Energy Fuels reported 2022-2Q results in line with expectations, absent mark-to-market losses. The company reported a loss of $18.1 million or $0.11 per share. However, that included a $13.4 million negative mark to market of the value of investments. Absent that charge, adjusted net income would have been a loss of $4.7 million, or $0.03 per share, vs. our forecast for a loss of $8.6 million, or $0.06 per share. Vanadium and Rare Earth Element (RRE) sales are modest but poised to expand. The company sold 575,000 lbs. of vanadium, almost twice our forecast at an average price of $13.44/lb. Pricing has dropped so the company has discontinued sales. UUUU sold 205 tonnes of RRE, in line with expectations and pricing. Energy Fuels continues to make strides towards assuring RRE supply and developing circuits to separate heavy and light RRE at its White Mesa facilities. Read More >>
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Energy Fuels - More signs that production is getting closer to ramping up
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Energy Fuels
Overview
Energy Fuels( TSX:EFR, NYSE:UUUU) has been the largest producer of uranium and vanadium in the United States and an emerging producer of rare earth elements (REEs). The company’s portfolio of assets positions it to contribute meaningfully to some of the most important challenges faced by the world today - climate change and energy security. Uranium remains the core business for Energy Fuels, contributing nearly 89 percent of revenue in the first nine months of 2023. However, the company is rapidly expanding its REE capacity, and expects to have the installed capacity to produce 1,000 tonnes of NdPr oxide in early 2023.
Energy Fuels is the only uranium producer with both conventional production and in-situ recovery (ISR) in the US. Its 100-percent-owned White Mesa Mill is the only conventional uranium mill in the country with a licensed capacity of over 8 million pounds (Mlbs) of U3O8 per year. The company also owns the Nichols Ranch Uranium Recovery Facility in Wyoming, which is a fully permitted uranium ISR facility with a licensed capacity of 2 Mlbs of U3O8 per year. The Nichols Ranch Project is currently being maintained on standby.
Energy Fuels has a number of other uranium mine projects which are ready to start production, including Pinyon Plain Mine in Arizona (pre-production), La Sal Complex in Utah (pre-production), the Whirlwind Mine (pre-production), and three large-scale projects in the permitting stage (Sheep Mountain, Roca Honda and Bullfrog). Importantly, the infrastructure at these conventional mines is already in place, allowing for a quick restart with minimal capital expenditure. These mines, once ready, could add roughly 1.5 Mlbs of uranium production per year. With Nichols Ranch's ISR project also on standby, Energy Fuels has a clear path to substantially grow its US uranium production.
With the uranium supply market expected to be in deficit over the next few years, prices are likely to continue to trend higher. For 2023, UxC, a leading market research firm, projects a 52-Mlb deficit with global demand at 195 Mlbs and supply at 143 Mlbs. The deficit is expected to further jump to 113 Mlbs by 2025. As a result, spot uranium prices have skyrocketed, reaching more than US$80/lb, the highest it’s been since 2008. The prices are likely to remain firm as the uranium supply/demand balance remains tight. With uranium prices trending higher, Energy Fuels is in a strong position to leverage its licensed, low-cost uranium production capabilities and extensive mineral resources in the US.
In addition to its core uranium business, Energy Fuels is building out its rare earth element (REE) production and processing at the White Mesa Mill. The company is advancing phase 1 of the project focused on producing 800 to 1,000 metric tons (MT) of neodymium-praseodymium (NdPr) oxide per year, which will be in operation in Q1 2024. At the current spot price of $69.79 per kilogram, sales could approach $70 million. The company expects the NdPr production to grow further nearly three times upon completion of phase 2 in 2026/27, along with the addition of “heavy” REE production in phase 3 (2027/28), implying annual sales from REE to be more than several hundred million.
Vanadium and medical isotopes present another long-term growth opportunity for Energy Fuels. White Mesa Mill is a significant US producer of vanadium (V2O5), and the only primary producer in the US. No vanadium production is currently planned for 2023, though the company continually monitors its inventory and vanadium markets to guide future potential vanadium production. It currently holds 0.9 Mlbs in inventory and aims to selectively produce and sell into the market based on the strength of price. The company also continues to evaluate the potential to recover medical isotopes from its existing uranium and vanadium process streams. These isotopes are required for emerging cancer therapies.
Sustainability is a key part of the company’s focus. It is committed to recycling naturally bearing uranium and vanadium materials. White Mesa Mill has a separate circuit for processing alternate feed materials, thereby promoting sustainable sourcing, reducing carbon emissions and saving resources.
Energy Fuels has US$162.5 million in working capital. This includes US$54.5 million cash and equivalents, US$70.6 million marketable securities (mostly short-term treasury bills), US$27.6 million inventory and no debt. Factoring in current commodity prices, the value of existing inventory rises to US$49.1 million. Further, the company benefits from a management team with a record of building and operating both conventional and ISR uranium mines globally.
Company Highlights
- Energy Fuels is one of the largest producers of uranium and vanadium in the United States, and an emerging producer of rare earth elements (REEs), all of which are key inputs in the production of clean energy.
- The company is currently ramping-up uranium production with a goal to achieve 2 million pounds of uranium production in the short-term.
- The company’s White Mesa Mill, located in Utah is the only conventional uranium and vanadium recovery facility operating in the US, having a licensed capacity of over 8 million pounds of U3O8 per year.
- In addition, the company also owns multiple uranium/vanadium properties which are in pre-production or on standby, plus three large-scale projects that are in permitting stage and have potential to produce more than 4 million pounds of additional U3O8 per year.
- Energy Fuels is building the first fully integrated REE supply chain in the US. The White Mesa Mill has the licenses and capability to handle and process radioactive materials in the REE-bearing monazite sands and produce advanced REE products.
- The company expects to have the capacity to produce up to 1,000 tonnes of NdPr oxide in early 2024, enough for the magnets needed to power up to 1 million electric vehicles per year.
- The acquisition of the Bahia Project (Brazil) in February 2023 ensures the availability of low-cost REE-bearing monazite sands to the White Mesa Mill for decades.
- The company’s products have the key ESG attributes needed to address climate change. Uranium is the key fuel for zero-carbon baseload nuclear energy; vanadium is suitable for grid-scale batteries; REEs for clean energy technologies such as EVs and wind power generation.
Key Projects
White Mesa Mill, Utah
White Mesa Mill, located near Blanding, San Juan County, Utah, is the only conventional uranium, vanadium and REE recovery facility operating in the US, with a licensed capacity of over 8 Mlbs of U3O8 per year. In addition to uranium, the Mill has a separate vanadium by-product recovery circuit, and will soon have a separate NdPr separation circuit. When in full operation, the mill employs approximately 150 people, which is reduced to approximately 110 people when the vanadium circuit is not being operated.
The White Mesa Mill has a separate circuit for processing alternate feed materials, which are other uranium-bearing materials, not derived from conventional ore. Recycling materials back into the market contributes to Energy Fuels’ commitment to sustainability.
The mill is also currently producing rare earth carbonate from REE-bearing monazite sands. In 2021, the company began utilizing the mill to process rare-earth-bearing materials at commercial scale from a monazite feed source. Since then, the company has been producing rare earth carbonate products that have been sold to the market.
In early 2023, the company began modifying and enhancing its circuits at the Mill (phase 1) to be able to produce separated REE oxides. Phase 1 is expected to be completed and fully commissioned in Q1 2024, and will have the capacity to produce roughly 800 to 1,000 MT of NdPr oxide per year. It is then planned for a further increase to 3,000 MT by 2026/27 (phase 2). A phase 3 program to produce heavy separated REE products, such as dysprosium, terbium and potentially other advanced REE materials, is expected to be completed by 2027/28.
The input (REE-bearing monazite sands) needed to produce these REEs is supplied by the Bahia Project (Brazil), which was acquired by Energy Fuels in February 2023, along with other heavy mineral sand (titanium/zirconium) mines. A sonic drilling program is currently underway at the project aiming to further delineate the rare earth, titanium and zirconium mineralization.
Nichols Ranch, Wyoming
Nichols Ranch is an ISR uranium mine located in the productive Powder River Basin district of Wyoming, with a total licensed capacity of 2 Mlbs of U3O8 per year. Energy Fuels acquired this key production asset in 2015 through its acquisition of Uranerz Energy Corporation.
The project is currently on standby and restoration, pending market conditions improving sufficiently to resume production. The company will need to incur capital expenditures to develop additional wellfields, as all existing wellfields are now depleted.
The Nichols Ranch ISR project has measured and indicated mineral resources of nearly 7 Mlbs of uranium and inferred resource estimate of 1.3 Mlbs of uranium.
Pinyon Plain Project, Arizona
The Pinyon Plain mine is a development-stage high-grade uranium mine located in Arizona. Acquired by Energy Fuels in 2012, the mine is currently in the pre-production stage with ongoing work including installing surface ventilation fans, secondary egress equipment and other underground development work. The mine hosts measured and indicated uranium resources at 0.7 Mlbs at average grades of 0.95 percent U3O8.
La Sal Complex, Utah
The La Sal Project is an existing complex comprising seven individual underground uranium mines and properties in eastern Utah, including the Beaver, Pandora, La Sal, Energy Queen and Redd Block Project. As of September 30, 2023, the company was performing rehabilitation and development work on its La Sal Project. This additional work will make the La Sal Project “mine ready” should market conditions warrant reopening of the mine.
La Sal hosts inferred mineral resources of 4.3 Mlbs of uranium and 17.8 Mlbs of vanadium at average grades of 0.26 percent U3O8 and 1.08 percent V2O5.
Sheep Mountain Project, Wyoming
The Sheep Mountain project, also located in Wyoming, includes an open-pit operation (the Congo pit), as well as the existing Sheep Mountain underground mine. The project is in Jeffrey City, Wyoming, and is easily accessible via airport and road. The project is currently on standby, pending evaluation of the processing options for the Sheep Mountain Project and improvement in market conditions.
The project has a resource estimate of approximately 4.2 million tons of measured and indicated resources at an average grade of 0.11 percent U3O8, including 18.4 Mlbs of probable mineral reserves. The pre-feasibility study estimates the project can produce up to 1.5 Mlbs of U3O8 annually over a 15-year mine life.
Roca Honda Project, New Mexico
The project is in McKinley County in New Mexico, covering an area of 4,440 acres. It is located within trucking distance of the White Mesa Mill and as such, materials mined from the project are to be processed at the White Mesa mill. The project is adjacent to General Atomics’ Mount Taylor mine and could see similar success. The Roca Honda Project is in the advanced stage of permitting.
The project has measured and indicated resources estimated at 1.8 million tons, with an average grade of 0.48 percent U3O8 containing 17.6 Mlbs U3O8, and inferred mineral resources estimated at 1.5 million tons of U3O8 with an average grade of 0.46 percent U3O8 containing 13.8 Mlbs U3O8. Once operational, it could produce up to 2.7 Mlb U3O8 annually with a nine-year mine life.
Bullfrog Project, Utah
The project is located in eastern Garfield County, Utah, covering 2,344 acres. The property is 100 percent owned by the company and was acquired in 2012. There is no existing infrastructure on the Bullfrog Property.
The project has measured and indicated resources estimated at 1.56 million tons, with an average grade of 0.29 percent U3O8 containing 9.1 Mlbs U3O8 and inferred mineral resources estimated at 0.41 million tons of U3O8 with an average grade of 0.25 percent U3O8 containing 2.0 Mlbs U3O8. The project is currently in the permitting stage.
Management Team
Mark S. Chalmers – President and CEO
Mark Chalmers brings a wealth of experience in mining and mineral processing to his position. Prior to his promotion to CEO in 2018, he served as president and chief operating officer of Energy Fuels. Chalmers is an expert in ISR uranium production and has managed the Beverley Uranium Mine owned by General Atomics (Australia) and the Highland Mine owned by Cameco Corporation (USA). Additionally, he has consulted several large players in the uranium supply sector, including BHP, Rio Tinto and Marubeni. He has served as the chair of the Australian Uranium Council for 10 years. He holds a Bachelor of Science in mining engineering from the University of Arizona and is a registered professional engineer.
Tom Brock – Chief Financial Officer
Tom Brock has more than two decades of executive leadership experience in the energy industry. Brock is skilled in raising money, M&A, technical accounting and SEC financial reporting matters. Prior to joining Energy Fuels in 2022, Brock served as the vice-president and chief accounting officer at Extraction Oil & Gas. He holds a degree in accounting from New Mexico State University and is a certified public accountant licensed in the State of Texas.
Curtis Moore – VP of Marketing & Corporate Development
Curtis Moore is involved in overseeing product marketing, public relations, investor relations and government relations, as well as M&A, strategy and legal matters. He has been working with Energy Fuels for over 15 years in various leadership positions. Before Energy Fuels, Moore worked in diverse fields, including multi-family real estate development, government relations and public affairs, production homebuilding, and private law practice. He earned a Juris Doctor degree and a Master of Business Administration from the University of Colorado, Boulder. Additionally, he holds a dual bachelor’s degree in economics-government from Claremont McKenna College.
J. Birks Bovaird – Chairman of the Board
J. Birks Bovaird has served as an independent director of several public resource companies including GTA Resources and Mining (TSXV:GTA) and Noble Mineral Exploration (TSXV:NOB). He brings extensive experience in corporate financial consulting and strategic planning. He holds an ICD.D designation.
*This article was written in collaboration with Couloir Capital.
Uranium Sector Expected to See a Run as Positive Momentum and Demand Builds
FN Media Group News Commentary - An article from REUTERS on the Uranium markets earlier this year painted a prosperous picture for the global Uranium. The report said: "Investment banks Goldman Sachs and Macquarie as well as some hedge funds are positioning themselves to reap the benefits of a newly buoyant uranium sector as prices of the nuclear fuel ingredient spike. While many other investment banks are still avoiding uranium, Goldman and Macquarie are boosting trading in physical uranium and in Goldman's case trading its options as well, five industry and hedge fund sources with knowledge of the deals said. The heightened activity comes as utilities seek new supplies amid shortfalls that have lifted prices to 16-year highs ." It continued: "A few hedge funds are also stepping up involvement in both equities and physical uranium, a sign that the metal is starting to broaden its appeal to financial institutions after a decade in the doldrums following the Fukushima nuclear disaster. With the headlines and positive momentum in nuclear more generally, hedge funds and other commodity investors are back in the (uranium) sector. A lot of it is done via physical funds, the easiest way to get exposure to uranium prices," said Bram Vanderelst at trading firm Curzon Uranium. The metal has captured investors' attention after prices doubled over the past year to $102 a pound as top producers Kazatomprom and Cameco cut production guidance because reopened mines that had been mothballed struggled to ramp up production to meet renewed demand." Active mining companies in the markets this week include Stallion Uranium Corp. (OTCQB: STLNF) (TSX-V: STUD) (, enCore Energy Corp. (NASDAQ: EU), Forum Energy Metals Corp. (OTCQB: FDCFF) (TSX-V: FMC), Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR), Ur-Energy Inc. (NYSE American: URG).
"It also comes with the revival of nuclear energy to help countries cut their carbon emissions, which was highlighted in the December 2023 Group of Seven most industrialized nations' statement that envisioned tripling nuclear energy capacity from 2020 to 2050." Goldman Sachs has started writing options on physical uranium for hedge funds , the first time it has created a derivative for the metal." It concluded: ""Goldman has been increasing their visibility, they've been increasing their book steadily," a source who dealt with the bank said, declining to give details of the transactions because they are confidential. Goldman is largely dealing with financial clients like hedge funds while Macquarie's main focus is boosting trading and marketing output from miners, another source who dealt with both banks said, also declining to elaborate because the data is confidential."
Stallion Uranium ($STUD.V $STLNF) Intersects Significant Conductive Structure - Stallion Uranium Corp. (TSX-V: STUD) (OTCQB: STLNF) ( FSE: HM40) is proud to announce the successful completion of their inaugural winter 2024 diamond drilling program on its 100% owned Coffer Project situated in the prolific Southwestern Athabasca Basin in Saskatchewan, Canada. This milestone initiative was successful in encountering anomalous radioactivity in all three drill holes and culminated with the discovery of a large, deep-rooted conductive structure intersected on the final drill hole CF24-003 giving the target area the characteristics needed to host a large uranium deposit.
Highlights
- Three diamond drill holes totaling 2,798.2m were completed at the Appaloosa target area (Figure 4).
- Hole CF24-003 intersected the unconformity at 720 m and was completed at a depth of 1055 m.
- CF24-003 is located 700 m west along strike from CF24-002, and 1.4km west of CF24-001.
- Anomalous radioactivity was encountered at the unconformity in all three holes.
- A total of 282 whole rock samples were obtained for assay, including interval and selective samples.
- A deep-rooted conductive structure, spanning 94.7 meters in down-hole thickness, was encountered in hole CF24-003 highlighting the significant size of the structure.
- Strong clay and chlorite alteration which is known be is associated with uranium mineralization was encountered.
- Stallion holds a 100% ownership of the project.
"Stallion's winter 2024 drilling program at the Coffer project has yielded remarkable results, identifying a large conductive structure and 1.4 km of anomalous radioactivity at the unconformity across all three drill holes. The third hole intersected significant alteration and structure, and given the size of those intersections, indicate that the Appaloosa target possesses the characteristics capable of hosting a substantial uranium deposit. Further processing and modeling of the data collected will provide enhanced targeting capabilities, greatly increasing the probability for discovery on a future program," commented Darren Slugoski, Vice President Exploration, Canada.
Winter Drill Program Summary - Stallion's maiden drill program commenced on March 6, 2024, to drill test geophysical targets derived from both regional and advanced ground surveys. A total 2,798.2m of diamond drilling was completed over 3 holes, all of which were successful in encountering anomalous radioactivity at or above the unconformity. The final hole targeted and intersected the conductive structure, with an intercept of over 94m, highlighting the size and ability of the structure in transporting uranium bearing fluids. The significant size of the structure adds to Stallion's view that not only is the structure fertile for a uranium deposit but has the potential to host a large deposit.
The drill program successfully identified the key characteristics of a uranium bearing system and the promising findings validate Stallion's geological model, allowing for building confidence in the target area. The structural elements and scale encountered, along with anomalous radioactivity throughout, are strong indicators the Appaloosa target has the potential to host a significant uranium discovery. The winter drill program only tested 1.4km of the extensive 3.5-kilometre-long conductive zone, giving the target area further size and exploration potential.
The company is currently in the process of compiling and analyzing all data acquired during the drilling program. Stallion will leverage this comprehensive analysis to inform future exploration efforts and guide the development of an optimized exploration strategy for the target area moving forward.
"Our maiden drill program was a game-changing moment for Stallion, as we not only uncovered radioactivity in every hole, but also struck a massive conductor that unveiled the size of the structure at Appaloosa. Our confidence in the Appaloosa target's potential continues to grow given the results of the drill program, providing us with the information needed to vector towards a discovery ," declared Drew Zimmerman, CEO. "Our drill program proved to be a resounding success, showcasing our ability to swiftly navigate from greenfield to drill testing in just 14 months. This achievement highlights our strategic approach to uncovering the next major uranium discovery. By systematically uncovering high-potential targets within our extensive portfolio of conductive corridors, we are maximizing the probability of success in all future exploration endeavors." #stallionuranium #uranium - CONTINUED … Read these full press releases and more news for Stallion Uranium at: https://stallionuranium.com/news/press-releases/
Other recent developments in the mining industry of note include:
enCore Energy Corp. (NASDAQ: EU), a domestic uranium producer, recently published its 2023 Annual Report, which is now available on the enCore Energy website at https://encoreuranium.com/investors/annual-report/ . The Annual Report outlines enCore's business plan, the corporate objectives for 2024 and evaluates the Company's success in meeting its 2023 objectives.
William M. Sheriff, Executive Chairman, commented: "enCore has made substantial progress throughout 2023 and I am proud of the dedication and work by our team to achieve all our objectives, specifically our highest priority 2023 objective to advance the Rosita Uranium Central Processing Plant into production. And now, within our 2024 objectives, we remain focused on commencing production at the Alta Mesa Uranium Central Processing Plant. I want to extend a large thank you to our dedicated staff, esteemed shareholders, capable management team, and valued board of directors. It's through your collaboration and shared vision that we've made significant strides forward. As we move forward in 2024 and beyond, we continue to strive to set high goals, achieve them, and continue to conduct ourselves as an industry leader as America's Clean Energy Company™."
Forum Energy Metals Corp. (OTCQB: FDCFF) (TSX-V: FMC) has recently reviewed initial data processed from its Ambient Noise Tomography (ANT) survey conducted over the Tatiggaq anomaly during the summer of 2023, The survey successfully established new drill targets over a one plus kilometer east-northeast extension along the Tatiggaq fault zone, which hosts the high-grade Tatiggaq uranium discovery at Forum's 100% owned Aberdeen Project in the Thelon Basin, Nunavut. The Aberdeen project comprises 95,500 hectares and is located adjacent to Orano's 133 million pound Kiggavik uranium project.
Dr. Rebecca Hunter, Forum's VP, Exploration commented, "The ANT survey may be a game-changing geophysical method for targeting unconformity systems in the northeast Thelon Basin. By measuring the velocity change interfaces throughout our anomalies, we can potentially image the faults that host the mineralization and the location of the mineralized bodies themselves. The survey results obtained suggest we will be able to target our drilling with a much higher degree of precision than what could be done in the past. I am very excited to resume on our Aberdeen Project in 2024."
Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) recently reported its financial results for the quarter ended March 31, 2024. 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 , on the System for Electronic Data Analysis and Retrieval + (" SEDAR+ ") at www.sedarplus.ca , and on the Company's website at www.energyfuels.com .
