Energy Fuels Announces Q3-2016 Results

- November 3rd, 2016

LAKEWOOD, CO, Nov. 3, 2016 /CNW/ – Energy Fuels Inc. (TSX:EFR,NYSEMKT:UUUU), today reported its financial results for the quarter ended September 30, 2016.

LAKEWOOD, CO, Nov. 3, 2016 /CNW/ – Energy Fuels Inc. (TSX:EFR,NYSEMKT:UUUU), today reported its financial results for the quarter ended September 30, 2016.  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 US dollars.
Financial and Operational Highlights:

  • $8.7 million of total revenue was realized by the Company.
  • Gross Profit of $3.0 million from mining and milling operations was realized by the Company, resulting in a 34% Gross Profit margin.
  • 150,000 pounds of U3O8 sales were completed by the Company pursuant to a long-term contract at an average realized price of $58.00 per pound.
  • The Company recovered a total of 350,000 pounds of U3O8, during the quarter including 90,000 pounds from Nichols Ranch and 260,000 pounds from conventional sources.
  • At September 30, 2016, the Company had $30.6 million of working capital, including cash and cash equivalents of $17.5 millionand approximately 570,000 pounds of uranium concentrate inventory.
  • A net loss of $8.2 million was realized by the Company, including a $1.4 million impairment of inventory and $6.3 million of development, permitting, and land holding costs primarily related to wellfield construction at the Nichols Ranch ISR Project and continued shaft-sinking and evaluation at the Canyon Project.
  • On August 2, 2016, the Company announced a significant maiden resource estimate for its Alta Mesa ISR Project (“Alta Mesa”) in South Texas, in a technical report prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).  According to the technical report, Alta Mesa contains 1.6 million tons of Measured and Indicated Mineral Resources with an average grade of 0.111% eU3O8 containing 3.6 million pounds of uranium, along with 7.0 million tons of Inferred Mineral Resources with an average grade of 0.121% eU3O8 containing 16.8 million pounds of uranium.  Alta Mesa includes a fully-licensed and constructed ISR processing facility which is currently on care and maintenance.
  • The Company has moved 300,000 pounds of contract deliveries previously scheduled for 2017 to November 15, 2016.  As a result, the Company is now expected to complete 850,000 pounds of contract deliveries during FY-2016 and 320,000 pounds of long term contract deliveries during FY-2017.  In consideration for moving these contract deliveries, the Company provided the customer with a small discount, which will be satisfied by the Company delivering additional uranium to this customer priced at the published October 2016 month-end spot uranium price.
  • The Company is also under contract to sell 200,000 pounds of uranium on December 1, 2016.  The pricing for this sale will be based on a weekly average of the published spot uranium prices for the 5 weeks prior to the delivery.
  • The Company is continuing to pursue significant cost cutting initiatives, including a reduction in scope of certain development initiatives, the sale or abandonment of certain non-core properties and the sale of excess mining equipment and other assets.  In addition, at its meeting on November 3, 2016, the Board of Directors decided to reduce their total compensation by 20% and receive one-third of their compensation in cash and two-thirds in restricted share units, thereby resulting in a 33% total reduction in cash compensation.

Project Development Highlights:

  • Shaft-sinking and evaluation activities continue at the Canyon Project.  The shaft, which is expected to be constructed to a total depth of 1,470 feet, is currently at a depth of approximately 1,250 feet.  The underground core and percussion drilling program to further evaluate the Canyon deposit continues.
  • On August 18, 2016, the Company reported that it had intercepted several large and high-grade areas of uranium mineralization within the Company’s Canyon Mine, including 8.5-feet of mineralization with an average grade of 6.88% eU3O8, 48.0-feet of mineralization with an average grade of 1.02% eU3O8, and 35-feet of mineralization with an average grade of 1.39% eU3O8.
  • On October 27, 2016, the Company reported that it had discovered an extensive system of high-grade copper mineralization within the Company’s Canyon Mine, with exploration results to date, based on five core holes representing 313 feet of total interception length, averaging 8.75% Cu and one intercept hitting five-feet of 31.69% Cu.  As a result, the Company has expanded the current evaluation of the Canyon Mine to include copper and other minerals.  The Company expects to complete a new resource estimate for the Canyon Mine in Q1-2017.
  • On August 15, 2016, the Company reported that it has intercepted several large and high-grade areas of mineralization within the Company’s Nichols Ranch ISR Project, including one hole with 5-feet of mineralization with an average grade of 2.4% eU3O8.

Financings & Liquidity Highlights:

  • On September 20, 2016, the Company announced the completion of a $15.0 million (gross) bought-deal offering (the “Offering”), including full exercise of the over-allotment option.  Pursuant to the Offering, the Company issued 8,337,500 common shares, along with 4,168,750 warrants with an exercise price of $2.45 per share.
  • On August 4, 2016, the Company reported that the holders of its floating-rate convertible unsecured subordinated debentures (the “Debentures”) approved amendments to the Debentures at a special meeting of the Debentures held on August 4, 2016.  The amendments extended the maturity of the Debentures from June 30, 2017 to December 31, 2020, reduced the conversion price from Cdn$15.00 to Cdn$4.15 per common share of the Company, and certain other amendments as described in the press release dated August 4, 2016.

Stephen P. Antony, Energy Fuels’ President and CEO stated:  “During the last quarter, Energy Fuels continued to execute its business plan in a difficult uranium market.  We are particularly pleased with the actions we took during the third quarter, where we strengthened our balance sheet through a $15 million financing and extended the term of our convertible debentures, expanded the high-grade uranium resources at our Nichols Ranch ISR Project in Wyoming, and made some very exciting discoveries at our Canyon Mine in Arizona, including large areas of very high-grade uranium and copper mineralization.
“Our uranium recovery activities are also showing excellent results, as we extracted 90,000 pounds of uranium from eight header-houses at the Nichols Ranch ISR Project and packaged 260,000 pounds from conventional sources.  As a result, we are increasing our previous uranium recovery guidance for 2016 from 950,000 pounds to 1,035,000 pounds and increasing our contract sales guidance from 750,000 pounds to 1,050,000 pounds.  Although spot uranium prices are now down 45% for the year, the long-term fundamentals for the space remain positive.  We don’t know when uranium prices will recover, but we believe they will at some point in the future.  And when the uranium recovery occurs, we believe it has the potential to happen quickly.  In the meantime, Energy Fuels is fortunate to have some protection from persistent low uranium prices, including fixed-price uranium sales contracts for a portion of our production, the potential of copper recovery at our Canyon Mine, and processing revenues at our White Mesa Mill, and we are taking the necessary steps that we believe will allow our shareholders to benefit from future uranium market improvement.”
Read the full press release.
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