Energy Fuels Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2024

There are 7 speakers on the call.

Operator

Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Energy Fuels First Quarter 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. Mr. Chalmers, you may begin your conference.

Speaker 1

Thank you, Julie, and good morning from Denver, Colorado. This is Mark Chalmers, President and CEO of Energy Fuels. And I'm excited to discuss our Q1 results and the exceptional progress we are making on both the uranium and the rare earth fronts and I'm extremely pleased and proud to discuss this with you today. Over the past several years, we have been pursuing a very focused strategy on building a critical mineral company centered around uranium, utilizing our uranium knowledge, assets, capability and expertise to a maximum unlike any other country or company I know in the entire world. On the back of our U.

Speaker 1

S. Leading uranium business, we are making extraordinary progress advancing our global critical mineral strategy on numerous fronts while remaining profitable. 2 in the uranium industry can currently tout being profitable at all, let alone while building It is highly unique that Energy Fuels is doing more than many other companies in the uranium sector, while also advancing very quickly and efficiently both our rare earth and heavy mineral sands based business strategies, which I believe presents significant opportunity for our investors. Today, I want to remind you, you will be controlling your slides from your own computer. I will try to tell you when to move these forward.

Speaker 1

Also, there will be playbacks available on our website shortly after the presentation. So at the end of the presentation, there will be time for questions. And I am being joined by Dave Friedland, our Executive Vice President, Chief Legal Officer Nate Bennett, our Chief Accounting Officer and Interim CFO and Curtis Moore, our Senior VP of Marketing and Corporate Development to assist me with any questions you might have. So looking at this first slide, and I love this slide, this is taken down in San Juan County, not far from the White Mesa Mill And the title Clean Energy Starts With Us and Actually Clean Energy on steroids because I believe energy fuels can do more for the energy transition than just about any company I know of because of our strategy. Next slide.

Speaker 1

I may be making some forward looking statements during this presentation. Those are included in page 2 of the presentation. Next slide. Our business objective is simple, creating a profitable high margin U. S.

Speaker 1

Critical mineral company that I don't believe anybody else out there is doing like us because there is no playbook centered around uranium, producing several of the advanced materials needed for the clean energy transition. When you look at this figure with uranium and these other things that surround uranium, they all have a common denominator. They contain uranium and radionuclides that we can recover the uranium profitably and also handle the residuals. For example, when we're processing uranium ores or rare earths, we solubilize a lot of things like some of the medical isotopes that we're advancing, particularly things like radium 226 and 228. Number of our mines contain vanadium and uranium and we can cover the vanadium as part of recovering uranium.

Speaker 1

The best rare earth elements include uranium and other radionuclides, so we can capitalize on and deal with. Heavy mineral sands historically have had legacy issues with monazite and we can monetize the monazite as well as the heavy mineral sands themselves. And the monazite becomes a byproduct of heavy mineral sands. And then our long history of uranium recycling, recovering uranium that would be lost for disposal and everything we do perfectly centered around ESG. So we're very excited about that.

Speaker 1

So next slide. Everything we do is a high value product line of recovery materials needed for the clean energy transition. Uranium, we have been the largest producer of uranium since 2017 and produced 2 thirds of the uranium produced in the United States. If you look back 10 or 15 years, we produced approximately 1 third of the uranium produced in the United States with Cameco being the largest producer of uranium. So second only to Cameco.

Speaker 1

We're restarting or we've restarted our uranium mines and we're increasing and ramping that up right now and I'll talk more about it in this presentation. The rare earths critical elements used for the powerful electric magnets for EVs, wind generation and other. We are starting the commissioning of our SX plant, our Phase 1 SX plant today and I will be at the mill in a few hours' time after this presentation. Heavy mineral sands that is expanding to provide us a source of low cost monazite at world scale, while also being able to capitalize on the titanium and zirconium minerals. Vanadium, we have the only conventional vanadium plant in the United States.

Speaker 1

We can restart that when we choose to, but we are currently mining uranium vanadium ores. And the recycling, it's the reason the mill has stood the test of time of uranium and vanadium bearing materials and that promotes sustainable sourcing and reducing carbon emissions and financial strength, I believe we have the strongest balance sheet of any of our peers out there and I'll talk about that more in just a second. Next slide. Q1, 2024 Financial Highlights. Next slide.