"Energy Fuels maintained our momentum from 2023, by reporting continued profitability in Q1-2024, driven mainly by uranium. We also continued to make extraordinary progress diversifying into the complementary HMS and rare earth oxide businesses.
"During the quarter, we made profitable uranium sales into our portfolio of long-term utility contracts, and we completed two opportunistic spot sales averaging nearly $103 per pound of U 3 O 8 , enabled by our significant uranium inventories backed by our near-term low-cost uranium production capacity. From these sales, we maintained high gross margins, averaging roughly 56%, contributed to in large part by our low-cost alternate feed material and other historic uranium production which we have maintained in inventory pending increased uranium prices such as we see today.
Ur-Energy Inc. (NYSE American: URG) recently invited visitors to attend its 2024 Q1 webcast/teleconference on May 8, 2024. Ur-Energy management will provide a review of our 2024 Q1 operations and results. A Q&A session will follow the presentation. The webcast and teleconference will be held Wednesday, May 8, 2024 at 8:00 a.m. MT / 10:00 a.m. ET. Please join us by phone or online as follows:
Toll Free Number: 888-506-0062
International Number: 973-528-0011
Provide event code 756904 or ask to join the Ur-Energy call.
The webcast can be accessed 10 minutes prior to the call. Pre-registration and participation access is available by clicking here or by copying the following URL into your web browser:
https://www.webcaster4.com/Webcast/Page/2307/50540 . Following the webcast, a replay will be available at the same link.
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Energy Fuels Announces Agreement for Transformational Acquisition of Base Resources, Creating a Global Leader in Critical Minerals Production with a Focus on Uranium, Rare Earth Elements and Heavy Mineral Sands
- The acquisition will include Base Resources' 100%-owned advanced, world-class Toliara heavy mineral sands project in Madagascar (" Toliara " or the " Project "), which includes a long-life, high-value and low cost monazite stream, produced as a byproduct of primary titanium and zirconium production.
- Toliara monazite production to be processed at Energy Fuels' 100%-owned White Mesa Mill (the " Mill ") into separated rare earth element (" REE ") oxides, at low capital and operating cost, setting a new paradigm for low-cost, globally competitive U.S.-centered rare earth oxide production.
- The transaction will also secure Base Resources' mine development and operations team, who have a successful track-record of designing, constructing, and profitably operating a world-class heavy mineral sands operation in Africa .
- Energy Fuels is currently engaged in high-level discussions with various U.S. government agencies and other offices who provide support for critical mineral projects, domestically and abroad.
- The transaction is complementary to and further strengthens Energy Fuels' U.S.-leading uranium production capability and plans.
- Senator Mike Lee , the Senior Senator from Utah and a member of the Senate Committee on Energy and Natural Resources, stated: "I'm grateful to Energy Fuels for their work to ensure the United States has a domestic critical mineral source. The acquisition of Base Resources and the Toliara project will only further their capacity and ability to produce minerals needed for defense, technology, and everyday life."
- Conference call on Monday, April 22, 2024 at 8:00 am ET .
Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) (" Energy Fuels " or the " Company "), a leading U.S. producer of uranium, REEs, and vanadium, is pleased to announce that it has executed a definitive Scheme Implementation Deed (the " SID ") with Base Resources Limited (ASX: BSE) (AIM: BSE) (" Base Resources ") pursuant to which Energy Fuels has agreed to acquire 100% of the issued shares of Base Resources (the " Transaction ") in consideration for (i) 0.0260 Energy Fuels common shares (the " Share Consideration ") and (ii) A$0.065 in cash, payable by way of a special dividend by Base Resources to its shareholders (the " Cash Consideration ", and together with the Share Consideration, the " Scheme Consideration ") for each Base Resources ordinary share held, for a total equity value of approximately A$375 million 1 . The Transaction will be effected by way of a scheme of arrangement under Australia's Corporations Act (the " Scheme "). Unless otherwise indicated in this news release, all references to dollars or $ are references to United States dollars.
KEY TRANSACTION HIGHLIGHTS
- The Transaction will unlock significant value for both Energy Fuels and Base Resources shareholders due to valuable and clearly identifiable synergies.
- Base Resources' Toliara project in Madagascar is a world-class, advanced-stage, low-cost, and large-scale heavy mineral sands project. In addition to its stand-alone, ilmenite, rutile (titanium) and zircon (zirconium) (collectively, " Ilmenite and Zircon ") production capability, the Project also contains large quantities of Monazite which is a rich source of the 'magnet' REEs used in electric vehicles (" EVs ") and a variety of clean energy and advanced technologies.
- Subject to receipt of further required Government of Madagascar approvals, the Monazite can be recovered as a byproduct of Ilmenite and Zircon production at low incremental cost, thereby adding to Toliara's world-class Ilmenite and Zircon capability at a cost of production that the Company expects to be globally competitive and will position Energy Fuels to be a first-tier REE oxide producer.
- Once in production, the Monazite from Toliara will provide a large portion of the raw materials needed for Energy Fuels' rapidly expanding and world-competitive REE oxide production facility at the Mill. Since 2021, Energy Fuels has proven its technical capabilities, speed-to-market, and competitiveness in a manner that is not being accomplished by any other facility in North America , first by processing Monazite to produce a mixed REE carbonate at the Mill, which it has been selling into the commercial REE market since 2021, and now by the commissioning of its Phase 1 NdPr separation facility at the Mill.
- Energy Fuels is currently engaged in high-level discussions with numerous U.S. government agencies and other offices who provide financial support for critical mineral projects within the U.S. and internationally, which may include grants, low-interest debt, non- or limited-recourse debt, loan guarantees, and other support vehicles.
- Energy Fuels is also releasing an AACE International (" AACE ") Class 4 Pre-Feasibility Study (not a Pre-Feasibility Study subject to or intended to be compliant with National Instrument 43-101 (" NI 43-101 ") or Subpart 1300 of Regulation S-K (" S-K 1300 ")) dated April 22, 2024 , prepared by Roger Mason , Engineering Manager, WSP USA Environment & Infrastructure Inc., indicating globally competitive capital and operating costs for its planned Phase 2 expanded REE oxide production at the Mill (the " Mill PFS "), which will be filed on the Electronic Document Gathering and Retrieval System (" EDGAR ") at www.sec.gov/edgar , and will be available on the System for Electronic Document Analysis and Retrieval Plus (" SEDAR+ ") at www.sedarplus.ca , and on the Company's website at www.energyfuels.com .
- With the Mill's unique, globally competitive, U.S.-based REE production capability, Energy Fuels is uniquely positioned to unlock significant value from Toliara's low-cost Monazite production, in a manner that the Company believes no other facility in the U.S. is capable of at this time.
- Monazite from Toliara will also provide material quantities of low-cost uranium production at the Mill over the life of the Project, which will supplement Energy Fuels' U.S.-leading uranium production capacity.
- This addition of a low-cost source of REE raw materials to Energy Fuels' globally competitive U.S. REE production infrastructure, along with a sustainable low-cost source of uranium production, is expected to be highly accretive to Energy Fuels' shareholders on a net asset value per share basis, with potential to unlock significant further upside.
- As part of this Transaction, Energy Fuels will also access Base Resources' proven leadership and heavy mineral sands operations team, which has an exceptional record of responsible asset development, construction, commissioning and profitable production in Africa . The Base Resources team will not only continue to oversee the development and operation of Toliara but will also enhance Energy Fuels' heavy mineral sands teams in Australia and Brazil , thus allowing the Company to maximize the value of all projects to the Company's shareholders.
- The offer is unanimously recommended by Base Resources' Board of Directors and Base Resources has also received voting intention statements from each of Base Resources' two major shareholders, confirming that they each intend to vote in favor of the Scheme 2 . Those two shareholders respectively hold 26.5% and 24.8% of Base Resources' shares. In addition, each of Base Resources' directors, holding (in aggregate) an additional 1.2% of Base Resources' shares, has confirmed their intention to vote in favor of the Scheme 2 .
- Energy Fuels will host an investor webcast and conference call on April 22, 2024 at 8:00 a.m. Eastern Time ( 10:00 p.m. Australian Eastern Standard Time).
Mark S. Chalmers , President and CEO of Energy Fuels stated: "The acquisition of Base Resources and the Toliara project represents a monumental leap forward for the Company, as we continue to execute on a truly revolutionary REE, uranium and critical mineral combined strategy. For the past four-plus years, Energy Fuels has innovated a new way to produce critical minerals, that we believe is more cost competitive than traditional approaches, by leveraging our uranium processing expertise and infrastructure to develop a secure, U.S.-centric REE oxide supply chain.
"At the same time, we plan to maintain our leadership and profitability in our core U.S.-based uranium business without diminishing our uranium capabilities or uranium growth potential in any way. In fact, Toliara will provide a steady, low-cost source of uranium for the Company over the life of the Project.
"To date, we have secured long-term sources of REE concentrate through offtake (Chemours), and direct ownership (the Company's 100% owned Bahia Project in Brazil once developed, and potentially 100% ownership of Base Resources' Toliara project, and further potential offtakes through a joint venture being negotiated with Astron Corporation Limited (the Astron Donald Project in Australia )). Toliara is expected to be the cornerstone source of feedstock supply to the Mill, with the scale to provide an average of 21,800 tonnes of rare earth-bearing Monazite per year at a cost that we believe will be at or below other leading global REE producers, including those in China .
"Energy Fuels has proven its REE processing capabilities at our Mill in Utah , as we have commercially produced a high-purity mixed REE carbonate since 2021. We recently completed construction of and are currently commissioning the Phase 1 REE separation circuit at the Mill, designed to produce up to 1,000 tonnes of NdPr oxide per year, which would be sufficient to supply enough 'magnet' REE oxides to produce 500,000 to 1 million EVs per year. We have also released the Mill PFS announcing what we believe to be globally competitive capital and REE production costs. Based on these highly compelling economics and the expected consummation of the Base Resources and Astron transactions, Energy Fuels is also planning to update the Phase 2 REE separation infrastructure for the Mill to expand our production capacity to 4,000 to 6,000 tonnes of NdPr oxide per year, along with 150 - 225 tonnes of Dy oxide and 50 - 75 tonnes of Tb oxide per year, which would supply enough 'magnet' REE oxides to power 3 to 6 million EVs per year. This would put Energy Fuels in the REE oxide production capacity category of the other major 'western' REE suppliers.
"We plan to supply REE oxides to U.S., European and Asian EV, wind energy and other clean energy manufacturers, along with emerging commercial REE metal-making, alloying, and magnet-making facilities now under development in the U.S. We also plan to be a reliable supplier to the U.S. defense industry, which could include offtake for other REE oxides, besides the 'magnet' oxides, contained in Monazite. This acquisition, along with the Mill's current and planned REE separation capability, will go a long way in establishing a 'western' REE supply chain. Energy Fuels is also in high-level discussions with numerous U.S. government agencies and offices that support critical mineral projects, and we look forward to advancing these discussions as we continue to build our REE business.
"The transaction will not only secure a world-class project for Energy Fuels at a highly attractive acquisition price compared to the fundamental value of the Project but will also secure a mine development and operations team with a successful track-record of designing, constructing, and profitably operating a world-class heavy mineral sands operation in Africa ."
Tim Carstens , Managing Director of Base Resources, commented: "This transaction reflects the exceptional quality of the Toliara project and the efforts of the Base Resources team over several years to advance the project towards construction readiness. The combined company will have the financial and technical capability to not only build Toliara into one of the best critical mineral projects in the world, but also to develop an integrated value chain for the rare earth elements that are essential to the global energy transition. Shareholders of Base Resources will receive both a compelling and immediate premium, and the opportunity to further participate in the market recognition and development of a company with a unique diversified position in the critical minerals landscape."
The Toliara project is a world-class, advanced-stage, large-scale critical mineral deposit underpinned by the Ilmenite, Zircon and Monazite-rich Ranobe deposit in southwest Madagascar .
On September 27, 2021 , Base Resources released the outcomes of its updated and enhanced Definitive Feasibility Study (" DFS2 ") 3 for the Toliara project, which calculated an after-tax NPV 10 (10% discount rate) of $1 billion , after-tax IRR of 23.8%, undiscounted life-of-mine free cash flows of $5.9 billion , and initial capital expenditures of $520 million to achieve first production. According to DFS2, the Ranobe deposit's estimated Ore Reserves of 904 million tonnes at 6.1% heavy mineral, are sufficient to support an initial 38-year mine life 4 . These results are based on the production of Ilmenite and Zircon alone.
The Ranobe deposit also contains large quantities of Monazite, which is a rich source of the 'magnet' REEs; neodymium and praseodymium (" NdPr "), Dysprosium (" Dy ") and Terbium (" Tb "), used in EVs and a variety of clean energy and advanced technologies, that can be recovered as a byproduct of Ilmenite and Zircon production at the Project.
In response to rising demand for REEs, on December 14, 2023 , Base Resources released a Pre-Feasibility Study for Toliara 5 on the production of Monazite through the concentration of the existing waste stream from the DFS2 mineral sands processing facilities (the " Monazite PFS "). Based on the combined outcomes of DFS2 and the Monazite PFS, Toliara has an overall after-tax NPV 10 (10% discount rate) of $2.0 billion , after-tax IRR of 32.4%, undiscounted life of mine free cash flows of $10.7 billion , and initial capital expenditures of $591 million , which included additional incremental capital expenditures of $71 million for Monazite production, over the 38-year mine life. As the Monazite is an add-on to the stand-alone Ilmenite and Zircon production and would be produced through concentration of the waste stream from processing of the mined Ore Reserves, the Mineral Resources and Reserves at the Project did not change. The Monazite PFS thus demonstrated that world-class Monazite production capability can be added to Toliara's already stand-alone, world-class Ilmenite and Zircon production capability at a low incremental cost of production, thereby allowing the Monazite production to withstand low or variable REE oxide markets.
Toliara is expected to be Energy Fuels' cornerstone source of Monazite supply, providing a long-term and large-scale supply of Monazite (21,800 tonnes per annum (" tpa ") average Monazite production), to the Mill for processing into REE oxides and other advanced REE materials, along with the recovery of contained uranium. As the Monazite will be a very low-cost byproduct of Toliara's primary Ilmenite and Zircon production, the total cost of production of REE oxides at the Mill is expected to be low-cost and globally competitive.
Processing Monazite from Toliara will also add approximately 75,000 lbs of low-cost uranium production (at an incremental cost of approximately $8 per pound) per year at the Mill, totaling approximately 3 million pounds of recovered U 3 O 8 over the life of the Project. This will provide a reliable low-cost stream of uranium production at the Mill that will be able to withstand lower uranium prices and will supplement Energy Fuels' U.S.-leading uranium production capacity from other mines and sources.
Base Resources has a proven leadership and mineral sands operations team with an exceptional record of responsible and profitable production at its now winding down heavy mineral sands project in Kwale County, Kenya , all of whom are expected to join the Energy Fuels management team upon completion of the Transaction. The Base Resources team will continue to manage Toliara and will enhance Energy Fuels' teams in Australia and Brazil , thus allowing the Company to maximize the value of all projects to shareholders.
Although the Toliara project holds a mining permit that allows production of Ilmenite, Rutile and Zircon, development at the Project was suspended by the Government of Madagascar pending negotiation of fiscal terms applying to the Project. With the recent adoption of a new Mining Code in Madagascar and Base Resources and the Government of Madagascar making sound progress on fiscal terms negotiations, the Company believes the suspension will be lifted, and required legal and fiscal stability achieved, during 2024. Aspects intended to facilitate the inclusion of Monazite on the Project's mining permit as soon as reasonably practicable after fiscal terms are agreed are included in the scope of current negotiations. However, there can be no assurance as to the timing of completion of fiscal terms negotiations and lifting of the current suspension, the timing for achieving sufficient legal and fiscal stability or the timing for approval of the addition of Monazite to the mining permit. If such approvals are not obtained, or obtained on terms less favorable than expected, this could delay any final investment decision in relation to the Project or prevent or otherwise have a significant effect on the development of the Project or ability to recover Monazite from the Project.
Highlights of Toliara's economics are presented below:
Unit | Monazite | Mineral | Combined | |
NPV 10 (discount rate of 10%), | US$ millions | 999 | 1,008 | 2,006 |
NPV 8 (discount rate of 8%) | US$ millions | 1,281 | 1,385 | 2,666 |
IRR | % | 78.6 % | 23.8 % | 32.4 % |
Initial (Stage 1) Capex | US$ millions | 71 | 520 | 591 |
Construction Period (Stage 1) | Months | 29 | 27 | 27 |
Stage 2 Capex | US$ millions | N/A | 137 | 137 |
Construction Period (Stage 2) | Months | N/A | 21 | 21 |
Capital Payback Period (Stage | Years | 1.0 | 4.5 | 3.6 |
Life of Mine (LOM) | Years | 38 | 38 | 38 |
LOM Free Cash Flow | US$ millions | 4,733 | 5,922 | 10,655 |
LOM Operating Costs + | US$/t ore mined | 0.98 | 3.78 | 4.92 |
LOM Operating Costs + | US$/t produced | 1,089 | 88 | 112 |
LOM Revenue | US$/t produced | 8,648 | 306 | 477 |
LOM Cash Margin | US$/t produced | 7,559 | 218 | 365 |
LOM Revenue: Cost of Sales | Ratio : 1 | 7.9 | 3.5 | 4.3 |
Notes: | ||
1) | Note the Monazite PFS (14 December 2023) contemplates selling the Monazite from the Toliara project to a third party at world Monazite prices. In contrast, the combined company would transport the Monazite to the Mill for additional processing and separation. The numbers in this table do not reflect any downstream processing or margins at the Mill. | |
2) | The DFS2 is dated 27 September 2021. | |
3) | The Monazite PFS and DFS2 constituted a "Pre-Feasibility Study" and "Feasibility Study" (respectively) for the purposes of JORC. Additionally, the Monazite PFS was based on Mineral Resources, and DFS2 was based on Ore Reserves, which, in each case, were estimated in accordance with JORC. The results from these studies and such estimates may not be comparable to data or estimates under either NI 43-101 or S-K 1300 – see note below under "Qualified Person". |
On April 22, 2024 , Energy Fuels will release its Mill PFS projecting globally competitive capital and operating costs for planned expanded REE oxide production at the Mill. The Mill is currently commissioning its Phase 1 NdPr separation facility, which has been constructed within the Mill's existing solvent extraction building and is designed to process up to 10,000 tpa of Monazite to produce up to 1,000 tpa of NdPr oxide.
The economics detailed in the Mill PFS are for the Phase 2 expansion of REE separation capacity in one or more additional facilities at the Mill, capable of processing 30,000 tpa of Monazite to produce approximately 3,000 tpa of NdPr oxide. The Mill PFS shows globally competitive capital expenditures of $348 million for the 30,000 tpa Phase 2 separation facility and an average processing cost of $29.88 /kg NdPr. This analysis does not include any capital or operating costs associated with the recovery of Dy and Tb or any revenues associated with the sales of those "heavy" REE oxides.
Upon completion of the Transaction, Energy Fuels plans to update the DFS2 and the Monazite PFS and re-issue those reports in a form that complies with NI 43-101 and S-K-1300, and that also updates and incorporates the results of the Mill PFS to expand Phase 2 production capacity from a 30,000 tpa Monazite process plant capable of producing approximately 3,000 tpa of NdPr oxide to a 40,000 - 60,000 tpa Monazite process plant capable of producing approximately 4,000 - 6,000 tpa of NdPr oxide, along with Dy and Tb oxides.
The details of the Mill PFS are presented below:
Unit | NdPr Production at the Mill 1 | |
Capital Costs to Construct Phase 2 | US$ millions | 348 |
Operating Cost $/kg NdPr | US$ | 29.88 |
Plant Capacity 2 | Monazite tpa | 30,000 |
Notes: | ||
1) | The Mill PFS addresses the production of NdPr alone from processing Monazite. It does not address or attribute any costs or value to the significant quantities of Dy and Tb that will also be recovered from the Monazite at the Mill. This will be updated in the future to also address Dy and Tb production from Monazite. | |
2) | The Mill PFS assumes a Phase 2 separation facility capacity of 30,000 tpa of Monazite. With the planned Monazite production from the Company's Bahia Project in Brazil, the planned acquisition of Toliara, the potential acquisition of an interest in the Astron Donald Project, and other potential Monazite acquisitions, Energy Fuels plans to update the Mill PFS based on an increased Monazite throughput of 40,000 – 60,000 tpa, which would generate 4,000 - 6,000 tpa of NdPr, 150 - 225 tpa of Dy, and 50 - 75 tpa of Tb. The Phase 2 separation facility is subject to completion of engineering design and receipt of any required permits and licenses. |
See the Mill PFS, which will be available on the Company's website at www.energyfuels.com and on SEDAR and EDGAR, for important information about its scope, key assumptions, qualifications and risks.
Under the terms of the Scheme, if approved, each Base Resources shareholder will receive (i) 0.0260 Energy Fuels common shares and (ii) A$0.065 in cash, payable by way of a special dividend, representing an implied price of A$0.30 per Base share 4 .
The Scheme Consideration represents a premium of 173% to the Base Resources' 20-day volume weighted average price up to and including April 19, 2024 of A$0.11 . Immediately following implementation of the Scheme, Energy Fuels and Base Resources shareholders will own approximately 83.6% and 16.4% 6 of Energy Fuels post-closing, respectively.
