LAKEWOOD, CO, March 14, 2019 /PRNewswire/ - Energy Fuels
Inc. (NYSE American: UUUU; TSX: EFR) ("Energy Fuels" or the
"Company"), a leading producer of uranium and vanadium in
the United States, is pleased to
present the following Letter to Shareholders from President and
Chief Executive Officer ("CEO") Mark S.
Chalmers:
Dear Fellow Shareholders:
Well, a full year has gone by since my first shareholder letter
as President and Chief Executive Officer of Energy Fuels. The past
year has been very exciting for the Company, and I believe we
achieved a number of significant milestones as we continue to
pursue our strategy of building Energy Fuels into a uranium mining
and energy company of major global significance. Moreover, on
behalf of the Board of Directors and my Management Team, I thank
you for your continued support of Energy Fuels.
Last year in my letter to shareholders, I introduced a
light-hearted phase: "Energy Fuels might be small, but we're
mighty!" I ended my letter with a goal to report that we would be
"larger and mightier" in 2019. I am pleased to report to you that I
believe the Company has made significant strides in this regard,
despite a continued difficult uranium market.
In this year's letter, I wish to introduce another light-hearted
phrase I routinely use around the office: "Energy Fuels punches
above its weight!" In addition to thinking big and pursuing great
goals, we seek challenges and opportunities that many larger
organizations would only hope to achieve. I want all of our
shareholders to understand that, working as a team, our competitive
spirit drives us to always be the very best we can be, creating
shareholder value wherever we can find it, regardless of what
challenges come before us.
Make no mistake about it, our primary focus remains – and always
will be – large-scale, profitable uranium production. All of our
activities support this focus. We continue to maintain our
industry-leading uranium production capabilities, including
licensed and permitted projects that we believe can resume and
increase production quicker and on a greater scale than any of our
peers in an environment of improving uranium market fundamentals,
and hopefully the successful conclusion of our efforts supporting
the ongoing Section 232 investigation into uranium imports into the
U.S.
So let me get started on some of our major accomplishments over
the past year and provide some insight into our thinking for
2019:
- Leading U.S. Uranium Producer: In 2018, Energy Fuels remained
the largest U.S. producer of uranium having produced 917,000 pounds
of U3O8 from a combination of production from our Nichols Ranch in situ recovery project in
Wyoming and from our White Mesa
Mill in Utah. We decreased uranium
production in 2018 in order to conserve cash and in-ground
resources, and our uranium production in 2019 will decrease
further, because we expect vanadium production to supplant uranium
production at the White Mesa Mill. We expect to temporarily focus
on vanadium production, because significant cash flow from vanadium
may be available to us for as long as vanadium prices remain
strong. But, as I stated above, Energy Fuels' primary focus is
uranium, and everything we do supports this focus – including
vanadium production.
- Stronger Balance Sheet and Share Performance: In May 2018, Energy Fuels qualified for inclusion on
the Russell 3000 Index. This allowed the Company to experience a
several-fold increase in share liquidity. This, along with the
significant catalysts ahead of us, also put the Company 'on the
radar' of a number of larger funds. Another benefit to being
included on the Russell indices is that the Company was able to
raise funds through our at-the-market facility during the annual
rebalance at a very cheap cost of capital. As a result, we were
able to repay, in full, all our Wyoming Industrial Development
bonds totaling $8.7 million and save
significant interest expense. During the rebalance period, our
strategies significantly strengthened the Company's balance sheet
to one of the best in the sector, while at the same time our share
price outperformed our peers.
- Bolstering U.S. National Security: In January 2018, Energy Fuels and Ur Energy
co-petitioned the U.S. Department of Commerce (DOC) under Section
232 of the Trade Expansion Act of 1962, asking them to look into
the threat of increasing quantities of uranium being imported into
the U.S. from state-owned and state-subsidized enterprises in
Russia, Kazakhstan, Uzbekistan, and China. In July
2018 the DOC initiated the investigation. We are seeking a
remedy which will limit imports into the U.S., effectively
reserving 25% of the U.S nuclear market for U.S. uranium producers.
It is the Company's belief that a report will be delivered to the
President of the United States in
mid-April 2019. The President will
then have up to 90 days to adjust trade, if he sees fit. While
there is no guarantee of the outcome of this initiative, we feel
our position is extremely compelling, and that the President can
protect U.S. national security by helping to support the domestic
uranium mining industry at a negligible cost.
- Capturing the Vanadium Opportunity: The possibility of Energy
Fuels resuming vanadium production was introduced in my past
shareholder letter. Vanadium is a mineral used in high-strength
steel, titanium and other alloys, in the chemical industry, and in
batteries used in renewable energy systems. During 2018, vanadium
prices rose dramatically, reaching a peak near $29 per pound. Today, the price remains strong at
over $17 per pound. Thanks to the
excellent technical work of our talented and dedicated staff at the
White Mesa Mill, the team tested and designed an innovative means
to recover the substantial solubilized inventory of vanadium
contained in our tailings solutions. Late in 2018 and into early
2019, this system was commissioned and is now performing
exceptionally well, producing commercial quantities of very high
quality V2O5 with an average purity of 99.6%. Assuming vanadium
price strength continues, we estimate we can recover approximately
four million pounds of V2O5 during 2019 and 2020. This has the
potential to generate significant revenues and cash flows for the
Company during the next two years that we intend to reinvest toward
further strengthening our industry-leading uranium capabilities. In
addition, the Company embarked on a test mining campaign at our
La Sal mine complex to determine
if certain vanadium ores can be more selectively mined to capture
higher vanadium grades by using modern "real-time" analytical
equipment. While final results are still pending, I am happy to
note that significant improvements in grade-control have been
observed, which have the strong potential to improve the economics
of these uranium/vanadium mines in the future.
