Energy Fuels Inc. (NYSE
MKT: UUUU; TSX: EFR) visited with Metals News at the recently held Metals and
Minerals Show. Mr. Stephen P. Antony (Steve)
is the Chief Executive Officer and President of Energy Fuels. He took the time to explain current
developments in the company, and how they have positioned themselves to
capitalize on what many believe will be significant increases in the demand for
uranium in the coming years.
Steve said, “Energy
Fuels is a conventional uranium producer.
Indeed, we are the only conventional producer in the U.S., the 2nd
largest producer in the U.S. behind Cameco, and we accounted for about 25% of
all U.S. uranium production in 2013.”
Since the company was founded in 2005, the company has seen changes in
the market that have included both highs and lows, as changes in uranium demand
have adjusted over time. Mr. Antony
said, “We have weathered the ups and the downs since then, and right now we are
one of the strongest companies in our uranium peer group, in terms of working
capital, current uranium production, and the potential ability to increase
production significantly in the coming years.”
Energy Fuels built
their production portfolio by investing in historically significant districts
and mining properties in the U.S. In
fact, Energy Fuels is one of the largest holders of NI 43-101 uranium resources
in the U.S. Steve said, “We have knit together
uranium properties that were in production in the 1950’s through the 1980’s.” Antony’s strategic plan was borne out of his
own experience in the industry. He said,
“I have been in the business since the 1980’s with Mobile Oil. They used underground solution mining. I joined the original Energy Fuels Nuclear, when
they were focused on conventional mining of the high-grade uranium deposits in Arizona.”
With the geopolitical
changes that happened during the 1980’s, much of the uranium industry experienced
a dramatic slowdown due to lack of demand and excessive supply. Antony said, “The industry went through
hibernation for about 20 years as a result, and most U.S. production was
shut-down. However, the U.S. was once
the World’s largest producer of uranium, and there are still huge quantities of
uranium which could be mined in these U.S. districts.” Modern day issues, such as the damage done to
a nuclear power plant during a Japanese earthquake in 2011, have put what Mr.
Antony believes is a short-term damper on the projected worldwide growth in
nuclear energy and uranium demand.
Yet, the demand for clean and efficient energy
sources remains strong. Indeed, demand
is stronger now that it was immediately prior to Fukushima, led mainly by
developing nations in Asia. Most governments
recognize that nuclear is the best technology for producing carbon-free,
low-emission, baseload electricity. As
of December 2013, there were 70 nuclear reactors under construction, 173 on
order or planned, and 314 that have been proposed around the world. Mr. Antony stated, “If all of these units are
built, the world will experience more than a doubling of nuclear capacity over
current levels, along with the attendant increases in uranium demand.” That
is the reason that Energy Fuels believes its ability to significantly increase
production is highly important. Said
Antony, “The world produces about 16% of its electricity utilizing nuclear
technology. However, the U.S. is the
world’s leading producer of nuclear energy and the largest consumer of uranium.” Antony continued, “The U.S. produces about
18% of our electricity from nuclear, but we are well over 90% dependent on
foreign sources of uranium. This is why
Energy Fuels’ position as a leading U.S.-based producer is particularly
strategic.” With demand increasing, Steve
said that the company is seeing new demand on the horizon both in the United
States and around the world.
While many uranium
companies are struggling to survive in the challenging mining market, Energy
Fuels is actually in production, and generating cash for their business. Mr. Antony said, “We have been a producer and
currently have three contracts with major utilities that we are fulfilling.” In 2013, the contracts called for about 1
million lbs. of deliveries. Said Antony,
“Our contracts are great assets to the company, as they have pricing that will
average above $58/lb. in 2014. This is about
65% higher than the current spot market for uranium. We have 2-4 years left on these contracts.”
One of the benefits of Energy Fuels is the amount
of resources in their portfolio that has yet to be tapped. Antony said, “We have the largest base of
pounds in the ground that are near term producible.” In addition to the company’s current
production from its Arizona mines and alternate feed materials, the company is also
developing three large-scale uranium projects at Roca Honda, Sheep Mountain,
and Henry Mountains. Mr. Antony stated,
“These are three of the most important uranium projects in the U.S. and have
the capacity to produce large quantities of uranium over long periods of time.” Having this large base of uranium, large, advanced-stage
development projects, and the only conventional mill in the U.S., gives the
company options in responding to changes in the market. Steve stated, “The best analysts think we are
looking at a 40 to 50 million pounds per year of underproduction in the 2015,
2016 time period. New reactors are
coming online around the world, each of which will require fuel produced from
uranium. But, no one knows where this
uranium will come from. We are
positioning Energy Fuels to be one of those suppliers.”
For investors who are bullish
on uranium and nuclear energy, Antony believes that Energy Fuels is worth
further investigation. He said, “If you
look at our peers in the uranium space, we offer excellent leverage to the
uranium price. We have current uranium production. But, we also have an unmatched ability to
scale-up production, once we see uranium prices recover on a sustained basis.” In fact, the company believes it can ramp up
production quickly in response to market pressures and demand. Antony said, “We are scalable. We believe we can increase production from 1
million pounds to 5-6 million pounds over the course of a few years, if markets
cooperate.” Antony said, “We are already
permitted, and we have the only producing mill in the United States. We are the only company in North America that
can process low-cost alternate feed materials.
And, we essentially have a monopoly on conventional uranium processing
and milling in the U.S.”
Energy Fuels’ production
capacity has created a solid financial base for the company. Antony said, “Our balance sheet is solid, as
we reported $16.7 million of cash on hand September 30, 2013, along with a
working capital position of $36.8 million.
We are operating very prudently in the current market, but doing the
right things to position the company for production growth once markets
rebound.”
Why should investors
consider Energy Fuels? Said Antony, “We
are truly levered to the uranium price.
We have unmatched uranium production scalability among our peers. We have the only conventional uranium mill in
the U.S. We have current production and
three large-scale uranium development projects.
If nuclear energy grows as expected, uranium demand and prices should
increase substantially. Energy Fuels
expects to be in a position to benefit.”
http://www.energyfuels.com/
Energy Fuels Inc.
2 Toronto Street, Suite 500
Toronto, Ontario, M5C 2B6
Canada
General Information:
U.S. Office
Energy Fuels Resources Corp.
225 Union Blvd., Suite 600
Lakewood, Colorado, 80228
General & Investor Information:
Curtis H. Moore
Tel: 303.974.2140
Fax: 303.974.2141
Toll Free: 1.888.864.2125
E-mail: investorinfo@energyfuels.com