LAKEWOOD, CO, Nov. 1, 2019
/CNW/ - Energy Fuels Inc. (NYSE American: UUUU; TSX: EFR)
("Energy Fuels" or the "Company") today reported its financial
results for the quarter ended September 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 September 30, 2019, the
Company had $41.1 million of working
capital, including $14.7 million in
cash, $7.8 million in marketable
securities, 500,000 pounds of uranium finished goods inventory, and
1,150,000 pounds of vanadium finished goods inventory.
- Vanadium production totaled 530,000 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 Q4-2019, subject to
continued successful recovery and suitable sales prices.
- Uranium production totaled 16,000 pounds of
U3O8 during the quarter.
- The Company did not complete any uranium sales during the
quarter.
- 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 to
capitalize on any future price increases in vanadium markets that
are often volatile.
- The Company had an operating loss of $8.8 million during the quarter, due in part to
an impairment to inventories of $2.3
million as a result of low uranium prices and a decrease in
vanadium prices during the quarter; as well as the decision to
limit uranium and vanadium sales during the quarter.
- 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." Following an apparent extension of
time to complete their report (a formal announcement was not made),
we understand the Working Group currently has until approximately
November 10, 2019 to present its
recommendations to the President. The Company intends to continue
supporting this initiative in Q4-2019 and believes it has the
potential to result in actions that could 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
ore 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 8,000 and 70,000
pounds of U3O8, or approximately $200,000 to $1.75
million at today's spot prices. Deliveries began in
late-June 2019, and to date total
4,600 tons of material out of an expected 10,000 to 50,000 tons of
material. 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.
- As previously announced, 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 Q3-2019, Energy Fuels continued to be the 'driving
force' within the U.S. uranium mining industry, as we continue to
encourage the U.S. government and President Trump to support a
renaissance in U.S. uranium production. We were pleased that on
July 12, 2019, the President created
the U.S. Nuclear Fuel Working Group, comprised of 13 Cabinet-level
and other major government agencies, and directed them to develop
recommendations on 'reviving and expanding' domestic nuclear fuel
production, including uranium mining. While the original deadline
for the Working Group to provide those recommendations was
apparently extended from October 10,
2019 to approximately November 10,
2019, we remain confident of a positive outcome for the
Company and our industry. Because Energy Fuels is currently the
largest U.S. uranium producer, with the most operational
production, licensed capacity, and in-ground uranium resources
among producers in the U.S., we expect to be a significant
beneficiary of any action taken by the U.S. government. I look
forward to corresponding with shareholders as we learn more from
the U.S. government on the future of U.S. uranium production.
"As previously announced, we are continuing to fulfill a new
processing agreement at the White Mesa Mill, under which we are
assisting in the cleanup of a formerly producing uranium mine in
New Mexico. While we expect to
generate significant incremental income from this project, perhaps
more importantly, we are successfully demonstrating to the U.S.
Environmental Protection Agency ("EPA") and the Navajo Nation that
we can be their partner in the cleanup of Cold War era abandoned
uranium mines in the Four Corners Region of the U.S. We look
forward to potentially seeing 'trucks rolling' in the not too
distant future.
"In addition, we continue to be very happy with our vanadium
production campaign; except prices continued to fall during the
quarter. At the current time, we are mainly building inventory for
later sale, while purities and recoveries remain high. We are also
continuing discussions to potentially sell our product at premium
pricing to customers who require higher purities. If vanadium
prices do not make a recovery in the next few months, we will
evaluate shutting down production to save this valuable asset for
later recovery.
"Finally, during 2018 and 2019, we selectively invested in a
number of critical path items at our uranium production facilities
and mines in order to significantly enhance their production
readiness. If and when the 'starting gun goes off', either due to
the President acting on the recommendations of the U.S. Nuclear
Fuel Working Group or generally improving uranium market
conditions, we believe we are very well positioned to quickly and
cost-effectively increase production and capture those higher
prices. Since 2006, uranium production facilities currently owned
by Energy Fuels have supplied roughly 35% of all uranium produced
in the U.S., putting us second only to Cameco during this period,
who produced about 50%. Our people and facilities have
demonstrated, time and again, that we can respond to rapidly
evolving market conditions, most recently when we commenced
vanadium production within just a few months of a production
decision. We look forward to once again demonstrating our ability
to execute when the U.S. uranium market rebounds."
