angry, at the decision Chalmers had adopted. Commentators were scrutinising the decision rigorously, claiming Chalmers had raised expensive, very dilutive capital. It’s amazing how things works out. Fast-forward a month, and this suddenly looks like the best deal a uranium company could have made. Energy Fuels is now positioned more strongly than most of its peers. It has the cash to ride out the coronavirus crisis, and to see the company into what is building to be the next long-awaited uranium bull market (hopefully, for investors, in the near future).

These are exciting times again for uranium investors, but pick your team wisely.

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Energy Fuels company logo

Uranium Refresher: Recommendations from s232 Nuclear Fuel Working Group to be released today

Pinch yourself. It has finally happened. This time, it really will be released.  It will be – sniff –  over.

The US Department of Energy has announced  that later today they will release the report of the Nuclear Fuel Working Group, which was constituted after the s232 trade investigation into uranium imports.

The s232 saga started way back on 16 January 2018, shrouding the uranium sector in a mouldy wet blanket that has suppressed fuel buyer activity and tested the most resilient uranium investors’ patience. 

And now the final stanza in this long-winded ode is about to be told – at a media briefing starting at 10:50am (EDT) today.  An embargoed report will be provided to qualified media at 9:00am (EDT), with the embargo lifted at noon.  So, the time to start looking for media reports is 12:00pm EDT/Toronto, 5:00pm London, 7:00pm Moscow, 10:00pm Nursultan, 12:00am Perth and 2:00am Sydney. 

For investors new to uranium, here is a quick summary of s232 so you know what to look out for:

What is s232 of the Trade Expansion Act?

Section 232 of the Trade Expansion Act of 1962 is designed to protect national security industries that are under threat from imports or unfair trade practices.  It was introduced in the wake of the Cuban missile crisis, when lawmakers realised that many executive powers required for rapidly protecting US strategic interests could only be deployed in time of war.  Under s232, the Department of Commerce has a maximum of 270 days to investigate the complaint and, if the relevant actions threaten to impair national security, make recommendations to the White House. The President then has up to 90 days to decide whether to act on any recommendations, which must be implemented and announced publicly within a further 45 days. If the investigation confirms that (a) there are unfair trade practices and (b) those practices may put US security at risk, then the President has very wide powers that can be implemented without recourse to Congress.  

The last time a section 232 investigation was conducted into uranium was in 1989 – the US produced 40% of its uranium requirements at that stage so no remedies were enacted.  The Trump administration has since used s232 to impose aluminium and steel tariffs.

What started this s232 investigation?

Energy Fuels and Ur-Energy (the two largest US uranium producers) filed a petition in mid-January 2018 asking the Department of Commerce to initiate a s232 investigation into uranium imports. The petition argued that US uranium producers are under threat from “state-sponsored” producers which, although not specifically stated, would imply producers in Russia and Kazakhstan. The petitioners linked cheap Kazakh material to a decade-low uranium price that has forced almost all US uranium production out of business (in 2019 the US produced less than 1% of its uranium requirements). 

The petitioners sought a mandated requirement that US utilities purchase a minimum 25% of their requirements from US producers. The petition disrupted the procurement programs of utilities in both the US and elsewhere.  The utilities surprised the petitioners by pushing back hard, sparking a public debate that was, at times, vitriolic and disingenuous.  Many question how the petitioners will rebuild relationships with US utilities from here.

When did the investigation commence?

The Department of Commerce took six months to confirm, on 18 July 2018, that they would commence the s232 trade investigation.  The announcement was a relief after a protracted period of uncertainty and at least put a timeframe on the long process ahead.

The DoC provided a recommendation to the White House on 15 April 2019.  At no point was the recommendation made public, although Bloomberg reported on 21 June that DoC insiders had leaked the key recommendation, being an initial 5% quota that would escalate by 5% per year.

What did the s232 investigation find?

On 12 July 2019, President Trump announced the completion of the s232 trade investigation. 

President Trump decided to take no trade action, which lifted concerns that a quota, tariff or other trade action would be imposed under the broad power delegated to the President under s232.  Instead, President Trump initiated a review of the domestic nuclear supply chain (uranium production, conversion, enrichment and fabrication) in the context of the 2017 White House initiative to revive, revitalise and expand the nuclear energy sector.

