10-K: Energy Fuels Inc. Commences Uranium Production, Advances REE Separation

Energy Fuels Inc. has begun uranium production at three mines and is advancing its rare earth element separation capabilities at its White Mesa Mill.

Summary

• Energy Fuels Inc. has started uranium production at its Pinyon Plain Project and La Sal and Pandora mines, with a planned run-rate of 1.1 to 1.4 million pounds per year by midto late-2024.
• The company is preparing two additional mines, Whirlwind and Nichols Ranch, for potential production in 2025, which could increase uranium production to over 2 million pounds per year.
• Energy Fuels is also advancing permitting on the Roca Honda, Sheep Mountain, and Bullfrog Projects, which could expand uranium production to a run-rate of up to 5 million pounds per year in the coming years.
• The company expects to produce 150,000 to 500,000 pounds of finished U3O8 in 2024 from conventional ore and Alternate Feed Materials.
• Energy Fuels plans to sell 300,000 to 600,000 pounds of uranium in 2024, with 200,000 to 300,000 pounds under existing long-term contracts and the remainder on the spot market.
• The company expects to produce 25-35 tonnes of NdPr oxide and 10-20 tonnes of Sm+ RE Carbonate in Q2 2024 as it ramps up its Phase 1 REE separation circuit.
• The company expects to sell all the NdPr it produces in 2024 to Neo Performance Materials under an existing contractual arrangement.
• The company expects to produce 1.0-2.0 million pounds of vanadium per year, which could be held as in-process inventory or processed into finished V2O5 available for sale into improving markets.
• The company expects uranium inventories to total between approximately 585,000 to 935,000 pounds of U3O8 at year-end 2024.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for the company, with increased uranium production, progress in REE separation, and a strategic focus on clean energy and medical isotopes. The company's financial results have improved significantly, and management is optimistic about future growth. However, there are some risks associated with commodity prices and supply chains.

Positives

• The company has commenced uranium production at three mines, indicating a positive shift towards increased revenue generation.
• The company is actively expanding its uranium production capacity with plans to bring additional mines online in the near future.
• The company is making progress in its REE program, with the Phase 1 separation circuit expected to be operational in early 2024.
• The company has secured a contract to sell its NdPr oxide production in 2024, providing a stable revenue stream.
• The company has a significant inventory of uranium and vanadium, providing flexibility in sales and market opportunities.

Negatives

• The company did not recover any pounds of uranium at the Mill during the year ended December 31, 2023, other than uranium from its monazite processing that is expected to remain in circuit and not be packaged in 2024.
• The company is still in the process of ramping up production at its three mines, which may result in lower production volumes in the short term.
• The company's REE production is dependent on securing sufficient monazite feed, which may be subject to supply chain risks.
• The company's vanadium sales are subject to spot market prices, which may be volatile.

Risks

• The company's REE production is dependent on securing sufficient monazite feed, which may be subject to supply chain risks.
• The company's vanadium sales are subject to spot market prices, which may be volatile.
• The company's future uranium sales may be required to be made at spot prices, unless it can enter into new long-term contracts at satisfactory prices.
• The company's REE Carbonate and REE oxide sales are tied to REE spot prices.
• The company may not be able to fulfill all its sales commitments out of inventories or production and may be required to fulfill deliveries through spot purchases at a loss or through other negotiable means that are unfavorable to the Company.

Future Outlook

The company expects to continue production from its three conventional uranium mines, prepare two additional mines for potential production in 2025, complete its Phase 1 REE separation circuit in early 2024, and advance its Bahia Project in Brazil.

Management Comments

• The Company believes that world demand for clean, carbon-free, reliable, and affordable baseload electricity is growing.
• The Company believes the geopolitical uncertainty and market tightness experienced in the 2023 uranium and nuclear fuel markets will continue in 2024.
• The Company believes that nuclear energy is essential to the global economy and addressing climate change, as it reliably and affordably provides electricity 24/7 and 365 days per year while generating lower life-cycle carbon emissions than other baseload energy sources.

Industry Context

The document highlights the growing global interest in nuclear energy and the need for secure, non-Russian sources of uranium, which is driving demand for companies like Energy Fuels. The company is also positioning itself to capitalize on the growing demand for REEs used in clean energy technologies.

Comparison to Industry Standards

• Energy Fuels is the only conventional uranium mill, and the only uranium, vanadium and REE recovery facility operating in the U.S., giving it a unique position in the industry.
• The company's planned production of 1,000 tonnes of NdPr oxide per year is a significant step towards establishing a U.S.-based REE supply chain, which is currently dominated by China.
• The company's focus on monazite as a source of REEs is advantageous due to its higher concentrations of heavy REEs compared to other ores.
• The company's ability to recover uranium, vanadium, and REEs from the same ore source provides a cost advantage over companies focused on a single commodity.
• The company's strategic alliance with RadTran to recover radioisotopes for medical therapeutics is a unique initiative that could provide a new revenue stream and address a critical need in the healthcare industry.

Management Changes

Legal Proceedings

• The Ute Mountain Ute Tribe has filed administrative appeals and petitions challenging the State of Utah's approvals related to the White Mesa Mill, which remain open and may involve an administrative law judge.
• The Grand Canyon Trust, Ute Mountain Ute Tribe and Uranium Watch have served Petitions for Review challenging UDEQs renewal of the Mill License and GWDP, which are currently suspended pending settlement discussions.
• The Ute Mountain Ute Tribe has filed a Petition to Intervene and Petition for Review challenging the UDEQs approval of Amendment No. 10 to the Mill License, which is currently stayed pending settlement discussions.

Related Party Transactions

• Robert W. Kirkwood, a member of the Companys Board of Directors, is a principal of the Kirkwood Companies, including United Nuclear LLC, which owns a 19% interest in the Companys Arkose Mining Venture.
• The Company acts as manager of the Arkose Mining Venture and has management and control over operations carried out by the Arkose Mining Venture.
• The Company provides services to CUR under a mine operating agreement and has a toll milling agreement to process ore from CUR properties at the Mill.

Stakeholder Impact

• The company's increased uranium production and REE separation capabilities are expected to create jobs and economic opportunities in the communities where it operates.
• The company's commitment to environmental protection and sustainability is expected to minimize the impact of its operations on the environment.
• The company's potential recovery of radioisotopes for medical therapeutics could benefit patients and the healthcare industry.
• The company's establishment of the San Juan County Clean Energy Foundation is expected to support local priorities in the communities surrounding the Mill.

Next Steps

• The company will continue production from its three conventional uranium mines.
• The company will prepare two additional conventional uranium mines for potential production as soon as 2025.
• The company will complete, commission, and optimize its Phase 1 REE separation circuit in early 2024.
• The company will advance its Bahia Project in Brazil.
• The company will continue to evaluate entering into a Venture on the Donald Project with Astron in Australia.
• The company will secure additional sources of monazite and potentially other feed for its emerging REE business.
• The company will continue to evaluate the potential for recovering and selling certain radioisotopes from the Mills existing process streams for use in making medical isotopes for emerging TAT cancer treatments.

Key Dates

Keywords

uranium, rare earth elements, REE, vanadium, mining, production, White Mesa Mill, monazite, NdPr oxide, ISR, Nichols Ranch, Pinyon Plain, La Sal, Pandora, Whirlwind, Roca Honda, Sheep Mountain, Bullfrog, Alternate Feed Materials, medical isotopes, TAT