Selected Summary Financial Information:
In thousands, except
per share data
|
Three months
ended
September 30, 2019
|
|
Three months
ended
September 30, 2018
|
Results of
Operations:
|
|
|
|
Total
revenues
|
$
|
423
|
|
$
|
451
|
Operating
loss
|
|
(8,832)
|
|
|
(10,215)
|
Net loss attributable
to the company
|
|
(6,840)
|
|
|
(13,812)
|
Basic and diluted loss
per share
|
|
(0.07)
|
|
|
(0.16)
|
|
|
|
|
|
As
of
|
|
As
of
|
In
thousands
|
September 30,
2019
|
|
December 31,
2018
|
Financial
Position:
|
|
|
|
Working
capital
|
$
|
41,059
|
|
$
|
52,000
|
Property, plant and
equipment
|
|
27,089
|
|
|
29,843
|
Mineral
properties
|
|
83,539
|
|
|
83,539
|
Total
assets
|
|
181,372
|
|
|
196,766
|
Total long-term
liabilities
|
|
40,615
|
|
|
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 from pond solutions at its White Mesa Mill
through 2019 and to build its vanadium inventory at current price
levels, which are close to the Company's incremental cost of
producing vanadium.
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 U.S. government, 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 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 efforts to receive U.S. government support for domestic uranium
production and will evaluate additional acquisition and disposition
opportunities that may arise.
Extraction and Recovery Activities Overview
During the nine months ended September
30, 2019, the Company recovered approximately 56,000 pounds
of U3O8, which currently places the Company
within its published guidance of 50,000 to 125,000 pounds of
U3O8 for the year. The Company also recovered
approximately 1,300,000 pounds of high-purity vanadium pentoxide
("V2O5" or "black flake") during the nine
months ended September 30, 2019 and
expects to continue to recover approximately 160,000 to 200,000
pounds of V2O5 per month while vanadium recovery operations
continue.
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, if prices
rise significantly above current levels, or maintained in
inventory.
ISR Activities
During the nine months ended September
30, 2019, we extracted and recovered approximately 56,000
pounds of U3O8 from the Nichols Ranch
Project, which is within the Company's published guidance of 50,000
to 70,000 pounds of U3O8 from Nichols Ranch
for the year.
As of September 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 U.S. government support or otherwise, the Company expects
to place this project on standby in early 2020.
The Company expects to continue to keep the Alta Mesa 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 nine months ended September
30, 2019, the Company produced 1,300,000 pounds of
high-purity V2O5 from its Mill Pond Return
program, as well as captured 30,000 pounds of
U3O8 in the mill circuit (which has not been
packaged) through September 19, 2019.
The Company is currently producing at full production rates of
160,000 to 200,000 pounds of V2O5 per month.
On September 19, 2019, the Company
ceased uranium recovery operations from Pond Returns in order to
lower its cost of production for vanadium. The Company expects to
continue to recover vanadium at these rates during the fourth
quarter of 2019, taking into account seasonal considerations.
Despite currently low vanadium prices, the Company plans to
continue this program, rather than place it on standby at this
time, for three reasons. First, the Company believes vanadium
prices are likely to rise in the future and the Company will be
well-positioned to take advantage of any future price increases if
it has readily saleable inventory. Second, the Company's vanadium
recovery process is running smoothly, and it makes sense to
continue producing efficiently and at the lowest possible cost
under current conditions. Finally, maintaining vanadium production
will allow the Mill to retain its current highly skilled workforce,
which will be able to switch over to uranium production if the
Company ramps up its uranium production in response to U.S.
government support for domestic uranium production or improved
market conditions. The Company will continue to monitor its
vanadium recoveries, which are expected to decrease during the
colder winter months, its costs of production, current and expected
vanadium prices, and its uranium production schedule, and may vary
these plans, including shutting down its vanadium production, as
circumstances warrant. If vanadium prices increase, or other
opportunities arise, the Company may sell all or a portion of its
vanadium inventory.
If vanadium recovery operations from the current Mill Pond
Return program are put on standby during Q4-2019, 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 nine months ended September
30, 2019, the Company completed 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 test-mining 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, Beaver Shaft 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 fourth quarter of 2019.
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
continue licensing and permitting 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 intends to maintain required
permits at the Company's conventional projects, including the Sheep
Mountain Project and the Daneros Project. In addition, the Company
intends to continue evaluation of 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 nine months ended September
30, 2019, the Company completed $66,000 of uranium sales. The Company currently
has no remaining contracts and is therefore fully unhedged to
future uranium price increases.
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 nine months ended
September 30, 2019, the Company
completed sales of 152,000 pounds of vanadium at an average price
of $12.88 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.
Unites States Nuclear Fuel Working Group
As described above, the deadline for the Working Group to make
recommendations to the President originally set for October 10, 2019 has apparently been extended for
30 days. The Company looks forward to learning the recommendations,
and believes this initiative has the potential to result in actions
that could provide meaningful support to the uranium mining
industry. 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.
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 are
not limited to, statements with respect to: production and sales
forecasts; costs of production; 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 Company's ability to respond to rapidly evolving
market conditions; 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; 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 Company's ability to
respond to rapidly evolving market conditions; 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.