Energy Fuels Inc. (TSX:EFR)(OTCQX:EFRFD) ("Energy Fuels" or the "Company")
announced that today it is filing its financial results for the three and twelve
months ended September 30, 2013. The Company's Quarterly Consolidated Financial
Statements, along with Management's Discussion and Analysis, will be filed on
the System for Electronic Document Analysis and Retrieval ("SEDAR") and may be
viewed at www.sedar.com. Unless noted otherwise, all dollar amounts are in US
dollars.
As more fully described below, readers should be advised that the Company has
changed its fiscal year end from September 30 to December 31. The Company also
completed a consolidation of its common shares, effective November 5, 2013, on
the basis of 50 pre-consolidation shares for each post-consolidation share. As
of November 4, 2013, immediately prior to the 50-for-1 share consolidation,
there were 981,110,441 common shares issued and outstanding (19,622,209 on a
post-consolidation basis). All share amounts in this press release are shown on
a pre-consolidation basis, followed by the post-consolidation amount in
parenthesis. All per share amounts are shown on a post-consolidation basis.
Selected Summary Financial Information:
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As at As at
September 30, September 30,
$000's 2013 2012
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Financial Position:
Working Capital $ 32,496 $ 41,934
Property, plant and equipment $ 104,549 $ 119,524
Total assets $ 185,539 $ 223,844
Total long-term liabilities $ 36,177 $ 37,921
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Three months Twelve months
ended ended
September 30, September 30,
$000, except per share data 2013 2013
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Results of Operations:
Total revenues $ 24,504 $ 72,472
Net loss for the period $ (70,472) $ (83,950)
Basic & diluted net loss per share $ (4.30) $ (5.76)
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Impairment Charge for the Three Months ended September 30, 2013
As a result of the drop in both the U3O8 spot and term prices from July 1, 2013
through September 30, 2013, and the Company's expectation to place the Pinenut
mine on stand-by in July 2014, the Company tested its plant, property and
equipment for impairment and recognized an impairment loss of $60.26 million.
Financial and Operational Highlights for the Three Months ended September 30, 2013:
-- Generated cash flow from operations of $5.05 million and $7.03 million
for the 3 and 12 months ended September 30, 2013 respectively
-- Sold 256,667 pounds of U3O8, pursuant to term contracts at an average
realized price of $55.83 per pound.
-- Sold an additional 200,000 pounds of U3O8 to an existing term contract
customer at an average price of $40.25 per pound. This sale was
completed at a premium to the spot market at the time, as the Company
provided the customer with a discount on portions of its long-term
contract deliveries in the years 2015 through 2017.
-- Sold 156,447 pounds of V2O5 at an average realized price of $5.53 per
pound, and 105,232 pounds of ferro vanadium at an average price of
$11.40 per pound.
-- Production at the White Mesa Mill totaled 180,000 pounds of U3O8, all of
which was sourced from alternate feed materials. There was no production
of V2O5.
-- As of September 30, 2013, the Company had working capital of $32.5
million, including cash and cash equivalents of $12.4 million, trade and
other receivables of $9.8 million, marketable securities of $0.3 million
and 426,000 pounds of uranium concentrate inventory which, based on spot
market prices as of September 30, 2013, had a market value of $14.9
million (although the Company has no intention of selling such uranium
concentrates on the spot market). These working capital and cash amounts
do not include the proceeds of the bought deal common share offering
completed on October 16, 2013 (see Corporate Highlights since the End of
the Three Months ended September 30, 2013).
Corporate Highlights for the Three Months ended September 30, 2013:
On August 30, 2013, Energy Fuels acquired, by way of a plan of arrangement (the
"Arrangement"), all of the issued and outstanding shares of Strathmore Minerals
Corp. ("Strathmore"). Under the Arrangement, Strathmore shareholders received
1.47 common shares (0.0294 common shares on a post-consolidation basis) of
Energy Fuels for each common share of Strathmore held. In total, Energy Fuels
issued 186,420,938 common shares under the Arrangement (3,728,419 common shares
on a post-consolidation basis). Through its acquisition of Strathmore, Energy
Fuels acquired a number of mineral properties, including a 60% interest in the
Roca Honda uranium project in New Mexico, one of the largest and highest grade
uranium development projects in the U.S. The Company believes that significant
synergies could be achieved by shipping Roca Honda's U3O8 resources to the
Company's White Mesa Mill. Sumitomo Corporation of Japan holds the other 40%
interest in Roca Honda. The Company also acquired the Gas Hills uranium project
in Wyoming, which was previously being developed in a strategic venture with
Korea Electric Power Corporation. Energy Fuels believes that synergies can be
achieved by combining aspects of the Gas Hills Project with the Company's Sheep
Mountain Project, located only 28 miles away. In addition, the Company acquired
the Juniper Ridge uranium project in Wyoming. The Company is evaluating
developing the Juniper Ridge Project as a stand-alone uranium project or as part
of a regional uranium project with Sheep Mountain and/or Gas Hills.
