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Energy Fuels dramatically narrows 1Q loss, and reveals robust marketable uranium, vanadium inventory

CEO Mark Chalmers said the company’s cash on hand and total inventory set it apart

Uranium
During the quarter, Energy Fuels recovered roughly 5,900 pounds of uranium and 67,000 pounds of high-purity vanadium pentoxide

Energy Fuels Inc (NYSEAMERICAN:UUUU) posted first quarter results after the close on Friday that revealed a narrowing loss and a robust inventory of uranium and vanadium to boost the company's balance sheet. 

The largest producer of uranium in the US reported a net loss of $5.6 million, $0.05 per share, for the three months ended March 31, a more than 50% reduction year over year from its $12.1 million, $0.13 per share, loss in the first quarter of 2019.

During the quarter, Energy Fuels recovered roughly 5,900 pounds of uranium and 67,000 pounds of high-purity vanadium pentoxide. Looking ahead, the company said it still expects to recover between 125,000 and 175,000 pounds of uranium in 2020.

READ: Energy Fuels applauds President's Nuclear Fuel Working Group for developing strategy to restore US nuclear energy leadership

At the end of March, Energy Fuels had $26 million in cash and marketable securities plues $22.4 million in concentrate inventory.

CEO Mark Chalmers said the company’s cash on hand and total inventory set it apart.

"[A] major way Energy Fuels is differentiated from our peers is in the strength of our balance sheet,” Chalmers said. “We ended Q1 2020 with over $48.4 million of cash, marketable securities, and uranium and vanadium inventories.

“At the end of 2020, we anticipate having nearly 700,000 pounds of uranium in inventory, which we hope to be able to sell to the US government, or into otherwise improving uranium markets, at prices much higher than those we see today. No other US uranium miner has Energy Fuels' balance sheet or the leverage to improving prices of our inventories."

To that end, the company has opted not to enter into any uranium sales this year.

Energy Fuels has also frequently praised the government’s efforts to boost domestic uranium production. 

“We received excellent news from the US government in February when President Trump published his budget for fiscal year 2021, which seeks appropriations totaling $1.5 billion over the next 10 years to create a new strategic US uranium reserve,” Chalmers said. “Then, on April 23, 2020, the long-awaited report of the Nuclear Fuel Working Group (NFWG) was released, which demonstrated the US government's strong commitment to restoring US nuclear energy leadership.

“Energy Fuels has taken the leading role in obtaining the US government's support for US uranium miners, spending more time and money on this initiative than any other US uranium miner. And, this makes sense, since we have been the largest US uranium producer since 2017, our assets have produced 34% of all US uranium since 2006, and we have more proven facilities, more permitted resources, and more production capacity than any other US miner.”

In addition to uranium, Energy Fuels is getting in on the rare earth elements (REEs) market with its White Mesa Mill, the only conventional uranium mill operating in the US today. The company believes the mine can be used to process certain REE ores and said that multiple companies, as well as the US government, have inquired about its capabilities.

"If you have followed Energy Fuels' story for any length of time, you also know that we are entrepreneurial, and we are always seeking to leverage our assets and expertise toward other business opportunities related to our core uranium business, including vanadium production, alternate feed materials processing, and land cleanup work,” Chalmers said.

“Many REE ore streams contain recoverable quantities of uranium, and, from health, safety, and environmental protection standpoints, they are very similar to the uranium ore streams the Mill has handled responsibly over the past 40 years. In addition, one of the main bottlenecks in US REE production is the availability of a processing facility capable of handling the uranium and thorium, since permitting and constructing a new facility can take many years, be victim to major activist opposition, and cost hundreds of millions of dollars. Because the mill is already licensed and constructed, many of these hurdles have already been cleared.”

Nobe reiterates Market Perform

In response to the results, Noble issued an analyst note maintaining its market perform rating on the uranium producer despite lower-than-expected revenue. 

The firm shares Energy Fuels' optimism in President Trump's $150 budget proposal to fund a strategic uranium reserve.

"We have revised our 2020 estimate to a loss of ($0.23) per share from ($0.15) per share to reflect, in part, lower revenue," Noble wrote. "It is difficult to forecast forward earnings given a wide range of outcomes based on potential actions arising from NFWG recommendations which will also have a bearing on the company's plans.

"While the budget proposal to fund a uranium reserve is encouraging, more details are needed to assess the financial impact to Energy Fuels.

—A previous version of this story incorrectly referred to these results as fourth quarter figures—

Contact Andrew Kessel at [email protected] 

Follow him on Twitter @andrew_kessel

Quick facts: Energy Fuels Inc.

Price: 2.22 CAD

TSX:EFR
Market: TSX
Market Cap: $260.9 m
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Energy Fuels to make a play for the rare earth elements industry

Energy Fuels Inc (NYSEAMERICAN:UUUU) (TSE:EFR) CEO Mark Chalmers tells Proactive the uranium producer is planning to enter the rare earth elements industry. Chalmers explains how the company's fully-licensed White Mesa Mill, the only uranium and vanadium mill in operation in the US today, can...

on 17/4/20

4 min read