What is the Nuclear Fuel Working Group?

Although President Trump did not agree that uranium imports threaten to impair the national security of the United States, he acknowledged that the United States’ uranium industry faces significant challenges in producing uranium domestically and that this is an issue of national security (because, for instance, the US Navy must use domestically produced uranium for its maritime nuclear power).  Accordingly, to address concerns regarding the production of domestic uranium and ensure a comprehensive review of the domestic nuclear supply chain, the President directed that a Nuclear Fuel Working Group be established.  The Working Group included the Secretary of State, Secretary of Energy and Secretary of Defence, amongst other key officials, and was charged with developing recommendations for reviving and expanding domestic nuclear fuel production (that is, uranium, conversion, enrichment and fuel fabrication). 

Why did it then take so much longer to resolve?

The Working Group was required to submit, within 90 days, a report to the President making recommendations to further enable domestic nuclear fuel production.

The deadline was initially 10 October 2019, although in mid October the deadline was extended by 30 days when the process was “in the final stages of the inter-agency process within the executive branch” according to Secretary of Energy, Dan Brouillette, who had only just replaced Rick Perry.  Nothing was forthcoming and in early December Bloomberg reported  a leak that the Working Group would recommend direct government interaction, in the form of either/both a Department of Defence contract to purchase uranium for military stockpiles or a Department of Energy contract to increase the DoE strategic reserves from current modest levels (approximately 7 reactor reloads).

Nothing further was heard until February, when the Trump Administration proposed its FY21 budget (commencing 1 October 2020) with the inclusion of $150 million per annum for a Uranium Reserve.  The budget notes stated that “Establishing a Uranium Reserve provides assurance of availability of uranium in the event of a market disruption and supports strategic US fuel cycle capabilities.  This action addresses immediate challenges to the production of domestic uranium and reflects the Administration’s Nuclear Fuel Working Group (NFWG) priorities.  The NFWG will continue to evaluate issues related to uranium supply chain and fuel supply.”

Since then Secretary Brouillette had made several comments about the Report being imminent, including telling a Congressional hearing on March 4 that “it is my sincere hope that later today you will see the final report.”  At the time he said the report “would also include other measures we will take to enhance the mining and capabilities… we have to have enrichment, conversion… the proposal will be all-encompassing and will address the entirety of the nuclear fuel cycle.”

Predictably, by then, the report was not forthcoming.  And then the US entered COVID-19 and the report was assumed to be back on the shelf for some time.

Brandon Munro is CEO of uranium developer, Bannerman Resources ASX: BMN, and regular uranium market commentator on CRUX Investor and CRUX Club.

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Energy Fuels (NYSE: UUUU) – I’m back and ready to go (Transcript)

The Energy Fuels Company Logo.
Energy Fuels Inc.
  • Shares Outstanding: 115M
  • Share price US$1.63 (21.04.2020)
  • Market Cap: US$191M

Interview with Mark Chalmers, President & CEO of Energy Fuels (NYSE: UUUU)

We like the uranium space. It’s been nearly a decade of hardship, but there are now signs of life. Uranium has the potential to make investors significant multiples of their initial investments; that’s if they pick a winner rather than a loser. Risk mitigation is key to this, and one of the most important components of certain uranium stories is commodity diversification. Energy Fuels, has mitigated risk with multiple cash streams: vanadium, milling and cleanup operations. Chalmers talks about another potential revenue stream: rare earth processing. This week the company announced it was entering the rare earth element (REE) space.

The first thing Chalmers makes clear is that this is a serious commercial venture. The White Mesa Mill is the ace up Energy Fuels’ sleeve, and if it can process rare earths, it makes sense to monetise this ability.

Energy Fuels believes the fully licensed and constructed White Mesa Mill (the only uranium and vanadium mill in operation in the US), can play a key role in bringing the rare earth element supply chain back to the U.S. from China. Energy Fuels’ primary focus remains on uranium and vanadium, but it believes it can leverage its existing licenses, infrastructure and capabilities at the mill to also produce REEs. Smart.