Corporate Highlights since the End of the Three Months ended September 30, 2013:
-- On October 16, 2013, the Company completed a bought deal public offering
(the "Offering") of 31,250,000 common shares (625,000 common shares on a
post-consolidation basis) at a price of Cdn$0.16 (Cdn$8.00 on a post-
consolidation basis) per share for aggregate gross proceeds of Cdn$5.0
million.
-- In order to facilitate a listing of the Company's common shares on a
recognized US stock exchange, the Company completed a consolidation of
its common shares on the basis of 50 pre-consolidation shares for each
post-consolidation share. Approval of the consolidation was provided by
the shareholders of the Company at a special meeting of shareholders
held on October 30, 2013. The common shares of Energy Fuels began
trading on the Toronto Stock Exchange on a post-consolidation basis on
November 5, 2013.
-- On November 4, 2013, the Company decided to place shaft-sinking
activities on standby at the Canyon mine due to market conditions, and
to simplify and lessen the expense of current litigation at the mine. As
a result of this decision, the Company agreed to maintain such
activities on standby until the earlier of a decision by the Arizona
District Court on the merits of the current litigation, or December 31,
2014.
-- On November 5, 2013, the Company submitted an application to list its
common shares on a recognized US stock exchange. The Company believes
that such a listing will provide better access to US institutional and
retail investors, increased trading liquidity in terms of value traded,
decreased shareholder transaction costs, decreased share price
volatility, and will highlight the Company's strategic position within
the United States.
-- The Company changed its fiscal year end from September 30 to December
31, to better align its year-end with its major uranium customers,
certain of its major subsidiaries and industry peers. The Company
expects to report its annual results for the period beginning on October
1, 2012 and ending on December 31, 2013 ("FY-2013") on or before March
31, 2014.
Energy Fuels' Outlook for the Three Months Ended December 31, 2013 and the
Fiscal Year Ended December 31, 2014 ("FY-2014")
Since July 1, 2013, the spot price of uranium has dropped from $39.65 per lb. to
its current price of $35.35 per lb., and the long term price has dropped from
$57.00 per lb. to $50.00 per pound (see Market Outlook for the Three Months
ended December 31, 2013 & FY-2014 below). Energy Fuels believes that the current
price of U3O8 is below the average economic cost to produce U3O8 from currently
operating uranium mines around the world, and is clearly well below the average
economic cost to develop and produce from new uranium mines which will be
required to fuel the projected growth in nuclear power plants globally. This
drop in uranium prices has adversely impacted uranium production and development
plans globally (as discussed below in the Market Outlook for the Three Months
ended December 31, 2013 & FY-2014). As a result, Energy Fuels expects a very
meaningful increase in the spot price in the future, since medium- to long term
demand fundamentals remain strong, while the supply required to fulfill this
demand is generally constrained in the current uranium price environment.
Energy Fuels has U3O8 term supply contracts in place with average realized sales
prices projected to be $58.42 per pound U3O8 in FY-2014. This represents a 65%
premium to the current spot price of $35.35 per pound. In addition, as of
September 30, 2013, Energy Fuels holds 426,000 pounds of U3O8 in its inventory.
The Company is also able to purchase U3O8 in the spot market for sale into one
of these contracts, which, along with Energy Fuels' significant U3O8
inventories, provides the Company with operational flexibility with respect to
how it can meet its contract delivery requirements. The Company intends to make
spot purchases for delivery under that contract, which will enable the Company
to reduce its required near-term U3O8 production. This will allow the Company to
place its Pinenut mine on stand-by in July 2014 and to discontinue current U3O8
production at the White Mesa Mill beginning in August 2014 until the latter half
of 2015, at which time the Mill is expected to re-commence processing alternate
feed materials.
This strategy of replacing produced U3O8 with purchased U3O8 for deliveries
under this particular contract creates value for Energy Fuels by positioning the
Company to purchase U3O8 at prices lower than its production cost. This strategy
will also extend the life of mine plan at the Pinenut mine into the future by
preserving its U3O8 resources, reduce operational risk associated with
production operations and enable the Company to implement significant cost
cutting measures (see the Company's updated outlook for the three months ended
December 31, 2013 and FY-2014 for additional details on the Company's production
expectations).
