Energy Fuels Inc. (TSX:EFR) ("Energy Fuels" or the "Company") today reported its
financial results for the quarter-ended December 31, 2012 ("Q1-2013"). The
Company's Quarterly Consolidated Financial Statements, along with Management's
Discussion and Analysis, has been filed on the System for Electronic Document
Analysis and Retrieval ("SEDAR") and may be viewed at www.sedar.com. Unless
noted otherwise, all dollar amounts are in US dollars.
Selected Summary Financial Information
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As at December As at September
$000's 31, 2012 30, 2012
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Financial Position:
Working capital $ 34,673 $ 44,080
Property, plant and equipment 137,844 133,085
Total assets 230,937 239,808
Total long-term liabilities 36,014 38,446
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Quarter-ended Quarter-ended
December 31, September 30,
$000, except per share data 2012 2012
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Results of Operations :
Total revenues $ 8,927 $ 25,028
Net Income (loss) $ (2,256) $ (15,905)
Basic & diluted net income (loss)
per share $ (0.00) $ (0.08)
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Financial and Operational Highlights for Q1-2013:
- Energy Fuels sold 157,000 pounds of U3O8 during Q1-2013, including
117,000 pounds U3O8 under term contracts at an average realized price
of $58.00 per pound.
- Energy Fuels sold 78,000 pounds of V2O5 at an average realized price
of $5.30 per pound during Q1-2013.
- Energy Fuels' production at the White Mesa Mill totaled 228,400
pounds of U3O8 and 234,600 pounds of V2O5 during Q1-2013. Q1-2013
U3O8 production included 19,000 pounds of U3O8 from alternate feed
materials and 209,000 pounds of U3O8 from Pandora and Beaver
conventional ore. The production cash cost during 1Q-2013 was $46.64
per pound of U3O8.
- As of December 31, 2012, the Company had working capital of $34.7
million, including cash and cash equivalents of $3.6 million,
marketable securities of $1.1 million and 358,000 pounds of uranium
concentrate and work-in-process inventory which, based on spot market
prices as of December 31, 2012, had a market value $15.6 million.
Between January 1, 2013 and February 12, 2013, pursuant to its term
contracts, Energy Fuels delivered and received payment for 216,667
pounds of U3O8.
- On October 1, 2012 Energy Fuels acquired the membership interests of
Aldershot Resources Ltd. ("Aldershot") in Colorado Plateau Partners
LLC and Arizona Strip Partners LLC, two 50/50 joint ventures between
subsidiaries of Energy Fuels and Aldershot, for consideration of
$750,000 in cash, the cancellation of debt owed by Aldershot to
Energy Fuels, and 3,527,570 Energy Fuels common shares.
- On January 18, 2013, subsequent to Q1-2013, Energy Fuels announced a
toll milling agreement with Laramide Resources Ltd. ("Laramide")
whereby Energy Fuels' White Mesa Mill will process all material
produced from Laramide's 100% owned and operated La Sal II uranium
mine in Utah. This toll milling agreement emphasizes the strategic
position of Energy Fuels' 100% owned White Mesa Mill, the only
operating conventional uranium mill in the United States.
- On January 28, 2013, subsequent to Q1-2013, Energy Fuels acquired
9,439,857 common shares of Virginia Energy Resources Inc. ("Virginia
Energy") at a price of Cdn$0.42 per share, representing a 16.5%
ownership interest in Virginia Energy. Virginia Energy owns 100% of
the Coles Hill Project in south-central Virginia, the largest known
conventional uranium deposit in the U.S. As consideration for this
investment, Energy Fuels paid Cdn$250,000 in cash and issued
21,851,411 common shares of Energy Fuels to Virginia Energy.
- On February 4, 2013, subsequent to Q1-2013, the U.S. Ninth Circuit
Court of Appeals issued its ruling in favor of the U.S. Secretary of
the Interior, the U.S. Bureau of Land Management and the Company and
against the Center for Biological Diversity et al in their challenge
relating to the Company's Arizona 1 mine.
Energy Fuels Outlook for the Fiscal Year Ended September 30, 2013 ("FY-2013")
Energy Fuels continues to execute its corporate strategy, which balances
prudent, measured operations in the midst of the current uranium price
environment, while concurrently positioning the Company to realize the economic
benefits of anticipated improvements in the price of uranium. Energy Fuels
believes the uranium market outlook is positive (as outlined below in Market
Outlook for FY-2013) and is supported by strong supply and demand fundamentals
within the sector.