Speaker 1

We are profitable. Q1 2024, we're continuing our earnings. We had $3,640,000 of net income, dollars 0.02 a share, including $2,000,000 of operating income driven by our uranium business and revenue. We sold £300,000 of uranium for gross profit of over $14,000,000 Our strong earnings, including last year with our net income, continues to fund the growth of our uranium business and rare earth production and heavy mineral sands strategies. Meanwhile, we're ramping up uranium production as I discussed and advancing the commercial rare earth separation capabilities as we speak.

Speaker 1

Over $24,000,000 of liquidity at current commodity prices. The working capital for March 31, 2024 was $222,000,000 made up of $55,000,000 of cash and cash equivalents, dollars 140,000,000 of marketable securities, which include uranium stocks and interest bearing securities, substantial inventories, dollars 28,000,000 of inventory and $19,000,000 of product inventory. When you adjust for current commodity prices, our product inventory goes up to about $40,000,000 dollars which adds another $20,000,000 of liquidity, 0 debt. And we have probably in excess of 1,000,000,000 worth of assets. We have nearly £400,000 of finished uranium and £900,000 of finished vanadium and 11 tons of finished high purity separated mixed rare earth carbonate.

Speaker 1

We also have nearly £500,000 of U-three zero eight as raw materials at the mill ready to be processed later this year. So we have substantial inventories of finished goods and raw materials. Next slide. Talk about some of our uranium highlights. Next slide.

Speaker 1

And many of you have seen these pictures before, but we're ramping up to £2,000,000 of uranium production in the short term, low cost production with limited capital required. That's important, limited capital, mainly working capital. The White Mesa Mill there in the upper left hand corner currently commissioning Phase 1. As soon as that commissioning is complete, we are going to switch over the mill and start processing uranium for the next couple of years while we're securing other sources of monazite. Pinion Plain in the lower left is currently got about 30 minuteers and mining high grade uranium ore right now.

Speaker 1

That is the highest grade uranium mine in the United States. We're also in pre production at our ISR facility Nichols Ranch in Wyoming And we also are mining at 2 of our mines in the LaSalle complex at LaSalle and Pandora and the Beaver Shaft is actually 3 mines and we're mining uranium and vanadium ores as we speak. Ramping up to £2,000,000 with limited capital and looking to the future from there. Next slide. So I've already talked about the uranium transactions of £300,000 generated north of $25,000,000 in revenue and average uranium sales price of $84 a pound resulting in the gross profit of $14,000,000 plus at a margin of 56%.

Speaker 1

£200,000 was under long term utility contracts price of 75.20 or 75.13 a pound. But we also sold £100,000 on the spot market at an average price of nearly $103 per pound. Continue ramping up our uranium and vanadium mines, as I mentioned, both in Utah and Arizona and Colorado with Whirlwind in Time and also Nichols Ranch, ramping it up to about £1,100,000 to £1,400,000 of newly mined ore. So this ore will be mined and stockpiled either at the mine site or at the White Mesa Mill ready for further processing later this year or into next year. Our guidance we've given out is finished goods in 2024 of between £150,000 to £500,000 We hope to be at the high end of that.

Speaker 1

It depends on how much ore gets delivered to the mill and what gets processed at the mill into finished goods this year, but we'll be building up those inventories for processing. And remember, we have about £400,000 of inventory finished goods already and we'll continue to prepare Nichols Ranch, as I said, in Whirlwind. So when you combine our finished inventory and our raw materials, we have nearly £900,000 either already finished or ready to be processed at the White Mesa Mill when we complete our commissioning of Phase 1. Next slide. So ramping up to £2,000,000 of annual production by 2025 will be a combination of a number of our mines, including processing low cost alternate feed materials and also potentially ore purchases from third parties with a buying schedule.

Speaker 1

Again, if you look over the past energy fuels that produced about a third of the uranium produced in the United States, second to Cameco. And we plan to continue to be the very significant producer of uranium in the United States. We're looking at expanding our future uranium production with exploration delineation drilling both at Nichols Ranch, underground delineation drilling at the Pinon Plain Mine, which as I mentioned is the highest grade underground mine. It's the highest grade uranium mine in the United States. We continue to advance the permits at Roca Honda, Sheep Mountain and Bullfrogs, all significant projects have the potential of adding an additional £4,000,000 of uranium production per year in the coming years.