The Scheme is subject to customary closing conditions, including: (a) approval by at least 75% of the number of votes cast, and more than 50% of the number of Base Resources shareholders present and voting, at the meeting of the shareholders of Base Resources to approve the Scheme (the " Scheme Meeting "); (b) approval by the Federal Court of Australia ; (c) the Independent Expert concluding that the Scheme is in the best interests of Base Resources shareholders; (d) certain government and regulatory approvals, including the Foreign Investment Review Board of Australia, Malagasy Competition Council, the TSX and the NYSE American; (e) no material adverse change or prescribed event to Base Resources or Energy Fuels; and (f) other customary closing conditions.
The SID also contains customary deal protection mechanisms, including a "no shop" and "no talk" provision, "matching rights" and "notification rights" for Energy Fuels, subject to customary exceptions, and a termination fee payable by Base Resources in certain circumstances in the amount of 1% of the Transaction Value (or US$2.4 million ). The SID also provides for a reverse break fee in the same amount payable by Energy Fuels in certain circumstances.
A Scheme Booklet setting out the key terms of the Scheme, the Independent Expert's report, and the reasons for the Base Resources directors' recommendation will be sent to all Base Resources shareholders in due course. The Scheme Meeting is expected to be held in late July / early August 2024 with the Transaction anticipated to close in the third quarter of 2024, subject to satisfaction of all conditions, including receipt of all necessary approvals.
Full details of the terms and conditions of the Scheme are set out in the SID that will be available on Energy Fuels' SEDAR+ profile at www.sedarplus.ca , and on Energy Fuels' EDGAR profile at www.sec.gov/edgar .
The Board of Directors of Energy Fuels has unanimously approved the Scheme, including, without limitation, the Scheme Consideration.
The Board of Directors of Base Resources has unanimously recommended that all Base Resources shareholders vote in favor of the Scheme at the Scheme Meeting, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Base Resources shareholders. Subject to those same qualifications, each director of Base Resources intends to vote (or cause to be voted) all Base Resources shares which they own or control in favor of the Scheme, representing approximately 1.2% of the issued and outstanding Base Resources shares.
In addition, Base Resources' two largest shareholders, Pacific Road Capital Management GP II Limited and Pacific Road Capital II Pty Limited (owning 26.5% of Base Resources shares on issue) and Sustainable Capital Ltd (owning 24.8% of Base Resources shares on issue), have each provided a voting intention statement to Base Resources confirming that they intend to vote all of the Base Resources shares that they hold or control in favor of the Scheme, subject to no superior proposal emerging and the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of shareholders.
In connection with the Scheme, Energy Fuels has engaged BMO Capital Markets and SCP Resource Finance as its financial advisers, and Dentons Canada LLP as its Canadian legal counsel, Dentons Australia Limited as its Australian legal counsel and Dorsey & Whitney LLP as its U.S. legal Counsel. Base Resources has engaged Azure Capital as its financial adviser, and Herbert Smith Freehills as its Australian legal advisor.
Energy Fuels will be hosting a conference call and webcast on Monday, April 22, 2024 at 8:00 am ET ( 10:00 pm Australian Eastern Standard Time) to discuss the transaction.
You may dial in to the conference call, and participate in Q&A, by calling 1-888-664-6392, and you will be connected to the call by an Operator.
You may also access viewer-controlled Webcast slides and/or stream audio of the call, by following this link: WEBCAST
A replay of the call will be available until May 6, 2024 by calling (888) 390-0541 or (416) 764-8677 and entering the replay code, 227391#
The investor call presentation slides can be viewed on the Company's website at www.energyfuels.com .
THE TECHNICAL INFORMATION IN THIS PRESS RELEASE HAS BEEN PREPARED IN ACCORDANCE WITH JORC STANDARDS AND REVIEWED ON BEHALF OF THE COMPANY BY DAN KAPOSTASY , VP, TECHNICAL SERVICES OF Energy Fuels RESOURCES ( USA ) INC., A QUALIFIED PERSON UNDER BOTH SK-1300 AND NATIONAL INSTRUMENT 43-101 REGULATIONS. THE JORC COMPLIANT MINERAL RESOURCES AND RESERVES CONTAINED HEREIN WERE DISCLOSED BY BASE RESOURCES ON DECEMBER 14, 2023 . A QUALIFIED PERSON HAS NOT DONE SUFFICIENT WORK TO CLASSIFY THESE ESTIMATES AS CURRENT NI 43-101 OR S-K 1300 ESTIMATES OF MINERAL RESOURCES, MINERAL RESERVES OR EXPLORATION RESULTS. ACCORDINGLY, Energy Fuels IS NOT TREATING THESE ESTIMATES AS A CURRENT ESTIMATE OF MINERAL RESOURCES, MINERAL RESERVES, OR EXPLORATION RESULTS AND IS TREATING THE INFORMATION DISCUSSED ABOVE RELATING TO TOLIARA AS HISTORICAL IN NATURE.
Energy Fuels is a leading US-based uranium and critical minerals company. The Company, as the leading producer of uranium in the United States , mines uranium and produces natural uranium concentrates that are sold to major nuclear utilities for the production of carbon-free nuclear energy. Energy Fuels recently began production of advanced REE materials, including mixed REE carbonate, and plans to produce commercial quantities of separated REE oxides commencing in 2024. Energy Fuels also produces vanadium from certain of its projects, as market conditions warrant, and is evaluating the recovery of radionuclides needed for emerging cancer treatments. Its corporate offices are in Lakewood, Colorado , near Denver , and substantially all its assets and employees are in the United States . Energy Fuels holds two of America's key uranium production centers: the White Mesa Mill in Utah and the Nichols Ranch in-situ recovery (" ISR ") Project in Wyoming . The White Mesa Mill is the only conventional uranium mill operating in the US today, has a licensed capacity of over 8 million pounds of U 3 O 8 per year, and has the ability to produce vanadium when market conditions warrant, as well as REE products, from various uranium-bearing ores. The Nichols Ranch ISR Project is on standby and has a licensed capacity of 2 million pounds of U 3 O 8 per year. The Company recently acquired the Bahia Project in Brazil , which is believed to have significant quantities of titanium (ilmenite and rutile), zirconium (zircon) and REE (monazite) minerals. In addition to the above production facilities, Energy Fuels also has one of the largest NI 43-101 compliant uranium resource portfolios in the US and several uranium and uranium/vanadium mining projects in production, 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".
Base Resources is an Australian based, African focused, mineral sands producer and developer with a track record of project delivery and operational performance. Base Resources operates the established Kwale Operations in Kenya and is developing the Toliara project in Madagascar . Base Resources is an ASX and AIM listed company. Further details about Base Resources are available at www.baseresources.com.au .
Cautionary Note Regarding Forward-Looking Statements
This news release contains certain "Forward Looking Information" and "Forward Looking Statements" within the meaning of applicable United States and Canadian securities legislation, which may include, but are not limited to, statements with respect to: any expectation that the Company will maintain its position as a leading U.S.-based uranium and critical minerals company or as the leading producer of uranium in the U.S.; any expectation that the Scheme will be completed or if completed, completed on the terms and time proposed; any expectation that the Transaction will unlock significant value to both Energy Fuels and Base Resources shareholders due to valuable and immediate synergies; any expectation as to production levels or timing or duration of production from the Toliara Project or any of the Company's other mines or projects; any expectations as to costs of production at the Toliara Project, the Mill or any of the Company's mines or other projects; any expectation that any production at the Toliara Project or Mill will be world or globally competitive; and any expectation that Energy Fuels will be in a position to unlock the value of Toliara's low-cost Monazite, including in a manner that no other facility in the U.S. is capable of doing, or at all; any expectation that the Transaction will be highly accretive to Energy Fuels' shareholders on a net asset value per share basis, with potential to unlock significant further upside, or at all; any expectation that the addition of the Base Resources team will allow the Company to maximize the value of the Company's projects; any expectation that Energy Fuels' Phase 1 REE separation facility will be commissioned successfully; any expectation that the Phase 2 separation facility will complete engineering design or will receive all required permits and licenses; any expectation that Energy Fuels will construct its Phase 2 REE separation facility; any expectation that the Mill PFS will be published as anticipated on April 22, 2024 , or at all; the estimates and projections contained in the DFS2, Monazite PFS and Mill PFS, including, without limitation, any estimates of mineral resources and reserves; any expectation that the Company will upgrade and re-issue the DFS2, Monazite PFS and Mill PFS in conformity with NI-43-101 and S-K 1300; any expectation that the Project will operate and the combined company will generate positive cash flow as the U.S. – based REE market is developing, or in the event of fluctuations in REE prices; any expectation that Energy Fuels is well-capitalized and will be able to meet its working capital, project financing and other financial commitments; any expectation that Energy Fuels will be successful in its high-level discussions with numerous U.S. government agencies and other offices that provide financial support for critical mineral projects within the U.S. and internationally or that Energy Fuels will be successful in obtaining any grants, low-interest debt, non- or limited-recourse debt, loan guarantees, or other support vehicles from any such agencies or offices, or at all; any expectation that Energy Fuels will be successful in agreeing fiscal terms with the Government of Madagascar or in achieving sufficient fiscal and legal stability; any expectation that the current suspension relating to the Project will be lifted in the near future or at all; any expectation that the additional permits for the recovery of Monazite at the Project will be acquired on a timely basis or at all; any expectation that the Company will be successful in becoming a reliable, globally diversified, multi-decade supplier of U.S.-produced magnet REE oxides to EV manufacturers and other end-users; any expectation that the Company will be successful in entering the REE metal, alloy, and magnet-making space, in order to fully-integrate the entire REE magnet supply chain; any expectation that the Company will be successful in securing any additional low-cost Monazite concentrates globally, or at all; any expectation that the Mill will successfully continue to operate to the highest global standards for the protection of human health and the environment; any expectation that the Company will be successful in advancing its REE initiatives or that it will be successful in installing REE production capacity at the Mill and the timing of installation of any such production capacity; any expectation as to the success of the Company's permitting programs, including any permitting required for the construction and operation of the planned Phase 2 separation facility at the Mill; and any expectation that Toliara will become a world-class heavy mineral sands project. 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: satisfying various conditions to closing the Scheme; commodity prices and price fluctuations; engineering, construction, processing and mining difficulties, upsets and delays; permitting and licensing requirements and delays; changes to regulatory requirements; legal challenges; the availability of feed sources for the Mill; competition from other producers; public opinion; government and political actions; the failure of the Government of Madagascar to agree fiscal terms or provide the approvals necessary to achieve sufficient fiscal and legal stability on acceptable terms and conditions or at all; the failure of the current suspension affecting the Project to be lifted on a timely basis or at all; the failure of the Company to obtain the required permits for the recovery of Monazite from the Project; the failure of the Company to provide or obtain the necessary financing required to develop the Project; available supplies of Monazite; the ability of the Mill to produce rare earth carbonate, rare earth element oxides or other rare earth element products to meet commercial specifications on a commercial scale at acceptable costs or at all; market factors, including future demand for rare earth elements; the ability of the Mill to be able to separate radium or other radioisotopes at reasonable costs or at all; the estimates and projections in the updated technical reports to be prepared in compliance with NI 43-101 and S-K 1300 may differ from the estimates and projections contained in the DFS2, Monazite PFS and Mill PFS; actual results may differ from all such estimates and projections; 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.
Cautionary Note for U.S. Investors Concerning Mineral Resources and Reserves
CERTAIN TECHNICAL DISCLOSURE CONTAINED IN THIS NEWS RELEASE HAS BEEN PREPARED IN ACCORDANCE WITH JORC. JORC CODE DIFFERS FROM THE REQUIREMENTS OF THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC"), INCLUDING S-K 1300, AND THEREFORE INFORMATION CONTAINED IN THIS NEWS RELEASE MAY NOT BE COMPARABLE TO SIMILAR INFORMATION DISCLOSED IN FILINGS WITH THE SEC BY DOMESTIC UNITED STATES COMPANIES SUBJECT TO THE SEC'S REPORTING AND DISCLOSURE REQUIREMENTS.
____________________________________ | |
1 | Based on (a) Base Resource's fully diluted ordinary shares on issue of 1,239,116,949 (including performance rights that will vest by virtue of the Transaction), (b) a share exchange ratio of 0.0260, (c) Energy Fuels' closing share price on April 19, 2024 of US$5.84 per share and (d) A$0.065 per Base Resources share in cash. |
2 | In the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of shareholders. |
3 | The financial information relating to the Ranobe deposit's mineral sands is based on the definitive feasibility study prepared on September 27, 2021. This study constituted a "Feasibility Study" for the purposes of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 Edition ("JORC") and the Ore Reserves underpinning this study were estimated in accordance with JORC. The results from this study and the estimated Ore Reserves may not be comparable to (as the case may be) data or estimates under either NI 43-101 or S-K 1300– see note below under "Qualified Person". |
4 | The JORC estimate of Ore Reserves is presented for informational purposes only. A qualified person has not done sufficient work to classify these estimates as current NI 43-101 or S-K 1300 estimates of mineral resources, mineral reserves, or exploration results. Energy Fuels is not treating these estimates as a current estimate of mineral resources, mineral reserves, or exploration results – see note below under "Qualified Person". |
5 | The production and financial information relating to the Ranobe deposit's monazite is based on the pre-feasibility study prepared on December 14, 2023. This study constituted a "Pre-Feasibility Study" for the purposes of JORC and the Mineral Resources underpinning this study were estimated in accordance with JORC. The results from this study and the estimated Mineral Resources may not be comparable to (as the case may be) data or estimates under either NI 43-101 or S-K 1300 – see note below under "Qualified Person". |
6 | Based on Base fully diluted ordinary shares on issue of 1,239,116,949 (including performance rights that will vest by virtue of the Transaction), Energy Fuels undiluted common shares on issue of 163,651,897 and a share exchange ratio of 0.026. |
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Billion Dollar Uranium Market Growing at a Solid Rate Along With Rising Adoption Strategies
FN Media Group News Commentary - The Global Uranium Mining Market has consistently been growing over the past several years and is expected to continue for years to come. Uranium is a silver-white metal chemical element belonging to the lanthanide series of the periodic table. Its chemical symbol is U and its atomic order is 92. Each uranium atom has 92 protons and 92 electrons, 6 of which are valence electrons. Uranium is micro-radioactive, its isotopes are unstable, and uranium-238 and uranium-235 are the most common. A report from Market Reports World said that the global Uranium market size is expected to expand at a CAGR of 3.6% of 3.6% during the forecast period, reaching USD $3.27 Billion by 2027. The report said that the primary factors propelling the growth in the industry is primarily fueled by technological advancements, evolving consumer preferences, and the impact of government policies and regulations, which serve as drivers for expansion. Another report from 360Research Reports said: "The Global Uranium Mining, market is anticipated to rise at a considerable rate during the forecast period, between 2024 and 2031. In 2023, the market is growing at a steady rate and with the rising adoption of strategies by key players, the market is expected to rise over the projected horizon." Active mining companies in the markets this week include Stallion Uranium Corp. (OTCQB: STLNF) (TSX-V: STUD), CanAlaska Uranium Ltd. (OTCQX: CVVUF) (TSX-V: CVV), Denison Mines Corp (NYSE American: DNN), IsoEnergy Ltd. (OTCQX: ISENF) (TSX-V: ISO), Energy Fuels Inc . (NYSE American: UUUU).
360Research Reports continued: "North America, especially The United States, will still play an important role which cannot be ignored. Any changes from United States might affect the development trend of Uranium Mining. The market in North America is expected to grow considerably during the forecast period. The high adoption of advanced technology and the presence of large players in this region are likely to create ample growth opportunities for the market. Europe also play important roles in global market, with a magnificent growth in CAGR During the Forecast period 2024-2031. Despite the presence of intense competition, due to the global recovery trend is clear, investors are still optimistic about this area, and it will still be more new investments entering the field in the future."
Stallion Uranium Corp. (TSX-V: STUD) (OTCQB: STLNF) Commences Drilling on Appaloosa Uranium Target - 3,300 Meter Program Testing High Priority Appaloosa Target - Stallion Uranium Corp. (FSE: HM40) is pleased to announce that it has begun drilling on its high priority Appaloosa Target as part the Company's maiden drill program on its 100% owned Coffer Project in the prolific Southwestern Athabasca Basin in Saskatchewan, Canada.
Highlights:
- The objective of the drill program is the discovery of uranium mineralization associated with conductive electromagnetic (EM) anomalies.
- Drill holes are targeting multiple stacked geophysical anomalies including conductive EM anomalies, gravity low anomalies and magnetic low anomalies.
- Approximately 3,300 meters are planned in 3 drill holes.
- Stallion holds a 100% ownership of the project.
"Drilling marks a key milestone for Stallion as we move into more advanced exploration with potential to make a uranium discovery! We have been able to progress the Appaloosa target from a regional survey to an advanced drill target that hosts several known features associated with uranium mineralization," stated Drew Zimmerman, CEO. "Our systematic approach over such a large land package gives our team high confidence in drill testing the Appaloosa target."
Drill Program: The diamond drill program is the maiden drill program for Stallion Uranium. Drilling on the first hole is currently underway and will be the first drilling undertaken on Stallion's 100% owned Coffer Project. The Company has contracted CYR Drilling, a company with extensive drilling experience with a history of successful drill programs in the Southwestern Athabasca Basin. They will utilize one drill to complete a 3,300-meter program on the Appaloosa target. The target area hosts a ~6 km long EM conductor located on the contact between the Beaverlodge and Taltson geological domains. The contact between two domains is an optimal location for uranium bearing fluid to concentrate. The drill targets are along the identified EM conductor and will focus on coincident gravity and magnetic lows associated with alteration which have the potential to host uranium mineralization. The results from the recent ground EM survey are being plate modeled which will be integrated into the final drill targeting models.
Stallion will be announcing any anomalous scintillometer results from the program as a preliminary indication of the presence of radioactive materials if they are encountered. Final assay results will be released when available and are expected in the summer of 2024 after lithogeochemical analysis is completed.
Darren Slugoski, VP Exploration Canada, commented. "We are thrilled to announce that drill coring has begun on Coffer Project. This drilling program is the result from our successful exploration in 2023. We will continue to update market and shareholders with the news as we receive the results." CONTINUED … Read these full press releases and more news for Stallion Uranium at: https://www.financialnewsmedia.com/news-stud/
Other recent developments in the mining industry of note include:
CanAlaska Uranium Ltd. (OTCQX: CVVUF) (TSX-V: CVV) recently reported that drillhole WMA082-4 has intersected 13.75% eU 3 O 8 over 16.8 metres, including 40.30% eU 3 O 8 over 4.7 metres and 13.54% eU 3 O 8 over 2.4 metres at the Pike Zone as part of the ongoing winter exploration program on the West McArthur Joint Venture project (the "Project") in the eastern Athabasca Basin. The main objectives of the 2024 drill program are continued expansion of the Pike Zone discovery and along strike unconformity testing to the northeast and southwest. The West McArthur project, a Joint Venture with Cameco Corporation, is operated by CanAlaska that holds an 83.35% ownership in the Project (Figure 1). CanAlaska is sole-funding the 2024 West McArthur program, further increasing its majority ownership in the Project.
CanAlaska CEO, Cory Belyk, comments, "It is extremely rare to intersect uranium mineralization of this grade and width anywhere in the world, including the Athabasca Basin. This is a significant outcome for the West McArthur JV and CanAlaska shareholders. Since initial discovery in 2022, the CanAlaska team has believed Pike Zone had the potential for Cigar- and McArthur River-like uranium grades and thickness based on prior drilling results. The geologists have been laser focused on determining the geological controls in a clear and methodical approach and the results of this fantastic work are now achieving outcomes for our shareholders. Tier 1 uranium deposits always occur as 'pearls on a string' and we have now found a pearl. We look forward to the remainder of the winter program results from West McArthur in the backdrop of an eastern Athabasca region that requires a tier 1 uranium deposit discovery to maintain its current production profile."
IsoEnergy Ltd. (OTCQX: ISENF) (TSX-V: ISO) recently announced its strategic decision to reopen access to the underground at our Tony M uranium mine ("Tony M" or the "Mine) in the first half of 2024 ("H1-2024"), with the goal of restarting uranium production operations in 2025, should market conditions continue as expected. The decision to advance Tony M is underpinned by rising uranium prices, the climate of increasing support and demand for nuclear energy, and the recent announcement by Energy Fuels Inc. ("EFR") to restart its uranium circuit at the White Mesa Mill (the "Mill"), with whom IsoEnergy has a toll milling agreement.
Tony M, along with our Daneros and Rim projects, is one of three past-producing, fully-permitted, uranium mines in Utah owned by IsoEnergy, and is a large-scale, fully-developed and permitted underground mine that previously produced nearly one million pounds of U 3 O 8 during two different periods of operation, from 1979-1984 and from 2007-2008.
Energy Fuels Inc. (NYSE American: UUUU) recently reported its financial results for the year ended December 31, 2023. The Company's Annual Report on Form 10-K 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. html , 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.
Mark S. Chalmers, Energy Fuels' President and CEO, stated: "In 2023, Energy Fuels joined an exclusive club. With nearly $100 million in net income, we became one of the only profitable non-state-owned uranium mining companies in the world. There were two factors that contributed to our profitability: profitable uranium sales that captured the recent sharp rise in uranium prices and the sale of our non-core Alta Mesa project. The Alta Mesa sale was important, because it provided the Company with the funds needed to increase our uranium production and strategically diversify into the REE business. Keep in mind that while net income was less than Alta Mesa proceeds, this was by design, as we are investing heavily in growth to become a sustainably profitable, high-margin U.S. critical minerals company."