What exactly is then mill capable of? It is primarily licensed to treat vanadium and uranium ores, but over the past 20 years, Energy Fuels has taken a variety of other feed streams that the company has permits to receive. Most of those are low-level natural uranium streams. The company has licences for 17 other streams, and can also recover uranium from other rare earth producers. White Mesa Mill is extremely large, capable of processing 2,000t per day. The mill will be operated on a batch basis. Material from a variety of different streams will be generated, collected, stored, collated, then processed. The feed arrangements are still in their early days, but Energy Fuels is mainly looking at this from a toll processing standpoint. Energy Fuels has all the tailings storage facilities necessary to make this work. The company is ready to move.

The US government is also on board with the rare earth elements play and has encouraged Energy Fuels’ venture. This is extremely positive news.

We then move to Energy Fuels’ priority. Energy Fuels has plenty of material in inventory (over 500,000lbs), waiting to be processed, so has much greater control of its production timescale than other uranium producers. As the spot price increases, so does the value of the inventory. The company is constantly working on mineralogy and pilot testing to ensure that when the time is right, Energy Fuels can move swiftly to capitalise on a resurrected uranium market. Energy Fuels is clearly ahead of the curve. They know what they don’t know. The company looks like it has the scale to attract strategic partners and the best minds in the uranium space to propel the company forward.

Chalmers doesn’t think US$40/lb will even be enough for uranium-giant, Cameco. there are some projects in Kazakhstan that could be profitable, but for the rest of the world, they need a higher uranium spot price: north of US$50/lb, closer to US$60/lb to take “full-loading on cost.” Companies like Kazatomprom would like the price to stay down so they can maintain a monopoly, and their inflated currency has also given them an advantage. The spot price has risen 25% in the last month or so, and these disruptions may start to shake utility companies up. “There is less uranium out there than people think.”

We Discuss:

  1. Getting into Rare Earths: Why, What’s the Idea?
  2. The Mill’s Capabilities: Setting it up for Different Streams
  3. Arrangements for Rare Earth Feed Stock: Making Money for Energy Fuels
  4. Impact of COVID-19 on the Uranium Market: Rising Share Prices
  5. Genesis of the Idea for Rare Earths and US Government’s Involvement
  6. Process of Understanding Economics and Timings on Moving Forward
  7. Spot Price Movement: When and How Might We See $40 and Over?
  8. Energy Fuels’ Position in the Uranium Space

CLICK HERE to watch the full interview.

Matthew Gordon: Hello, Mark, how are you, sir?

Mark Chalmers: I’m excellent. Matt, how are you? It’s been awhile.

Matthew Gordon: I know, I know. I know. I’m liking that painting behind you; what’s going on there? Is this at home? You are at home, you’re not at the office?

Mark Chalmers: When you’re airing out of your living room, you have just got to find something that looks reasonable behind you.

Matthew Gordon: You didn’t knock that up yourself then?

Mark Chalmers No, I didn’t. I don’t have any artistic skills – I’m a mining engineer.

Matthew Gordon: Okay. Good. Thanks for taking our call. First of all, we listened to the call yesterday with regards to your most recent announcement with regards to getting into the rare earth business. Can you just talk us through that? What is the idea why rare earths?

Mark Chalmers: Look, first of all, we’re very excited about this new opportunity for us, Matt, as I’ve said on the call, we’re first and foremost a Uranium producer and that’s the key focus of the business. But like Vanadium, and some of the other business opportunities that we’re always progressing, we had a lot of inbound calls from various parties that either had rare earth projects or other sources of rare earth, or the US government, and it came a point where we couldn’t turn our head to it. The White Mesa Mill was so uniquely suited with our ability to handle some of these streams, particularly those that have Uranium content, and we have a facility that can handle this low-level material, which is a real problem for other people, but they’re not a problem for us. So we decided to put out that press release. We mentioned that a few weeks ago that were looking at it. And as I said, we would not have done that release and not be pushing this if we didn’t think this has some real opportunities secondary to the Uranium business.

Matthew Gordon: So this isn’t just window dressing: something to say, just to kind of keep your name out there? This is a serious commercial venture.