Speaker 1

For 2024 uranium sales, I already talked in detail about Q1, but for the remainder of 2024, we're going to continue to evaluate spot market sales opportunities. We still potentially have another £100,000 under contract for this year and we may potentially make a delivery on that, but we'll have to see if the utility wants to take delivery. So we will continue to use our existing inventory, our raw material that we have at the mill site or alternate feed in these ores that get transported to the mill to capitalize on a strong uranium price as much as possible. Next slide. Let's talk about the rare earth and heavy mineral sand highlights.

Speaker 1

Next slide. Excuse me. The rare earth element production complements our uranium production because when we're processing monazite, we're recovering uranium. And that uranium is a lot of times will be at very, very attractive cost structures, very low cost uranium like our alternate feed and some of our uranium production that we have as our uranium projects. So the combination of that are very competitive uranium production costs like no other company because of the way we can produce uranium.

Speaker 1

We completed the Phase 1 separation plant in Q1. And as I said, we're starting to commission the SX unit today and I'll be there. The cost of building out that separation plant was approximately $16,000,000 That is incredible. It was under budget by $7,000,000 to $9,000,000 under budget and most companies in the rare earth business could not even build a pilot plant for $16,000,000 and we have built a separation plant with capability up to 1,000 tons per year of NDPR, which in itself is world significant, subject to receipt of sufficient monazite feed, which we're in the process of doing. And so again, I'll talk more about that in a moment.

Speaker 1

We also expect to produce between 25 tons to 35 tons of separated NTP oxide as we commission this circuit and then switch over and start producing uranium with White Mesa Mill. The White Mesa Mill over time has never been held back because we were doing something like for, in this case, processing alternate feeds or even processing, the rare earths, we have plenty of capacity at the White Mesa Mill to handle all the feed we have lined up for the immediate future. But we are engineering a upsized Phase 2 and Phase 3, so we can have completely separate facilities in time. So we have the full production capacity of all our infrastructure at all times for the processing of rare earth uranium and vanadium. So we plan to increase the capacity basically two times to up to 6,000 tons of NDPR oxide per year.

Speaker 1

And just for people's information, that is the quantity of NDPR that Linus produced last year. So world significant. We'll have our own separate crack and leach facility and the ability to separate disposium, interbium and other heavies in due course. The Phase 2 and Phase 3 separation circuits are still subject to final engineering design and receipt of all required permits. Next slide.

Speaker 1

This is a very unique slide and it shows how we are advancing an innovative rare earth supply chain. 4 years ago, all there would have been is a flag for White Mesa. So look at the progress we're making for a fully integrated rare earth business while we're doing this on the back of our uranium business, advancing through mining, crack leach, separation with a view and advancing towards metal making and alloys. We've had our relationship with Chemours, which we plan to continue to advance. We secured the Bahia project 100%.

Speaker 1

We have agreement signed for the acquisition of base resources with the world class toliara project and also the Qualia project in Kenya. And we're advancing the agreements with Astron on the Donald project in Victoria. Next slide. This next slide is a bit busy, but it shows that we are building world scale for monazite supplies while also building a very strong portfolio of heavy mineral sand projects globally and it was not by accident. We searched the world high and low to find the best heavy mineral sun projects that had monazite and we went after them.

Speaker 1

Look at the Bahia project with potential production in 2026, Donald in 2026, Tolarb potentially in 2028 when it gets all agreements in place to go forward. And that when you add up the potential of securing that monazite and the heavy mineral sand revenue places us in enviable position going forward. We're also very excited about the world class Tulliara project is well known in the world and base through the acquisition has an outstanding project team and a history of profitable HMS uranium production. And many of these projects, the monazite was never even considered an asset. It was considered a waste stream And we're able to capitalize on this like no other company I know of and recover the uranium in a very opportunistically and economic way at low cost structures.

Speaker 1

We're also looking at purchasing additional monocyte Just some preliminary rare earth economics. We expect to be globally competitive. I talked about the Phase 1 separation plant of up to 1,000 tons of NDPR oxide per year at a $16,000,000 investment. We had when we have completed a Class IV pre feasibility study to increase the NDPR separation and crack and leach capacity at the mill. This is the standalone at 30,000 tons of monazite per year.