Denison Mines Corp. (NYSE American: DNN) recently announced that it has completed an acquisition of fixed and mobile MaxPERF Tool Systems from Penetrators Canada Inc. ("Penetrators"). Significantly, Penetrators has also agreed to work exclusively with Denison with respect to the use of the MaxPERF Tool Systems for uranium mining applications, and related services, in Saskatchewan for a 10-year period.
David Cates, Denison's President & CEO, commented, "We are pleased to enter into this exclusive arrangement with Penetrators and add the MaxPERF technology to Denison's in-house ISR mining toolkit, which we believe will further enhance our existing and significant competitive advantage in deploying the low-cost In-Situ Recovery ('ISR') mining method to our high-grade uranium deposits in the Athabasca Basin."
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Energy Fuels Announces 2023 Results: Record Net Income and Earnings per Share, Uranium Production Ramp-Up, and Near-Term Production of Separated Rare Earth Elements
Conference Call and Webcast on February 26, 2024
Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) ("Energy Fuels" or the "Company") today reported its financial results for the year ended December 31, 2023. The Company's Annual Report on Form 10-K 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.govedgar. html 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.
Financial Highlights:
- Record Annual Net Income of Nearly $100 Million : During the year ended December 31, 2023 , the Company earned net income of $99.76 million , or $0.63 per common share.
- Robust Balance Sheet with Over $220 million of Liquidity and No Debt: As of December 31, 2023 , the Company had $222.34 million of working capital (versus $116.97 million as of December 31, 2022 ), including $57.45 million of cash and cash equivalents, $133.04 million of marketable securities (uranium stocks and interest-bearing securities), $38.87 million of inventory, and no debt.
- Nearly $45 Million of Additional Liquidity from Market Value of Inventory: At current commodity prices, the Company's product inventory has a value of approximately $76.10 million , while the balance sheet reflects product inventory carried at cost of $31.16 million .
- Uranium Drives Revenue: Revenue was comprised of (i) sales of 560,000 pounds of uranium concentrates (" U 3 O 8 ") for $33.28 million , which resulted in a gross profit of $17.96 million and an average gross margin of 54%; (ii) sales of 153 metric tons (" tonnes ") of finished high purity, partially separated mixed rare earth carbonate (" RE Carbonate ") for $2.85 million ; and (iii) sale of 79,344 pounds of vanadium (" V 2 O 5 ") for $0.87 million .
- Alta Mesa Sale Funds Investment in Uranium and Rare Earth Production: The Company realized a gain of $119.26 million on the sale of the Company's Alta Mesa in situ recovery project in Texas (the " Alta Mesa Sale ") and Prompt Fission Neutron Assets that were used exclusively at Alta Mesa. The cash received from the Alta Mesa Sale helped to fund expenses associated with (i) preparing three (3) of our uranium mines for production and (ii) developing commercial rare earth element (" REE ") separation capabilities.
- Well-Stocked to Capture Market Opportunities: As of December 31, 2023 , the Company held 685,000 pounds of finished U 3 O 8 , 905,000 pounds of finished V 2 O 5 , and 11 tonnes of finished RE Carbonate in inventory. The Company holds an additional 436,000 pounds of U 3 O 8 as raw materials and work-in-progress inventory (for total finished, raw material and work-in-progress inventory of 1.12 million pounds of U 3 O 8 ), along with an estimated 1 - 3 million pounds of solubilized V 2 O 5 in tailings solutions that could be recovered in the future. In December 2023 , the Company purchased 100,000 pounds of U 3 O 8 and 480 tonnes of monazite from third parties.
Capitalizing on Strong Uranium Pricing:
- During the year ended December 31, 2023 , the Company sold 560,000 pounds of U 3 O 8 for $33.28 million or a realized sales price of $59.42 per pound. These sales resulted in a gross profit of $17.96 million ( $32.07 per pound of U 3 O 8 ), or a 54% gross margin.
- During 2023, the Company readied three of its permitted and developed uranium mines for uranium production, Pinyon Plain ( Arizona ), La Sal ( Utah ) and Pandora ( Utah ). In late December 2023 , the Company announced that all three uranium mines had commenced production on schedule.
- Once production is fully ramped up at these mines, which is expected by mid- to late-2024, the Company expects to be producing uranium at a run-rate of 1.1 to 1.4 million pounds per year.
- During 2024, the Company expects to produce approximately 150,000 to 500,000 pounds of U 3 O 8 from newly mined conventional ore, stockpiled ore, and recycled alternate feed materials, depending on the timing of the ramp up of production at the Company's Pinyon Plain, La Sal and Pandora mines, while increasing to higher levels of production in 2025 and beyond.
- The Company expects to issue an ore buying schedule in early 2024, describing the terms under which the Company is prepared to buy uranium and uranium/vanadium ore from third-party miners in the vicinity of the White Mesa Mill (the " Mill "), which is expected to contribute to the Company's production profile.
- During 2024, the Company expects to sell 200,000 to 300,000 pounds of U 3 O 8 into its existing portfolio of long-term uranium contracts, of which 200,000 pounds were sold during Q1-2024 at a realized price of $75.13 per pound, which resulted in a gross profit of $38.29 per pound, or gross margin of 51%.
- During Q1-2024, the Company contracted to sell an additional 100,000 pounds of uranium in March 2024 at an average sales price of $102.88 per pound, which it expects to result in a gross profit of approximately $66.04 per pound, or approximate gross margin of 64%. Assuming continued strength in uranium prices, the Company intends to capture further opportunities to selectively sell uranium into the spot market during 2024.
- In anticipation of continued strength in uranium markets, the Company is preparing two additional mines in Colorado and Wyoming (Whirlwind and Nichols Ranch) for expected production within one year. If market conditions remain strong, the Whirlwind and Nichols Ranch mines could potentially increase Energy Fuels' uranium production to a run-rate of over two million pounds of U 3 O 8 per year as early as 2025.
- In light of the current strength in the uranium market, the Company is planning to conduct exploration drilling on its Nichols Ranch area properties and underground delineation drilling at its Pinyon Plain mine, in order to increase the Company's uranium resources and mine life at its existing mines, as well as advance permitting on its large-scale Roca Honda , Sheep Mountain and Bullfrog uranium properties for additional uranium production in the future, which could expand the Company's uranium production to a run-rate of up to five million pounds of U 3 O 8 per year in the coming years.
- As of February 16, 2024 , the spot price of U 3 O 8 was $102.00 per pound and the long-term price of U 3 O 8 , which is the price most relevant for long-term uranium sales contracts, was $72.00 per pound, according to data from TradeTech.
Rare Earth Element Ramp-Up:
- The Mill's REE production is complementary to its uranium production and does not diminish the Mill's uranium production profile in any way.
- The Phase 1 modification and enhancements to the existing solvent extraction (" SX ") circuits at the Mill are expected to be completed on-schedule, and $7 million to $9 million below budget, by the end of Q1-2024, at which time the Company will be able to produce high purity separated REE oxides. Subject to securing sufficient monazite feed, "Phase 1" is expected to position Energy Fuels as one of the world's leading producers of separated neodymium-praseodymium (" NdPr ") outside of China .
- The Mill's "Phase 1" REE circuit is expected to have the capacity to produce approximately 800 to 1,000 tonnes of separated NdPr oxide per year. For reference, 1,000 tonnes of NdPr can be used in enough permanent REE magnets to power up to 1 million electric vehicles per year. "Phase 1" capital costs are expected to total between $16 million and $18 million , or approximately $7 million to $9 million less than our initial $25 million budget. During Q2-2024, the Company expects to produce about 25 – 35 tonnes of NdPr oxide to commission and optimize the NdPr circuit, after which time the Company expects to begin processing uranium ore and alternate feed materials for the large-scale production of uranium at the Mill for the remainder of the year.
- Due to the significant opportunity in REEs, Energy Fuels is engineering further enhancements at the Mill to increase NdPr oxide production capacity to approximately 3,000 tonnes – 5,000 tonnes per year by 2027 (" Phase 2 "), and to add a separate crack and leach facility to allow for the simultaneous operation of the Mill's conventional ore and REE processing circuits. The Company also intends to produce separated dysprosium (" Dy "), terbium (" Tb ") and potentially other advanced REE materials in the future from monazite and potentially other REE process streams by 2028 ( "Phase 3" ). Phase 2 and Phase 3 are subject to permitting, financing and receipt of sufficient monazite feed.
- To secure a cost-effective and reliable supply of monazite ore, Energy Fuels made significant progress in developing its Bahia Project in Brazil . During the first half of 2023, the Company completed 2,266 meters of sonic drilling at its Bahia Project in Brazil to confirm and further delineate the rare earth, titanium, and zirconium mineralization at the Bahia Project. The Company commenced further sonic drilling in Q1-2024. The Company is awaiting the results from the 2023 drilling campaign. The Company expects to complete an SK-1300 and NI 43-101 compliant mineral resource estimate on the Bahia Project during 2024.
- In December 2023 , the Company announced it had signed a non-binding Memorandum of Understanding (" MOU ") with Astron Corporation Limited to jointly develop the Donald Rare Earth and Mineral Sands Project, located in the Wimmera Region of the State of Victoria, Australia (the " Donald Project "). Under the terms of the MOU, Energy Fuels could earn into a 49% equity interest by investing Aus$180 million ( US$117 million ) into the Donald Project. The Donald Project has the potential to produce approximately 7,000 to 8,000 tonnes of monazite per year during its first phase, and 13,000 to 14,000 tonnes during its second phase, and is expected to be another low-cost source of feed for the Company's REE production at the Mill. This joint venture is subject to due diligence investigations and the negotiation of definitive agreements.
- The Company continues active discussions with several additional suppliers of natural monazite around the world to significantly increase the supply of feed for our growing REE initiative.
Vanadium Highlights:
- The Company produces high purity V 2 O 5 from time-to-time and carries that material in inventory for sale into market strength, including during Q1-2023 when the Company sold approximately 79,344 pounds of V 2 O 5 for a realized sales price of $10.98 per pound.
- The Company currently holds approximately 905,000 pounds of V 2 O 5 in inventory.
- As of February 16, 2024 , the spot price of V 2 O 5 was $6.88 per pound, according to data from Fastmarkets.
Medical Isotope Highlights:
- The Company continued advancing its program to evaluate the potential to recover radioisotopes from its process streams for use in emerging targeted alpha therapy (" TAT ") cancer therapeutics.
- In June 2023 , the Utah Division of Waste Management and Radiation Control issued the Company a research and development (" R&D ") license for the recovery of R&D quantities of Ra-226 at the Mill.
- During 2024, the Company intends to complete engineering on the R&D pilot facility for the production of Ra-226 at the Mill; to set up the first stages of the pilot facility; and to produce R&D quantities of Ra-226 at the Mill for testing by end-users of the product.
Mark S. Chalmers, Energy Fuels' President and CEO, stated:
"In 2023, Energy Fuels joined an exclusive club. With nearly $100 million in net income, we became one of the only profitable non-state-owned uranium mining companies in the world. There were two factors that contributed to our profitability: profitable uranium sales that captured the recent sharp rise in uranium prices and the sale of our non-core Alta Mesa project. The Alta Mesa sale was important, because it provided the Company with the funds needed to increase our uranium production and strategically diversify into the REE business. Keep in mind that while net income was less than Alta Mesa proceeds, this was by design, as we are investing heavily in growth to become a sustainably profitable, high-margin U.S. critical minerals company."
Chalmers continued, "Our nimble business plan enabled us to capture opportunities in the uranium market as prices surged beginning in late-2023. During 2023, we sold 560,000 pounds of uranium for about $60 per pound for total gross profits of $17.96 million and a 54% gross margin. However, uranium prices have risen significantly since then, and in Q1-2024, we intend to sell approximately 300,000 pounds of uranium under long-term contracts and on the spot market at an expected weighted average sales price of $84.38 per pound and at substantially higher gross margins. As long as market prices are strong, we will continue to selectively capitalize on spot market sales opportunities as we ramp up our production, in ways that are unique to our Company, in 2024 and beyond, and with limited capital.
"Furthermore, we have a bullish long-term view on uranium prices, and we are investing to increase production. We are ramping-up production at several of our uranium mines, which continue to proceed on-time and on-budget. In late-2023, we announced that we had begun ore production at our Pinyon Plain, La Sal , and Pandora mines. We currently expect to process ore from these conventional mines, along with alternate feed material recycling, at the Mill in the latter half of 2024. As a result, we intend to produce approximately 150,000 to 500,000 pounds of uranium during 2024 from both newly mined conventional ore and stockpiled alternate feed materials, increasing further in 2025, depending on the timing of the ramp up of production at the Company's Pinyon Plain, La Sal and Pandora mines."
"Looking further ahead, we are preparing two additional mines for production (the Whirlwind mine and the Nichols Ranch ISR Project), which have the potential to increase Company-wide production to a run-rate of about two million pounds of uranium per year by 2025. At the current time, only about 25% to 30% of our short-term, low-cost production is committed to contracts, and our contracts maintain some exposure to market prices. As a result, most of Energy Fuels' future uranium production is exposed to further market upside at this time. We are also planning an exploration drilling program on our Nichols Ranch Project and an underground delineation drilling program at our Pinyon Plain mine to increase our resources at those projects as well as advancing permitting efforts at three of our large-scale uranium mines, which could increase Company-wide production to a run-rate of up to five million pounds of uranium per year in the next several years."
Turning to the Company's REE opportunities, Chalmers noted, "Even as we capture today's opportunities in uranium, we are also advancing our REE initiatives. With relatively minimal capital expenditures, we are now positioned to capitalize on this potentially high-growth market. We believe now is the right time to secure a strategic position in the REE space, since REE prices are at relatively low levels, and because our unique ability to process radioactive ore at the Mill gives us a durable competitive advantage. We plan to commission our new NdPr circuit at the White Mesa Mill during Q2-2024 and produce about 25 – 35 tonnes of NdPr oxide, and are seeking to secure low-cost sources of monazite to feed current and future rare earth oxide crack-and-leach and separation circuits. We will not make major capital expenditures on any projects unless the REE economics build shareholder value. We are very excited about the long-term opportunity in REEs, especially because it is complementary to our uranium efforts, and does not diminish our short-, medium-, or long-term uranium opportunities."
Chalmers concluded, "Energy Fuels is taking a unique and attractive path in the critical minerals business. Unlike other companies, who are reliant on only uranium, Energy Fuels is taking a broader view of the critical mineral industry and is producing the materials necessary to power the energy transition. Over time, our intent is to build a multi-product, high value commodity portfolio, centered on uranium, that earns long-term, sustainable, and high-margin cashflows. I am excited to see our plans develop further in 2024."
Conference Call and Webcast at 8:30 am ET on Monday , February 26, 2024:
Energy Fuels will be hosting a conference call and webcast on February 26, 2024 at 8:30 am ET ( 6:30 am MT ) to discuss our 2023 financial results, the outlook for 2024, and our uranium, rare earths, vanadium, and medical isotopes initiatives.
To instantly join the conference call by phone, please use the following link to easily register your name and phone number. After registering, you will receive a call immediately and be placed into the conference call: RAPIDCONNECT
Alternatively, you may dial in to the conference call by calling 1-888-664-6392, and you will be connected to the call by an Operator.
You may also access viewer-controlled Webcast slides and/or stream the call by following this link: WEBCAST
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Selected Summary Financial Information:
Years Ended December 31, | |||||
(In thousands, except per share data) | 2023 | 2022 | 2021 | ||
Results of Operations: | |||||
Uranium concentrates revenues | $ 33,278 | $ — | $ — | ||
Vanadium concentrates revenues | 871 | 8,778 | 74 | ||
RE Carbonate revenues | 2,848 | 2,122 | 1,385 | ||
Total revenues | 37,928 | 12,515 | 3,184 | ||
Gross profit | 19,747 | 4,671 | 1,370 | ||
Operating loss | (32,367) | (44,938) | (35,425) | ||
Net income (loss) attributable to the company | 99,862 | (59,849) | 1,541 | ||
Basic net income (loss) per common share | 0.63 | (0.38) | 0.01 | ||
Diluted net income (loss) per common share | 0.62 | (0.38) | 0.01 | ||
December 31, | Percent | ||||
(In thousands) | 2023 | 2022 | Change | ||
Financial Position: | |||||
Working capital | $ 222,335 | $ 116,966 | 90 % | ||
Total current assets | 232,695 | 135,590 | 72 % | ||
Mineral properties | 119,581 | 83,539 | 43 % | ||
Property, plant and equipment, net | 26,123 | 12,662 | 106 % | ||
Total assets | 401,939 | 273,947 | 47 % | ||
Total current liabilities | 10,360 | 18,624 | (44) % | ||
Total liabilities | 22,734 | 29,538 | (23) % |
ABOUT ENERGY FUELS
Energy Fuels is a leading US-based critical minerals company. The Company, as the leading producer of uranium in the United States , mines uranium and produces natural uranium concentrates that are sold to major nuclear utilities for the production of carbon-free nuclear energy. Energy Fuels recently began production of advanced rare earth element (" REE ") materials, including mixed REE carbonate, and plans to produce commercial quantities of separated REE oxides in the future. Energy Fuels also produces vanadium from certain of its projects, as market conditions warrant, and is evaluating the recovery of radionuclides needed for emerging cancer treatments. Its corporate offices are in Lakewood, Colorado , near Denver , and substantially all its assets and employees are in the United States . Energy Fuels holds two of America's key uranium production centers: the White Mesa Mill in Utah and the Nichols Ranch in-situ recovery (" ISR ") Project in Wyoming . The White Mesa Mill is the only conventional uranium mill operating in the US today, has a licensed capacity of over 8 million pounds of U 3 O 8 per year, and has the ability to produce vanadium when market conditions warrant, as well as REE products, from various uranium-bearing ores. The Nichols Ranch ISR Project is on standby and has a licensed capacity of 2 million pounds of U 3 O 8 per year. The Company recently acquired the Bahia Project in Brazil , which is believed to have significant quantities of titanium (ilmenite and rutile), zirconium (zircon) and REE (monazite) minerals. In addition to the above production facilities, Energy Fuels also has one of the largest NI 43-101 compliant uranium resource portfolios in the US 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 United States and Canadian securities legislation, which may include, but are not limited to, statements with respect to: any expectation that the Company will maintain its position as a leading U.S.-based critical minerals company or as the leading producer of uranium in the U.S.; any expectation with respect to timelines to production; any expectation as to rates of production; any expectation as to quantities of uranium or NdPr oxides to be produced in 2024 or in any subsequent years; any expectation that production rates will increase in 2025 or in any future years; any expectation that the Company's permitting efforts will be successful and as to any potential future production from any mines that are in the permitting or development stage; any expectation that the Company will issue an ore buying schedule in 2024 or at all; any expectation as to future uranium sales, the price of any such sales or the gross profits or gross margins from any such sales; any expectations with respect to the Company's planned exploration programs; any expectation that the Mill's REE production will not diminish the Mill's uranium production profile in any way; any expectation that Energy Fuels will be successful in developing U.S. separation, or other value-added U.S. REE production capabilities at the Mill, or otherwise, including the timing of any such Phase 1, Phase 2, Phase 3 or other initiatives and the expected production capacity or capital costs associated with any such production capabilities; any expectation that the Company's planned Phase 1 separation facility will position the Company as one of the world's leading producers of NdPr outside of China ; any expectation as to the quantity of U 3 O 8 , RE Carbonate and V 2 O 5 the Company may hold as raw material and work-in-progress inventory or solubilized in tailings solution and the Company's ability to recover any such inventories in the future; any expectation with respect to the quantities of monazite to be acquired by Energy Fuels, or the quantities of RE Carbonate or REE oxides to be produced by the Mill; any expectation that the Company is well-stocked to capture market opportunities; any expectation that the Company may sell its separated NdPr oxide to electric vehicle manufacturers; any expectation that the Bahia Project will be a cost-effective and reliable supply of monazite ore for the Mill; any expectation that the Company will commence further sonic drilling at its Bahia Project in Q1-2024 or complete an SK-1300 and NI 43-101 compliant mineral resource estimate during 2024, or otherwise; any expectation that the Company's due diligence will be satisfactory and that the Company will enter into definitive agreements to jointly develop the Donald Project, the expected production levels associated with the Donald Project if it progresses and that, if developed, the Donald Project would be expected to be a low-cost source of feed for the Company's REE production at the Mill; any expectation that the Company will be successful in securing monazite from additional sources on satisfactory commercial terms or at all; any expectation that now is the right time to secure a strategic position in the REE space; any expectation that the Mill has a unique ability to process radioactive ore and that such ability gives the Company a durable competitive advantage; any expectation the Company will not make major capital expenditures on any projects unless the REE economics build shareholder value; any expectation about the long-term opportunity in REEs; any expectation the Company is taking a unique and attractive path in the critical minerals business or that the Company is taking a broad view of the many critical materials that are necessary to power the energy transition; any expectation that, over time, the Company will be successful in building a multi-product, high value commodity portfolio, centered on uranium, that earns long-term, sustainable, and high-margin cashflows; any expectation that the Company will complete engineering on its R&D pilot facility for the production of Ra-226 at the Mill, will set up the first stage of the pilot facility, and produce R&D quantities of Ra-226 at the Mill for testing by end-users of the product or at all; any expectation that the Company's evaluation of radioisotope recovery at the Mill will be successful; any expectation that the potential recovery of medical isotopes from any radioisotopes recovered at the Mill will be feasible; any expectation that any radioisotopes that can be recovered at the Mill will be sold on a commercial basis; any expectation as to the quantities to be delivered under existing uranium sales contracts; any expectation that the Company will be successful in completing any additional contracts for the sale of uranium to U.S. utilities on commercially reasonable terms or at all; any expectation that the Company will continue to selectively capitalize on spot market sales opportunities; and any expectation as to future uranium, vanadium or REE prices or market conditions. 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: commodity prices and price fluctuations; engineering, construction, processing and mining difficulties, upsets and delays; permitting and licensing requirements and delays; changes to regulatory requirements; legal challenges; the availability of feed sources for the Mill; competition from other producers; public opinion; government and political actions; available supplies of monazite; the ability of the Mill to produce RE Carbonate, REE oxides or other REE products to meet commercial specifications on a commercial scale at acceptable costs or at all; market factors, including future demand for REEs; the ability of the Mill to be able to separate radium or other radioisotopes at reasonable costs or at all; market prices and demand for medical isotopes; 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. html , 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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Energy Fuels Enters into MOU to Secure Near-Term, Large-Scale Australian Source of Rare Earth Minerals to Supply New U.S.-Based Supply Chain for Decades
Energy Fuels and Astron Corporation execute non-binding MOU to jointly develop the Donald Mineral Sands Project, a large heavy mineral sand deposit that has the potential to supply Energy Fuels with approximately 7,000 tonnes of rare earth-bearing monazite sand per year starting in 2026, ramping up to 14,000 tonnes per year soon thereafter.
Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) ( "Energy Fuels" or the "Company" ), a leading U.S. producer of uranium, rare earth elements (" REE "), and vanadium, is pleased to announce that it has entered into a non-binding Memorandum of Understanding (" MOU ") with Astron Corporation Limited (" Astron ") to jointly develop the Donald Rare Earth and Mineral Sands Project, located in the Wimmera Region of the State of Victoria, Australia (the " Donald Project "). The MOU describes indicative commercial terms and provides Energy Fuels with a binding exclusivity period to end on March 1, 2024 during which Energy Fuels will be entitled to conduct due diligence and the parties will negotiate definitive agreements.
The Donald Project is a world-class, world scale, 'shovel-ready' critical mineral deposit that Energy Fuels believes would provide it with another near-term, low-cost, and large-scale source of monazite sand in an REE concentrate (" REEC ") that would be transported to the Company's White Mesa Mill in Utah, USA (the " Mill ") for processing into REE oxides and other advanced REE materials and recovery of the contained uranium. Energy Fuels is announcing this non-binding MOU at this time, because Astron has determined that it is required to announce the MOU at this time under applicable Australian Securities Exchange (" ASX ") rules.
With supportive U.S. government policies, and U.S. and European companies increasingly focused on security of supply, Energy Fuels is rapidly creating a new significant REE supply chain that can reduce America's reliance on REE's from China . As part of this strategy, the Company is actively securing long-term sources of REEC through offtake (Chemours), joint venture (Astron), and direct ownership (the Company's 100% owned Bahia Project in Brazil ). Through these assets and potentially others, Energy Fuels is building a world significant REE oxide supply chain that the Company believes will be attractive to EV manufacturers and their Tier 1 suppliers.
THE DONALD PROJECT
With Energy Fuels' proposed investment of approximately A$180 million (approximately US$122 million at current exchange rates), and most licenses and permits in place (or at an advanced stage of completion), the Donald Project (see Figure 1) is expected to soon be a new, long-term source of several critical minerals key to the clean energy transition, including REE's, titanium, zircon, and uranium. The Donald Project is expected to provide Energy Fuels with 7,000 to 14,000 metric tons (" tonnes ") of REEC per year, containing 4,000 to 8,200 tonnes of total REE oxides (" TREO "), with commissioning and ramp-up expected to begin in 2026. Most of Energy Fuels' proposed investment is expected to be disbursed in 2025.
This annual quantity of REEC contains roughly 850 to 1,700 tonnes of neodymium-praseodymium (" NdPr ") oxide, 70 to 140 tonnes of dysprosium (" Dy ") oxide and 12 to 25 tonnes of terbium (" Tb ") oxide. The REEC from the Donald Project is also expected to contain approximately 50,000 to 100,000 pounds of low-cost recoverable uranium per year, which, in addition to the Company's large-scale uranium production from its numerous US mines and other sources, would be sold to the U.S. nuclear industry for the generation of clean, carbon-free electricity.
NdPr, Dy and Tb are known as the "magnet rare earths," as they are key ingredients in powerful permanent REE magnets used in the most efficient electric vehicles (" EVs "), wind generators, and other defense-related and advanced technologies. For scale, REEs provide significantly greater power and range for EVs, and the typical REE-powered EV uses about one kilogram (" kg ") of NdPr oxide per vehicle. Therefore, the Donald Project could supply enough of these critical elements for up to 1.4 million EVs per year.
The following tables summarize the updated Ore Reserve Statement for the Donald Project, prepared in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 Edition (" 2012 JORC Code "), as of June 27, 2023 . The Company is treating the Mineral Reserves disclosed in the table below as historical in nature as a Qualified Person (" QP ") for the Company has not conducted the due diligence necessary to classify these as current Mineral Reserves. There can be no assurance that additional due diligence work will convert the historical Mineral Reserves to current Mineral Reserves under S-K 1300 and NI 43-101:
MIN5532 | |||||||||||||
% of total HM | |||||||||||||
Tonnes | HM | Slimes | Oversize | Zircon | Rutile + Anatase | Ilmenite | Leucoxene | Monazite | Xenotime | ||||
Classification | (Mt) | ( %) | ( %) | ( %) | |||||||||
Proved | 263 | 4.4 | 15.4 | 9.8 | 16.7 | 5.5 | 21.6 | 25.9 | 1.8 | 0.67 | |||
Probable | 46 | 4.1 | 19.7 | 11.1 | 15.3 | 5.5 | 21.3 | 20.1 | 1.8 | 0.64 | |||
Total | 309 | 4.4 | 16.1 | 10.0 | 16.5 | 5.5 | 21.6 | 25.1 | 1.8 | 0.66 | |||
Notes: | |||||||||||||
1) The ore tonnes have been rounded to the nearest 1 Mt and grades have been rounded to two significant figures. | |||||||||||||
2) The Ore Reserve is based on Indicated and Measured Mineral Resources contained within the mine designs above an economic cut-off. | |||||||||||||
3) A break-even cut-off has been applied defining any material with product values greater than processing cost as Ore. | |||||||||||||
4) Mining recovery and dilution have been applied to the figures above. | |||||||||||||
5) The area is wholly within the mining license (MIN5532). | |||||||||||||
6) The rutile grades are a combination of rutile and anatase minerals. 7) The Ore Reserve estimates have been compiled in accordance with the guidelines defined in the 2012 JORC Code. | |||||||||||||
RL2002 outside of MIN5532 | ||||||||||
% of total HM | ||||||||||
Tonnes | HM | Slimes | Oversize | Zircon | Rutile + Anatase | Ilmenite | Leucoxene | Monazite | Xenotime | |
Classification | (Mt) | ( %) | ( %) | ( %) | ||||||
Proved | 152 | 5.6 | 7.1 | 18.8 | 21.1 | 9.4 | 31.3 | 18.2 | 1.8 | |
Probable | 364 | 4.1 | 13.7 | 15.7 | 17.1 | 7.5 | 32.8 | 19.3 | 1.6 | |
Total | 516 | 5.6 | 11.7 | 16.6 | 18.6 | 8.2 | 32.3 | 18.9 | 1.7 | |
Notes: | ||||||||||
1) The ore tonnes have been rounded to the nearest 1 Mt and grades have been rounded to two significant figures. | ||||||||||
2) The Ore Reserve is based on Indicated and Measured Mineral Resources contained within the mine designs above an economic cut-off. | ||||||||||
3) The economic cut-off is defined as the value of the products less the cost of processing. | ||||||||||
4) Mining recovery and dilution have been applied to the figures above. | ||||||||||
5) The updated RL2002 Ore Reserve does not include an announced figure on xenotime due to historical samples used in the Ore Reserve calculation not being analyzed for xenotime. | ||||||||||
6) The rutile grades are a combination of rutile and anatase minerals. | ||||||||||
7) The Ore Reserve estimates have been compiled in accordance with the guidelines defined in the 2012 JORC Code. |
THE DONALD PROJECT JOINT VENTURE:
The MOU sets out in broad terms the basis upon which the parties would enter into an Australian incorporated Joint Venture (the " Venture ") covering the tenements MIN5532 and RL2002, which together form the Donald Deposit (see the attached figure). The MOU provides for the continuation of due diligence by Energy Fuels and the negotiation of definitive and binding agreements governing the Venture. The transactions contemplated by the MOU, including formation of the Venture, are conditional on a number of factors, including the Company being satisfied with the results of its due diligence investigations and the ability of the parties to successfully negotiate and enter into definitive and binding agreements. There can be no assurance that the Company will enter into definitive agreements to govern the Venture, or if entered into that the terms will be as set out in the MOU.
The MOU contemplates that the Venture would initially consist of operations to mine 7.5 million tonnes per year of ore to produce approximately 200,000 to 250,000 tonnes per year of heavy mineral concentrate (" HMC ") and approximately 7,000 to 8,000 tonnes per year of monazite-bearing rare earth element concentrate (" REEC ") (" Phase 1 "). It is further contemplated that, as soon as practicable after commencing Phase 1 commercial production, the Venture would double ore production to 15 million tonnes per year to produce approximately 400,000 to 500,000 tonnes per year of HMC and approximately 13,000 to 14,000 tonnes per year of REEC (" Phase 2 ") for decades to come.
The MOU provides for Energy Fuels to invest A$180 million (approximately US$122 million at current exchange rates) to earn a 49% interest in the Venture, most of which is expected to be spent in 2025. In addition, the Company would issue to Astron common shares having a value of US$17.5 million in consideration of RL2002 being included in the Venture to cover the entire Donald Deposit.
Energy Fuels' investment of A$180 million is expected to satisfy most of the equity capital requirements for the construction of the Phase 1 project. Astron, with a 51% interest, would be the Manager and Operator of the Venture, with specified major decisions subject to approval of both parties. Any future Venture expenditures, including development of Phase 2, would be funded by Energy Fuels and Astron on a pro-rata basis.
The MOU contemplates that under the Venture, Energy Fuels would enter into an offtake agreement for 100% of the Donald Project's Phase 1 and Phase 2 REEC production based on market prices of contained rare earth elements. Astron would have the right, but not the obligation, to enter into an offtake agreement with the Venture for up to 100% of the HMC product at market prices. Following payment of all joint venture expenses, all profits from the Venture would be distributed to Energy Fuels and Astron, pro-rata according to their respective ownership percentages.
The MOU also provides that the agreements will provide Energy Fuels with a first right of refusal over participation in the development of Astron's Jackson Deposit which is contained in the tenement RL2003 and adjoins the Donald Deposit to the south-west (see the attached figure). The Donald Deposit and the Jackson Deposit, together, form the Donald Rare Earth and Mineral Sands Project.
The Donald Project would greatly supplement Energy Fuels' other near-term monazite supplies. Earlier in 2023, Energy Fuels announced the acquisition of its 100% owned Bahia Mineral Sand Project, which is comprised of 60+ square miles of mineral concessions in Brazil containing large in-ground heavy mineral sand resources, including monazite. The Company is currently completing a sonic drill program at the Bahia Project to expand the heavy mineral sand resources and guide mine planning and additional permitting. The Bahia Project is expected to commence production in 2026, producing in the range of 3,000 to 10,000 tonnes of REEC per year.
Therefore, between the Bahia Project and the Donald Project, Energy Fuels would control roughly 10,000 to 24,000 tonnes of low-cost REEC per year, containing approximately 1,150 to 2,700 tonnes of NdPr along with significant quantities of "heavy" REEs and uranium for decades to come. The Company is continuing to evaluate additional opportunities to secure low-cost, large-scale monazite concentrates globally.
Energy Fuels' NEW U.S.-CENTRIC RARE EARTH SUPPLY CHAIN:
For the past four years, Energy Fuels has been developing a secure, U.S.-centric REE oxide supply chain that sources monazite concentrates from the US and around the world. Monazite is an excellent source of REE's, as it has superior distributions of the 'magnet' REE's versus other minerals. Energy Fuels is utilizing excess capacity at the Mill, and installing additional infrastructure, to produce advanced REE materials, including mixed REE carbonate and separated REE oxides. The Mill is the only operable conventional uranium mill in the U.S., and these REE capabilities are additive to the Company's uranium production capabilities.
Energy Fuels is utilizing the Mill for REE recovery, as most major REE-bearing minerals, including monazite, bastnaesite, ionic clays, xenotime, and others, contain uranium, thorium, and other radioactive elements that become concentrated through the REE extraction process. Therefore, companies that process REE-bearing minerals must have the licenses, infrastructure, tailings capacity, and expertise in radioactive hydrometallurgy to properly manage, process, recover, and/or dispose of uranium, thorium and other radioactive elements. As a result, the Company believes the Mill is an ideal facility to perform these functions, as it already possesses these attributes and is further able to recover the associated uranium for beneficial use. The Mill is licensed and constructed in the United States and overseen by an array of federal and state government agencies with expertise in the processing of radioactive materials. The Mill has an exceptional record of regulatory compliance and operates to the highest global standards for the protection of human health and the environment.
Furthermore, the proven processing method for producing high purity separated REE oxides is solvent extraction (" SX "), and the Mill has been utilizing SX for over 40 years to produce high-purity uranium and vanadium oxides. Therefore, it has not been difficult for Energy Fuels to deploy this institutional knowledge and experience with relatively minor Mill modifications to produce mixed REE carbonates since 2021 and to begin producing separated REE oxides, expected in early 2024, that meet applicable specifications.
As previously announced, the Company is currently installing a "Phase 1" REE separation circuit (the " Phase 1 REE Separation Circuit ") within the Mill's existing SX building that will have the capacity to process 8,000 to 10,000 tonnes of REEC per year and produce up to 1,000 tonnes of high-purity NdPr oxide per year. Based on current committed REEC supplies, the Company expects to produce 40-50 tonnes of NdPr oxide in 2024, while continuing to negotiate for the procurement of additional feedstock. The Mill has pilot-tested NdPr separation at its in-house laboratory for over two years, which has allowed the Company to compile extensive real-time data that it is using to design and optimize its soon-to-be-operational NdPr circuit. As previously announced, the Phase 1 REE Separation Circuit is expected to be operational in Q1-2024. Also in Q1-2024, the Company plans to perform pilot-scale testing on "heavy" REE separation, including the production of high-purity Dy and Tb oxides, along with potentially samarium (" Sm + ") oxides and others.
The Company is also in the process of designing a "Phase 2" REE separation circuit (the " Phase 2 Separation Circuit ") and a "Phase 3" REE separation circuit (the " Phase 3 Separation Circuit ") at the Mill. The Phase 2 Separation Circuit, which is currently expected to be completed in 2027, subject to receipt of any required regulatory approvals and the Company securing sufficient supplies of REEC, will consist of expanding NdPr oxide capacity to process between 30,000 and 40,000 tonnes of REEC per year and produce approximately 3,000 to 4,000 tonnes of NdPr oxide per year. The Company also plans to construct a dedicated "crack-and-leach" circuit in conjunction with its Phase 2 Separation Circuit, in order to allow the Mill to simultaneously process conventional uranium ore and REEC independently, thereby allowing for more efficient utilization of Mill capacity. The Phase 3 Separation Circuit, which is currently expected to be completed in 2028, subject to receipt of any required regulatory approvals, will consist of installing the capacity to produce "heavy" REE oxides, including Dy, Tb, and potentially Sm and other oxides. The Company continues to evaluate opportunities to enter the REE metal, alloy, and magnet-making space, in order to fully-integrate the entire REE magnet supply chain.
Assuming completion of the transactions contemplated by the MOU and formation of the Venture, the Company would expect to receive Phase 1 quantities of REEC from the Donald Project commencing in 2026. The Phase 1 quantities of REEC from the Donald Project would then be processed through the Mill's Phase 1 Separation Circuit, which is expected to be completed in 2024, for the production of NdPr oxide, with the heavies, Tb and Dy, either stockpiled at the Mill for future processing for the recovery of Tb and Dy in the Mill's Phase 3 Separation Circuit when constructed (currently expected to be in 2028) or sold as an SM + carbonate to third parties in the interim. The Company currently expects that the Phase 2 Separation Circuit at the Mill will be completed prior to receipt of Phase 2 quantities of REE from the Donald Project.
MARK S. CHALMERS , PRESIDENT AND CEO OF Energy Fuels STATED:
"Energy Fuels is working to secure future large-scale in-situ rare earth element projects around the world, which we expect to become low-cost sources of feed to supply our U.S.-centric REE supply chain in the coming years. Earlier in 2023, we acquired the Bahia Project in Brazil , and now we are working toward partnering with Astron on the Donald Project in Australia . Energy Fuels' goal is to source monazite from the US and around the World and become a reliable, globally diversified, multi-decade supplier of U.S.-produced magnet REE oxides to EV manufactures and other end-users. Our announcement today should help people 'connect-the-dots' to better understand the magnitude of our burgeoning REE business strategy. We are earning into an essentially 'de-risked' heavy mineral sand project that is in Australia , has many years of detailed resource and project evaluation, and has all the main regulatory approvals in place or well-advanced.
"And we are able to develop this U.S.-centric REE supply chain without diminishing our U.S.-leading uranium production capability in any way. Uranium will always continue to be our primary focus. However, REE and uranium production go hand-in-hand, as the REEC from the Donald Project contains decades of low-cost recoverable uranium, which perfectly complements the Company's large-scale uranium production. While this represents only a small part of our total uranium production, these pounds of uranium are very valuable to us because their incremental cost of production is expected to be very low, while providing a secure source of uranium for the generation of clean, carbon-free electricity in the U.S.
"We are putting Utah on the map as a responsible domestic supplier of many clean energy and critical minerals, including uranium, rare earths, vanadium, and even potentially life-saving medical isotopes. We are not aware of any other U.S. company able to produce as many advanced materials that contribute to carbon-reduction and electrification as Energy Fuels."
QUALIFIED PERSON
The technical information in this press release has been prepared in accordance with both U.S. and Canadian requirements set out in SK-1300 and National Instrument 43-101 and reviewed on behalf of the company by Dan Kapostasy , VP, Technical Services of Energy Fuels Resources ( USA ) Inc., a Qualified Person under both SK-1300 and National Instrument 43-101 regulations. The JORC compliant Mineral Reserves contained herein were disclosed by Astron Corporation Limited on 27 June 2023 . The Company has not completed the necessary due diligence on the Mineral Reserves to disclose them as current Mineral Reserves. Therefore, the Company is treating the contained tables as historical in nature as a Qualified Person has not done sufficient work to classify the Mineral Reserves as current under S-K 1300 or NI 43-101. These historical Mineral Reserves are relevant to this disclosure, as they provide information on the potential size and scale of MIN5532 and RL2002. The method used to estimate the in-situ resources was ordinary kriging utilizing octant and ellipsoid search parameters. The mineralized zone was domained into three zones: low grade, medium grade (>3% & 5%) heavy mineral. The block model used a 100 m x 200 m x 1 m block, which is approximately half the drillhole spacing in the well drilled areas. The model was visually verified against drillholes, SWATH plots were used to check average grade trends, and the current estimate is similar to previous estimates. To convert the mineral resources to mineral reserves, modifying factors including mining methods (dry mining), metallurgical testwork (including processing size assumptions, >38 µm size fraction) producing both a heavy mineral concentrate (Ti and Zr minerals) and a rare earth mineral concentrate (monazite + xenotime), capital cost, operating costs, and environmental factors. Additional details regarding the historical Mineral Reserves are available in the Astron Corporation Limited press release dated 27 June, 2023 :
https://www.astronlimited.com.au/wp-content/uploads/2023/06/20230627-Phase-2-Ore-Reserve-Update.pdf
ABOUT Energy Fuels
Energy Fuels is a leading US-based uranium and critical minerals company. The Company, as the leading producer of uranium in the United States , mines uranium and produces natural uranium concentrates that are sold to major nuclear utilities for the production of carbon-free nuclear energy. Energy Fuels recently began production of advanced REE materials, including mixed REE carbonate, and plans to produce commercial quantities of separated REE oxides commencing in 2024. Energy Fuels also produces vanadium from certain of its projects, as market conditions warrant, and is evaluating the recovery of radionuclides needed for emerging cancer treatments. Its corporate offices are in Lakewood, Colorado , near Denver , and substantially all its assets and employees are in the United States . Energy Fuels holds two of America's key uranium production centers: the White Mesa Mill in Utah and the Nichols Ranch in-situ recovery (" ISR ") Project in Wyoming . The White Mesa Mill is the only conventional uranium mill operating in the US today, has a licensed capacity of over 8 million pounds of U 3 O 8 per year, and has the ability to produce vanadium when market conditions warrant, as well as REE products, from various uranium-bearing ores. The Nichols Ranch ISR Project is on standby and has a licensed capacity of 2 million pounds of U 3 O 8 per year. The Company recently acquired the Bahia Project in Brazil , which is believed to have significant quantities of titanium (ilmenite and rutile), zirconium (zircon) and REE (monazite) minerals. In addition to the above production facilities, Energy Fuels also has one of the largest NI 43-101 compliant uranium resource portfolios in the US and several uranium and uranium/vanadium mining projects in production, 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 .
ABOUT ASTRON
Astron Corporation Limited (ASX: ATR) is an Australian-based company listed on the ASX. With over 35 years of operating history, Astron has been involved in mineral sands processing, downstream product development, as well as the marketing and sales of zirconium and titanium related products. Astron's prime focus is on the development of its large, long-life Donald Rare Earths and Mineral Sands Project in regional Victoria, Australia . Astron's website is www.astronlimited.com.au .
