Filed by Energy Fuels Inc.
(Commission File No.: 001-36204)
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Uranerz Energy Corporation
(Commission File No.: 001-32974)

 

ENERGY FUELS INCORPORATED

 

PRESENTATION BY STEVE ANTHONY

ON JANUARY 20, 2015
 

1                       MR. ANTHONY: All right. Good morning.
2   My name is Steve Anthony. I'm the CEO and President
3   of Energy Fuels Incorporated, a uranium mining company
4   based in Lakewood, Colorado. And this morning, I'm
5   going to talk about nuclear energy.
6                       Nuclear is the only way you can produce clean,
7   carbon-free basic electricity in the United States
8   today. We expect to see a big growth in nuclear power
9   throughout the world as the issues of global warming
10   and electricity demand increase as we go forward in
11   this decade.
12                       The growth in nuclear power, you know, is
13   always hampered by, obviously, issues that are out of
14   our control. I mean, there's been some nuclear power
15   upsets in the world that have really hampered the
16   growth. The golden age of nuclear power began in the
17   '60s -- actually the '50s, went into the '60s and
18   peaked in the '70s in the United States, which became
19   the largest producer of nuclear power and largest
20   consumer of U308 which is the fuel for nuclear power.
21                       I want you to take away today four things;
22   that we are a producer, not an explorer, we have the
23   strongest balance sheet amongst our peers, production
24   growth potential in the US through permeated assets
25   that are in a standby state and can be turned on in a

2


1   short period of time. We've recently announced a
2   transaction with Uranerz which is an institute uranium
3   producer, a methodology of extraction that is purported
4   to be on the lower end of the cost curve. This will
5   create a company that will be the purely dominant
6   mining company in the US.
7                       These next slides are regulatory compliance
8   slides. Take a look at 'em at your convenience. Now,
9   today I'm going to talk about energy fuels. I'll talk
10   about our most recent acquisition, the Uranerz Company
11   located in Wyoming. We'll talk a bit about uranium
12   market dynamics and the Energy Fuel's production
13   platform. I'll end with some financials and current
14   guidance for the company.
15                       The US nuclear power industry is the
16   strongest in the world currently. Of course, China is
17   rapidly closing that gap with an aggressive build of
18   power plants to service their ever-increasing demand.
19   As you see on this slide, the area in the yellow is our
20   operating area predominantly in the Western US.
21   Historically, this is where the majority of the uranium
22   production came from and, as I indicated before, we
23   peaked at around 55 million pounds of production here
24   in the United States in the late 1970s. You can see
25   where these nuclear power plants are located. There's

3


1   about 102 currently operating, two have recently shut
2   down, but there are five currently under construction
3   that will come online in the Southeast United States.
4                       To service the demand of the nuclear power
5   industry, we embark on a two-pronged philosophy. That
6   is, play to our strengths, which is a strong balance
7   sheet and our long-term contracts, and take advantage
8   of opportunities in the current downturn in the market
9   to continue consolidation. We've consolidated five
10   major companies since 2008 following the financial
11   crisis, and we took advantage of the consolidation in
12   the industry because there were many companies out
13   there in 2007 when the price of uranium peaked at $138
14   a pound. It's currently $36 a pound, so you can see the
15   rapid and volatile price movement in the market has
16   caused companies to fall by the wayside that don't have
17   the strength to survive and others that don't have the
18   strength to grow in the market.
19                       Of course, having the best balance sheet
20   helps us in this current market situation. Three
21   long-term contracts currently with the company, and
22   these contracts average a price of around $59 a pound.
23   You can see over the current price of 36 that there's a
24   substantial buffer there.
25                       It -- we have some important strategic

4


1   alliances with two major players in the world; that is
2   Kepco which is he Korean Electric Power Company and
3   Sumitomo, a major Japanese trader.
4                       Again, our two part strategy is to manage our
5   assets with a strong working capital conservatively and
6   focus on low-cost production centers. Build the
7   production growth potential by permeating the current
8   large-scale base load projects which are three projects
9   that each one individually consists of over 20 million
10   pounds a year production potential -- or 20 million
11   pounds of resource base. These three base load
12   projects will give us a sufficient feed into our
13   uranium mill to produce what we project to be 4-5
14   million pounds a year.
15                       Uranerz acquisition; increasing uranium
16   production through this strategic acquisition allows us
17   to be perceived on a lower cost of the production
18   curve. ISR production is solution mining essentially,
19   contrary to the conventional mining that we've done to
20   date. ISR production is purported to have a lower
21   operating cost and that has borne to be true in other
22   areas of the world such as Kazakhstan which produces
23   about 40 percent of the world's demand -- supply or
24   uranium, at lower costs than are typically seen in
25   hard-rock mines. But ISR production has a certain