Mark Chalmers: Absolutely. It’s not window dressing. And I actually think that a lot of the other Uranium guys are quite envious that we have some of this optionality. And as I said, we’re not trying to brand ourselves other than first and foremost a Uranium company, but this is a real opportunity and there is a lot of Uranium tied up in Rare Earth around the world. And why not? Why not if we’re at a head-start to, well most people, that we have this facility. Some of these rare earth opportunities can’t be developed because of the Uranium content, they can’t get the permits to process those ores. I think you’re seeing some backlash with some of the larger rare earth producers in the world. I won’t mention one of them, but they have a facility that they’re getting a lot of backlash from a number NGOs, and I don’t wish harm on anybody, but we have a facility that’s got 40-years of history dealing with these types of materials at White Mesa.

Matthew Gordon: Okay. Look, I don’t think it’s any secret that I like the fact that you have got experience in producing and selling Uranium into the market and the other component and you’ve got cash. I think maybe you got lucky or maybe it was good foresight on your part to raise the cash when you did, but it’s certainly very useful for you now. But the third thing which I liked was the mill. Now, if I’m a shareholder, I’m going to like this a lot. If I’m not, if I’m invested in one of the other companies, at one of your competitor companies, I probably don’t like it so much. But I need to understand what the mill is capable of. It’s an extremely large mill. You’ve got a series of licenses on it. So let me just start with that – what is it licensed to do?

Mark Chalmers : Okay, well look, it is primarily licensed to treat Uranium ores and Vanadium ores but over the course of the last 20 years or so, we’ve taken a number of other feed streams that we’ve had permits to receive. And most of those are low-level natural Uranium streams that could come from a number of things like for example, residues from water treatment plants. We’ve received material from other Uranium producers. We’ve received streams from some of the conversion facilities and whatnot, and recover the Uranium from those streams. So we have the ability to take a number of streams. I think we have  license amendments for 17, currently, streams other than just primary ores. And we have taken some of those streams from other rare earth producers in the past and recovered Uranium from those streams. So this is not new to us but what is the advantage, it’s a large mill; it’s about 2,000 tons per day, but most of these rare earth streams are going to be much smaller than that. So we don’t need the full capacity of the mill to enter this business.

Matthew Gordon: Okay. So you said a few things I want you to explain there. So I’ll come back to the rare earths component in a second, but when you say these streams; you’ve got 17 licenses for different types of streams coming, feeding into the mill, does that mean that these streams operate concurrently with each other or do they… how do you set the mill up to run different streams at the same time?

Mark Chalmers Well, we usually do it in a batch basis so we’ll accumulate some of this material maybe for 6-months or a year or two, and then we’ll do a run on that material through the mill. We actually, at the mill, we have the front end of the mill that you can process some of this material through, but we also have a separate alternate feed circuit that it can enter the mill in a different location or locations. So it’s very flexible, Matt, and I think I’ve told you before, it’s really the reason the White Mesa Mill has survived the test of time is because of the foresight of the people owning the mill to make sure that it was as flexible as possible. So this is not new and it’s been a good secondary business for the facility for decades. And we plan to expand that, I think I’ve said that historically, it’s probably been a USD$5M to say USD$50M a year business, but I don’t see any reason. It cannot be USD$50M a year. Who knows? Maybe more, maybe USD$100 a year extra business in addition to Uranium production.

Matthew Gordon: Okay, we’ve talked in the past about Uranium and Vanadium, people who don’t understand that should go and look at those videos, so let’s get onto the rare earths component here. So rare earths by definition are rare, so therefore they have a high value and potentially high margin. So how, I mean, and I don’t know how much work you’ve done on this, but you are looking at multiple sources of feed. How would those arrangements work? Are they JVs with people? Are they just commissioning you to just process their ore and they take all the upside? How do you make money?

Mark Chalmers :Well, look, yes, that’s it’s still early days as I said on the call yesterday. We’re mainly looking at it from a tow processing perspective. We’re also going to be evaluating a number of opportunities that are presenting themselves to find which streams that are out there that we can process. You know what I mean? One of the things with multiple streams is that it may require  different processing equipment and different sizing of equipment. So it’s very early stages but we’re looking at initially as a tow processing arrangement, but it could be something else. I mean, we mentioned in the call that we weren’t planning to become a miner of rare earths, but again, we’ll just take it a step at a time and see where it leads us.