With respect to operations management in the current uranium pricing
environment, the Company is tailoring its production levels to meet the delivery
requirements specified in its term contracts, which include pricing terms at a
significant premium to the current uranium spot price. In doing so, the Company
will maximize its realized selling price for produced U3O8 and avoid investment
in excess concentrate inventories. Energy Fuels believes its term supply
contracts are important intangible assets that significantly diminish the
financial impact of the current uranium price on the Company. The Company is
also able to fulfill this targeted level of production output utilizing sources
with relatively lower marginal cash costs of production, including stockpiled
ore inventories, mined Arizona Strip ore and alternate feed materials.
Energy Fuels expects significant improvements in the uranium price over the
medium to long-term and is maintaining and selectively growing its asset base in
a manner that positions the Company to realize the associated economic benefits
of a higher uranium price. Production on the Arizona Strip is anticipated to
continue in FY-2013. The Company is maintaining its formerly producing mines on
the Colorado Plateau on standby. Development of the Canyon Mine in Arizona is
anticipated to continue, securing a relatively lower-cost ore feed to the White
Mesa Mill. Permitting at the Sheep Mountain Project is anticipated to continue,
advancing a second major production center for the Company. The Company is
evaluating potential new supplies of alternate feed materials for the White Mesa
Mill (which carry no mining costs). The Company will continue to evaluate
additional toll milling and/or ore purchase agreements with third-parties who
own uranium properties within trucking distance of the White Mesa Mill. Energy
Fuels will also continue to evaluate growth through accretive acquisitions.
As outlined below, Energy Fuels provides the following updated outlook for
FY-2013 and provides the following outlook for uranium sales and production for
the quarter-ended March 31, 2013 ("Q2-2013"):
- FY-2013 Sales: The Company expects to sell 1,000,000 to 1,050,000
pounds of U3O8 during FY- 2013, of which 957,000 pounds is expected
to be sold under term contracts and the remainder sold into the spot
market. V2O5 sales are estimated to be between 1,700,000 and
1,800,000 pounds during FY-2013.
- Q2-2013 Sales: The Company expects to sell 533,334 pounds U3O8,
during Q2-2013 of which 100% will be sold under term contracts.
- FY-2013 Production: The Company expects to produce approximately
1,000,000 pounds of U3O8 during FY-2013, sourced from both
conventional ore and alternate feed sources. Conventional ore
production is expected to include ore mined from the Beaver, Pandora,
Arizona 1 and Daneros mines. Given the expected processing of Beaver
and Pandora ores, Energy Fuels also anticipates production of between
1,700,000 and 1,800,000 pounds of V2O5 in FY-2013.
- Q2-2013 Production: The Company expects to produce 250,000 to 300,000
pounds of U3O8 during Q2-2013, sourced from alternate feed sources
and conventional ore from the Beaver and Pandora mines.
- FY-2013 Mining Activities: Mining on the Arizona Strip is expected to
continue during FY- 2013 at the Arizona 1 and Pinenut mines.
Effective October 17, 2012, the Company placed the Daneros and Beaver
mines on standby. In addition, the Pandora mine was placed on standby
in December 2012.
- FY-2013 Project Development: As previously announced, Energy Fuels
plans to invest in high priority development projects and maintain
general permitting and exploration activities during FY-2013. The
Company expects to continue development of the Canyon mine in Arizona
in FY- 2013. The Company anticipates development expenditures at the
Canyon mine to be $3.9 million to $4.4 million during FY-2013. In
addition, Energy Fuels expects to continue permitting activities at
the Sheep Mountain Project at an anticipated cost of approximately
$1.1 million during FY-2013. The Company expects other permitting and
exploration expenditures to be approximately $1.8 million for FY-
2013.
Market Outlook for FY-2013
Energy Fuels continues to anticipate uranium market improvement in FY-2013 and
into FY-2014. Long-term demand fundamentals within the uranium sector remain
strong. China, Russia, India, the U.S., the UK, Saudi Arabia and Brazil continue
to develop nuclear power plants. Globally, there are now 65 nuclear reactors
under construction, and 484 nuclear reactors are planned or proposed (versus 64
and 483, respectively, in the last quarter), as reported by the World Nuclear
Association. Below are descriptions of some recent uranium market announcements:
- In December 2013, Japan elected the pro-business/pro-nuclear Liberal
Democrat Party in a clear-cut majority. There was an immediate bump
in the spot price of uranium after the election, as the new leaders
provided clear direction that several more reactors are expected to
be restarted during 2013. There are also indications that nuclear
power will continue to be part of Japan's long term energy mix.
