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Energy Fuels reported 2021-2Q revenue, losses and loss per share of $0.8 million, $10.8 million, and $0.15 per share. Results were below our expectations due to higher costs associated with Rare Earth Elements (REE) and a later-than-expected first shipment of REE (first shipment was July 7th with revenues falling outside of the quarter). The company continues to idle uranium production and vanadium sales at current prices. Investor focus is justifiably more centered on corporate developments than near-term results. The Balance Sheet is getting strong. Energy Fuels has $98.8 million of working capital including $79.4 million of cash, ahead of our forecasts. Rising inventories are the reason for higher working capital. In addition, the company has reached an agreement to sell non-core uranium assets for $24 million, which will further boost its cash and working capital position. A strong balance sheet leaves the company well positioned to expand uranium and vanadium production, or enter into REE separation, should pricing justify such investments. Uranium, vanadium and REE prices are rising and approaching a point where UUUU could begin production. Uranium prices have risen 7% ytd, vanadium prices have risen 83% ytd, and REE prices have risen 48%. Energy Fuels has ample inventory of uranium and vanadium and is ramping up REE carbonate production. We probably do not give the company enough credit for the optionality it has to shift focus on the three minerals as prices dictates. In addition, the company has signed an agreement to evaluate the recovery of thorium and potentially radium, further expanding its optionality. REE processing set back by Monazite sand delays. Management now expects to recover 700-1,100 tonnes of RE Carbonate in 2021, down from a previous estimate of 2,000-3,000 tonnes. The company cited a short-term delay in the supply of monazite sands to the mill for reduction. The news is disappointing but we remain confident that the company will be able to ensure adequate future supply Rating remains Outperform with a $9 price target. Reported results were below expectations and we are disappointed in REE delays. However, we believe the overall story remains in tact and believe we are starting to see the initial signs of an expected improvement in prices. Management will host a webcast on August 3 at 4:00 EST (888-664-6392). Read More >>