Cautionary Note Regarding Forward-Looking Statements: This news release contains certain "Forward Looking Information" and "Forward Looking Statements" within the meaning of applicable United States and Canadian securities legislation, which may include, but are not limited to, statements with respect to: any expectation that the Company will maintain its position as a leading U.S.-based uranium and critical minerals company or as the leading producer of uranium in the U.S.; any expectation that the transactions contemplated by the MOU will be completed, or the terms on which it will be completed, and that the Venture will be formed; any expectation as to production levels or timing or duration of production from the Donald Project or any of the Company's other mines or projects; any expectations as to costs of production at the Donald Project or any of the Company's mines or other projects; any expectation that the Company will complete a sonic drill program at the Bahia Project, or that any such program will expand the heavy mineral sand resources and guide mine planning and additional permitting; any expectation that the Company will be successful in creating a new REE supply chain that can reduce America's reliance on China that will be attractive to EV manufacturers and their Tier 1 suppliers or at all; any expectation that the Company will be successful in becoming a reliable, globally diversified, multi-decade supplier of U.S.-produced magnet REE oxides to EV manufacturers and other end-users; any expectation that the Company will be successful in entering the REE metal, alloy, and magnet-making space, in order to fully-integrate the entire REE magnet supply chain; any expectation that any ore reserves estimated to date will accurately reflect actual reserves or resources; any expectation that the Company's A$180 million investment in the Venture will satisfy most of the equity capital requirements for the construction of Phase 1 of the Donald Project; any expectation that the Company will be successful in securing any additional low-cost monazite concentrates globally, or at all; any expectation that the Mill will successfully continue to operate to the highest global standards for the protection of human health and the environment; any expectation that the Company will be successful in advancing its REE initiatives or that it will be successful in installing REE production capacity at the Mill and the timing of installation of any such production capacity; any expectation as to the success of the Company's permitting programs; and any expectation that the Company will be successful in its medical isotopes program. 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: the results of due diligence investigations relating to the Donald Project yet to be performed; the inability to negotiate satisfactory definitive agreements relating to the Venture; commodity prices and price fluctuations; engineering, construction, processing and mining difficulties, upsets and delays; permitting and licensing requirements and delays; changes to regulatory requirements; legal challenges; the availability of feed sources for the Mill; competition from other producers; public opinion; government and political actions; available supplies of monazite; the ability of the Mill to produce rare earth carbonate, rare earth element oxides or other rare earth element products to meet commercial specifications on a commercial scale at acceptable costs or at all; market factors, including future demand for rare earth elements; the ability of the Mill to be able to separate radium or other radioisotopes at reasonable costs or at all; market prices and demand for medical isotopes; 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.
Cautionary Note for U.S. Investors Concerning Mineral Resources and Reserves: Certain technical disclosure contained in this news release has been prepared in accordance with the JORC Code . The JORC Code differs from the requirements of the U.S. Securities and Exchange Commission (" SEC ") and resource information contained in this news release may not be comparable to similar information disclosed by domestic United States companies subject to the SEC's reporting and disclosure requirements.
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SOURCE Energy Fuels Inc.
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Cosa Resources Announces Summer Exploration Plans for Athabasca Basin Uranium Projects
Cosa Resources Corp. (TSXV: COSA) (OTCQB: COSAF) (FSE: SSKU) ("Cosa" or the "Company") is pleased to announce its summer exploration plans for its portfolio of Athabasca Basin uranium projects.
Highlights
Diamond drilling at Ursa to follow up positive winter drilling results and test second high priority target area
Ambient Noise Tomography (ANT) surveys to prioritize strike at Ursa and follow-up airborne survey results at Orion
Airborne Electromagnetic (EM) and Gravity surveying at Aurora and Orbit to advance these shallow, prospective projects toward drill readiness for 2025
Keith Bodnarchuk, President & CEO, commented: "After a successful winter drill program, we are eager to return to the field and continue exploration at the 100% owned Ursa Project. Alongside summer drilling at Ursa, including following up on the exciting results at drill hole UR-24-03, we will be advancing multiple other projects to drill readiness for 2025. With the completion of our oversubscribed C$6.5 million bought deal financing earlier this year, we are fully funded to complete this work and well positioned to take advantage of a strengthening uranium market by expanding our pipeline of exciting drill targets across many of our highly underexplored uranium projects."
Andy Carmichael, VP of Exploration, commented: "We are planning a busy summer season in the southeastern Athabasca with exploration plans that respond to the encouraging results of initial drilling at Ursa and reflect the discovery potential we see in our Orion, Aurora, and Orbit projects. Completing ANT before resuming drilling at Ursa will improve prioritization of existing targets and potentially highlight new target areas on trend. ANT work at Orion will follow-up the prominent, kilometre-scale sandstone hosted conductivity anomaly identified in 2023 and guide future exploration efforts. Work at Aurora and Orbit will advance these prospective projects towards drill readiness, which, despite being within 25 kilometres of the Key Lake Mill, have seen little to no modern exploration."
Ursa and Orion Ambient Noise Tomography Surveys
Ambient Noise Tomography (ANT) surveying is planned at Ursa and Orion beginning in May (Figures 1 to 3). Cosa expects ANT to prove a rapid, low-cost, low-impact method to evaluate broad areas for prospective structures and alteration zones. Using data collected from a grid of compact, standalone sensors to measure naturally occurring seismic activity, ANT produces a three-dimensional model of subsurface seismic wave velocity. As the Athabasca sandstone is relatively homogenous and seismic wave velocity varies with changes in the host rock, velocity variations can be attributed to post-Athabasca faulting and/or alteration zones characteristic of the region's high-grade uranium deposits. Although ANT is relatively new to the Athabasca Basin, recent exploration drilling in the region targeting ANT anomalies has successfully intersected zones of hydrothermal alteration at depth.
At Ursa, ANT will be deployed over the 27-kilometres of conductive strike length hosting the alteration and structure intersected by UR24-03 at Kodiak, the Kodiak North, Smokey, and Panda West target areas, and all three weakly mineralized historical drill holes within the Project (Figure 2). Cosa anticipates preliminary ANT results will influence Ursa summer drilling planned to begin in August.
At Orion, ANT will follow up a prominent zone of anomalous sandstone conductivity identified by Cosa's 2023 MobileMT™ survey. The 4-kilometre-long, 1.4-kilometre-wide anomaly is coincident with flexures in basement conductive trends (Figure 3). Cosa will use ANT to locate seismic velocity anomalies coincident with the conductivity features and to optimize the locations of ground EM surveying used to generate targets for diamond drilling.
Aurora and Orbit Airborne Surveys
Cosa will complete comprehensive airborne electromagnetic (EM) and gravity surveys to advance its Aurora and Orbit properties toward drill readiness for 2025 (Figure 4). EM surveying will be completed by Geotech Ltd.'s helicopter borne VTEM™ Plus system with the objective of identifying basement-hosted conductivity anomalies consistent with prospective graphitic structures and/or large zones of hydrothermal alteration. Gravity surveying will be completed by Xcalibur Multiphysics's Falcon® Airborne Gravity Gradiometer system (AGG) with the objective of identifying gravity anomalies consistent with large zones of hydrothermal alteration and to improve the understanding of basement geology. Top priority drill targets would be gravity low anomalies coincident with basement-hosted conductive features. Airborne surveys commenced in early May.
Ursa Diamond Drilling
Planning is ongoing for summer diamond drilling at Ursa. Drilling is expected to include following-up the broad zone of hydrothermal alteration and post Athabasca structure intersected well above the unconformity by drill hole UR24-03 (Figure 5; see Cosa news release dated April 24, 2024) as well as initial drill testing of a second target area. It is anticipated that ANT survey results will be used to influence drill strategy and targeting.
Figure 1 – Cosa's Portfolio of Athabasca Basin Region Uranium Exploration Properties
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Figure 2 – Ursa ANT Survey Areas over 2023 MobileMT™ Results
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Figure 3 – Orion ANT Survey Area at over 2023 MobileMT™ Results
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Figure 4 – Aurora and Orbit Airborne Survey Areas
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Figure 5 – Cross Section of the Kodiak Target Area (Looking Northeast)
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About Cosa Resources Corp.
Cosa Resources is a Canadian uranium exploration company operating in northern Saskatchewan. The portfolio comprises roughly 209,000 ha across multiple projects in the Athabasca Basin region, all of which are underexplored, and the majority reside within or adjacent to established uranium corridors.
Cosa's award-winning management team has a long track record of success in Saskatchewan. In 2022, members of the Cosa team were awarded the AME Colin Spence Award for their previous involvement in discovering IsoEnergy's Hurricane deposit. Prior to Hurricane, Cosa personnel led teams or had integral roles in the discovery of Denison Mines' Gryphon deposit and 92 Energy's Gemini Zone and held key roles in the founding of both NexGen and IsoEnergy.
Cosa's primary focus through 2024 is initial drilling at our Ursa Project, which captures over 60-kilometres of strike length of the Cable Bay Shear Zone, a regional structural corridor with known mineralization and limited historical drilling. It potentially represents the last remaining eastern Athabasca corridor to not yet yield a major discovery. Modern geophysics completed by Cosa in 2023 identified multiple high-priority target areas characterized by conductive basement stratigraphy beneath or adjacent to broad zones of inferred sandstone alteration – a setting that is typical of most eastern Athabasca uranium deposits. Initial drilling results from Ursa in winter 2024 are positive and include the intersection of a broad zone of alteration with associated structure in the Athabasca sandstone located 250 to 460 metres above the sub-Athabasca unconformity. Follow-up is planned in the second half of 2024.
Qualified Person
The Company's disclosure of technical or scientific information in this press release has been reviewed and approved by Andy Carmichael, P.Geo., Vice President, Exploration for Cosa. Mr. Carmichael is a Qualified Person as defined under the terms of National Instrument 43-101.
Contact
Keith Bodnarchuk, President and CEO
info@cosaresources.ca
+1 888-899-2672 (COSA)
Cautionary Statements
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The information contained herein contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. "Forward-looking information" includes, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future, including, without limitation, planned exploration activities. Generally, but not always, forward-looking information and statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or the negative connotation thereof or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative connotation thereof. Forward-looking statements in this news release include, among others, statements relating to: the exploration, development, and production at the Company's mineral projects.
Forward‐looking statements and forward‐looking information relating to any future mineral production, liquidity, enhanced value and capital markets profile of the Company, future growth potential for the Company and its business, and future exploration plans are based on management's reasonable assumptions, estimates, expectations, analyses and opinions, which are based on management's experience and perception of trends, current conditions and expected developments, and other factors that management believes are relevant and reasonable in the circumstances, but which may prove to be incorrect. Assumptions have been made regarding, among other things, the price of uranium and other commodities; no escalation in the severity of public health crises; costs of exploration and development; the estimated costs of development of exploration projects; the Company's ability to operate in a safe and effective manner and its ability to obtain financing on reasonable terms.
These statements reflect the Company's respective current views with respect to future events and are necessarily based upon a number of other assumptions and estimates that, while considered reasonable by management, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause actual results, performance, or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward‐looking statements or forward-looking information and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: the Company's dependence on one mineral project; precious metals price volatility; risks associated with the conduct of the Company's mining activities; regulatory, consent or permitting delays; risks relating to reliance on the Company's management team and outside contractors; the Company's inability to obtain insurance to cover all risks, on a commercially reasonable basis or at all; currency fluctuations; risks regarding the failure to generate sufficient cash flow from operations; risks relating to project financing and equity issuances; risks and unknowns inherent in all mining projects; contests over title to properties, particularly title to undeveloped properties; laws and regulations governing the environment, health and safety; the ability of the communities in which the Company operates to manage and cope with the implications of public health crises; the economic and financial implications of public health crises to the Company; operating or technical difficulties in connection with mining or development activities; employee relations, labour unrest or unavailability; the Company's interactions with surrounding communities; the Company's ability to successfully integrate acquired assets; the speculative nature of exploration and development; stock market volatility; conflicts of interest among certain directors and officers; lack of liquidity for shareholders of the Company; litigation risk; the ongoing military conflict around the world; general economic factors; and the factors identified under the caption "Risk Factors" in the Company's management discussion and analysis and other public disclosure documents.
Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information or implied by forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company undertakes no obligation to update or reissue forward-looking information as a result of new information or events except as required by applicable securities laws.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/208453
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Tisdale Clean Energy Corp. Presents in Red Cloud's Virtual Webinar Series
Tisdale Clean Energy Corp. (CSE: TCEC) is pleased to announce that the company is presenting a live virtual corporate update hosted by Red Cloud Financial Services on May 6th, 2024 at 2pm ET.
We invite our shareholders, and all interested parties to register for the webinar and participate in the live Q&A session at the end of the presentation moderated by Red Cloud.
The replay will be emailed out to all webinar registrants proceeding the event and will also be available on the Red Cloud website.
For more information and to register: https://redcloudfs.com/events/rcwebinar-tcec/.
Learn about an undervalued microcap explorer developing a near-surface uranium deposit within a larger, highly prospective exploration opportunity in the Athabasca Basin.
Commodities to be covered: Uranium
About Tisdale Clean Energy Corp.
Tisdale Clean Energy is a uranium exploration and development company developing the Fraser Lakes B Uranium Deposit within the larger South Falcon East project, Athabasca Basin, Saskatchewan.
About Red Cloud Securities Inc.
Red Cloud Securities Inc. is an IIROC-regulated investment dealer focused on providing a full range of brokerage services to all investor types focused in the junior resource sector. Our services include Investment Banking, Research, Institutional and Retail Trading, Institutional Sales, and Retail Investment Advisory services.
About Red Cloud Financial Services Inc.
Red Cloud Financial Services Inc. is a globally focused capital markets advisory firm that provides a full range of executive strategy, media, marketing, and corporate access services. Our breadth of services combines with our significant knowledge of the junior mining industry combine for unique product offering. The company was founded by capital markets professionals with extensive experience in the junior mining industry.
For further information:
Tisdale Clean Energy Corp.
Alex Klenman, CEO
6049704330
aklenman@tisdalecleanenergy.com
For additional information contact marketing@redcloudfs.com or visit:
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www.facebook.com/RedCloudFinancialServices
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Canadian Natural Resources Limited Reports Voting Results at Annual and Special Meeting
Canadian Natural Resources Limited (TSX: CNQ) (NYSE: CNQ) held its Annual and Special Meeting of Shareholders on May 2, 2024. The result of the vote by shareholders for each resolution is reported below.
| ||
Votes For | Votes Withheld | |
Catherine M. Best | 739,666,794 97.19% | 21,395,027 2.81% |
M. Elizabeth Cannon | 755,414,889 99.26% | 5,646,932 0.74% |
N. Murray Edwards | 734,115,206 96.46% | 26,946,615 3.54% |
Christopher L. Fong | 730,264,360 95.95% | 30,797,461 4.05% |
Ambassador Gordon D. Giffin | 681,630,086 89.56% | 79,431,703 10.44% |
Wilfred A. Gobert | 749,993,920 98.55% | 11,067,902 1.45% |
Christine M. Healy | 759,396,832 99.78% | 1,664,989 0.22% |
Steve W. Laut | 752,522,642 98.88% | 8,539,180 1.12% |
Honourable Frank J. McKenna | 713,843,507 93.80% | 47,218,314 6.20% |
Scott G. Stauth | 755,136,229 99.22% | 5,925,592 0.78% |
David A. Tuer | 721,224,440 94.77% | 39,837,382 5.23% |
Annette M. Verschuren | 757,804,674 99.57% | 3,257,147 0.43% |
Votes For | Votes Withheld | |
| 733,200,212 94.14% | 45,678,373 5.86% |
Votes For | Votes Against | |
| 774,321,586 99.41% | 4,556,996 0.59% |
Votes For | Votes Against | |
| 748,228,501 98.31% | 12,833,315 1.69% |
Canadian Natural is a senior crude oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa.
Canadian Natural Resources LIMITED
T (403) 517-6700 F (403) 517-7350 E ir@cnrl.com
2100, 855 - 2 Street S.W. Calgary, Alberta, T2P 4J8
www.cnrl.com
SCOTT G. STAUTH
President
MARK A. STAINTHORPE
Chief Financial Officer
LANCE J. CASSON
Manager, Investor Relations
Trading Symbol - CNQ
Toronto Stock Exchange
New York Stock Exchange
Certain information regarding the Company contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Refer to our website for complete forward-looking statements www.cnrl.com
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Canadian Natural Resources Limited Announces Further Details Regarding Share Split
Canadian Natural Resources Limited (TSX: CNQ) (NYSE: CNQ) ("Canadian Natural") announced today that it has set June 3, 2024 as the record date (the "Record Date") for the previously announced two for one split of its common shares (the "Share Split"). The Share Split was approved by shareholders of Canadian Natural at its annual and special meeting of shareholders held on May 2, 2024. On June 10, 2024 (the "Payment Date"), shareholders of record as of the close of business on the Record Date will receive one additional share for every one common share held.
As of the close of markets on May 2, 2024, Canadian Natural had 1,068,104,423 common shares issued and outstanding. Adjusted for the Share Split, there would have been 2,136,208,846 common shares issued and outstanding.
The Share Split will not dilute shareholders' equity and there will be no change to the interest, rights or privileges of common shares. It is believed that the Share Split will encourage greater market liquidity for Canadian Natural's common shares and provide opportunities for ownership of Canadian Natural's common shares by a wider group of investors.
The Toronto Stock Exchange (the "TSX") and the New York Stock Exchange ("NYSE") have determined that the common shares will trade on a due bill basis from June 3, 2024 (the Record Date) to June 10, 2024, inclusive (the "Due Bill Trading Period"). A due bill is an entitlement attached to listed securities undergoing a material corporate action, such as the Share Split. Any trades that are executed during the Due Bill Trading Period will be flagged to ensure purchasers receive the entitlement to the additional common shares issuable as a result of the Share Split. The common shares will commence trading on a split-adjusted basis on June 11, 2024 (the ex-distribution trading date), as of which date purchases of common shares will no longer have the attaching entitlement to the additional common share. The due bill redemption date will be June 11, 2024.
No action is required by shareholders in connection with the Share Split. Existing share certificates representing common shares of Canadian Natural will remain effective and should be retained by shareholders and should not be forwarded to Canadian Natural or Computershare Investor Services Inc. ("Computershare"). Computershare will electronically issue the appropriate number of common shares to CDS Clearing and Depository Services Inc. and the Depository Trust Company for distribution to non-registered (beneficial) shareholders. Non-registered shareholders who hold their common shares in an account with their investment dealer or other intermediary will have their accounts automatically updated to reflect the Share Split in accordance with the applicable brokerage account providers' procedures. On or about June 10, 2024, Computershare will send out certificates representing the additional common shares issued to registered shareholders as a result of the Share Split.
The Share Split is not expected to result in taxable income or in any gain or loss to shareholders for Canadian federal income tax purposes. Shareholders are advised to consult with their own tax advisors for further information. All share and per share data for future periods will reflect the Share Split. Canadian Natural's equity-based compensation plans as well as its normal course issuer bid will be adjusted to reflect the Share Split.
Canadian Natural is a senior crude oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa.
Canadian Natural Resources LIMITED
T (403) 517-6700 F (403) 517-7350 E ir@cnrl.com
2100, 855 - 2 Street S.W. Calgary, Alberta, T2P 4J8
www.cnrl.com
SCOTT G. STAUTH
President
MARK A. STAINTHORPE
Chief Financial Officer
LANCE J. CASSON
Manager, Investor Relations
Trading Symbol - CNQ
Toronto Stock Exchange
New York Stock Exchange
Certain information regarding the Company contained herein, including but not limited to the Share Split, the Record Date, the Payment Date, the due bill trading dates, the ex-distribution date, the due bill redemption date and the Canadian federal income tax consequences of the Share Split, constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Refer to our website for complete forward-looking statements www.cnrl.com.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/207833
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Canadian Natural Resources Limited Announces Quarterly Dividend
Canadian Natural Resources Limited (TSX: CNQ) (NYSE: CNQ) announces that its Board of Directors has declared a quarterly cash dividend on its common shares of $1.05 (one dollar and five cents) per common share on a pre-stock split basis or $0.525 (fifty-two and one half cents) per common share after giving effect to the two for one stock split of the common shares, subject to approval at the Company's Annual and Special Meeting of Shareholders on May 2, 2024. The dividend will be payable on July 5, 2024 to shareholders of record at the close of business on June 17, 2024.
As previously announced on February 29, 2024, the Board of Directors increased the quarterly dividend by 5% to $1.05 per common share. This demonstrates the confidence that the Board of Directors has in the sustainability of our business model, our strong balance sheet and the strength of our diverse, long life low decline reserves and asset base. The Company's leading track record of dividend increases continues, with 2024 being the 24th consecutive year of dividend increases with a compound annual growth rate ("CAGR") of 21% over that time.
Canadian Natural is a senior crude oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa.
Canadian Natural Resources LIMITED
T (403) 517-6700 F (403) 517-7350 E ir@cnrl.com
2100, 855 - 2 Street S.W. Calgary, Alberta, T2P 4J8
www.cnrl.com
SCOTT G. STAUTH
President
MARK A. STAINTHORPE
Chief Financial Officer
LANCE J. CASSON
Manager, Investor Relations
Trading Symbol - CNQ
Toronto Stock Exchange
New York Stock Exchange
Certain information regarding the Company contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Refer to our website for complete forward-looking statements. www.cnrl.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/207722
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Canadian Natural Resources Limited Announces 2024 First Quarter Results
Canadian Natural's (TSX: CNQ) (NYSE: CNQ) President, Scott Stauth, commented on the Company's first quarter results, "Canadian Natural is a world class company and during our 35 years of operations, we've delivered significant value, including recently reaching a position where, commencing in 2024, we are returning 100% of our free cash flow to our shareholders. Crude oil price forecasts have strengthened for the remainder of 2024, including improvements in West Texas Intermediate ("WTI"), Western Canadian Select ("WCS") and Synthetic Crude Oil ("SCO") pricing over those prices experienced in the first quarter of 2024, driving significant targeted free cash flow generation going forward.