Speaker 1

But if you go back to the previous slide, you will see that we're securing in time, we believe when we close all these agreements and get these projects up and running up to 50,000 tons of monazite secured to our account. So the original Phase 2 pre feasibility at 3,000 tons of NDPR per year showed a capital investment about 350,000,000 dollars and the cost of producing a kilogram of NDPR of around $30 per kilogram. And I want to mention that it really depends the economics of the rare earth business and the separation and advancing integration of rare earth products really in our case depends on what the cost of securing the monazite is because we know we can be world competitive if we have low cost sources of monazite and folks look at the program we're putting in place. We're building up our position to be and receive low cost monazite and also have revenues from the HMNS business. So we're updating the PFS between 40,000 to 60,000 tons of monazite that will probably be on the upper end to have the capability as we get these projects online to produce up to 6,000 tons of NDPR per year, which is the size of Linus.

Speaker 1

And just for information, Lynas has a market cap of US4 $1,000,000,000 even in a period where rare earth prices have been low. And on top of that, have the ability to recover the DY in the TB and separated oxides per year. So this is exciting stuff. We are also doing pilot scale testing on recovery and separating out the DY and the TB right now. And again, that is one of the really exciting and powerful things that we can do.

Speaker 1

All this work at our site at White Mesa when most companies have to go out to laboratories and wait in line for months to do their testing. We can do it right now real time. Next slide. So we'll talk briefly about vanadium medical isotope highlights. Next slide.

Speaker 1

So we're continuing to advance the potential recovery of radioisotopes from existing processing streams. I know I've mentioned this in the past that we have a R and D license that allows us to recover Radian 226. We also expect to complete the engineering on a pilot facility to recover Radium 226 for testing by end users later this year or during this year. Vanadium sales are basically on hold until vanadium prices increase, but we do have large inventories of vanadium and we have the ability to recover vanadium out of our tailing solutions and also building up sources of future vanadium with the mining of our deposits at the LaSalle complex. Next slide.

Speaker 1

So talk about recycling and commitment to community, which is very important to us. Next slide. We continue to be very proud of the San Juan Clean Energy Foundation that we set up a few years ago with our initial contribution of $1,000,000 into the foundation and an ongoing commitment to fund the foundation with 1% of the annual revenues from the White Mesa Mill. We've made grants of north of $300,000 to date, supporting existing and new programs in education, environment, health, wellness, economic development and Native American priorities. And this is an outstanding program.

Speaker 1

If you haven't ever done so, you can go on the website, the San Juan County Clean Energy Foundation website and look at the great things that we're doing with our stakeholders and in the community. The mill recycling programs are particularly recovering of uranium, which we will be doing this year reduces carbon emissions and the world's finite resources to be able to recycle them using the White Mesa Mill is incredible. And all this has been done at our state of the art facilities and tailings facilities at the highest global standards out there. Next slide. Now this is my last slide and this is an exciting slide for a number of reasons because look at the things that we are doing and accomplishing.

Speaker 1

We're restarting the mill to have finished uranium production. Guidance was £150,000 to £500,000 this year. But remember, we have inventory and we plan to push that as hard as we can to capitalize on potential future spot sales. We have no further contract sales this year expected except for that potential £100,000 with one of our customers. We're ramping up the ore production as I indicated at our existing mines to that £1,100,000 to £1,400,000 per year rate and that ore will be going to the mill to be ready to be processed.

Speaker 1

And matter of fact, some of it is going to the mill right now. So we're increasing to that £2,000,000 per year using a combination of our mines, alternate feed and potential third party purchases of uranium with limited capital and doing it right now with proven assets that we know what the cost structures are and we know we can accomplish that because we've done it for decades. And also at the same time, increasing our long term production profile by to an additional £4,000,000 per year through the projects that we have mainly Sheep Mountain, Rocca Honda and Bullfrog. Now that's a lot just in the uranium space alone and doing that while at the same time bolting on the rare earth elements in the heavy mineral sands with the commissioning of Phase 1, the increased the engineering of Phase 2, Phase 3 at 2x what we had planned, drilling at Bahia in Brazil, coming up with a resource later this year or early next year and advancing the Donald project with Astron and acquisition of base resources, which also puts us in the heavy mineral sand in a big way and secures low cost supplies of monazite at world scale while being profitable.

Speaker 1

We are busy folks and people, some people don't understand what we're doing, but watch our advancements. We are not slowing down. So everything we do is focused on long term sustainable profitability at energyfuels. We're not a promotion. We're doers and we're making great progress and I really appreciate our shareholders and I appreciate and happy to talk to anybody else that wants to consider becoming a shareholder.

