Market Overview

Energy Fuels Announces Q2-2019 Results

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LAKEWOOD, CO, Aug. 2, 2019 /CNW/ - Energy Fuels Inc. (NYSE:UUUU, TSX:EFR) ("Energy Fuels" or the "Company") today reported its financial results for the quarter ended June 30, 2019. 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.shtml, 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.

Energy Fuels Inc. (CNW Group/Energy Fuels Inc.)

Highlights:

  • At June 30, 2019, the Company had $42.6 million of working capital, including $16.6 million in cash, $11.4 million in marketable securities, 485,000 pounds of finished uranium goods inventory, and 610,000 pounds of finished vanadium goods inventory.
  • Vanadium production totaled 437,000 pounds of V2O5 for the quarter, and the Company expects to continue to produce 160,000 to 200,000 pounds of V2O5 per month through Q3-2019, subject to continued successful recovery and suitable sales prices.
  • Uranium production totaled 19,000 pounds of U3O8 during the quarter.
  • The Company completed no uranium sales of any significance during the quarter and continues to add to uranium inventories.
  • The Company completed 98,000 pounds of vanadium sales into the steel industry during the quarter at an average price of $7.87 per pound of V2O5, following conversion of the Company's V2O5 product into ferrovanadium. At the current time, the Company is selling only small quantities of vanadium, while mainly focusing on building V2O5 inventory for sale in the future as the Company expects prices to increase.
  • The Company had an operating loss of $11.5 million during the quarter, due primarily to an impairment to inventories of $4.9 million as a result of low uranium prices and a decrease in vanadium prices during the quarter; the decision not to sell any uranium product during the quarter; and the decision to retain most of the Company's vanadium inventory for future sale.
  • In April 2019, the Company completed a test mining program at its La Sal Complex and continued further operational readiness activities based on these encouraging results. The Company expects to continue these activities through Q3-2019. As of June 30, 2019, the Company had mined approximately 11,000 tons of mineralized material with an average grade of 1.472% V2O5 and 0.192% U3O8 from previously mined areas. While these numbers are not intended to represent the basis of a new resource estimate, the Company believes that the new mining methods that were tested are likely to result in reduced costs, higher grades, and higher value for mined material compared to historic mining methods, due to significantly improved grade control at the mine.
  • On July 12, 2019, President Donald J. Trump issued a Presidential Memorandum pursuant to Section 232 of the Trade Expansion Act of 1962 (as amended), ordering the creation of the U.S. Nuclear Fuel Working Group (the "Working Group") to "examine the current state of domestic nuclear fuel production to reinvigorate the entire nuclear fuel supply chain, consistent with United States national security and nonproliferation goals." The Working Group has 90 days from July 12, 2019 to complete its recommendations to the President. The Company intends to continue supporting this initiative in Q3-2019 and believes it has the potential to result in actions that provide meaningful support to the U.S. uranium mining industry.
  • On July 13, 2019, the Company announced that it had entered into a new processing agreement, whereby the owner of a formerly producing uranium mine in New Mexico will deliver cleanup material from the mine for processing and recovery of uranium at the Company's White Mesa Mill. Revenues payable to the Company are expected to be between $700,000 and $3.5 million. In addition, the Company will retain any uranium recovered from the material for its own account, which is expected to total between 10,000 and 70,000 pounds of U3O8, or approximately $250,000 to $1.75 million at today's spot prices. Deliveries began in late-June 2019. The Company has proposed similar services to assist in the cleanup of Cold War era abandoned uranium mines on the Navajo Nation and other lands.
  • On August 1, 2019, the Board of Directors (the "Board") of the Company appointed Mr. Alex G. Morrison to serve as a director.

Mark S. Chalmers, Energy Fuels' President and CEO stated:

"During Q2-2019, Energy Fuels continued to make important progress on a number of initiatives that have the potential to significantly improve the outlook for both our Company and the U.S. uranium mining industry as a whole.

"First, we were pleased that on July 12, 2019, President Donald Trump took meaningful action that has the potential to revive the U.S. uranium industry. In early 2018, we filed a Section 232 Petition asking the Administration to investigate uranium imports into the U.S., thereby embarking on a bold initiative to 'make American uranium great again.' We have truly come a long way since we first filed the Petition, and we believe this initiative has been a success, as the President recognized the relationship between domestic uranium mining and national security. Our issue now has the attention of the highest levels of the U.S. Government -- and probably the highest focus in several decades -- and we look forward to aggressively seeing this through to the end. I look forward to corresponding with shareholders in the coming months as the U.S. Nuclear Fuel Working Group completes its important work to 'reinvigorate the entire nuclear fuel supply chain,' which includes uranium mining.

