Energy Fuels – Energy Fuels Restocks its Balance Sheet and Inventories

UUUU reports financial results. As expected, Energy Fuels completed another year of limited production and sales due to depressed uranium prices. On a positive note, losses decreased due to cost reductions and there are signs that uranium prices may be improving. The operating loss for the year was $24.6 million vs. $40.6 million and $34.0 million expected, and EPS was $(0.23) vs. $(0.40) and $(0.28) expected. Call on Tuesday at 4:00 pm ET (888-664-6392). The company shored up its balance sheet and appears ready to expand. Management took advantage of share price strength to raise $30.4 million on its ATM program pushing working capital to $40.2 million ($22.4 million cash/mkt sec). The company has no debt. Both numbers are up sharply from last year and leave Energy Fuels in a good position to weather another year of operating losses if uranium prices do not improve. Management is prepared to forego sales at current prices and build up its inventory. The company has no remaining uranium contracts and all inventory and future production is unhedged. Uranium producers and purchasers seem to be at a standstill with producers unwilling to sell at prices below $40/lb and purchasers unwilling to sign contracts at prices above the current spot price of $27/lb. Nuclear plants have been meeting supply through international purchases (cheap sources are running out), depleting inventory, uranium underfeeding and weapons degrading — all short-term strategies. Meanwhile, UUUU is planning on expanding inventories in anticipation of a price rise possibly enhanced by the creation of a national uranium reserve ($75 million approved in the last budget for reserve). Keep an eye on Vanadium and Rare Earth Element (REE) developments. The company has accelerated the mining of Vanadium, which is seeing prices rise, and the production of REE. Mark Chalmers (P & CEO) referred to REE at the best resource opportunity in his 45-year mining career. At this point, we view Vanadium and REE as wild cards that are not significant contributors to results, but could become significant in the future. We continue to rate the shares of UUUU as Market Perform with the stock trading near our fair value estimate, which does not include value for Vanadium or REE.Read More >>