LAKEWOOD, CO, Aug. 2, 2019 /CNW/ - Energy Fuels Inc.
(NYSE American: UUUU; TSX: EFR) ("Energy Fuels" or the
"Company") today reported its financial results for the quarter
ended June 30, 2019. The Company's quarterly report on Form
10-Q has been filed with the U.S. Securities and Exchange
Commission ("SEC") and may be viewed on the Electronic Document
Gathering and Retrieval System ("EDGAR") at
www.sec.gov/edgar.shtml, on the System for Electronic Document
Analysis and Retrieval ("SEDAR") at www.sedar.com, and on the
Company's website at www.energyfuels.com. Unless noted otherwise,
all dollar amounts are in U.S. dollars.
Highlights:
- At June 30, 2019, the Company had $42.6 million of working capital, including
$16.6 million in cash, $11.4 million in marketable securities, 485,000
pounds of finished uranium goods inventory, and 610,000 pounds of
finished vanadium goods inventory.
- Vanadium production totaled 437,000 pounds of
V2O5 for the quarter, and the Company expects
to continue to produce 160,000 to 200,000 pounds of
V2O5 per month through Q3-2019, subject to
continued successful recovery and suitable sales prices.
- Uranium production totaled 19,000 pounds of
U3O8 during the quarter.
- The Company completed no uranium sales of any significance
during the quarter and continues to add to uranium
inventories.
- The Company completed 98,000 pounds of vanadium sales into the
steel industry during the quarter at an average price of
$7.87 per pound of
V2O5, following conversion of the Company's
V2O5 product into ferrovanadium. At the
current time, the Company is selling only small quantities of
vanadium, while mainly focusing on building
V2O5 inventory for sale in the future as the
Company expects prices to increase.
- The Company had an operating loss of $11.5 million during the quarter, due primarily
to an impairment to inventories of $4.9
million as a result of low uranium prices and a decrease in
vanadium prices during the quarter; the decision not to sell any
uranium product during the quarter; and the decision to retain most
of the Company's vanadium inventory for future sale.
- In April 2019, the Company
completed a test mining program at its La Sal Complex and continued
further operational readiness activities based on these encouraging
results. The Company expects to continue these activities through
Q3-2019. As of June 30, 2019, the Company had mined
approximately 11,000 tons of mineralized material with an average
grade of 1.472% V2O5 and 0.192%
U3O8 from previously mined areas. While these
numbers are not intended to represent the basis of a new resource
estimate, the Company believes that the new mining methods that
were tested are likely to result in reduced costs, higher grades,
and higher value for mined material compared to historic mining
methods, due to significantly improved grade control at the
mine.
- On July 12, 2019, President
Donald J. Trump issued a
Presidential Memorandum pursuant to Section 232 of the Trade
Expansion Act of 1962 (as amended), ordering the creation of the
U.S. Nuclear Fuel Working Group (the "Working Group") to "examine
the current state of domestic nuclear fuel production to
reinvigorate the entire nuclear fuel supply chain, consistent with
United States national security
and nonproliferation goals." The Working Group has 90 days from
July 12, 2019 to complete its
recommendations to the President. The Company intends to continue
supporting this initiative in Q3-2019 and believes it has the
potential to result in actions that provide meaningful support to
the U.S. uranium mining industry.
- On July 13, 2019, the Company
announced that it had entered into a new processing agreement,
whereby the owner of a formerly producing uranium mine in
New Mexico will deliver cleanup
material from the mine for processing and recovery of uranium at
the Company's White Mesa Mill. Revenues payable to the Company are
expected to be between $700,000 and
$3.5 million. In addition, the
Company will retain any uranium recovered from the material for its
own account, which is expected to total between 10,000 and 70,000
pounds of U3O8, or approximately $250,000 to $1.75
million at today's spot prices. Deliveries began in
late-June 2019. The Company has
proposed similar services to assist in the cleanup of Cold War era
abandoned uranium mines on the Navajo Nation and other lands.
- On August 1, 2019, the Board of
Directors (the "Board") of the Company appointed Mr. Alex G. Morrison to serve as a director.
Mark S. Chalmers, Energy
Fuels' President and CEO stated:
"During Q2-2019, Energy Fuels continued to make important
progress on a number of initiatives that have the potential to
significantly improve the outlook for both our Company and the U.S.
uranium mining industry as a whole.
