Energy Fuels - Financial Results Lower on Limited Sales Company Gearing Up For Rare Earth Push

Energy Fuels reported a loss net to the company of $10.9 million ($0.08) versus a loss of $5.7 million ($0.05). With uranium and vanadium operations largely shut down until prices improve, the loss was not unexpected. Revenues were a modest $353,000, in line with previous quarters. The company has been recovering modest amounts of uranium from alternate feed materials and mixed rare earth elements processing and uranium inventories have grown to 690,800 pounds of uranium from 134,000 a year ago. The company has not entered into any long-term sales contracts and does not expect to do so in 2020. Company is gearing up for a rare earth elements (REE) push. Energy Fuels took advantage of a higher stock price to raise $12.99 million growing its cash position to $44 million from $24 million at the end of the year. In a recent presentation to analyst at another firm, management indicated it would take $2 million to convert the White Mesa mill to produce REE carbonate. It would take another $4-5 million to create a separate circuit to process REE at the same time as uranium. Beginning to separate REE components could cost $200-300 million to have everything in place. This cost is well below the cost of starting from scratch, giving the company a leg up over competitors seeking to enter the REE separation market. We believe processing REE carbonate could generate tens of millions in cash flow, separating REE elements could be even more profitable. Estimating the economics of rare earth elements is difficult because there are few publicly-traded competitors specializing in REE. We estimate that REE carbonate might sell for $50,000 per tonne with cost of goods representing 75% of revenues depending on the quality of the Monazite. Such an estimate would imply $30 million generated by Energy Fuels for producing 2,000-3,000 tonnes of REE carbonate as per guidance. That number would grow to $75 million if the company meets targets to eventually process 15,000 tonnes of Monazite (6,000 tonnes of REE carbonate). Separating REE could be even more profitable. The stock seems fairly valued but that could change as REE grows. We are keeping an eye on Energy Fuel's growing participation with rare earth elements and working to get a better handle on its potential. Energy Fuel's management will host a webcast with investors on Monday, May 17 at 4:00 pm EST to discuss financial results and corporate initiatives. Read More >>