But the key bit is, is that we’re not going to lose our capability at White Mesa for processing Uranium and Vanadium, it’s likely that we would have a separate circuit that would be literally bolted onto the facility, typically you’re not talking to tonnages that we’d have from processing traditional ores. So as I said, it’s early days, but we’re very excited and the fact that we have the facility, we have the permits, we have the tailings areas that are state of the art; designed for a thousand years, triple line. We have two cells that have a lot of capacity and we’ve been permitting two additional cells. So we’ve been looking far down the path here. And as I said, we’re very excited about this, Matt.

Matthew Gordon: No, I get it. And I get that it’s early days, but I wondered why you’d made the announcement now and therefore, how much do you know because being able to bolt on a circuit and process, presumably a much lower volume of ore, is that the case? You did sort of indicate that a second ago, like by what quantum?

Mark Chalmers: It is going to be very small quantum. I mean, instead of a facility that can process 6,000 to 7,000 tons per year, you could be talking 5,000 tons, 10,000, 20,000 tons; very small quantities relative to what you’d process through Uranium circuit.

Matthew Gordon: Right. But the margins are high because the value is high.

Mark Chalmers: Yes. A lot of it, some of the material may have been pre-concentrated, it may not be. So yes, the reason we made the announcement is that there were so many inbound calls. I mean, literally dozens and dozens of calls here of people saying, do you know what you have? Do you know what a big role White Mesa could play in this space? And I was going from call after call, so we couldn’t turn her head to it. And again, that’s one of the best opportunities when people are calling you and saying, we think this facility could play a role. Now, I don’t talk in absolutes because we’ve got to take it a step at a time but the market seemed to react positively to it. Now, we’ve had a number of different factors over the last few days: the price of Uranium is going up, this supply disruption because of COVID-19, and then we added this. So we’ve had a lot of interest in the stock, a lot of volume, and we’ve been, and we’re still getting, even after that call, a lot of inbounds from other people because of that call.

Matthew Gordon: We’ve been watching. The share price has bounced back up. I think the whole sector has done quite well, obviously. Obviously it’s terrible news; COVID-19 is not a pleasant thing for anyone to have to deal with and it’s affecting a lot of people in very, very negative ways. But for Uranium and Gold, it’s what it needed. It’s reacted strongly to this news, and I guess, with all the negative stuff aside, Uranium CEO’s must be quite pleased with the way the market has reacted. I mean, you guys have been starving for three, four, or five years?

Mark Chalmers Yes, absolutely. And I think I’ve said this to you before too, I usually find that it usually takes a number of small things to add up to a major thing in this business, you know, like you saw the shutdowns on some of these facilities, and then it started in Canada and then you saw it in Namibia and in Kazakhstan, the conversion facility, Cameco shut down their conversion facility. So it all starts building. So then there’s a shortfall of production that people were expecting. Price of Uranium starts to go up. The whole COVID-19 issue has heightened the awareness on dependency on other countries, particularly some of those that are political adversaries, so all this stuff starts feeding, and people start saying that going for the cheapest product isn’t necessarily the best option, and it is not the best option, particularly on a number of critical materials. I’m not talking minerals, I’m talking materials that are necessary for a country like the United States of America to be ready and prepared and have security of supply at different levels to not have that total dependency.

Matthew Gordon: Okay. I’ve got to ask this question – you did the Section 232 petition. You were one of the two, you and Jeff at UR-Energy. Okay. And you’ve been huddled up on Capitol Hill talking to people, knocking on doors and you’ve been pushing the security issue. Has this rare earths story come about because of conversations up on the Hill? Are you getting support for this announcement from the US government? I mean, is there some kind of connection between those two decisions? What was the genesis of this? You got calls, I get it, but what’s the genesis of this idea?