"First, we were pleased that on July 12,
2019, President Donald Trump
took meaningful action that has the potential to revive the U.S.
uranium industry. In early 2018, we filed a Section 232 Petition
asking the Administration to investigate uranium imports into the
U.S., thereby embarking on a bold initiative to 'make American
uranium great again.' We have truly come a long way since we first
filed the Petition, and we believe this initiative has been a
success, as the President recognized the relationship between
domestic uranium mining and national security. Our issue now has
the attention of the highest levels of the U.S. Government -- and
probably the highest focus in several decades -- and we look
forward to aggressively seeing this through to the end. I look
forward to corresponding with shareholders in the coming months as
the U.S. Nuclear Fuel Working Group completes its important work to
'reinvigorate the entire nuclear fuel supply chain,' which includes
uranium mining.
"However, Energy Fuels is much more than Section 232. We
recently announced the completion of a new processing agreement,
under which we will assist in the cleanup of a formerly producing
mine in New Mexico. We recently
began taking deliveries of cleanup material at our White Mesa Mill,
and this initiative is expected to result in a total of
approximately $1.0 to $4.25 million of value for the Company. On a
broader perspective, this is exactly the type of work we have
proposed to the U.S. Environmental Protection Agency ("EPA") to
assist in the cleanup of Cold War era abandoned uranium mines on
the Navajo Nation and other nearby lands, with the EPA holding over
$1.5 billion set aside in trust for
those purposes. It is our hope that this will be a demonstration of
the White Mesa Mill's capabilities, professionalism and responsible
operations. In addition, local Native American communities will see
equipment removing contaminated soils from nearby lands, and trucks
hauling it away, thereby having the potential of creating momentum
to begin the large-scale cleanup of other sites in the region.
"We are also very happy with our vanadium production campaign;
except prices failed to cooperate during the quarter. We brought
our vanadium product to market very quickly and achieved extremely
high purities. But, as it turned out, it wasn't quick enough. At
the current time, we expect to continue producing vanadium through
Q3-2019, due in large part to seasonal considerations, while only
making selective sales. We are also moving forward with discussions
to potentially sell our product at premium pricing to customers who
require higher purities. If vanadium prices do not make a dramatic
recovery in the next few months, we expect to build inventory to
capture future price spikes and then shut down production to save
this valuable asset for later recovery.
"Finally, I'd like to welcome Mr. Alex
Morrison to the Board of the Company. Alex is an experienced
and accomplished mining professional with many decades of
experience with public companies both large and small, with a
particular focus on finance, audit, and governance, including many
years with PriceWaterhouseCoopers."
Selected Summary Financial Information:
|
|
|
|
|
$000, except per
share data
|
|
Three months
ended
June 30, 2019
|
|
Three months
ended
June 30, 2018
|
Results of
Operations:
|
|
|
Total
revenues
|
|
$
|
3,071
|
|
$
|
26,973
|
Gross profit
(loss)
|
|
(11,504)
|
|
7,120
|
Net income (loss)
attributable to the company
|
|
(9,312)
|
|
7,149
|
Basic earnings (loss)
per share
|
|
(0.10)
|
|
0.09
|
Diluted earnings (loss)
per share
|
|
(0.10)
|
|
0.08
|
|
|
|
|
|
|
|
|
As at June
30,
|
|
As at December
31,
|
'$000's
|
|
2019
|
|
2018
|
Financial
Position:
|
|
|
|
|
|
Working
capital
|
|
$
|
42,600
|
|
$
|
52,000
|
Property, plant and
equipment
|
|
28,193
|
|
29,843
|
Mineral
properties
|
|
83,539
|
|
83,539
|
Total assets
|
|
183,592
|
|
196,766
|
Total long-term
liabilities
|
|
43,588
|
|
43,059
|
Overview
Operations and Sales Outlook Overview
The Company plans to extract and recover uranium from its
Nichols Ranch Project in 2019 at reduced levels as its existing
wellfields become depleted. This will continue until such time as
the incremental cost of production exceeds the value of the pounds
recovered. In addition, the Company expects to continue to extract
and recover vanadium and uranium from pond solutions at its White
Mesa Mill through September 2019,
assuming vanadium prices remain at current levels or higher. If
vanadium prices improve significantly from existing prices, the
Company will evaluate continuing vanadium production beyond that
time.