- Steady Alternate Feed Material Business: Our alternate feed
recycling business, which has been a mainstay for the Company
during periods of low uranium prices, continued to contribute
materially to Energy Fuels' bottom line. We collected approximately
$7 million in fees (or uranium value
equivalent) during 2018, and we recovered 424,000 pounds of uranium
for third parties during the year. As a point of reference, this
program effectively recycled a years' worth of fuel for a nuclear
reactor. Due to our focus on vanadium recovery, we do not expect to
earn any alternate feed revenue in 2019. However, we continue to
pursue multiple opportunities, and this remains an important part
of our business plan over the long-term.
- Abandoned Uranium Mine Opportunity: We continued to advance the
potential for Energy Fuels to participate in the clean-up of Cold
War era abandoned uranium mines. We offer the U.S. government one
of the most cost-effective and 'shovel ready' solutions for this
cleanup. As of the writing of this letter, the EPA has collected
approximately $1.7 billion in trust
from various parties to pay for the cleanup of these abandoned
mines. While the Company has not obtained any of this work to date,
our White Mesa Mill is in an excellent position to assist with
these cleanups, while also recycling the cleanup material to
recover uranium. As a company which values sustainability, and
responsible cradle-to-grave principles, this opportunity remains a
high priority for us looking to the future.
Lastly, in addition to the initiatives mentioned above, Energy
Fuels continues to seek other sources of revenue, cost-cutting
measures, and catalysts, which will support our uranium production
over the long term.
With 2019 off to a quick and exciting start, we reflect proudly
on 2018 when we believe we took major steps forward toward
achieving our objective of being "larger and mightier" than the
year before. While Rome was not
built in a day, or even a year, we are passionate about seeking –
and realizing – shareholder value and sustainability in every
possible way.
Next year, I look forward to writing once again with an update
on how we are doing by "punching above our weight" on our journey
to becoming a uranium company of major global significance.
Regards,
Mark S. Chalmers
President and CEO
About Energy Fuels: Energy Fuels is a leading integrated
US-based uranium mining company, supplying
U3O8 to major nuclear utilities. Its
corporate offices are in Denver,
Colorado, and all of its assets and employees are in the
western United States. Energy
Fuels holds three of America's key uranium production centers, the
White Mesa Mill in Utah, the
Nichols Ranch Processing Facility in Wyoming, and the Alta Mesa Project in
Texas. The White Mesa Mill is the
only conventional uranium mill operating in the U.S. today and has
a licensed capacity of over 8 million pounds of
U3O8 per year. The Nichols Ranch Processing
Facility is an ISR production center with a licensed capacity of 2
million pounds of U3O8 per year. Alta Mesa is an ISR production center currently
on care and maintenance. Energy Fuels also has the largest NI
43-101 compliant uranium resource portfolio in the U.S. among
producers, and uranium mining projects located in a number of
Western U.S. states, including one producing in situ recovery
project, mines on standby, and mineral properties in various stages
of permitting and development. The Company also produces vanadium
as a co-product of its uranium production from certain of its mines
on the Colorado Plateau, as market conditions warrant. The primary
trading market for Energy Fuels' common shares is the NYSE American
under the trading symbol "UUUU", and the Company's common shares
are also listed on the Toronto Stock Exchange under the trading
symbol "EFR". Energy Fuels' website is www.energyfuels.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This letter to shareholders 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: production capability, and
the Company's ability and readiness to re-start or expand any of
its existing projects to respond to any improvements in uranium
market conditions; any expectations regarding vanadium
opportunities, the Company's program for the recovery of
vanadium from pond solutions and vanadium purity; the
ability of the Company to secure any new sources of alternate feed
materials or other processing opportunities at the White Mesa Mill;
the strength of the Company's balance sheet; any expectations as to
cash flows at the White Mesa Mill; expected timelines for the
permitting and development of projects; the Company's expectations
as to longer term fundamentals in the market and price projections;
expectations to become or maintain its position as a leading
uranium company in the United
States; and the outcome of the Department of Commerce
Section 232 investigation, including whether or not the Secretary
of Commerce will make a recommendation to the President and the
nature of the recommendation; whether or not the President will act
on the recommendation and, if so, the nature of the action and
remedy; the expected benefits of the proposed remedies. 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 include risks associated with:
production capability, and the Company's ability and readiness to
re-start or expand any of its existing projects to respond to any
improvements in uranium market conditions; any expectations
regarding vanadium opportunities, the Company's program for
the recovery of vanadium from pond solutions and vanadium
purity; the ability of the Company to secure any new
sources of alternate feed materials or other processing
opportunities at the White Mesa Mill; the strength of the Company's
balance sheet; any expectations as to cash flows at the White Mesa
Mill; expected timelines for the permitting and development of
projects; the Company's expectations as to longer term fundamentals
in the market and price projections; expectations to become or
maintain its position as a leading uranium company in the United States; and the outcome of
the Department of Commerce Section 232 investigation, including
whether or not the Secretary of Commerce will make a recommendation
to the President and the nature of the recommendation; whether or
not the President will act on the recommendation and, if so, the
nature of the action and remedy; the expected benefits of the
proposed remedies; and the other factors described under the
caption "Risk Factors" in the Company's Annual Report on Form 10-K,
as amended, for the year ended December 31,
2018, which is available for review on EDGAR at
www.sec.gov/edgar.shtml, on SEDAR at www.sedar.com, and
on the Company's website at www.energyfuels.com.
Forward-looking statements contained herein are made as of the date
of this letter to shareholders, 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. The Company assumes no obligation to update the
information in this communication, except as otherwise required by
law.
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SOURCE Energy Fuels Inc.