Mark Chalmers: Well, I think the genesis is the awareness over the last several years actually, that we have become overly dependent on a lot of our critical minerals. And they were basically on separate paths, separate but similar paths. Now we’ve been approached by some in government on the rare earths, even a year ago and we expressed interest in it. But again, we don’t want to lose focus; we’re not trying to morph ourselves into something that we’re not. We wanted to keep our main focus on Uranium because that’s our main game. So yes, we have made a lot of contacts with the government. Several of those contacts also have an interest in rare earths and I think, and I believe that a lot of them will be very pleased that we’re being more aggressive on the rare earth front because of particularly what we’ve communicated in the last few weeks. So I think it just highlights, I think that White Mesa has a potential to be a huge critical mineral central. When you look at the critical mineral of Uranium, Vanadium, and now we start expanding into the rare earths themselves which are also critical minerals, where else would you find that in the United States or in the world? And even though we’re still hanging our hat on Uranium first and foremost, as I said, we can’t turn our head to it and it’s a legitimate opportunity. So we’re going to be pursuing it, but when we have to make a choice between one or the other, it’s going to be first Uranium going forward but we’re definitely going to focus on this with at least a few people, a few employees trying to advance this as quickly as they can.

Matthew Gordon: Okay. When are you going to be in a position? Because actually, let’s start with, what is the process that you have to go through to understand the economics as to whether you do invest in a new circuit or some kind of upgrade to the current mill? Because you are going to need to spend some money on this thing, and obviously in this climate, money’s tight. What’s the process and when do you make that decision?

Mark Chalmers Yes. Well, look, you’ve got to start from the material that’s available to be processed. So we’ll start looking at different feeds. We have already got some feeds from other groups that we’re testing to determine what the mineralogy is and what it takes to unlock some of these minerals. We’ve got a full lab at White Mesa. We can do a lot of pilot testing at White Mesa, which gets us again, ahead of everybody else. We also have, and I have had a long relationship with ANSTO in Sydney with testing and on Uranium projects, but they’re also one of the world leaders on rare earths. I’m a firm believer that “you need to know what you don’t know”, remember that little saying –

Matthew Gordon: I love that phrase. Yes.

Mark Chalmers: Yes, but I’ve got a number of contacts with ANSTO. They can provide support where we don’t have the knowledge in some of these areas. There also could be other people here in the United States or Canada that we may tap into. We will go where we can get the best advice, but at the same time we’ve got a head-start with a full laboratory and the ability to pilot material right now, and we are testing rare earth material right now for recovery because we have facilities to do so.

Matthew Gordon: And again, timing – can you give us an idea of timing? Because okay, that’s the process you are going through but people are going to be excited about, look, you talked about USD$50 million earlier, right? So people are going to be excited about, when are we going to start seeing some movement on this?

Mark Chalmers: Yes. Look, there could be movement on this in the coming weeks. We think that it is possible, and I said this on the call, look, some of these streams we think we can treat now, okay? If they’re suitable for our process or our modified process, but we think that this is not multiples of years out, this is just a year or two out for certain processing of certain streams. But again, we are not so far ahead that we can really give any specific dates, but we are far closer to the market than somebody that’s trying to build a facility from scratch, by years and years and probably millions and millions of dollars, maybe hundreds of millions of dollars, I don’t know. It depends on the scale and the size. So we think we’re offering something unique here and scarce. And that’s a good place to be in.

Matthew Gordon: That’s a very good place to be. And so you’re going to, if it is weeks, you pick up the phone and let us know because that’s pretty exciting. That can be very exciting to everyone because if you’re able to in a few weeks, start giving us definition of the process and the numbers and the timing, that would be, that’d be great news indeed.

Mark Chalmers:  Yes, if I could say one thing; look, I mean, as I said, we’ve already started some testing and if we can have a party that we can team with, that we can go public with, we’ll certainly update the market with that at the appropriate time. So but as I said, we do have material from some projects right now that we’re looking at and we’re testing as we speak.

Matthew Gordon: Okay. And just to be clear, because you mentioned that you’ve got a lab facility. This isn’t just regular toll money. You’ve got a lab facility there, you’re dealing with radioactive material. It’s actually quite sophisticated, not just a kind of regular processing mill here we’re talking about.

Mark Chalmers : Look, I mean we’ve got the facility, we’ve got around 60 people at the facility. We have a very sophisticated lab. We have the ability to deal with those streams, dispose of those streams. We’re done testing them. Just a very, very unique position to be in.