5


1   geological environment that has to be conducive toward
2   it. It's not uniform. In other words, all uranium
3   deposits -- the majority of uranium deposits in the
4   world that are known really have to be mined through
5   the conventional method.
6                       Now, the true cost of production with Uranerz
7   will lower our overall portfolio of projects and we
8   will get down to what we feel's a competitive rate to
9   compete on utility contracts which we feel are going to
10   increase in the future. Scalability is one of our key
11   strengths and Uranerz also has scalability which will
12   add to the production profile of the company as we see
13   the price come up and allow production to resume.
14                       This slide shows the dominant position we
15   think Energy Fuels has in the industry. By any metric,
16   both methods of production, supply contracts and sole
17   focus in the US, we think we rank at the number one
18   position -- actually number two, second to Cameco,
19   which is the world's largest producer out of Canada.
20                       This is a shot of the Nichols Ranch
21   processing facility. As you can see, it's a brand new
22   facility, just came online in April of 2014, has a
23   licensed capacity of 2 million pounds a year and in the
24   current production in 2014, was 197,000 pounds. We
25   project the Nichols Ranch to contribute up to 500

6


1   million -- or 500,000 pounds a year of production in
2   2016 as the mine comes up to production design
3   capacity. It's located in the Powder River Basin of
4   Wyoming. The Powder River Basin is where Cameco has
5   its operations which is the largest current producer of
6   ISR generated uranium in the United States. The
7   district itself has several other uranium mining
8   companies that have contributed toward ISR production
9   in that area.
10                       Together, Energy Fuels and Uranerz will offer
11   a diverse uranium production profile from two separate
12   production centers, along with six long-term contracts
13   that deliver through 2020 at an average price of $59 a
14   pound. Now, this -- you know, this production and
15   contract portfolio allows us really to be a revenue
16   generator and we have actually generated positive cash
17   flow and reported the first earnings in the history of
18   the company in third quarter 2014.
19                       We have strong board and management, and I
20   want to emphasize that with the Uranerz acquisition,
21   which is the largest in the history of the company and
22   we -- by the way, we've done five -- Uranerz is the
23   fifth rollup acquisition that we've done in the
24   business. We started in 2008 with a company called
25   Magnum and consequently bought or merged with four

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1   other companies. Uranerz has the largest and with
2   Uranerz we got the ISR technical expertise that we
3   needed to come into this area of production. And, as
4   you see, Paul Goranson who's a major COO of Uranerz
5   will come with the company and be in charge of those
6   operations.
7                       Our board of directors is deep in mining
8   industry experience and uranium specifically, with some
9   of the major names in the industry on our board.
10                       Let's talk a little bit about uranium market
11   dynamics. There's increasing demand in the world for
12   clean energy. I'm sure you've seen pictures of
13   Beijing, China and some of the issues they have with
14   air quality. Of course, China still depends in large
15   part on coal production to supply the fuel to their
16   generating units to supply the electricity to the
17   populus. But they are the most aggressive builder of
18   nuclear power plants today. They have some 24 plants
19   that are under construction and more to come. I mean,
20   they're -- you know, their whole philosophy is to --
21   similar to the French in the '70s where they settled on
22   a reactor type, perfected that reactor type, and the
23   duplicate that reactor type. It was successful for the
24   French. They built to be -- to supply 80 percent of
25   their electrical demand in the 1970s through the most

8


1   robust program and are still regarded leaders in
2   technology today.
3                       So the geopolitical risk of creating new
4   uranium supply are substantial. Right now, the areas
5   of the world that have seen rapid production are
6   Central Asia in the town -- or excuse me, in the
7   country of Kazakhstan -- African in Niger, Namibia,
8   some of the other African countries that have really
9   seen political unrest which has jeopardized some of the
10   production sources there. In fact, Areva had a
11   shutdown of their production facility there until they
12   got the issue straightened out through local military
13   intervention.
14                       Has the market turned the corner? Well, if
15   you look at all the other sources of fuel that have
16   gone down here in the last six months, uranium's the
17   only one that actually has risen in price. We've seen
18   prices rise 25 percent since July. Now, a lot of this
19   is predicated on the Japanese reactor restarts because
20   we all know that the Japanese nuclear power situation
21   at Fukushima caused worldwide concern, both in safety
22   and in the resumption of nuclear power in Japan. We
23   thought, in the industry, that it would maybe be a year
24   or two because the Japanese had a very dedicated
25   political base to develop nuclear power. They were