As a result of current low uranium market conditions, both ISR
and conventional uranium recovery are being maintained at reduced
levels until such time as market conditions improve sufficiently,
either as a result of potential relief from the Working Group study
and recommendations, or through improved uranium market
fundamentals. Until such time as improvements in uranium market
conditions are observed or suitable sales contracts can be entered
into, the Company expects to defer further wellfield development at
its Nichols Ranch Project. In addition, the Company will keep the
Alta Mesa ISR Project and its conventional mining properties on
standby. The Company is also seeking new sources of revenue,
including new sources of Alternate Feed Materials and new fee
processing opportunities at the Mill that can be processed under
existing market conditions, largely unrelated to uranium sales
prices. The Company will also continue its support of the Working
Group and will evaluate additional acquisition and disposition
opportunities that may arise.
Extraction and Recovery Activities Overview
During the six months ended June 30, 2019, the Company
recovered approximately 40,000 pounds of U3O8. In the year ending
December 31, 2019, the Company expects to recover
approximately 50,000 to 125,000 pounds of U3O8. The Company also
recovered approximately 760,000 pounds of high-purity vanadium
pentoxide ("V2O5" or "black flake") during the six months ended
June 30, 2019 and expects to continue to recover approximately
160,000 to 200,000 pounds of V2O5 per month during the third
quarter of 2019, at which time the Company expects to place
vanadium recovery operations at the Mill on standby, pending
improvements in vanadium prices.
The Company has entered into no uranium sales commitments for
2019 thus far. Therefore, all 2019 uranium production is expected
to be added to existing inventories. All V2O5 production is
expected to be sold on the spot market or maintained in
inventory.
ISR Activities
During the six months ended June 30, 2019, we extracted and
recovered approximately 40,000 pounds of U3O8 from the Nichols
Ranch Project. In the year ending December 31, 2019, the
Company expects to produce approximately 50,000 to 70,000 pounds of
U3O8 from Nichols Ranch.
As of June 30, 2019, the Nichols Ranch wellfields had nine
header houses extracting uranium. Until such time as improvement in
uranium market conditions is observed or suitable sales contracts
can be procured, the Company intends to defer development of
further header houses at its Nichols Ranch Project. The Company
currently holds 34 fully-permitted, undeveloped wellfields at
Nichols Ranch, including four additional wellfields at the Nichols
Ranch wellfields, 22 wellfields at the adjacent Jane Dough
wellfields, and eight wellfields at the Hank Project, which is
fully permitted to be constructed as a satellite facility to the
Nichols Ranch Plant. The Company currently expects to continue
running the Nichols Ranch Project through the end of 2019. However,
if market conditions do not improve significantly by that time as a
result of the Working Group recommendations or otherwise, the
Company expects to place this project on standby in early 2020.
The Company expects to continue to keep the Alta Mesa ISR
Project on standby until such time as improvements in uranium
market conditions are observed or suitable sales contracts can be
procured.
Conventional Activities
Conventional Extraction and Recovery Activities
During the six months ended June 30, 2019, the Company
produced 760,000 pounds of high-purity V2O5 from its Mill Pond
Return program, as well as captured 7,700 pounds of
U3O8 in the mill circuit. The Company is
currently producing at full production rates of 160,000 to 200,000
pounds of V2O5 per month and approximately
6,500 pounds of U3O8 per month under this
program. The Company expects to continue to recover vanadium and
uranium at these rates during the third quarter of 2019, at which
time the Company expects to place this program on standby, pending
improvements in vanadium prices and taking into account seasonal
considerations. Despite currently low vanadium prices, the Company
plans to continue this program through the end of the third quarter
of 2019, rather than place it on standby at this time, for two
reasons: first, vanadium recoveries from Pond Returns are highest
in the warm summer months, due to the higher concentrations of
dissolved vanadium in the solutions as a result of the normal
evaporative process during the warm summer months and other
chemical reasons, thereby enabling us to produce vanadium at the
lowest cost possible, with the marginal cost of production not
including fixed Mill overhead currently at or near spot
V2O5 prices; and secondly, the Company
believes the price of vanadium is likely to increase at some point
in the future, and running the program through the end of the third
quarter will provide the Company with a significant quantity of
V2O5 produced that can be sold
opportunistically as future price volatility occurs. One of the
benefits of the Mill's vanadium Pond Return program is that it can
be stopped and restarted relatively quickly in response to changes
in vanadium market conditions.