Matthew Gordon: Okay. Well let’s move on from that. So thank you very much for explaining what’s going on and what you’re thinking. I do want more from you as it develops, please. The market actually, we touched upon it earlier, Cigar Lake, Kazatomprom, Rossing, even HUSAB are all affected. Between 20Mlbs and 40Mlbs out of the market, just like that, almost in a two-week period. Your share price recovered. Lots of Uranium juniors are feeling the benefits of that. There’s a kind of change in sentiment, so that’s all good. I want to talk to you about what’s the reality of how quickly the spot price moves to a point where you can start making the decision, because you talked about USD$40. USD$40 isn’t going to move the dial for you. How do you think, or do you think Kazatomprom and Cameco would like to control the price and make it remain somewhere around the forties, in which case, what do you do?

Mark Chalmers Yes, look, I don’t think USD$40 is enough for Cameco either. There are some projects in Kazakhstan that probably USD$40 is a nice place to be but I think that we still need that north of USD$50/lbs to be sustainable, and really need closer to USD$60/lbs to be able to take full loading on cost. If you took Cameco’s costs on Cigar Lake or MacArthur, including exploration, development and all that, they’re going to be way above USD$40/lbs. And anyone from Cameco would agree with that. Now going forward, and that’s what most people are looking for right now is they’re going for costs.

So look, I think that companies like Kazatomprom would like it not to go too high so they can kind of maintain their leading role there but they’ve also benefited from the weakening of their currency; this whole Russian oil pump, the pump it out, pushing down the rouble, pushing down the tenge does also give them an advantage. So yes, we do need higher prices, and really anyone in the Western world that says that they can do it at USD$40/lbs sustainably, I really will question them.

I think there may be one project that I know of in Australia; at Olympic Dam and maybe Heathgate Resources, projects might be able to do that at USD$40/lbs, but that’s only a certain amount of production. I mean you look at your man being starting to push towards 200M lbs per year. There’s only so many projects that can produce under that USD$40/lbs positively.

Matthew Gordon: So here’s the question, given what’s going on at the moment, when do you think its going to hit USD$40 and where do you think that’s going to settle?

Mark Chalmers: Well, that’s the big question, but I think we’ve seen that the Uranium price can move up quickly, fairly quickly. I mean, it’s gone up 25% in the last month or so. I think that these disruptions are starting to shake people up and I think it may start shaking up the utilities a bit. I don’t know if it’ll happen, but some people have been saying that Uranium could go past USD$40/lbs pretty quickly. I think there’s less Uranium out there than people think. I think that it’s also apparent to me that what you see the Russians doing with oil and gas, they also want to do with Uranium and nuclear fuel products.

The Russian suspension agreement expires at the end of this year where it was limiting the Russians to 20% of the market with the United States. I think they’d like to expand that. I think that is the absolute wrong thing to do: to allow the Russians that have a larger share of the US market. So that’s going to be an interesting saga to watch unfold over the rest of this year. But so no, it’s a very interesting time and I think it’s a time that a lot of our investors have been waiting for a long time and they’re starting to see how these little things all add up to be big things. So look, I wouldn’t be surprised if we see USD$40/lbs. I don’t know, I don’t want to speculate, but shortly in the next month or two. But we may not.

Matthew Gordon: Yes, I think that’s the big question. We need to see what the utilities are doing, and we’re hearing, we spoke with a Uranium trader, he said that he’s been getting a lot more inbound phone calls, not a lot more trading in terms of volume, small amounts, but where the utilities would typically for him sit back and just watch what the market is doing and watch it settle again, they’ve been one of the first on the phone to him. He’s a reasonably big trader so it’s kind of indicative that they, as you said at the beginning, are perhaps a little bit more unsettled than they were 3-weeks, 4-weeks ago.