Canadian Natural's large, unique and diversified asset base provides a key competitive advantage enabling us to effectively allocate capital across our asset base and manage the pace and timing of development activities, maximizing value for our shareholders. We are executing on our 2024 plan which is strategically weighted to longer cycle thermal development projects in the first half of the year and shorter cycle growth projects in the second half of the year, which aligns with increased market egress and improved forward strip crude oil pricing. As a result, we target to finish the year with strong exit rates as conventional activity ramps up in the second half of the year.
In Oil Sands Mining and Upgrading, at the Horizon site, we are well prepared for 2024 turnaround activity and final tie ins of the reliability enhancement project in the second quarter of the year which will be followed by targeted strong production in the second half of the year with high upgrader utilization. Through optimization efforts and early turnaround work done in early 2024, we have reduced the Horizon turnaround to 28 days from 30 days and improved the commissioning schedule for the reliability enhancement project. These optimizations will advance and shorten commissioning timing after the turnaround to support high targeted utilization and production rates in the second half of the year.
We have a defined path to reduce our environmental footprint and continue delivering sustainable, responsibly produced energy that the world needs. We are committed to supporting Canada's and Alberta's climate goals and have robust environmental targets, including net zero greenhouse gas ("GHG") emissions for the oil sands by 2050. We are uniquely positioned with diverse, long life low decline assets, which are ideal for applying GHG reduction technologies and providing industry leading environmental performance. It is important to continue working together with the Canadian and Alberta governments to make the Pathways Alliance a transformative industry collaboration and achieve meaningful GHG reductions in Canada. We believe Canadian energy is one of the most responsibly produced sources of energy in the world and should be the preferred energy choice."
Canadian Natural's Chief Financial Officer, Mark Stainthorpe, also added, "In Q1/24, we delivered strong financial results, including adjusted net earnings of approximately $1.5 billion and adjusted funds flow of $3.1 billion, which drove significant returns to shareholders totaling $1.7 billion in the quarter. Commencing in 2024, we are returning 100% of free cash flow to shareholders, as per our free cash flow allocation policy, and continue to manage the allocation on a forward looking annual basis.
At Canadian Natural, our culture of continuous improvement and employee ownership alignment with shareholders drives our teams to create significant value across all areas of the Company. Our effective and efficient operations combined with our flexible capital allocation maximizes value for our shareholders."
HIGHLIGHTS
Three Months Ended | ||||||||||
($ millions, except per common share amounts) | Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
Net earnings | $ | 987 | $ | 2,627 | $ | 1,799 | ||||
Per common share | - basic | $ | 0.92 | $ | 2.43 | $ | 1.63 | |||
- diluted | $ | 0.91 | $ | 2.41 | $ | 1.62 | ||||
Adjusted net earnings from operations (1) | $ | 1,474 | $ | 2,546 | $ | 1,881 | ||||
Per common share | - basic (2) | $ | 1.38 | $ | 2.36 | $ | 1.71 | |||
- diluted (2) | $ | 1.37 | $ | 2.34 | $ | 1.69 | ||||
Cash flows from operating activities | $ | 2,868 | $ | 4,815 | $ | 1,295 | ||||
Adjusted funds flow (1) | $ | 3,138 | $ | 4,419 | $ | 3,429 | ||||
Per common share | - basic (2) | $ | 2.93 | $ | 4.09 | $ | 3.12 | |||
- diluted (2) | $ | 2.91 | $ | 4.05 | $ | 3.08 | ||||
Cash flows used in investing activities | $ | 1,392 | $ | 946 | $ | 1,153 | ||||
Net capital expenditures (3) | $ | 1,113 | $ | 975 | $ | 1,257 | ||||
Abandonment expenditures | $ | 162 | $ | 149 | $ | 137 | ||||
Daily production, before royalties | ||||||||||
Natural gas (MMcf/d) | 2,147 | 2,231 | 2,139 | |||||||
Crude oil and NGLs (bbl/d) | 975,668 | 1,047,541 | 962,908 | |||||||
Equivalent production (BOE/d) (4) | 1,333,502 | 1,419,313 | 1,319,391 | |||||||
(1)Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. (2)Non-GAAP Ratio. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. (3)Non-GAAP Financial Measure. The composition of this measure was updated in the fourth quarter of 2023 and has been updated for all periods presented. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. (4)A barrel of oil equivalent ("BOE") is derived by converting six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of crude oil (6 Mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, or to compare the value ratio using current crude oil and natural gas prices since the 6 Mcf:1 bbl ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. |
The strength of Canadian Natural's long life low decline asset base, supported by safe, effective and efficient operations, makes our business unique, robust and sustainable. In Q1/24, the Company generated strong financial results, including:
Net earnings of approximately $1.0 billion and adjusted net earnings from operations of approximately $1.5 billion.
Cash flows from operating activities of approximately $2.9 billion.
Adjusted funds flow of approximately $3.1 billion.
Canadian Natural continues to maintain a strong balance sheet and financial flexibility, with approximately $6.8 billion in liquidity(1) as at March 31, 2024.
Subsequent to quarter end, the Company repaid US$0.5 billion of 3.8% debt securities due April 15, 2024.
Canadian Natural achieved its $10 billion net debt level at year end 2023 and is returning 100% of free cash flow(1) in 2024 to shareholders, per the Company's free cash flow allocation policy. The Company will manage the allocation of free cash flow on a forward looking annual basis, while managing working capital and cash management as required.
(1) Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of this press release and the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024.
Canadian Natural continues to focus on safe, effective and efficient operations, and delivered quarterly average production in Q1/24 of 1,333,502 BOE/d, consisting of total liquids production of 975,668 bbl/d and natural gas production of 2,147 MMcf/d.
The Company is targeting strong production from its Oil Sands Mining and Upgrading assets in the second half of the year, as we optimize turnaround activity, complete final tie ins and advance commissioning of the reliability enhancement project in Q2/24.
Canadian Natural has significant growth opportunities across its asset base, including sustainable production enhancements at its Oil Sands Mining and Upgrading operations.
Near-term projects include the reliability enhancement project at Horizon, which targets to increase the two-year average SCO capacity by approximately 14,000 bbl/d by extending the turnaround schedule to once every two years. Additionally, the debottlenecking project at the Scotford Upgrader targets to add incremental capacity at the Athabasca Oil Sands Project ("AOSP") of approximately 5,600 bbl/d net to Canadian Natural.
Medium-term projects include the Naphtha Recovery Unit Tailings Treatment ("NRUTT") project at Horizon, which targets to add incremental production of approximately 6,300 bbl/d of SCO, reduce GHG emissions and lower reclamation costs.
Long-term projects at our Oil Sands operations include combining In-Pit Extraction Process ("IPEP") and Paraffinic Froth Treatment ("PFT") that have the potential to add approximately 195,000 bbl/d of additional annual bitumen production, reduce GHG emissions and lower reclamation costs.
The Company's 2024 development plan has conventional activity strategically weighted to the second half of 2024 to better align with increased market egress and improved crude oil pricing, maximizing value for our shareholders. Following completion of the Trans Mountain Expansion ("TMX") pipeline, there will be ample egress and optionality for our crude oil products.
Strong free cash flow generation is targeted in the last nine months of the 2024, given improved crude oil forward strip pricing as of April 30, 2024:
WTI of US$79.95/bbl, an improvement of approximately US$3/bbl from US$76.97/bbl experienced in Q1/24.
SCO at a US$2.47/bbl price premium to WTI, an improvement of approximately US$10/bbl from a US$7.54/bbl discount experienced in Q1/24.
WCS differential strengthening to a discount to WTI of US$13.17/bbl, an improvement of approximately US$6/bbl from the US$19.34/bbl discount experienced in Q1/24.
The Company continues to evaluate and implement opportunities to maximize netbacks through the diversification of sales and optimized blending and transportation options through diverse market access. Canadian Natural has optionality for crude oil exports, including the following pipeline commitments:
In Q1/24, the Company increased its commitment on Flanagan South by 55,000 bbl/d to 77,500 bbl/d, further expanding the Company's heavy oil diversification and market access to the United States Gulf Coast ("USGC").
94,000 bbl/d on Trans Mountain Expansion ("TMX") pipeline that creates additional crude oil market diversification opportunities on the west coast, both by land and by water.
10,000 bbl/d on the Base Keystone Pipeline, with direct access to the USGC.
RETURNS TO SHAREHOLDERS
Canadian Natural has a strong history of growing its sustainable dividend for 24 consecutive years and commencing in 2024, we are now returning 100% of free cash flow to shareholders.
Returns to shareholders in Q1/24 were strong, totaling approximately $1.7 billion, comprised of $1.1 billion of dividends and $0.6 billion through the repurchase and cancellation of approximately 6.7 million common shares at a weighted average price of $90.78 per share.
Year to date in 2024, up to and including May 1, 2024, the Company has returned a total of approximately $3.1 billion directly to shareholders through $2.2 billion in dividends and $0.9 billion through the repurchase and cancellation of approximately 9.6 million common shares.
Subsequent to quarter end, the Company declared a quarterly cash dividend on its common shares of $1.05 (one dollar and five cents) per common share on a pre-stock split basis or $0.525 (fifty-two and one half cents) per common share after the two for one share split of the common shares, subject to shareholder approval at the Company's Annual and Special Meeting of Shareholders on May 2, 2024. The quarterly dividend will be payable on July 5, 2024 to shareholders of record at the close of business on June 17, 2024.
As previously announced on February 29, 2024, the Board of Directors increased the quarterly dividend by 5% to $1.05 per common share. This demonstrates the confidence that the Board of Directors has in the sustainability of our business model, our strong balance sheet and the strength of our diverse, long life low decline reserves and asset base. The Company's leading track record of dividend increases continues, with 2024 being the 24th consecutive year of dividend increases with a compound annual growth rate ("CAGR") of 21% over that time.
On February 28, 2024, Canadian Natural's Board of Directors approved a resolution to subdivide the Company's common shares on a two for one basis, subject to shareholder approval at the Company's Annual and Special Meeting of Shareholders on May 2, 2024. The Company will also be required to obtain all regulatory approvals, including TSX approval.
OPERATIONS REVIEW AND CAPITAL ALLOCATION
Canadian Natural has a balanced and diverse portfolio of assets, primarily Canadian-based, with international exposure in the UK section of the North Sea and Offshore Africa. Canadian Natural's production is well balanced between light crude oil, medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil) and SCO (herein collectively referred to as "crude oil") and natural gas and NGLs. This balance provides optionality for capital investments, maximizing value for the Company's shareholders.
Underpinning this asset base is the Company's long life low decline production, representing approximately 79% of total budgeted liquids production in 2024, the majority of which is zero decline high value SCO production from the Company's world class Oil Sands Mining and Upgrading assets. The remaining balance of the Company's long life low decline production comes from its top tier thermal in situ oil sands operations and Pelican Lake heavy crude oil assets. The combination of these long life low decline assets, low reserves replacement costs, and effective and efficient operations results in substantial and sustainable adjusted funds flow throughout the commodity price cycle.
In addition, Canadian Natural maintains a substantial inventory of low capital exposure projects within the Company's conventional asset base. These projects can be executed quickly and, in the right economic conditions, provide excellent returns and maximize value for our shareholders. Supporting these projects is the Company's undeveloped land base which enables large, repeatable drilling programs that can be optimized over time. Additionally, Canadian Natural maximizes long-term value by maintaining high ownership and operatorship of its assets and has an extensive infrastructure network, allowing the Company to control the nature, timing and extent of development. Low capital exposure projects can be stopped or started relatively quickly depending upon success, market conditions or corporate needs.
Canadian Natural's balanced portfolio, built with both long life low decline assets and low capital exposure assets, enables effective capital allocation, production growth and value creation.
Drilling Activity | Three Months Ended | |||||||||||
Mar 31, 2024 | Mar 31, 2023 | |||||||||||
(number of wells) | Gross | Net | Gross | Net | ||||||||
Crude oil (1) | 62 | 61 | 88 | 83 | ||||||||
Natural gas | 23 | 16 | 26 | 21 | ||||||||
Dry | - | - | 2 | 2 | ||||||||
Subtotal | 85 | 77 | 116 | 106 | ||||||||
Stratigraphic test / service wells | 452 | 386 | 455 | 394 | ||||||||
Total | 537 | 463 | 571 | 500 | ||||||||
Success rate (excluding stratigraphic test / service wells) | 100% | 98 % | ||||||||||
(1)Includes bitumen wells. |
- Canadian Natural drilled a total of 77 net crude oil and natural gas producer wells in Q1/24 compared to 106 net wells in Q1/23, a decrease of 29 net wells over this time period. This decrease in drilling activity reflects the Company's strategic decision to focus on longer cycle development opportunities in the first half of 2024 and shorter cycle development opportunities in the second half of 2024, as previously outlined in the Company's 2024 budget press release.
North America Exploration and Production
Crude oil and NGLs - excluding Thermal In Situ Oil Sands | |||||||||
Three Months Ended | |||||||||
Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
Crude oil and NGLs production (bbl/d) | 237,481 | 243,157 | 234,465 | ||||||
Net wells targeting crude oil | 38 | 42 | 60 | ||||||
Net successful wells drilled | 38 | 42 | 58 | ||||||
Success rate | 100% | 100 % | 97 % |
North America E&P liquids production, excluding thermal in situ, averaged 237,481 bbl/d in Q1/24, comparable to Q1/23 levels. As previously outlined in the 2024 budget, the Company has strategically allocated capital for its conventional assets to the latter part of 2024 to better align with incremental market egress, driving strong targeted 2024 exit rates.
Primary heavy crude oil production averaged 78,431 bbl/d in Q1/24, comparable to Q1/23 levels, reflecting strong results from the Company's multilateral wells in the Mannville and Clearwater fairways which offset natural field declines.
The Company is targeting to drill 148 net multilateral wells in 2024, 12 more than budgeted, as we are shifting certain dry natural gas activity to these higher returning multilateral heavy oil wells. The majority of this activity is strategically planned for the second half of 2024.
Operating costs(1) in the Company's primary heavy crude oil operations averaged $19.16/bbl (US$14.21/bbl) in Q1/24, a decrease of 11% from Q1/23 levels, primarily reflecting lower energy costs.
Pelican Lake production averaged 45,145 bbl/d in Q1/24, a decrease of 6% from Q1/23 levels, reflecting low natural field declines from this long life low decline asset.
Operating costs at Pelican Lake averaged $9.75/bbl (US$7.23/bbl) in Q1/24, comparable to Q1/23 levels.
North America light crude oil and NGLs production averaged 113,905 bbl/d in Q1/24, an increase of 5% from Q1/23 production which was impacted by a third party pipeline outage. Production in Q1/24 reflects strong drilling results from the Company's liquids-rich Montney and Deep Basin assets partially offset by natural field declines.
Operating costs in the Company's North America light crude oil and NGLs operations averaged $15.25/bbl (US$11.31/bbl) in Q1/24, a decrease of 18% from Q1/23 levels, reflecting increased production and lower energy costs.
North America Natural Gas | |||||||||
Three Months Ended | |||||||||
Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
Natural gas production (MMcf/d) | 2,135 | 2,218 | 2,127 | ||||||
Net wells targeting natural gas | 16 | 9 | 21 | ||||||
Net successful wells drilled | 16 | 9 | 21 | ||||||
Success rate | 100% | 100 % | 100 % |
Canadian Natural's North America natural gas production averaged 2,135 MMcf/d in Q1/24, comparable to Q1/23 production which was impacted by a third party pipeline outage. Production in Q1/24 reflects strong results from the Company's capital efficient drill to fill development plan, offset by natural field declines.
North America natural gas operating costs averaged $1.27/Mcf in Q1/24, a decrease of 11% from Q1/23 levels, primarily reflecting lower energy costs.
(1) Calculated as production expense divided by respective sales volumes. Natural gas and NGLs production volumes approximate sales volumes.
Thermal In Situ Oil Sands | |||||||||
Three Months Ended | |||||||||
Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
Bitumen production (bbl/d) | 268,155 | 278,422 | 242,884 | ||||||
Net wells targeting bitumen | 23 | - | 25 | ||||||
Net successful wells drilled | 23 | - | 25 | ||||||
Success rate | 100% | - % | 100 % |
Thermal in situ long life low decline production averaged 268,155 bbl/d in Q1/24, an increase of 10% from Q1/23 levels, driven by strong execution on Cyclic Steam Stimulation ("CSS") and Steam Assisted Gravity Drainage ("SAGD") pad developments in 2023.
Thermal in situ operating costs averaged $14.05/bbl (US$10.42/bbl) in Q1/24, a decrease of 12% from Q1/23 levels, primarily reflecting higher production volumes and lower energy costs.
The Company successfully completed the planned turnaround at Jackfish ahead of schedule in April 2024, and has an upcoming turnaround at Kirby North in May 2024. As a result of completing the turnaround at Jackfish ahead of schedule, the total impact to Q2/24 average production is now targeted to be approximately 15,300 bbl/d, an improvement from the previous target of 17,100 bbl/d.
Canadian Natural has decades of strong capital efficient growth opportunities on its long life low decline thermal in situ assets. As outlined in our 2024 budget, we continue to develop these assets in a disciplined manner to deliver safe and reliable thermal in situ production with the following opportunities:
At Primrose, the Company is currently drilling two CSS pads which are targeted to come on production in Q2/25. At Wolf Lake, the Company recently drilled one SAGD pad which is targeted to come on production in Q1/25.
At Jackfish, the first of two SAGD pads that were drilled in 2023 has ramped up to its targeted full production capacity in April 2024, ahead of budget. The second pad is targeted to ramp up to its full production capacity in Q4/24, supporting continued high utilization rates at the Jackfish facilities. Additionally, the Company is targeting to drill one SAGD pad at Jackfish in the second half of 2024, with production from this pad targeted to come on in Q3/25.
Canadian Natural has been piloting solvent enhanced oil recovery technology on certain thermal in situ assets with an objective to increase bitumen production while reducing the Steam to Oil Ratio ("SOR") and GHG intensities by 40% to 50% and optimizing solvent recovery. This technology has the potential for application throughout the Company's extensive thermal in situ asset base.
At Kirby North, the commercial scale solvent SAGD pad development is approximately 90% complete and the Company is targeting to begin solvent injection in July 2024.
At Primrose, the Company is continuing to use its solvent enhanced oil recovery pilot in the steam flood area to optimize solvent efficiency and to further evaluate the commercial development opportunity.
North America Oil Sands Mining and Upgrading
Three Months Ended | |||||||||
Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
Synthetic crude oil production (bbl/d) (1)(2) | 445,209 | 500,133 | 458,228 | ||||||
(1)SCO production before royalties and excludes production volumes consumed internally as diesel. (2)Consists of heavy and light synthetic crude oil products. |
Canadian Natural remains focused on safe, reliable, effective and efficient operations of its world class Oil Sands Mining and Upgrading assets. In Q1/24, the Company delivered average production of 445,209 bbl/d of high value SCO, a decrease of 3% from Q1/23 levels. Production in Q1/24 reflected planned and unplanned maintenance activities, including the advancement of the Scotford Upgrader planned turnaround to March 2024 from April 2024. These activities in Q1/24 reduced Oil Sands Mining and Upgrading production by approximately 45,000 bbl/d of SCO from what would have been achieved otherwise. Through the actions discussed below and other optimization efforts, the Company is targeting to recover these daily production volumes in the last three quarters of 2024.
Oil Sands Mining and Upgrading operating costs are top tier, averaging $24.85/bbl (US$18.43/bbl) in Q1/24, comparable to Q1/23 levels.
Canadian Natural has the following upcoming turnarounds, including schedule optimizations, planned at our Oil Sands Mining and Upgrading operations:
At Horizon, a planned turnaround is targeted to begin on May 15, 2024. Through continuous improvement, optimization efforts and early turnaround work done in Q1/24 during unplanned maintenance activities, the Company has reduced the targeted duration of the turnaround to 28 days from 30 days.
Additionally, following the turnaround, the Company is optimizing the commissioning schedule of the reliability enhancement project, which is targeted to increase Q3/24 SCO production.
At AOSP, a 49 day turnaround is targeted to begin in September 2024, when the Scotford Upgrader will run at reduced rates, impacting annual production by approximately 11,000 bbl/d.
The Company continues to progress sustainable production enhancements at both Horizon and AOSP.
At Horizon, the Company targets to complete the remaining components and tie-ins related to the reliability enhancement project during the planned turnaround in Q2/24.
This project targets to increase capacity of the zero decline, high value SCO production over a two year timeframe by shifting the planned turnarounds to once every two years from the current annual cycle, reducing downtime and increasing overall reliability. In 2025, annual production is targeted to increase by approximately 28,000 bbl/d, with the two year average annual SCO capacity targeted to increase by approximately 14,000 bbl/d.
At the Scotford Upgrader, a debottlenecking project, which targets to add incremental capacity at AOSP of approximately 5,600 bbl/d net to Canadian Natural, is targeted to be completed during the planned Fall 2024 turnaround.