9


1   second to the United States. They had some 54 reactors
2   and, of course, they shut them all down after Fukushima
3   and not -- and that was in March of 2011 and not one
4   has restarted yet. The latest projection is for the
5   Chennai nuclear power plant, two reactors at that
6   location to start up here in the first quarter of '15.
7                       So time will tell on that. But, of course,
8   with the Japanese shutdowns came major production
9   cutbacks around the world. Some of the biggest
10   producers of U308, our product, are Rio Tinto, BHP,
11   Paladin and Cameco. They're all down as far as their
12   production that they've brought to the market. So this,
13   consequently, will have a lagging effect on the price,
14   which we believe, you know, has got to increase because
15   the world supply right now isn't being met by
16   production and, of course, that bridge -- that gap is
17   being bridged by secondary -- what they call secondary
18   supplies in the market, which is a fairly complex
19   situation around the world; stems from the de-blending
20   program, the arms treaty with the Russians and a lot
21   comes out of what we call enrichment facilities on,
22   essentially, secondary supplies that come out of that.
23   Underfeeding is the term where they can produce more
24   than they have to.
25                       China continues to aggressively buy uranium

10


1   and stockpile it. They've got the longest runway look
2   in the industry and India also is a major -- country
3   with a major demand for nuclear power that they go
4   along at a different pace than China, but we expect
5   them to enter into the market with increased production
6   -- with increased demand, excuse me.
7                       Uranium, the beacon in darkness; when you
8   look at the -- all the current price decreases that
9   have occurred; some are on this -- this list here
10   where, you know, crude oil is off 57 percent, natural
11   gas 9, heating oil 46, gasoline 54; you obviously see
12   that everything has been going down with the energy
13   price situation in the world, but uranium increased 25
14   percent from its low of $28 in early '14.
15                       I'd like to talk a little bit about uranium
16   -- tho operating platform for uranium -- or for Energy
17   Fuels. The pictures you see her are really the
18   fundamental basis of our company. We are an operating
19   company. We have mines. They are permitted. We
20   employ people. In fact, our payroll peaked at 350
21   people between mines and mill and exploration and
22   development staff in early 2014. We've since had
23   cutbacks with the uranium production being cut back
24   just to meet our contracts, but nevertheless, this
25   gives you a picture of the real world as we operate.

11


1                       The White Mesa Mill is truly our strategic
2   asset. It was built in the early '80s, but maintained
3   in excellent condition and currently supplies 20 to 25
4   percent of the US production. US production is down to
5   4 million pounds a year from 55 in the '70s as I said
6   before, but of that we produce about a million pounds a
7   year. The remainder is being produced by Cameco and
8   ISR producers that don't require a hard rock convention
9   uranium mill. You can see our annual production for
10   the last five years has averaged around a million
11   pounds a year. So we've put the product in the can,
12   converted it to revenue through our contracts and, you
13   know, we are truly an operating company from that
14   standpoint.
15                       When you look at our mill, it gives us an
16   opportunity for alternate feed which, in the depressed
17   times in the market, is a way to generate additional
18   revenue by essentially taking waste streams or streams
19   that have to be reprocessed, and they can be delivered
20   and -- or they can be disposed of in our NRC regulated
21   tailings cells. So it gives us a little bit of a
22   sideline as a value added business.
23                       So this is kind of a snapshot of our
24   production platform from the mining standpoint. We
25   operate in the five western states and one mine is

12


1   currently under production at Pinenut. These are
2   underground -- or shaft-access mines. We have a mine
3   in development in Canyon which is also on the south
4   side of the Grand Canyon. I must note that we operate
5   in highly-sensitive environmental areas that the bar
6   for us to get approved, I think, and I've -- I've
7   personally been in coal, I've been in copper, I've been
8   in vanadium in my career; it's the highest bar as far
9   as environmental. The rules may seem the same, but
10   they're regulated by a separate US agency, the Nuclear
11   Regulatory Commission.
12                       So the Canyon mine has got five -- produced
13   3-4 million pounds of potential resource. We've
14   developed the mine based on only knowing 1.4 million
15   pounds. Large-scale products, that's what we need to
16   average down the cost of processing at the White Mesa
17   Mill and, as you see, we have three mines that are in
18   this category what we call base load production
19   potential and that's Sheep Mountain Wyoming, Roca Honda
20   in New Mexico and Henry Mountains in Utah. Sheep
21   Mountain is permitted from the mining standpoint. Roca
22   Honda is -- is in permitting, and Henry Mountains we
23   will continue permitting these areas, and we're all
24   comfortable we can get operating permits there. Roca
25   Honda and Henry Mountains are within trucking distance

