The Conversation (0)
Energy Fuels ships Uranium, Vanadium and Rare Earth Element (REE) Carbonate in the same week. The shipment of Vanadium is not unusual nor is the shipment of REE Concentrate although it is worth noting that shipments of both elements can be erratic. The shipment of Uranium to an enrichment center in Illinois does not represent sales, per se, but can be viewed as a sign that the company is getting closer to sales. While not significant by itself, the shipment all three elements in the same week represents a milestone for the company. Energy Fuels REE production is advancing. The company has begun producing a "more advanced" form of REE Carbonate. Importantly, it was achieved with existing operations and will set the stage for the company as it takes the next step of considering complete separation of Rare Earth Elements. Energy Fuels has already begun a pilot to evaluate the separation of heavy elements and has engaged a firm to explore the separation of light elements. At this point, we do not include the separation of elements in our models. However, we do assume a growing level of REE Carbonate production. Uranium prices are soaring. Spot uranium prices have risen to $63 per pound. When we began covering Energy Fuels and the uranium industry a few years ago, prices were near $30, a price too low to justify production. We believe Energy Fuels is able to produce Uranium at a cost near $40/lb. at its White Mesa plant. A key test for Energy Fuel and other uranium companies will be whether or not consumers (electric utilities) will begin to sign long-term contracts. Production is moving forward. We are raising our price target. Rising uranium prices lead to to believe that the company is close to signing a contract and restarting uranium sales. In addition to raising our uranium price forecast to $60/lb. in 2022 and rising $5/lb. annually until hitting $80/lb., we now expect the company to begin selling uranium in 2023 instead of 2024. We have also accelerated our expectations regarding REE Carbonate sales to levels in line with management projections given recent developments. The combined impact of the aforementioned adjustments increased our estimated fair value for the stock to $13 per share from $9 per share and our price target accordingly. Read More >>