If vanadium and uranium recovery operations from the current
Mill Pond Return program are put on standby at the end of the third
quarter of 2019, as expected under current vanadium pricing
conditions, the Company plans to utilize the resulting available
Mill capacity by processing stockpiled Alternate Feed Materials in
the fourth quarter of 2019.
Conventional Standby, Permitting and Evaluation Activities
During the six months ended June 30, 2019, the Company
continued its test-mining and refurbishment program targeting
vanadium at the fully-permitted La Sal Complex located on the
Colorado Plateau. We completed the test-mining by the end of
April 2019, and continued to pursue
enhanced operational readiness targeting future commercial
production. The goal of the program was to evaluate different
mining approaches in previously mined-out areas that selectively
target high-grade vanadium zones, thereby potentially increasing
productivity and mined grades for vanadium and decreasing mining
costs per pound of V2O5 and U3O8. During this program, the Company
refurbished the La Sal and Pandora mines within the La Sal Complex
and extracted approximately 11,000 tons of mineralized material.
The Company expects to continue readiness activities through the
third quarter of 2019. In addition, the Company completed a surface
and underground drilling program at the La Sal Complex during the
quarter ended June 30, 2019 in order
to potentially expand the known uranium and/or vanadium resources
available to mine.
During 2019, the Company plans to continue carrying out
engineering, metallurgical testing, procurement and construction
management activities at its Canyon Project, including additional
bench and pilot plant scale metallurgical test work of the
uranium/copper mineralization, and to continue pursuing any
additional permitting actions that may be required to potentially
recover copper at the White Mesa Mill. The timing of the Company's
plans to extract and process mineralized materials from this
project will be based on the results of this additional evaluation
work, along with market conditions, available financing, sales
requirements, and/or permits required for copper recovery at the
Mill.
The Company is selectively advancing certain permits at its
other major conventional uranium projects. The Company plans to
accelerate the licensing and permitting of the Roca Honda Project,
a large, high-grade conventional project in New Mexico, with the Record of Decision
currently scheduled to be completed in 2021. The Company will also
maintain required permits at the Company's conventional projects,
including the Sheep Mountain Project and the Daneros Project. In
addition, the Company will continue to evaluate the Bullfrog
Property at its Henry Mountains Project. Expenditures for certain
of these projects have been adjusted to coincide with expected
dates of price recoveries based on the Company's forecasts. All of
these projects serve as important pipeline assets for the Company's
future conventional production capabilities, as market conditions
warrant.
Sales
During the six months ended June 30, 2019, the Company
completed no uranium sales of significance. The Company currently
has no remaining contracts and is therefore fully unhedged to
future uranium price increases.
The Company continued V2O5 shipments during the six months ended
June 30, 2019 with initial quantities being allocated for
conversion to ferrovanadium ("FeV"), which was sold into spot
metallurgical markets on a selective basis. At the current time,
the Company is selling only small quantities of vanadium, while
mainly focusing on building V2O5 inventory for sale in the future
as prices are expected to increase. During the six months ended
June 30, 2019, the Company completed sales of 150,000 pounds
of vanadium at an average price of $12.83 per pound. The Company expects to continue
to sell finished vanadium product when justified into the
metallurgical industry, as well as other markets that demand a
higher purity product, including the aerospace, chemical, and
potentially the vanadium battery industries. The Company expects to
sell to a diverse group of customers in order to maximize revenues
and profits. The Company is continuing to produce a high-purity
vanadium product of 99.6%-99.7% V2O5. The Company believes there
may be opportunities to sell certain quantities of this high-purity
material at a premium to reported spot prices. The Company may also
retain vanadium product in inventory for future sale, depending on
vanadium spot prices at the time of production.
The Company also continues to pursue new sources of revenue,
including additional Alternate Feed Materials and other sources of
feed for the White Mesa Mill.