At Horizon, the Company is progressing the Naphtha Recovery Unit Tailings Treatment ("NRUTT") project that targets incremental production of approximately 6,300 bbl/d of SCO following mechanical completion in Q3/27. This project is targeted to reduce GHG emissions, equivalent to 6% of Horizon's total Scope 1 emissions, and will result in lower reclamation costs.
International Exploration and Production
Three Months Ended | |||||||||
Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
Crude oil production (bbl/d) | 24,823 | 25,829 | 27,331 | ||||||
Natural gas production (MMcf/d) | 12 | 13 | 12 |
- International E&P crude oil production volumes averaged 24,823 bbl/d in Q1/24, a decrease of 9% from Q1/23 levels, reflecting natural field declines and maintenance activities.
MARKETING
Three Months Ended | ||||||||||
Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | ||||||||
Benchmark Commodity Prices | ||||||||||
WTI benchmark price (US$/bbl) (1) | $ | 76.97 | $ | 78.33 | $ | 76.11 | ||||
WCS heavy differential (discount) to WTI (US$/bbl) (1) | $ | (19.34 | ) | $ | (21.90 | ) | $ | (24.74 | ) | |
WCS heavy differential as a percentage of WTI (%) (1) | 25% | 28 % | 33 % | |||||||
Condensate benchmark price (US$/bbl) | $ | 72.79 | $ | 76.22 | $ | 79.83 | ||||
SCO price (US$/bbl) (1) | $ | 69.43 | $ | 78.64 | $ | 78.18 | ||||
SCO premium (discount) to WTI (US$/bbl) (1) | $ | (7.54 | ) | $ | 0.31 | $ | 2.07 | |||
AECO benchmark price (C$/GJ) | $ | 1.94 | $ | 2.52 | $ | 4.12 | ||||
Realized Prices | ||||||||||
Exploration & Production liquids realized price (C$/bbl) (2)(3)(4)(5) | $ | 70.01 | $ | 69.39 | $ | 58.85 | ||||
SCO realized price (C$/bbl) (1)(3)(4)(5) | $ | 88.84 | $ | 98.73 | $ | 96.07 | ||||
Natural gas realized price (C$/Mcf) (4) | $ | 2.55 | $ | 2.80 | $ | 4.27 | ||||
(1)West Texas Intermediate ("WTI"); Western Canadian Select ("WCS"); Synthetic Crude Oil ("SCO"). (2)Exploration & Production crude oil and NGLs average realized price excludes SCO. (3)Pricing is net of blending costs. (4)Excludes risk management activities. (5)Non-GAAP ratio. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. |
Canadian Natural has a balanced and diverse product mix of natural gas, NGLs, heavy crude oil, light crude oil, bitumen and SCO.
WTI prices averaged US$76.97/bbl in Q1/24, comparable to both Q4/23 and Q1/23, although the global crude oil market continues to be impacted by heightened geopolitical tensions.
WTI forward strip pricing(1) has strengthened for the last nine months of 2024, averaging US$79.95/bbl, an improvement of approximately US$3/bbl from Q1/24.
SCO pricing averaged US$69.43/bbl in Q1/24, representing a US$7.54/bbl price discount to WTI, compared to a US$2.07/bbl price premium to WTI in Q1/23. The lower SCO price in Q1/24 was primarily driven by egress constraints in the Western Canadian Sedimentary Basin ("WCSB").
SCO forward strip pricing(1) has strengthened for the last nine months of 2024, averaging a price premium to WTI of US$2.47/bbl, an improvement of approximately US$10/bbl from Q1/24.
The average WCS differential to WTI of US$19.34/bbl in Q1/24 has strengthened from both comparable periods, primarily reflecting the anticipated startup of TMX and stronger US Gulf Coast heavy oil pricing due to lower Mexican imports.
WCS forward strip pricing(1) has strengthened for the last nine months of 2024, averaging US$13.17/bbl, an improvement of approximately US$6/bbl from Q1/24.
The Company continues to evaluate and implement opportunities to maximize netbacks through the diversification of sales and optimized blending and transportation options through diverse market access. Canadian Natural has optionality for crude oil exports, including the following pipeline commitments:
In Q1/24, the Company increased its commitment on Flanagan South by 55,000 bbl/d to 77,500 bbl/d, further expanding the Company's heavy oil diversification and market access to the USGC.
94,000 bbl/d on TMX pipeline that creates additional crude oil market diversification opportunities on the west coast, both by land and by water.
10,000 bbl/d on the Base Keystone Pipeline, with direct access to the USGC.
(1) Forward strip pricing as of April 30, 2024.
The North West Redwater ("NWR") refinery primarily utilizes bitumen as feedstock, with production of ultra-low sulphur diesel and other refined products averaging 78,569 bbl/d in Q1/24.
AECO natural gas prices in Q1/24 compared to Q1/23 and Q4/23 reflect lower NYMEX benchmark pricing, increased production in the WCSB and higher storage inventories resulting from mild winter weather.
In 2024, the Company is targeting to use the equivalent of approximately 38% of its budgeted natural gas production in its operations, with approximately 25% targeted to be sold at AECO/Station 2 pricing, and approximately 37% targeted to be exported to other North American and international markets capturing higher natural gas prices, maximizing value from its diversified natural gas marketing portfolio.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS
Canada and Canadian Natural are well positioned to deliver affordable, reliable, safe and responsibly produced energy that the world needs, through leading ESG performance. Canadian Natural's diverse portfolio is supported by a significant amount of long life low decline assets which have low risk, high value reserves that require low maintenance capital. This allows the Company to remain flexible with our capital allocation and creates an ideal opportunity to pilot and apply technologies for GHG emissions reductions. Canadian Natural continues to invest in a range of technologies to reduce emissions, such as solvents for enhanced recovery and Carbon Capture, Utilization and Storage ("CCUS") projects. Our culture of continuous improvement provides a significant advantage to delivering on our strategy of investing in GHG technologies across our assets, including opportunities for methane emissions reduction.
Environmental Targets
Canadian Natural is committed to reducing our environmental footprint and as previously announced, has committed to the following environmental targets:
40% reduction in corporate Scope 1 and Scope 2 absolute GHG emissions by 2035, from a 2020 baseline
50% reduction in North America E&P (including thermal in situ) methane emissions by 2030, from a 2016 baseline
40% reduction in thermal in situ fresh water usage intensity by 2026, from a 2017 baseline
40% reduction in mining fresh river water usage intensity by 2026, from a 2017 baseline
Canadian Natural has a defined pathway to achieve long-term emissions reductions with an integrated GHG emissions management strategy that includes ongoing investments in technology and innovation while transferring technology across the Company. The areas of focus include, but are not limited to: carbon capture, sequestration/storage and utilization, the use of solvents, energy/steam efficiencies, methane reduction, and tailings and water management.
Pathways Alliance
The six major oil sands companies in the Pathways Alliance ("Pathways"), including Canadian Natural, operate approximately 95% of Canada's oil sands production. The goal of this unique alliance is to work together with governments to achieve net zero emissions from oil sands operations by 2050, support Canada in meeting its climate commitments and be the preferred source of crude oil globally. Pathways has a defined plan, including its foundational carbon capture and storage ("CCS") project involving a CO2 transportation line connecting Fort McMurray and Cold Lake to a carbon sequestration hub.
Pathways continues to work together with governments on the necessary co-investment and regulatory certainty needed to proceed. As a step in moving the project forward, Canadian Natural, on behalf of the Pathways Alliance, commenced regulatory applications in March 2024 to the Alberta Energy Regulator for the proposed CO2 Transportation Network and Storage Hub. Project engineering and environmental field programs are on track to meet timelines. Multiple feasibility studies on phase-one capture facilities, with engineering and design work continue to progress. Stakeholder engagement and consultation is ongoing with Indigenous and local communities in northern Alberta related to the Pathways CCS project.
Government Support for Emissions Reductions and Carbon Capture, Utilization and Storage
The Government of Canada announced a Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap on December 7, 2023 with plans to publish draft regulations by mid-2024. The framework proposes to cap and cut emissions from the oil and natural gas sector through implementation of a national cap-and-trade system. The oil and natural gas sector has made significant progress in GHG emissions reductions along with investments in technology and innovation that have been enabled under existing carbon pricing systems. As such, the proposed oil and natural gas sector emissions cap is unnecessary, exceedingly complex and undermines the investor confidence required for large-scale, long-term emission reduction initiatives.
Canadian Natural is a leader in CCUS and GHG reduction projects and sees many opportunities to work collaboratively with industry peers and governments to advance investments in CCUS and to achieve meaningful GHG emissions reductions in support of Canada's climate goals. The Government of Canada has proposed an investment tax credit ("ITC") for CCUS projects for all sectors across Canada that would offer a refundable ITC of up to 50% on capture equipment and 37.5% on qualified carbon transportation, storage or usage equipment from 2022 to 2030. Additionally, the Government of Alberta announced it would provide a 12% tax credit on eligible capital costs associated with building new CCUS projects. It remains important for governments to work together with industry to ensure that policy and regulatory frameworks deliver the required support to enable CCUS project development.
Canadian Natural will continue to provide input to government on the importance of balancing environmental and economic objectives along with being able to support Canada's allies with energy security. By working together, industry and governments have the opportunity to help achieve climate goals, meet economic objectives and support Canada's role in energy security.
ADVISORY
Special Note Regarding Forward-Looking Statements
Certain statements relating to Canadian Natural Resources Limited (the "Company") in this document or documents incorporated herein by reference constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule", "proposed", "aspiration" or expressions of a similar nature suggesting future outcome or statements regarding an outlook. Disclosure related to the Company's capital budget, expected future commodity pricing, forecast or anticipated production volumes, royalties, production expenses, capital expenditures, abandonment expenditures, income tax expenses, and other targets provided throughout this document and the Management's Discussion and Analysis ("MD&A") of the financial condition and results of operations of the Company, constitute forward-looking statements. Disclosure of plans relating to and expected results of existing and future developments, including, without limitation, those in relation to: the Company's assets at Horizon Oil Sands ("Horizon"), the Athabasca Oil Sands Project ("AOSP"), the Primrose thermal oil projects, the Pelican Lake water and polymer flood projects, the Kirby thermal oil sands project, the Jackfish thermal oil sands project and the North West Redwater bitumen upgrader and refinery; construction by third parties of new, or expansion of existing, pipeline capacity or other means of transportation of bitumen, crude oil, natural gas, natural gas liquids ("NGLs") or synthetic crude oil ("SCO") that the Company may be reliant upon to transport its products to market; the abandonment and decommissioning of certain assets and the timing thereof; the development and deployment of technology and technological innovations; the financial capacity of the Company to complete its growth projects and responsibly and sustainably grow in the long-term; and the impact of the Pathways Alliance ("Pathways") initiative and activities, government support for Pathways and the ability to achieve net zero emissions from oil sands production, also constitute forward-looking statements. These forward-looking statements are based on annual budgets and multi-year forecasts, and are reviewed and revised throughout the year as necessary in the context of targeted financial ratios, project returns, product pricing expectations and balance in project risk and time horizons. These statements are not guarantees of future performance and are subject to certain risks. The reader should not place undue reliance on these forward-looking statements as there can be no assurances that the plans, initiatives or expectations upon which they are based will occur. In addition, statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment based on certain estimates and assumptions that the reserves described can be profitably produced in the future. There are numerous uncertainties inherent in estimating quantities of proved and proved plus probable crude oil, natural gas and NGLs reserves and in projecting future rates of production and the timing of development expenditures. The total amount or timing of actual future production may vary significantly from reserves and production estimates.
The forward-looking statements are based on current expectations, estimates and projections about the Company and the industry in which the Company operates, which speak only as of the earlier of the date such statements were made or as of the date of the report or document in which they are contained, and are subject to known and unknown risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others: general economic and business conditions (including as a result of the actions of the Organization of the Petroleum Exporting Countries Plus ("OPEC+"), the impact of armed conflicts in the Middle East, the impact of the Russian invasion of Ukraine, increased inflation, and the risk of decreased economic activity resulting from a global recession) which may impact, among other things, demand and supply for and market prices of the Company's products, and the availability and cost of resources required by the Company's operations; volatility of and assumptions regarding crude oil, natural gas and NGLs prices; fluctuations in currency and interest rates; assumptions on which the Company's current targets are based; economic conditions in the countries and regions in which the Company conducts business; political uncertainty, including actions of or against terrorists, insurgent groups or other conflict including conflict between states; the ability of the Company to prevent and recover from a cyberattack, other cyber-related crime and other cyber-related incidents; industry capacity; ability of the Company to implement its business strategy, including exploration and development activities; the Company's ability to implement strategies and leverage technologies to meet climate change initiatives and emissions targets on the expected timelines; the impact of competition; the Company's defense of lawsuits; availability and cost of seismic, drilling and other equipment; ability of the Company to complete capital programs; the Company's ability to secure adequate transportation for its products; unexpected disruptions or delays in the mining, extracting or upgrading of the Company's bitumen products; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; ability of the Company to attract the necessary labour required to build, maintain, and operate its thermal and oil sands mining projects; operating hazards and other difficulties inherent in the exploration for and production and sale of crude oil and natural gas and in the mining, extracting or upgrading the Company's bitumen products; availability and cost of financing; the Company's success of exploration and development activities and its ability to replace and expand crude oil and natural gas reserves; the Company's ability to meet its targeted production levels; timing and success of integrating the business and operations of acquired companies and assets; production levels; imprecision of reserves estimates and estimates of recoverable quantities of crude oil, natural gas and NGLs not currently classified as proved; actions by governmental authorities; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations and the impact of climate change initiatives on capital expenditures and production expenses); interpretations of applicable tax laws and regulations; asset retirement obligations; the sufficiency of the Company's liquidity to support its growth strategy and to sustain its operations in the short, medium, and long-term; the strength of the Company's balance sheet; the flexibility of the Company's capital structure; the adequacy of the Company's provision for taxes; the impact of legal proceedings to which the Company is party; and other circumstances affecting revenues and expenses.
The Company's operations have been, and in the future may be, affected by political developments and by national, federal, provincial, state and local laws and regulations such as restrictions on production, changes in taxes, royalties and other amounts payable to governments or governmental agencies, price or gathering rate controls and environmental protection regulations. Should one or more of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are dependent upon other factors, and the Company's course of action would depend upon its assessment of the future considering all information then available.
Readers are cautioned that the foregoing list of factors is not exhaustive. Unpredictable or unknown factors not discussed in this document or the Company's MD&A could also have adverse effects on forward-looking statements. Although the Company believes that the expectations conveyed by the forward-looking statements are reasonable based on information available to it on the date such forward-looking statements are made, no assurances can be given as to future results, levels of activity and achievements. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Except as required by applicable law, the Company assumes no obligation to update forward-looking statements in this document or the Company's MD&A, whether as a result of new information, future events or other factors, or the foregoing factors affecting this information, should circumstances or the Company's estimates or opinions change.
Special Note Regarding Currency, Financial Information and Production
This document should be read in conjunction with the Company's unaudited interim consolidated financial statements (the "financial statements") and the Company's MD&A for the three months ended March 31, 2024, and audited consolidated financial statements for the year ended December 31, 2023. All dollar amounts are referenced in millions of Canadian dollars, except where noted otherwise. The Company's financial statements and MD&A for the three months ended March 31, 2024 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
Production volumes and per unit statistics are presented throughout this document on a "before royalties" or "company gross" basis, and realized prices are net of blending and feedstock costs and exclude the effect of risk management activities. In addition, reference is made to crude oil and natural gas in common units called barrel of oil equivalent ("BOE"). A BOE is derived by converting six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of crude oil (6 Mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, since the 6 Mcf:1 bbl ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In comparing the value ratio using current crude oil prices relative to natural gas prices, the 6 Mcf:1 bbl conversion ratio may be misleading as an indication of value. In addition, for the purposes of this document, crude oil is defined to include the following commodities: light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil), and SCO. Production on an "after royalties" or "company net" basis is also presented for information purposes only.
Additional information relating to the Company, including its Annual Information Form for the year ended December 31, 2023, is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Information on the Company's website does not form part of and is not incorporated by reference in the Company's MD&A.
Special Note Regarding Non-GAAP and Other Financial Measures
This document includes references to non-GAAP measures, which include non-GAAP and other financial measures as defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure. These financial measures are used by the Company to evaluate its financial performance, financial position or cash flow and include non-GAAP financial measures, non-GAAP ratios, total of segments measures, capital management measures, and supplementary financial measures. These financial measures are not defined by IFRS and therefore are referred to as non-GAAP and other financial measures. The non-GAAP and other financial measures used by the Company may not be comparable to similar measures presented by other companies, and should not be considered an alternative to or more meaningful than the most directly comparable financial measure presented in the Company's financial statements, as applicable, as an indication of the Company's performance. Descriptions of the Company's non-GAAP and other financial measures included in this document, and reconciliations to the most directly comparable GAAP measure, as applicable, are provided below as well as in the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024, dated May 1, 2024.
Break-even WTI Price
The break-even WTI price is a supplementary financial measure that represents the equivalent US dollar WTI price per barrel where the Company's adjusted funds flow is equal to the sum of maintenance capital and dividends. The Company considers the break-even WTI price a key measure in evaluating its performance, as it demonstrates the efficiency and profitability of the Company's activities. The break-even WTI price incorporates the non-GAAP financial measure adjusted funds flow as reconciled in the "Non-GAAP and Other Financial Measures" section of the Company's MD&A. Maintenance capital is a supplementary financial measure that represents the capital required to maintain annual production at prior period levels.
Capital Budget
Capital budget is a forward looking non-GAAP financial measure. The capital budget is based on net capital expenditures (Non-GAAP Financial Measure) and excludes net acquisition costs. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for more details on net capital expenditures.
Capital Efficiency
Capital efficiency is a supplementary financial measure that represents the capital spent to add new or incremental production divided by the current rate of the new or incremental production. It is expressed as a dollar amount per flowing volume of a product ($/bbl/d or $/BOE/d). The Company considers capital efficiency a key measure in evaluating its performance, as it demonstrates the efficiency of the Company's capital investments.
Free Cash Flow Policy in 2023 and 2024
Free cash flow is a non-GAAP financial measure. The Company considers free cash flow a key measure in demonstrating the Company's ability to generate cash flow to fund future growth through capital investment, pay returns to shareholders and to repay or maintain net debt levels, pursuant to the free cash flow allocation policy.
The Company's free cash flow is used to determine the target amount of shareholder returns after dividends. The calculation in determining free cash flow varies depending on the Company's net debt position, and as a result of achieving $10 billion in net debt at the end of 2023, the Company's free cash flow calculation has changed in 2024, when compared to 2023 as follows:
- Allocation of Free Cash Flow in 2024
As net debt of $10 billion was achieved at the end of 2023, commencing in 2024, the Company will target to return 100% of free cash flow to shareholders. Free cash flow is calculated as adjusted funds flow less dividends on common shares, net capital expenditures and abandonment expenditures. The Company targets to manage the allocation of free cash flow on a forward looking annual basis, while managing working capital and cash management as required.
The Company's free cash flow for the three months ended March 31, 2024 is shown below:
Three Months Ended | |||
($ millions) | Mar 31 2024 | ||
Adjusted funds flow (1) | $ | 3,138 | |
Less: Dividends on common shares | 1,076 | ||
Net capital expenditures (2) | 1,113 | ||
Abandonment expenditures | 162 | ||
Free cash flow | $ | 787 | |
(1)Refer to the descriptions and reconciliations to the most directly comparable GAAP measure, which are provided in the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024, dated May 1, 2024. (2)Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024, dated May 1, 2024. |
- Allocation of Free Cash Flow in 2023
When net debt was between $10 billion and $15 billion, as was the case in 2023, approximately 50% of free cash flow was allocated to shareholder returns and 50% was allocated to the balance sheet, less strategic growth/acquisition opportunities. In 2023, free cash flow of $6.9 billion was calculated as adjusted funds flow of $15.3 billion less dividends on common shares of $3.9 billion, base capital expenditures of $4.0 million and abandonment expenditures of $0.5 billion.
Long-term Debt, net
Long-term debt, net (also referred to as net debt) is a capital management measure that is calculated as current and long-term debt less cash and cash equivalents.
($ millions) | Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | ||||||
Long-term debt | $ | 11,040 | $ | 10,799 | $ | 12,024 | |||
Less: cash and cash equivalents | 767 | 877 | 92 | | |||||
Long-term debt, net | $ | 10,273 | $ | 9,922 | $ | 11,932 |
CONFERENCE CALL
Canadian Natural Resources Limited (TSX: CNQ) (NYSE: CNQ) will be issuing its 2024 First Quarter Earnings Results on Thursday, May 2, 2024 before market open.
A conference call will be held at 7:00 a.m. MDT / 9:00 a.m. EDT on Thursday, May 2, 2024.
Dial-in to the live event:
North America 1-800-717-1738 / International 001-289-514-5100.
Listen to the audio webcast:
Access the audio webcast on the home page of our website, www.cnrl.com.
Conference call playback:
North America 1-888-660-6264 / International 001-289-819-1325 (Passcode: 56079#)
Canadian Natural is a senior crude oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa.
Canadian Natural Resources LIMITED
T (403) 517-6700 F (403) 517-7350 E ir@cnrl.com
2100, 855 - 2 Street S.W. Calgary, Alberta, T2P 4J8
www.cnrl.com
SCOTT G. STAUTH
President
MARK A. STAINTHORPE
Chief Financial Officer
LANCE J. CASSON
Manager, Investor Relations
Trading Symbol - CNQ
Toronto Stock Exchange
New York Stock Exchange
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/207678
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