Speaker 1

We're always available to talk about the advancements of our company and our strategy. So I will complete it, the presentation at this time and now open the floor for any questions.

Operator

Thank Your first question comes from Matthew Keay from B. Riley. Please go ahead.

Speaker 2

Good morning and thank you for taking my questions. We all see a big announcement last week with the Russian enrichment ban passed in the Senate. At a high level, could you maybe provide some additional color on how you expect this to impact your business in the U. S. Uranium production chain more broadly?

Speaker 1

Well, I think it certainly shows bipartisan support for reshoring our uranium production capabilities and a priority being placed on having the integration in the uranium business. So no, it's certainly a significant help. And I think it's going to take some time to get all this in place. I mean, we've got a lot of catch up because it was a national priority looking back 20, 30 years ago. We got a lot of catching up to do.

Speaker 1

So we plan to be ready and able to help fulfill uranium production in the United States right now. Curtis Moore is on the line. Curtis, do you have any other comments to that that you'd like to add?

Speaker 3

Yes, not so much. I mean, it's just I think firstly, it's wonderful that we're not going to be sending any more money to Russia through our nuclear industry. And yes, no, it's U. S. Utilities have been shifting off of Russian supply over the last several years, which is to their credit.

Speaker 3

I think this was a very important step, mainly to unleash some funding out there. I think $2,700,000,000 to help restore domestic nuclear fuel capabilities, which is just going to increase demand for our U-three zero eight product here in the United States. So this was an extremely important move and I think that energy fuels is probably in one of the better positions to take advantage.

Speaker 2

Great. I appreciate that color. And just one more for me. You've mentioned for several months now that bringing on Whirlwind and Nichols Ranch will bring you over £2,000,000 of mine production. I was wondering if you could potentially drill down into that number a little more.

Speaker 2

If I recall correctly, Nichols Ranch has a nameplate capacity of £2,000,000 kind of alone. So basically, if uranium pricing performs really well heading into 2025, do you have kind of what's the optionality here to kind of push those assets further if you have it?

Speaker 1

Well, I mean, we can get to the £2,000,000 When you start going above £2,000,000 it's just a function of how much additional investment that you make with regard to things like satellites and additional well fields pushing these mines. So when I talk about this goal of getting to this first rung of about £2,000,000 this is with limited capital, mainly working capital. So it's just a function of investment to push it past the 2,000,000 in time. When we start talking about £3,000,000, £4,000,000 of uranium production, we've got to start spending pretty substantial capital. I mean, I'm talking like increments of $100,000,000 or so for about every £1,000,000 or so somewhere in that order.

Speaker 1

So the $2,000,000 is really kind of a threshold with limited capital. And again, that will be made up of newly mined ore from our conventional mines, production from Nichols Ranch, alternate feed and potential some third party purchases. So it's approximate £2,000,000 We can go above that, but to really go way higher like to double that we have to start making substantial capital investments to go higher.

Speaker 2

Got it. Thank you. Super helpful and best of luck moving forward.

Operator

Your next question comes from Joseph Reagor from Roth MKM. Please go ahead.

Speaker 4

Hey, Mark. Thanks for taking my questions. I guess, first thing is on your inventories. You guys have a little under £400,000 of uranium, a little under £1,000,000 of vanadium. What do you guys think about what level of you'd like to keep of those inventories?

Speaker 4

Or is it just a function of pricing that would allow you to sell that as an option into the market over the remainder of this year and maybe long term?

Speaker 1

Yes. Well, Joe, what we're looking at is, as we said, we're mining this newly mined ore, shipping it to the mill. We're going to look at how we can maximize these higher prices to maintain our profitability to the best of our ability. So next year, I mean this year we have potentially another £100,000 to put into some of our long term contracts. Next year, we also have long term contracts, but we certainly don't have all that uranium committed for this year, next year.

Speaker 1

So Joe, we're going to push it as hard as we can, but a lot of it may be just timing. And because we have such significant inventories coming to the mill, we may run down our inventories a bit just to get the best result for our shareholders as we go forward and really kind of quasi self fund ourselves, not quasi self fund us, but based on the back of the uranium business. So Curtis, do you have any other comments from a uranium market perspective?

