Shares in Energy Fuels Inc (NYSEAMERICAN:UUUU) (TSE:EFR) headed north Monday as it revealed its White Mesa mill in Utah was producing its highest-purity V2O5 (vanadium pentoxide) to date, averaging around 99.6% due to updates at the facility last year.
Energy is currently selling this vanadium (as ferrovanadium) into the steel industry, and it continues to pursue opportunities to sell portions into speciality chemical and aerospace markets, potentially at a premium.
Energy reckons that up to four million pounds of recoverable V2O5 could lie in White Mesa's pond solutions and is currently being recovered at commercial rates of around 150,000 and 160,000 pounds of V2O5 per month.
Notably, this could increase to around 200,000 and 225,000 pounds per month in the warmer, dryer months of the year.
Also significant, current production rated are less than were originally budgeted, which is resulting in margins that exceed original expectations, even at today's vanadium pentoxide prices of around $13.88 per pound (after reaching a high of $17.38 per pound in February and early-March). Energy sees vanadium prices strengthening in the coming months.
The company also said in the statement that if production rates increase as expected, costs per pound would be expected to decrease, resulting in even more attractive margins, while if vanadium prices increase to recent levels, margins would also improve.
"Our campaign to recover vanadium from pond solutions at the White Mesa Mill is going very well," said Mark S. Chalmers, president and CEO of Energy Fuels.
"Product purities are higher than expected, production costs are lower than expected, and vanadium prices remain at high levels. We also have the ability to adjust our vanadium production very easily in response to changing market conditions. This production readiness and flexibility is a key attribute when dealing with minor metals like vanadium. It allows us to be able to produce or conserve our vanadium, as we see fit, in response to market volatility."
Also in today's statement, Energy said it had mined around 5,200 tons of material under the test-mining program at its 100%-owned La Sal Complex of uranium/vanadium mines.
Grades observed early in the campaign have averaged around 1.60% vanadium pentoxide and 0.19% U3O8 (uranium).
The firm believes here new mining methods being tested are likely to result in reduced costs, higher grades, and higher value for mined material.
Both the Pandora and La Sal mines are now ready to enter full production shortly following a positive commercial production decision.
Chalmers summed up: "We also believe we have shifted the paradigm for both mining and processing of uranium/vanadium deposits on the Colorado Plateau, including our fully permitted and developed mines at the La Sal Complex as well as two of our other fully permitted mines nearby.
"This will become even more important to Energy Fuels if the Trump Administration decides to help support domestic uranium mining through the ongoing Section 232 investigation into uranium imports. This could result in uranium sales contracts at prices that would support commencing full-scale production from these mines at current or lower vanadium prices. And, if vanadium prices rise further – which they could at any time – we will be in the enviable position of being able to fully capitalize on those higher prices almost immediately."
Shares in Energy Fuels rose around 4% in Toronto to $4.61 while in New York they advanced 4.8% at US$3.49.
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