At the same time, Energy Fuels will continue to position itself to realize the
economic benefits of anticipated improvements in the price of U3O8, through
select development and permitting expenditures and care and maintenance
activities. Energy Fuels has a number of projects with large U3O8 resources
including the Henry Mountains complex and the Roca Honda uranium project, which,
in a higher U3O8 price environment, have the potential to provide large,
base-load quantities of resources that could enable the White Mesa Mill to
produce U3O8 with greater operating efficiency. In addition, the Company has
extensive U3O8 resources in Wyoming for which it is evaluating a co-development
strategy that it hopes will result in a second large, stand-alone production
center. The Company intends to continue permitting activities on all of these
projects.
As outlined below, Energy Fuels provides the following updated outlook for the
three months ended December 31, 2013 and FY-2014. The Company intends to closely
monitor U3O8 prices, and may change operating plans under actual or expected
market conditions, as necessary. Accordingly, the outlook provided herein may
differ materially from actual results:
-- Uranium Sales for the three months ended December 31, 2013: The Company
does not have any uranium deliveries scheduled during the three months
ended December 31, 2013, and therefore does not expect any sales during
the quarter.
-- FY-2014 Uranium Sales: The Company forecasts FY-2014 sales to be
approximately 800,000 pounds of U3O8, all of which will be sold into
existing long-term contracts and of which 300,000 pounds is expected to
be purchased in the spot market as opposed to being produced at the
White Mesa Mill. Energy Fuels expects to earn an average realized price
of $58.42 per pound of U3O8 during FY-2014. This average realized price
per pound is not subject to any decrease resulting from declines in
future U3O8 spot and/or term prices as a result of minimum floor prices
within the Company's contract portfolio. Also, one contract has no
ceiling price. The other two contracts have certain ceiling prices which
begin to take effect if either the spot or long-term prices exceed
$90.00 per pound for one of the contracts, and if the long term price
exceeds $120.00 per pound for the other contract. This would allow the
Company to capture a significant portion of any significant improvements
in price over the remaining terms of these contracts.
-- Production for the three months ended December 31, 2013: The Company
expects to produce approximately 100,000 pounds of U3O8 during the three
months ended December 31, 2013 from alternate feed sources.
-- Production for FY-2014: The Company expects to produce approximately
400,000 to 500,000 pounds of U3O8 during FY-2014, from both conventional
ore (250,000 to 350,000 pounds) and alternate feed sources (150,000
pounds). Conventional ore processing is expected to resume during the
second quarter of FY-2014 to process ore mined through the middle of FY-
2014 from the Arizona 1 and Pinenut mines.
-- Mining Activities for the three months ended December 31, 2013: Mining
at the Arizona 1 and Pinenut mines is expected to continue during the
three months ended December 31, 2013.
-- FY-2014 Mining Activities: Subject to the results of additional
underground drilling, mining at the Arizona 1 mine is expected to cease
in early FY-2014 due to the depletion of its known resources. Mining at
the Pinenut mine is expected to continue into the middle of FY-2014, at
which point the mine is expected to be placed on care and maintenance.
Re-starting mining activities at Pinenut would be evaluated in the
context of business and market conditions, including the U3O8 price
environment.
-- Project Development for the three months ended December 31, 2013: During
the three months ended December 31, 2013, the Company expects permitting
activities to total approximately $0.6 million, primarily at the Sheep
Mountain, Roca Honda and Henry Mountains projects.
-- FY-2014 Project Development: During FY-2014, the Company expects
permitting activities to total approximately $1.3 million, primarily at
the Sheep Mountain, Roca Honda and Henry Mountains projects.
Market Outlook for the Three Months ended December 31, 2013 & FY-2014:
Similar to recent quarters, near- to medium-term uncertainty continues to lead
to weakness in the uranium market. As a result, contracted volumes have remained
low with little impetus on buyers or sellers to enter into new transactions.
According to price data from The Ux Consulting Company, LLC ("Ux"), the spot
price of uranium dropped $4.65 per lb., from $39.65 per pound at the end of the
prior quarter to $35.00 per pound on September 30, 2013. The Ux long-term price
indicator dropped $7.00 per pound from $57.00 per pound to $50.00 per pound
during the same period. The current Ux spot and long-term prices are $35.35 and
$50.00, respectively. The continued shutdown of Japanese reactors, operational
issues and scheduled shutdowns in Asia and the U.S., and the resulting build-up
in inventories are largely responsible for the continued market weakness.
The Company continues to believe that the anticipated restart of the Japanese
reactors will be an important catalyst to the market. To date, five utilities
have applied to the Japanese Regulatory Authority for the restart of fourteen
reactors. However until these (or other) catalysts occur, uranium markets will
remain uncertain.