"However, Energy Fuels is much more than Section 232. We recently announced the completion of a new processing agreement, under which we will assist in the cleanup of a formerly producing mine in New Mexico. We recently began taking deliveries of cleanup material at our White Mesa Mill, and this initiative is expected to result in a total of approximately $1.0 to $4.25 million of value for the Company. On a broader perspective, this is exactly the type of work we have proposed to the U.S. Environmental Protection Agency ("EPA") to assist in the cleanup of Cold War era abandoned uranium mines on the Navajo Nation and other nearby lands, with the EPA holding over $1.5 billion set aside in trust for those purposes. It is our hope that this will be a demonstration of the White Mesa Mill's capabilities, professionalism and responsible operations. In addition, local Native American communities will see equipment removing contaminated soils from nearby lands, and trucks hauling it away, thereby having the potential of creating momentum to begin the large-scale cleanup of other sites in the region.

"We are also very happy with our vanadium production campaign; except prices failed to cooperate during the quarter. We brought our vanadium product to market very quickly and achieved extremely high purities. But, as it turned out, it wasn't quick enough. At the current time, we expect to continue producing vanadium through Q3-2019, due in large part to seasonal considerations, while only making selective sales. We are also moving forward with discussions to potentially sell our product at premium pricing to customers who require higher purities. If vanadium prices do not make a dramatic recovery in the next few months, we expect to build inventory to capture future price spikes and then shut down production to save this valuable asset for later recovery.

"Finally, I'd like to welcome Mr. Alex Morrison to the Board of the Company. Alex is an experienced and accomplished mining professional with many decades of experience with public companies both large and small, with a particular focus on finance, audit, and governance, including many years with PriceWaterhouseCoopers."



Selected Summary Financial Information:






$000, except per share data


Three months ended
June 30, 2019


Three months ended
June 30, 2018

Results of Operations:



Total revenues


$

3,071


$

26,973

Gross profit (loss)


(11,504)


7,120

Net income (loss) attributable to the company


(9,312)


7,149

Basic earnings (loss) per share


(0.10)


0.09

Diluted earnings (loss) per share


(0.10)


0.08









As at June 30,


As at December 31,

'$000's


2019


2018

Financial Position:






Working capital


$

42,600


$

52,000

Property, plant and equipment


28,193


29,843

Mineral properties


83,539


83,539

Total assets


183,592


196,766

Total long-term liabilities


43,588


43,059

 

Overview

Operations and Sales Outlook Overview

The Company plans to extract and recover uranium from its Nichols Ranch Project in 2019 at reduced levels as its existing wellfields become depleted. This will continue until such time as the incremental cost of production exceeds the value of the pounds recovered. In addition, the Company expects to continue to extract and recover vanadium and uranium from pond solutions at its White Mesa Mill through September 2019, assuming vanadium prices remain at current levels or higher. If vanadium prices improve significantly from existing prices, the Company will evaluate continuing vanadium production beyond that time.

As a result of current low uranium market conditions, both ISR and conventional uranium recovery are being maintained at reduced levels until such time as market conditions improve sufficiently, either as a result of potential relief from the Working Group study and recommendations, or through improved uranium market fundamentals. Until such time as improvements in uranium market conditions are observed or suitable sales contracts can be entered into, the Company expects to defer further wellfield development at its Nichols Ranch Project. In addition, the Company will keep the Alta Mesa ISR Project and its conventional mining properties on standby. The Company is also seeking new sources of revenue, including new sources of Alternate Feed Materials and new fee processing opportunities at the Mill that can be processed under existing market conditions, largely unrelated to uranium sales prices. The Company will also continue its support of the Working Group and will evaluate additional acquisition and disposition opportunities that may arise.

Extraction and Recovery Activities Overview

During the six months ended June 30, 2019, the Company recovered approximately 40,000 pounds of U3O8. In the year ending December 31, 2019, the Company expects to recover approximately 50,000 to 125,000 pounds of U3O8. The Company also recovered approximately 760,000 pounds of high-purity vanadium pentoxide ("V2O5" or "black flake") during the six months ended June 30, 2019 and expects to continue to recover approximately 160,000 to 200,000 pounds of V2O5 per month during the third quarter of 2019, at which time the Company expects to place vanadium recovery operations at the Mill on standby, pending improvements in vanadium prices.

The Company has entered into no uranium sales commitments for 2019 thus far. Therefore, all 2019 uranium production is expected to be added to existing inventories. All V2O5 production is expected to be sold on the spot market or maintained in inventory.

ISR Activities

During the six months ended June 30, 2019, we extracted and recovered approximately 40,000 pounds of U3O8 from the Nichols Ranch Project. In the year ending December 31, 2019, the Company expects to produce approximately 50,000 to 70,000 pounds of U3O8 from Nichols Ranch.

As of June 30, 2019, the Nichols Ranch wellfields had nine header houses extracting ur

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