Speaker 3

No, I don't think so. I think that hits it. I mean, it's yes, there seems to be some really good things happening in uranium markets and the price seems to be headed in the right direction. I think this Russian uranium ban and additional things happening out there bodes well for spot prices. So I think, yes, that inventory is going to be an important part of our plans going forward this year.

Speaker 4

Okay. And then any comments on the vanadium market? What are you guys seeing there?

Speaker 1

It's been pretty soft, Joe. And we look at what's happening to the vanadium market and when the price goes up, we sell some product. It's an interesting vanadium is an interesting one because it is very spiky. And so what we're doing is when we process vanadium and put it into inventory, we'll just hold that until we see a spike in vanadium prices. So we have had some people reach out to us for, of interest for vanadium for some of these vanadium flow batteries.

Speaker 1

And we're hopeful that we can get some long term interest for purchasing that at prices higher than the current prices, I think is $5 or $6 a pound right now?

Speaker 3

Yes. If I could add there, I mean, vanadium prices, we found it just to be closely tied to global economic forecasts. The main use for vanadium is steel. And so when there's good economic forecasts for construction, for vehicles, for infrastructure, things like that, you'll see vanadium prices go up. When the outlook is a little bit more uncertain like maybe it is right now, vanadium prices are weak.

Speaker 3

But again, we just see every 3, 4, 5 years, there's a spike in vanadium prices. And so that's it's very hard to time that. And so it's beneficial to carry inventory, so you're ready for it. And then as you sell it into those strengthening markets, we have the ability to produce it pretty quickly. As we bring our LaSalle mines online, we're going to also be processing and producing vanadium.

Speaker 3

So I think it's just a good kind of option that we have that we can capitalize on every few years.

Speaker 4

Okay, thanks. And then, on the capital spending front, you spent about $7,300,000 in the Q1. Are you guys thinking for kind of the full year on the CapEx side?

Speaker 1

A lot of that, Joe, is where we're capitalizing some of our uranium development and also we're capitalizing some of the uranium production that we haven't turned into finished goods yet. So Nate, you're on, I think it's around, what, dollars 40,000,000 or something. Can you correct me with the estimate on what our capital spend looks like, including what we're capitalizing for production?

Speaker 4

Yes. No, that's exactly right. We should see a similar spend throughout the rest of the year, but ramping up to approximately the $40,000,000,000 throughout the year. But we have been capitalizing some of the development of our opinion plane mines and some of the other activities. So that's the activity that you're seeing.

Speaker 4

Okay. All right. Thanks for the guidance guys. I'll turn it over.

Operator

Your next question comes from Mike Haim from Noble Financial Markets. Please go ahead.

Speaker 5

All right. Thanks. And the question was kind of partially answered with the question on inventory, but let me just re ask it for confirmation. It sounds to me like you kind of feel like you need to have more uranium inventory before we sign more long term contracts. Is that the case?

Speaker 5

Or is it still the case that the utilities are still stuck on the trying to buy things on spot?

Speaker 1

No. We don't think we I mean, we think mining on our current contract portfolio. So we still are looking at and considering additional long term contracts. A number of the utilities like the fact that we can be in production sooner, faster without capital or significant capital and financing the capital right now. So we yes, we're not going to I mean, we're just going to be opportunistic when it looks like when we evaluate what inventory we have, what inventory is being produced at the mines, what alternate feed we have, and go from there.

Speaker 1

But we don't necessarily I mean, we'd like to have some inventory just because it gives you a little breathing room if for some reason you have some sort of production disruption for a short period of time. But we're confident, we know our assets well, we know our ability to deliver from those assets and we're not going to have large inventories just to cover that.

Speaker 3

Yes. If I could jump in as well, Mark, real fast. Remember, most long term contracts, they don't have deliveries that start for a couple of years. And so and we're ramping up to producing around £2,000,000 of uranium per year. We have not secured contracts for anywhere near that at this point.

Speaker 3

So, we still have significant uncovered future production to enter into long term contracts. And we're certainly talking to utilities on that front.

Speaker 5

How should we view the ramp up of production? Is it kind of a steady scale or is it do things really jump when you hit a certain what I want to say a certain point, a certain achievement level?

