Energy Fuels Inc. (TSX:EFR) ("Energy Fuels" or the "Company") today reported its
financial results for the quarter-ended March 31, 2013 ("Q2-2013"). 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 As at
March 31, September 30,
$000's 2013 2012
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Financial Position:
Working Capital $ 33,109 $ 44,080
Property, plant and
equipment $ 139,623 $ 133,085
Total assets $ 225,087 $ 239,808
Total long-term
liabilities $ 36,488 $ 38,446
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Six months
Quarter-ended Quarter-ended ended
March 31, December 31, March 31,
$000, except per share data 2013 2012 2013
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Results of Operations:
Total revenues $ 34,087 $ 8,927 $ 43,014
Net Income (loss) $ (7,756) $ (2,256) $ (10,012)
Basic & diluted net income
(loss per share) $ (0.01) $ (0.00) $ (0.01)
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Company Financial and Operational Highlights for Q2-2013:
-- Generated $14.7 million in cash flow from operations.
-- Sold 533,334 pounds of U3O8, all of which was pursuant to term contracts
at an average realized price of $56.23 per pound.
-- Sold 667,000 pounds of V2O5 at an average realized price of $6.06 per
pound.
-- Production at the White Mesa Mill totaled 290,600 pounds of U3O8 and
812,600 pounds of V2O5. U3O8 production included 51,600 pounds of U3O8
from alternate feed materials and 239,000 pounds of U3O8 from
conventional ore primarily from the Company's Pandora and Beaver mines.
-- The production cash cost was $39.57 per pound of U3O8.
-- As of March 31, 2013, the Company had working capital of $33.1 million,
including cash and cash equivalents of $13.0 million, marketable
securities of $0.5 million and 113,000 pounds of uranium concentrate and
work-in-process inventory which, based on spot market prices as of March
31, 2013, had a market value of $4.8 million.
-- On January 18, 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 as the only operating conventional uranium mill in the United
States.
-- On January 28, 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, which is listed on the TSX Venture Exchange
(Ticker: VUI), owns 100% of the Coles Hill Project in 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. Concurrent
with the closing of this investment, Graham Moylan, Energy Fuels' Chief
Financial Officer, joined Virginia Energy's Board of Directors.
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 during the current uranium price environment, while
concurrently positioning the Company to realize the economic benefits of
anticipated improvements in the price of uranium through select development
expenditures and care and maintenance activities. Energy Fuels believes the
long-term uranium market outlook remains positive (as outlined below in Market
Outlook for FY-2013) and is supported by strong supply and demand fundamentals
within the sector. However, the Company anticipates that short-term price
weakness could persist.
Energy Fuels remains focused on relatively lower cost sources of production from
its Arizona Strip mines and alternate feed materials. These will provide Energy
Fuels with the U3O8 required for delivery pursuant to its term contracts. By
doing so, the Company aims to maximize its realized sales price per pound of
U3O8 and minimize its marginal cash cost of production. Consistent with this
strategy, Energy Fuels is pleased to provide the following operational update.
The Company has determined that it can realize production efficiencies by
milling its entire stockpile of conventional ore, including the ore stockpiled
as of March 31, 2013 (mainly comprised of Arizona Strip and Daneros ore), during
the quarter-ended June 30, 2013 ("Q3-2013"). As such, the Company has elected to
increase its production forecast for FY 2013. The Company expects to resume
conventional ore processing during the second half of FY-2014. The processing of
alternate feed materials is expected to continue through the remainder of
FY-2013 and into FY 2014. Mining activities are expected to continue on the
Arizona Strip for the remainder of FY-2013 and into FY-2014.
Energy Fuels expects 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 at the Pinenut mine in Arizona is currently
anticipated to begin in Q3-2013. The Company placed its formerly producing mines
on the Colorado Plateau on care and maintenance. 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
Q3-2013:
-- 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 1,500,000 and 1,600,000 pounds during
FY-2013.
-- Q3-2013 Sales: The Company expects to sell 50,000 pounds U3O8 during Q3-
2013 of which 100% will be sold pursuant to term contracts.
-- FY-2013 Production: The Company expects to produce approximately
1,175,000 pounds of U3O8 during FY-2013, 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 1,500,000 and 1,600,000 pounds of
V2O5 in FY-2013.
-- Q3-2013 Production: The Company expects to produce 500,000 to 550,000
pounds of U3O8 during Q3-2013, sourced from alternate feed sources and
conventional ore from the Beaver Pandora, Arizona 1 and Daneros 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: Energy Fuels plans to selectively 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, which included the
commencement of shaft sinking in March 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
The uranium market has seen little change over the past quarter, with the spot
price and term price remaining relatively stable. During the last quarter, sales
volumes remained low, and there was little impetus for new long-term contracts.
As a result, the spot price of uranium dropped $1.00/lb. from $43.25/lb. to
$42.25/lb., according to TradeTech. As of May 9, 2013, the spot price was
$40.60/lb. During the last quarter, TradeTech's long-term price indicator
remained unchanged at $57.00/lb.
While Energy Fuels continues to anticipate modest uranium market improvements in
FY-2013, and into FY-2014, significant market improvements will require a market
catalyst. Catalysts include the restart of nuclear reactors in Japan following
the issuance of final safety guidelines in July, further delays in new uranium
mining projects around the world, or stronger than anticipated demand.
Nevertheless, 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 66 nuclear reactors
under construction, and 479 nuclear reactors are planned or proposed (versus 65
and 484, respectively, in the last quarter), as reported by the World Nuclear
Association. Indeed, China and India plan to begin operation at eight nuclear
reactors this year. In addition, long-term supplies may not meet demand, as
uranium mining projects around the world continue to be delayed and shelved as a
result of the current price weakness. When prices strengthen and new projects
are proposed, it will likely take several years for these projects to be
permitted and go into production. On the other hand, new supplies from
government-controlled entities are not market driven and may come online sooner.
In addition, several positive market indicators are described below:
-- The discontinuation of the US-Russia highly enriched uranium ("HEU")
agreement in November 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 183 million lbs.
annually to supply just the currently operating units. Primary uranium
production from operating mines is about 152 million lbs. annually. The
31 million lb. gap is filled with secondary supplies drawn from various
inventories around the world which continue to diminish, most notably
the removal of up to 24 million pounds from Russian HEU.
-- Nuclear reactor "new-build" activity remained firm throughout the market
disruption caused by the natural disaster at Fukushima. According to the
World Nuclear Association, there are about the same number of reactors
in operation, under construction, planned and proposed now as there were
prior to Fukushima. The 66 reactors now under construction will generate
almost 33 million lbs. per year of new demand for U3O8, and should all
479 reactors currently planned and proposed be constructed, that will
more than double the current annual global demand for U3O8.
-- The supply of uranium will likely be restricted due to the depressed
U3O8 price since Fukushima. Uranium pricing has not only caused the
delay of major announced uranium mining projects, but has also slowed
the development of new projects worldwide.
-- On January 14, 2013, the shareholders of Uranium One Inc. ("U1")
approved a transaction whereby ARMZ Uranium Holding Co. ("ARMZ"), an
affiliate of a Russian state-owned uranium mining company, will take U1
private. This 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 may 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 by the end of 2013 with accelerated
strengthening expected into 2014. However, in the short-term, the Company
believes the spot price will remain in the low $40 range, and possibly dropping
below $40, before a recovery begins. Despite the challenging short-term market
environment, Energy Fuels believes it is well positioned to execute the
Company's business plan.
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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