- Germany has publicly stood by its exit from the nuclear community,
while purchasing nuclear generated power from France across the
border, and significantly increasing coal generation, both at
increased costs.
- On the supply side, the discontinuation of the US-Russia highly
enriched uranium ("HEU") agreement in December 2013 appears certain.
This could remove as much as 24 million pounds of uranium from World
supplies. In addition, the delay of several very large, new uranium
development projects could constrict uranium supply over the medium-
to long-term. Globally, reactor demand for U3O8 is currently about
175 million lbs. annually to supply just the currently operating
units. Primary uranium production from operating mines is about 142
million lbs. annually. The 33 million lb. gap is filled with
secondary supplies drawn from various inventories around the world,
including the 24 million pounds from Russian HEU.
- Nuclear reactor "new-build" activity remained firm throughout the
market disruption caused by the natural disaster at Fukushima. The 65
reactors now under construction will generate almost 33 million lbs.
per year of new demand for U3O8, and should all 484 reactors
currently planned and proposed be constructed, that will more than
double the current annual global demand for U3O8. However, the
depressed U3O8 price since Fukushima has not only caused the delay of
major announced uranium mining projects, but has also impeded the
development of new mining projects worldwide.
- On January 14, 2013, it was announced that ARMZ Uranium Holding Co.
("ARMZ"), an affiliate of a Russian state-owned uranium mining
company, is seeking to take Uranium One Inc. ("U1") private. ARMZ
currently owns approximately 51.4% of U1. ARMZ bid $2.86 per share
(which, at the time of the announcement, was a 32% premium to the 20-
day weighted market average) for the 48.6% common shares of U1 that
they don't already own. It has been suggested that his transaction
could divert Kazakh production to Russia and further limit the global
availability of uranium. Russia itself has 33 reactors currently in
operation, ten more under construction, and 44 planned or proposed.
Energy Fuels believes the timing and nature of this transaction could
also signal a market bottom for uranium.
Based on these factors, Energy Fuels believes the market will see a modest
strengthening of the uranium spot price during FY-2013 with accelerated
strengthening expected beyond FY-2013.
Stephen P. Antony, P.E., President & CEO of Energy Fuels, is a Qualified Person
as defined by National Instrument 43-101 and has reviewed and approved the
technical disclosure contained in this document.
About Energy Fuels: Energy Fuels is America's largest conventional uranium
producer, supplying approximately 25% of the uranium produced in the U.S., and
is also a significant producer of vanadium. The company operates the White Mesa
Mill, which is the only conventional uranium mill currently operating in the
U.S., capable of processing 2,000 tons per day of uranium ore. Energy Fuels has
projects located throughout the Western U.S., including producing mines and
mineral properties in various stages of permitting and development.
This news release contains certain "Forward-Looking Statements" within the
meaning of Section 21E of the United States Securities Exchange Act of 1934, as
amended and "Forward Looking Information" within the meaning of applicable
Canadian securities legislation, which may include, but is not limited to,
statements with respect to the future financial or operating performance of the
Company and its projects.
Generally, these forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" "does not expect", "is
expected", "is likely", "budget" "scheduled", "estimates", "forecasts",
"intends", "anticipates", "does not anticipate", or "believes", or variations of
such words and phrases, or state that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur", "be achieved" or "have
the potential to". All statements, other than statements of historical fact,
included herein are generally considered to be forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements express or implied by the forward-looking statements. Factors that
could cause actual results to differ materially from those anticipated in these
forward-looking statements are described under the caption "Risk Factors" in the
Company's Annual Information Form dated December 20, 2012, which is available
for view on the System for Electronic Document Analysis and Retrieval at
www.sedar.com. Forward-looking statements contained herein are made as of the
date of this news release and the Company disclaims, other than as required by
law, any obligation to update any forward-looking statements whether as a result
of new information, results, future events, circumstances, or if management's
estimates or opinions should change, or otherwise. There can be no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, the reader is cautioned not to place undue reliance on
forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Energy Fuels Inc.
Curtis Moore
Investor Relations
(303) 974-2140 or Toll free: 1-888-864-2125
investorinfo@energyfuels.com
www.energyfuels.com
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