13


1   of the White Mesa Mill. It'll allow us to utilize the
2   underutilized capacity in that facility.
3                       We have other smaller mines up in what's
4   called the Colorado Plateau area that are currently
5   being maintained on standby situations and can be
6   brought back to production as early as three to six
7   months. Keep in mind, when we acquired Denison, a major
8   acquisition in 2012 that brought us into the production
9   world, we -- they were mining about 1.5 million pounds
10   a year and as the price was $52 a pound then, dropped
11   precipitously lower below the cost of production, we
12   shut in those mines, but they were fully permitted,
13   equipped and manned and mining at that rate at that
14   time. So we're comfortable we can bring those back up
15   should the price support it.
16                       This is a picture of resource summary. We
17   have the largest 43-101 resource base in the United
18   States; both conventional, and we've added Uranerz
19   here, which you'll see what they add to our -- about
20   another 16 million pounds to our resource portfolio.
21                       Again, financial highlights for the nine
22   months ended September 30th, we had 800,000 pounds of
23   sales. We produced 770, almost balancing there. The
24   rest came out of inventory. We put another 800,000
25   pounds in inventory for revenues of 46 million as you

14


1   can see, and $45 million of working capital. Currently,
2   cash is 13 million pounds.
3                       Capitalization summary; as you can see, you
4   know, we feel we're in a strong position with our cash
5   and cash equivalence; $45 million working capital.
6   Everybody asks me are you raising money? Well, the
7   price of the stock keeps going down and we don't think
8   it's prudent to do that at this time, but I think you
9   always have to be -- you always have to be ready to
10   take advantage of the market and in this volatile price
11   environment that we're in and volatile price stock
12   movement, you know, we are all well aware of monitoring
13   that and trying to capitalize it to the best interests
14   of the company. We're covered by six analysts, a
15   couple of majors out of Canada and here in the US
16   Cantor, Roth and Cowen Securities cover us.
17                       Guidance for '14-'15, we'll sell again
18   800,000 pounds of resource at $57. We'll produce 770
19   pounds of that and in 2015 we'll have another 800,000
20   pounds of sales. These are on the existing contracts.
21   Production will drop to 125,000 pounds and spot
22   purchases will be 300,000 which will serve into one of
23   our longer-term contracts where we can, essentially,
24   bridge the difference between spot and our contract
25   price.

15


1                       We're going to campaign the mill in 2015.
2   Campaigning, essentially, is when you get a sufficient
3   amount of resource stockpile so you can make an
4   economic operation of the mill. I mean, these mills,
5   you can't turn them on for one month. You have to
6   stockpile material until you can get a minimum of a
7   three-month run, and that's what we mean by
8   campaigning.
9                       In summary, we have a strong balance sheet,
10   current uranium production, significant growth
11   potential and a proposed acquisition of Uranerz gives
12   us a new entry into the ISR area. We're going to
13   create the leading producer in the United States and,
14   as you see in this picture, this is our end product.
15   Drums of U308 ready to go to the converter. Each one of
16   these drums is about 50,000 pounds value as it sits. So
17   I'm going to leave that with you and answer any
18   questions at this time. Yes?
19                       MALE SPEAKER: Germany pushing back and what
20   are your feelings about that? Are they actually going
21   to be free of nuclear energy?
22                       MR. ANTHONY: Well, Germany's on record for,
23   you know, dismantling their nuclear power plants and
24   removing, you know, the nuclear power component from
25   their electrical supply. If they do it, it remains to