In spite of the current uncertainty, long-term demand fundamentals in the
uranium sector remain strong. In fact, the fundamentals may be slightly stronger
than in the previous quarter. The World Nuclear Association now reports that
there are 70 nuclear reactors under construction in 13 countries, led by China
with 30 units under construction. The 70 reactors under construction represent
an increase of two units from the prior quarter. In addition, there are 487
nuclear reactors planned or proposed around the World. This represents an
increase of nine units from the prior quarter. The 70 reactors under
construction are expected to require over 100 million pounds of U3O8 for initial
cores and an additional 35 million pounds of U3O8 annually once they are in
operation.
Although long-term fundamentals remain strong, Energy Fuels believes near-to
medium-term uncertainty could lead to continued sluggishness in the uranium
market. Yet, recently announced production decreases and project deferrals may
provide further impetus for improvements in the price of uranium. Energy Fuels
recently announced the deferral of development at the Canyon Mine in Arizona, in
addition to the planned deferral of production at the Pinenut mine beginning in
the latter half of FY-2014 mentioned above. Uranium Energy Corp. recently
announced its intent to reduce mining operations at its Palangana ISR uranium
project in south Texas. Kazatomprom has announced that it will halt plans to
expand uranium production in Kazakhstan, and is projecting that annual output
from its Kazakh operations may experience uranium output reductions in 2014, the
first such reduction since expansion began earlier in the decade. Russia's
Atomredmetzoloto, including its wholly-owned Uranium One division, recently
announced that the Honeymoon project in Australia will be placed on care and
maintenance. In addition, they recently announced that they have ceased
well-field development at their Willow Creek project in Wyoming, and it has been
reported that they are ceasing all investment in new projects in Russia and
abroad and are placing a number of projects on standby. Many analysts believe a
number of other projects around the World are likely operating at a loss in the
current market environment. Energy Fuels expects additional project
cancellations and deferrals may be announced in the coming months. However, as
Japan begins to restart their reactor fleet and new nuclear units come online
worldwide, the supply of uranium for new and existing nuclear units may become
less certain, providing additional stimulus to potential increases in the price
of uranium.
Energy Fuels believes it is well positioned to respond to improved uranium
prices and to execute the Company's business plan.
Stephen P. Antony, P.E., President & CEO of Energy Fuels, is a Qualified Person
as defined by National Instrument 43-101 and has reviewed and approved the
technical disclosure contained in this document.
About Energy Fuels: Energy Fuels is currently America's largest conventional
uranium producer, expected to supply approximately 25% of the uranium produced
in the U.S. in 2013. Energy Fuels operates the White Mesa Mill, which is the
only conventional uranium mill currently operating in the U.S. The mill is
capable of processing 2,000 tons per day of uranium ore. Energy Fuels has
projects located throughout the Western U.S., including producing mines and
mineral properties in various stages of permitting and development. The
Company's common shares are listed on the Toronto Stock Exchange under the
trading symbol "EFR" and on the OTCQX under the trading symbol "EFRFD".
Cautionary Note Regarding Forward-Looking Statements: This news release contains
certain "Forward-Looking Information" and "Forward-Looking Statements" within
the meaning of applicable Canadian and United States securities legislation,
which may include, but is not limited to, statements with respect to the future
financial or operating performance of the Company and its projects and with
respect to the market outlook. Generally, these forward-looking statements can
be identified by the use of forward-looking terminology such as "plans",
"expects" "does not expect", "is expected", "is likely", "budget" "scheduled",
"estimates", "forecasts", "intends", "anticipates", "does not anticipate", or
"believes", or variations of such words and phrases, or state that certain
actions, events or results "may", "could", "would", "might" or "will be taken",
"occur", "be achieved" or "have the potential to". All statements, other than
statements of historical fact, herein are considered to be forward-looking
statements. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements express or implied by the forward-looking
statements. Factors that could cause actual results to differ materially from
those anticipated in these forward-looking statements are described under the
caption "Risk Factors" in the Company's Annual Information Form dated December
20, 2012, which is available for review on the System for Electronic Document
Analysis and Retrieval at www.sedar.com, and may also include the possibility
that the listing on the recognized U.S. stock exchange is not approved.
Forward-looking statements contained herein are made as of the date of this news
release, and the Company disclaims, other than as required by law, any
obligation to update any forward-looking statements whether as a result of new
information, results, future events, circumstances, or if management's estimates
or opinions should change, or otherwise. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, the reader is cautioned not to place undue reliance on
forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Energy Fuels Inc.
Curtis Moore
Investor Relations
(303) 974-2140 or Toll free: 1-888-864-2125
investorinfo@energyfuels.com
www.energyfuels.com
Energy Fuels (TSX:EFR)
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