Trade Petition and United States Nuclear Fuel Working
Group
The Company looks forward to the United States Nuclear Fuel
Working Group's study and recommendations. The Company believes
this initiative has the potential to result in actions that could
provide meaningful support to the uranium mining industry,
including all or some of the remedies proposed in the Company's
Petition. It should be noted, however, that there can be no
certainty of the outcome of the Working Group's study and
recommendations. No action could be taken or remedies granted, and
any actions taken may not result in a meaningful or material remedy
to the uranium mining industry. Therefore, the outcome of this
process is uncertain.
Appointment of Alex G.
Morrison as Director
On August 1, 2019, the Board of
Directors (the "Board") of the Company appointed Mr. Alex G. Morrison to serve as a director of the
Company pursuant to the Board's power to increase the size of the
Board by up to one-third in number between annual meetings of
shareholders. Mr. Morrison is an accomplished mining professional
with strong management, technical, governance and financial skills
in the precious and base metals industries. He also has significant
hands-on experience in financial reporting, capital raising, audit,
and deal-making. He is currently a board member of Taseko Mines
Ltd, Gold Resources Corporation, and Gold Standard Ventures. He
previously served as a director for Pershing Gold Corporation and
Detour Gold Corporation. From 2007 to 2010, Mr. Morrison served as
Vice President and Chief Financial Officer for Franco-Nevada
Corporation, and from 2002 to 2007, he served for Newmont Mining
Corporation as Vice President, Information Technology, Vice
President, Operations Services, Group Executive, Operations
Services, and Group Executive, Internal Audit. Mr. Morrison also
has 13 years of experience with PriceWaterhouseCoopers, where he
provided business advisory, financial audit, and operational audit
services to a diverse group of mining clients.
Mark S. Chalmers, P.E., of Energy Fuels, is a
Qualified Person as defined by Canadian National Instrument 43-101
and has reviewed and approved the technical disclosure contained in
this news release.
About Energy Fuels: Energy Fuels is a leading
U.S.-based uranium mining company, supplying U3O8 to major nuclear
utilities. The Company also produces vanadium from certain of its
projects, as market conditions warrant. Its corporate offices are
in Lakewood, Colorado near
Denver, and all of its assets and
employees are in the United
States. Energy Fuels holds three of America's key uranium
production centers: the White Mesa Mill in Utah, the Nichols Ranch in-situ recovery
("ISR") Project in Wyoming, and
the Alta Mesa ISR Project in Texas. The White Mesa Mill is the only
conventional uranium mill operating in the U.S. today, has a
licensed capacity of over 8 million pounds of U3O8 per year, and
has the ability to produce vanadium when market conditions warrant.
The Nichols Ranch ISR Project is in operation and has a licensed
capacity of 2 million pounds of U3O8 per year. The Alta Mesa ISR
Project is currently on standby. In addition to the above
production facilities, Energy Fuels also has one of the largest NI
43-101 compliant uranium resource portfolios in the U.S. and
several uranium and uranium/vanadium mining projects on standby and
in various stages of permitting and development. 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 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: production and sales
forecasts; costs of production; scalability, 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,
or the Company's ability to sell any of its vanadium product at a
premium to spot prices or otherwise; the ability to quickly and
inexpensively adjust vanadium production in response to evolving
market conditions; the ability to generate cash flows during
periods of elevated vanadium prices; the expected results from the
vanadium test-mining program; the ability of the Company to secure
any new sources of alternate feed materials or other processing
opportunities 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; the outcome of the U.S. Nuclear Fuel Working Group
study, including the nature of any recommendations by the Working
Group to the President of the United
States; whether or not the President will act on any such
recommendations and, if so, the nature of the action and remedy;
and the expected benefits of any such 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," "budgets," "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 and sales forecasts; costs of production; scalability,
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, or the Company's ability to sell any of its
vanadium product at a premium to spot prices or otherwise; the
ability to quickly and inexpensively adjust vanadium production in
response to evolving market conditions; the ability to generate
cash flows during periods of elevated vanadium prices; the expected
results from the vanadium test-mining program; the ability of the
Company to secure any new sources of alternate feed materials or
other processing opportunities 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; the outcome of the U.S.
Nuclear Fuel Working Group study, including the nature of any
recommendations by the Working Group to the President of
the United States; whether or not
the President will act on any such recommendations and, if so, the
nature of the action and remedy; the expected benefits of any such
remedies; and the other factors described under the caption "Risk
Factors" in the Company's most recently filed Annual Report on Form
10-K, 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 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. 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.