Speaker 1

Well, I think that the way you should look at it is that if we're saying we're mining £1,100,000 to £1,400,000 of newly mined ore, that will become steady state in time on average. And you add getting to that £1,500,000 to £2,000,000 that Curtis stock too, that's going to happen all fairly quickly over the next year or so. And then depending as what the uranium pricing is doing as we're advancing these other projects, we'll just start kicking them in time as well. So we want to and we like to have sort of a base load of long term contracts to underpin our operations and but also like to be able to put product out in the market in an opportunistic way like we did in Q1.

Speaker 4

Okay. All right. Thank you.

Operator

Your next question comes from Graham Tanaka from Tanaka Capital Management. Please go ahead.

Speaker 6

Congratulations on your progress so far. I'm wondering if you could give us a little bit of guidance of what your revenues could be, should the uranium prices strengthen further, just to give us a range, sort of minimum, maximum, as the if say, prices get well over $100 a pound, etcetera, how much higher could you ramp faster? Could you ramp production sales and therefore revenues perhaps giving us a range of revenue guidance for the full year? Thanks.

Speaker 1

Yes. Hey, Graham, good to have you ask a question. Graham, as we said, we can get to that £1,500,000 to £2,000,000 quite quickly. So depending on what uranium prices gives you an idea of the revenue. When you look at sort of the blended price of our production costs and whatnot, I mean, you could kind of see that we had these significant margins.

Speaker 1

I think it was our basis was around $37 to $40 per pound. As we mine additional uranium from various sources and including our alternate feed, I'm just going to say a blended price of around $50 ish a pound or something as we are ramping this up. But as we go past that to me and as I said, you can kind of assume that to get to £3,000,000, £3,500,000 we're going to have to spend $100,000,000 or so of capital investment. So to get beyond, say £3,000,000 $2,500,000 or £3,000,000 per year, we're going to need a few years to get beyond that. So I don't know if that provides any flavor, but that's just sort of the realities of the timing, getting all the permits in order, getting infrastructure.

Speaker 1

Now we have the infrastructure to get to that $2,000,000 $2,000,000 plus a bit, but then it's going to take some more time to go beyond that.

Speaker 6

Right. So I understand it will take time and some capital to go to $1,000,000 to $2,500,000 $3,000,000 But with your ability to ramp production, I'm just wondering in a faster ramp scenario on prices, not a ramp, but higher prices, if prices were to firm up, what could your revenues be this year? I'm just trying to get a feeling from going from the Q1 to the rest of this year. Thanks.

Speaker 1

This year? Yes. Well, this year depending on how we sell inventories and ramp up, When we sold 300,000 in the Q1, I'm just going to speculate that it could be around $100,000,000 okay, of revenues this year, if everything clicks together and goes from there this year.

Speaker 6

And that would be kind of roughly at what average price range kind

Speaker 1

of just Well, I already gave some indication that we carrying the uranium on our books a little north of $30 depends on the blended price, but just say in the order of that $40 to $50 somewhere in that order.

Speaker 6

Sorry, dollars 40 to $50 would be your cost per pound?

Speaker 1

In that order.

Speaker 6

Okay. So in other words, to get to $100,000,000 I'd have to do the math on how many 1,000,000 pounds. I'm just trying to figure out what the price would be, have to be to get the 1,000,000,000 revenues. Thanks.

Speaker 1

Yes. Well, in the order of £1,000,000, £1,200,000 something in that order.

Speaker 6

Okay. £1,000,000 to £1,200,000 and at a okay, I got it. So you okay, now I understand that. Thank you. And on the rare earths, a lot of what you do in terms of how fast you ramp that production is going to be a function of capacity and I'm sorry, of prices that you can realize?

Speaker 6

And I was wondering how much of a price increase you're going to need to see in the markets to really ramp up the rare earth production and sales? Thanks.

Speaker 1

Yes. Well, on the rare earth front, I mean, right now our focus is going to be on securing the molecules, which we think we're putting our foot on these projects that I mentioned. It's going to take some development time right now to get all that in place. Meanwhile, the uranium business is really hot and we can capitalize on that. And it also allows us time to get our Phase 2, Phase 3 and ramp that up over the next 2 or 3 years.

Speaker 1

Graham, we think we're going to be world competitive and we're going be low cost curve on the rare earth front, because of the strategy that we're executing. So I mean really to look at material rare earth production, you'd be looking at 26, 27, 28 out in that timeframe in terms of being able to fully capitalize and do the value add that we plan to do at the White Mesa Mill. But when you add up, the scale of what we're talking about, you can see that it is world material compared to any other company that you added up to, including China.