Mark Chalmers: Yes, I know. Look, I think that people become complacent on the supply chains. When the price of Uranium moved in 2006/2007, very quickly, it was on the back of supply disruptions, flooding of MacArthur and Cigar Lake, and those were longer term interruptions. I’m not sure how long the COVID interruption will last but it just highlights that there’s no certainty, and it doesn’t mean that one of these mines can’t flood again. It doesn’t mean that there can’t be a civil war or something else that happens that disrupts supply. So yes, look, I think the unfortunate thing about the world, or particularly the United States is they have become addicted to cheap, cheap, cheap. The American consumer, including a lot of companies and including utilities, they go for the cheapest product they can get for the lowest dollars. And I understand why they’re doing that; everybody’s trying to push the best margins they can. But going cheap on everything isn’t necessarily the best plan. Look at what we’ve discovered with in the United States, and in the world actually, how dependent we are for a lot of our pharmaceuticals and other supplies, health supplies and whatnot, the same thing’s happening with energy and let’s watch this space.

Matthew Gordon: Yes. Well, thanks very much. I mean, the thing I wanted to catch up about was the rare earths; we should probably catch up and see what’s going on with the rest of the organisation with regards to the Uranium and Vanadium. Certainly, as this price movement carries on through. I mean, every day feels like a new story to me. There’s always something big going on in Uranium at the moment. After a few years of let’s say quiet, it’s probably very welcome.

Mark Chalmers: Well, look Matt, and also, in our position as Energy Fuels, we’ve got a lot of inventory, and every time that price goes up that inventory becomes more valuable. So we have around currently a little over 500,000lbs of inventory. We expect that to grow to around 700,000lbs of inventory. So if you do your math at 5 to 700,000lbs at USD$25/lbs, and then you do your math at say 5 to 700,000 pounds at USD$40/lbs or USD$45/lbs, we can get a lot of bang out of that. And we’d been hoping to sell that material to the US government and this national stockpile at a premium. And we still hope we can sell that at a premium. But unlike just about anybody else out there, we have inventory and none of the small players have inventory. UR-Energy has some inventory, but we have a lot more inventory than anyone out there in the world outside of the Camecos and the Areva’s we have a substantial amount of inventory. So not only do we have cash in the bank, we’ve got inventory, Uranium, we’ve got an inventory of Vanadium, and we will play those to our best advantage.

Matthew Gordon: Beautiful. I’m sure your shareholders are delighted to hear that. So let’s finish up there. I appreciate your time. I’m glad to see you are well and keeping safe and the family are well. Maybe let’s talk next week because I think next week is going to feel like a whole new story again.

Mark Chalmers : Well I hope so because when the market moves, at least when the market’s moving up, it all feels better, Matt.

Matthew Gordon: It takes away a lot of problems, right? There’s different sorts of questions, different sorts of questions. But yes. Okay, well look, we’ll speak to you soon Mark. Thanks very much for today. I appreciate your time.

Mark Chalmers: Okay, Matt, have a good evening.

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Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

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Energy Fuels (NYSE: UUUU): Uranium Player Enters The Rare Earth Elements Sector

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Energy Fuels Inc.
  • Shares Outstanding: 115M
  • Share price US$1.63 (21.04.2020)
  • Market Cap: US$191M

Energy Fuels is one of our favourite uranium stories. Now, it looks like there’s another reason to feel excited. The company recently announced it is entering the rare earth elements (REE) sector. We sat down with CEO, Mark Chalmers, to discuss the details.

If the uranium space is your kind of thing, why not read one of our recent uranium articles, or watch our latest uranium interview?

Energy Fuels has mitigated risk with multiple cash streams: vanadium, tolled milling and cleanup operations. In this interview, talks about another potential revenue stream: rare earths processing. Last week, the company announced it was entering the rare earth element (REE) space. How will this affect Energy Fuels’ economics? Could this be a catalyst moment for the share price?

We Discuss:

  1. Getting into Rare Earths: Why, What’s the Idea?
  2. The Mill’s Capabilities: Setting it up for Different Streams
  3. Arrangements for Rare Earth Feed Stock: Making Money for Energy Fuels
  4. Impact of COVID-19 on the Uranium Market: Rising Share Prices
  5. Genesis of the Idea for Rare Earths and US Government’s Involvement
  6. Process of Understanding Economics and Timings on Moving Forward
  7. Spot Price Movement: When and How Might We See $40 and Over?
  8. Energy Fuels’ Position in the Uranium Space

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Energy Fuels Company Logo.