16


1   be seen. That's the current political position that
2   they took, but keep in mind, you know, that the
3   hypocrisy there is that they get all their electricity
4   that they shut down nuclear wise, they get it across
5   the rind from France whose 80 percent nuclear
6   generation. So, you know, that's part of the deal
7   there with Germany.
8                       Whether they do it or not; again, economics
9   will tie into that because, you know, they're like
10   Japan having to buy hydrocarbons and things like that.
11   So that's what I think there. Yes?
12                       MALE SPEAKER: Is it determined that Japan is
13   going to be turning their facilities back on? I read
14   that they've made a bigger commitments to, or want to,
15   to L&G [phonetic]?
16                       MR. ANTHONY: Mm-hm.
17                       MALE SPEAKER: So that's question number one.
18   Two is what percentage of your end market goes to
19   batteries and things other than nuclear energy? And,
20   third, can you just talk about incentives and how much
21   stock insiders own?
22                       MR. ANTHONY: Mm-hm. Well, first -- first
23   one on -- I believe the first one you entered on Japan.
24   Japan, politically, is set to turn on their nuclear
25   reactors. They did have 54 operating. Our best

17


1   estimate is that they'll turn on 33, which are the most
2   modern design, what they call a boiling point reactors,
3   not the -- you know, not the -- excuse me, the pressure
4   reactors, not the boiling water reactors. So, you
5   know, it's a political game with -- you know, with the
6   Japanese. The Japanese, culturally, have usually
7   followed step with what the government has said. Of
8   course, Fukushima disrupted that greatly, so there's a
9   factor between the populus and the people, but they're
10   paying dearly in their economy on the cost of power. So
11   we think they will come online and to -- we'll find the
12   first quarter's going to really tell that.
13                       And your second question was about --
14                       MALE SPEAKER: End market.
15                       MR. ANTHONY: Excuse me?
16                       MALE SPEAKER: End markets in terms of any
17   end markets for --
18                       MR. ANTHONY: Oh yeah, for vanadium. Yeah,
19   we -- it was little touched on here, but part of our
20   resource base has a vanadium component to it. In fact,
21   White Mesa Mill had a vanadium processing circuit at
22   it. One of the few -- one of the only ones in the
23   country and we did produce vanadium as a value add, and
24   as vanadium is getting more attention for the new
25   generation of batteries, we feel that, you know, that's

18


1   going to be an opportunity. But we really don't push
2   that because it's going to come at a different place
3   than we're tied into as far as our core business.
4                       And the other one on insiders, I think
5   insiders have about, when you add it up, it's somewhere
6   around 5 percent.
7                       MALE SPEAKER: Okay. Thank you.
8                       MR. ANTHONY: So I appreciate you coming
9   today. Thanks so much. I have one -- I have one pop
10   quiz question though. Here's my pop quiz question.
11   When you always talk about nuclear and this dark side,
12   tell me what powered the USS Enterprise in the series
13   Star Trek? What was the fuel? It was nuclear. Don't
14   you remember that? Nuclear powered starship on its
15   20-year voyage. I always liked that one, you know?
16                       And the other one, two -- second point is the
17   United States Navy, you know, which is -- which is
18   elemental to the security of this country, runs their
19   major ships off nuclear, and they haven't had any major
20   upsets in the history since Admiral Rickover brought
21   the nuclear generation into the Navy. So what can I
22   say about nuclear? It's safe. Thank you.
23    
24    
25    

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Important Information for Investors and Stockholders

This communication is for informational purposes only and does not constitute an offer to purchase, a solicitation of an offer to sell the shares of common stock of Uranerz or a solicitation of any proxy, vote or approval. Energy Fuels will file with the United States Securities and Exchange Commission (“SEC”) a registration statement on Form F-4 that will include a proxy statement of Uranerz that also constitutes a prospectus of Energy Fuels. Energy Fuels and Uranerz also plan to file with or furnish other documents to securities regulatory authorities in Canada and the United States regarding the proposed transaction.

INVESTORS AND STOCKHOLDERS OF URANERZ ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Anyone may obtain free copies of these documents when available free of charge under Energy Fuels’ profile on SEDAR at www.sedar.com or EDGAR at www.sec.gov, or by accessing Energy Fuels’ website at www.energyfuels.com under the heading “Investors” and from Energy Fuels directly by contacting Curtis Moore, Investor Relations: (303) 974-2140. Documents will also be available free of charge under Uranerz’ profile on EDGAR at www.sec.gov or on SEDAR at www.sedar.com, or by accessing Uranerz’ website at www.uranerz.com under the heading “Investors” and from Uranerz directly by contacting Derek Iwanaka, Investor Relations: (800) 689-1659. Energy Fuels, Uranerz, their respective directors and certain of their executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Uranerz in connection with the proposed transaction. Information about the directors and executive officers of Uranerz is set forth in its proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on April 29, 2014. Information about the directors and executive officers of Energy Fuels can be found in its 2014 management information circular dated March 26, 2014, which is available at www.sedar.com and www.sec.gov. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.