Speaker 6

Yes, that's congratulations, by the way, on lining up so much supply of Monocyte pretty quickly. That was great. So getting back to uranium, what kind of funding might be available for you from the U. S. Legislation?

Speaker 6

I'm not quite sure what the spending of a couple of $1,000,000,000 by the U. S. Government in the industry infrastructure means. Does that mean low cost loans possibly for energy fuels or grants or what? Thanks.

Speaker 1

Curtis, I'll let you handle that.

Speaker 3

Yes, no problem. Yes. Hey Graham, this is Curtis Moore again. So most if not all of that money is for domestic conversion and enrichment capacity, not for mining. However, there is currently a big bottleneck in conversion with Russia essentially being kicked out of the Western market.

Speaker 3

And so that actually limits the ability of conversion facilities to take our material. So you've seen things like conversion prices are up like 10x, 12x or something like that over the last couple of years and enrichment prices are up a similar amount. But you've seen uranium prices, I mean, they're strong, but they're only up say 3x or maybe 4x over the last 5 years. And so by increasing conversion capacity, that will increase the demand or at least the amount of U-three zero eight that they can take from guys like us, from Western Producers. So that's what that money is mainly for.

Speaker 3

But it's going to we think it's going to have a big impact on uranium prices just because it's going to increase demand for our material because of that debottlenecking of the conversion function, if that makes sense.

Speaker 6

Thank you very much. Thanks and good luck. Thanks.

Speaker 3

Thank you.

Speaker 1

Thank you, Graham.

Operator

And there are no further questions at this time. I will turn the call back over to Mark for closing remarks.

Speaker 1

Well, first of all, thank you for those that have joined the conference call and for those questions. Again, I understand that our strategy is different from others in the fact we're building this diversified critical mineral hub centered around uranium. And there is no playbook. There is no playbook. Nobody has done this before.

Speaker 1

And that makes it difficult for some people to understand what we're doing. But again, if you go back to that last slide, showing our focus and guidance on uranium and reverse and you look at our actions. You look at our actions where we're producing uranium, we're advancing our ability to produce and expand that in time. And then you look on the rare earth front. I mean, when you look at those three projects that we either have secured or in the process of securing or trying to get all the final agreements and close these opportunities.

Speaker 1

I hope that provides people with an idea of the scale we are talking about. It is significant. It is significant scale. And right now, we still get valued as a uranium producer and in fact probably penalized because uranium producer, while building out this rare earth supply chain at world class scale and what we believe will be low, low cost structures because of the unique attributes that we bring to the table and the types deposits that we're out there looking to secure. So, all I can say is that energy fuels, I believe, and I might be a little biased and I go back to Page 2 of our forward looking statements, is an outstanding uranium investment and rare earth investment, but you cannot compare us to just the rare earth business or just the uranium business.

Speaker 1

You cannot compare us. We really don't have a peer group. But if you believe in the energy transition and the focus on reducing carbon emissions, Look at what we do. When we tell people we're going to do something, we do it. That is how we operate.

Speaker 1

We're not promoters. Mining uranium is difficult. It's very difficult. I've been mining uranium for 48 years. We know how to do this.

Speaker 1

These assets are proven. And on the other side, we're securing these feeds through a very focused strategic way. We're looking at high quality acquisitions and the base acquisition is a perfect example of the type of assets we're trying to secure that are world class long term multi decade projects that can help with that diversification at scale again over the long term and having that diversified cash flow creates other opportunities over time. So I mean look at the fact that in 4 years as we build our uranium production and at the same time, look at the speed that we're operating in advancing the rare earth, I think it is absolutely extraordinary. And that's what we're focused on.

Speaker 1

We're not trying to be status quo. We're not trying to repeat what everybody else is doing in your AIM space. We're trying to be a standout and look for extraordinary opportunities to build a world material critical mineral hub. So thank you very much. Look forward with future updates, but we are moving fast and we have the balance sheet, we have the team and we're acquiring the assets and we have a very significant asset asset base to build a very significant company going forward.

Speaker 1

Have a great day.

Operator

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Remove Ads
Powered by Quartr
Earnings Conference Call
Energy Fuels Q1 2024
00:00 / 00:00
Remove Ads