Energy Fuels Inc.

Good morning. My name is Ina and I will be your conference operator today. At this time, I would like to welcome everyone to the Energy Fuels Third Quarter 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session where you will be able to ask one question and one follow-up question should you desire. If you would like to ask a question during this time, Simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you. Mr. Chalmers, you may begin your conference.

Thank you very much. And again, Mark Chalmers, I'm President and CEO of Energy Fuels. And thank you for joining this conference call today. And I can say with absolute confidence that momentum is growing and for our company quicker than ever before on three fronts. Uranium production ramp up. Three mines are operating. More are planned. Rare earths, we've achieved commercial separation. Our phase one plant and our expansion projects are advancing. The heavy mineral sands and the closing of base resources on October 2nd. The moving forward of the Donald Joint Venture FID decision and expiration at Bahia. And on top of that, we have the isotopes. But so it really is an exciting time for energy fuels. And I will go through a presentation as I normally do on the progress in more detail shortly. The conference call will have replays available. on the website later today or tomorrow, and so people can refer to that if they are not able to attend this call at this point in time. As always, at the end of the presentation, Zena said there will be time for questions, and I have Nate Bennett, our interim CFO and chief accounting officer, and Dave Friedland, our senior VP and chief legal officer. will also be available to answer any questions that I'm not able to do so. So let's get going. And certainly this first slide, and I always say I love this slide because it's in close proximity to the White Mesa Mill in San Juan County. And really the title, Clean Energy, starts with us. And I always say on steroids because that has not changed. Next slide. I may be making some forward-looking statements, and those are included on this slide two in the presentation. Next slide. And again, many of you have seen this slide, but really, we're building a business around our ability to process uranium, and that is really our advantage that we have that nobody really has out there, with the exception of perhaps the Chinese. And so our why is really the ability to recover critical elements that contain natural occurring radioactive materials. So when you look at uranium, if we're mining some of our uranium, vanadium projects, again, the combinator is uranium. The rare earth elements contain uranium and other radionuclides. Heavy mineral sands have a long history of having radionuclides with monazite, the uranium recycling, and medical isotopes, and all built on a very strong financial strength. So, again, this is playing to our strengths here. And not having the ability and the knowledge and the licenses and the permits to recover the uranium and deal with the radionuclides is our secret weapon here. Next slide. So you look at the company, several high-value product lines, uranium, and I've said this many times, we've produced two-thirds of the uranium since about 2017. We're ramping up these three existing mines to a run rate of about 1.1 to 1.4 million pounds by the end of this year, and we will achieve that. The rare earths and Most of you are very aware of the requirements for the most powerful magnets required for electric vehicles, wind, and other technologies. We successfully commissioned our phase one separation plant at the beginning of this year, and it has capability up to 1,000 tons per annum, which is equivalent to about 1 million electric vehicles. The heavy mineral sands, and I'll talk more on that, The addition of that is very exciting to us, really focused on the titanium and zirconium elements, but also the material amounts of monazite that come with the heavy mineral sands, securing our sources of molecules going forward. Vanadium, and we don't get a lot of airtime on that currently because the price of vanadium is down, but we have the only conventional vanadium plant in North America that can also restart in due course when prices are higher, and our recycling, which is really something that we built the company around over years that is still there, and we're currently recycling uranium ores as we speak. And that built on the financial strength. At quarter close, we had 183 million U.S. of working capital Most of that is in cash and marketable securities and large inventories of uranium and vanadium. Next slide. So what we have here, and this is what's extraordinary and unusual. We have three businesses in one. We have a U.S. leading uranium company, and we have been the U.S. leading uranium company for decades. And then you have a rare earth element, quickly emerging rare earth element company or sector, which has, we believe, will have global significance for NDPR and DY and TB, the elements to get the most efficient electric motors out there because of the characteristics of those elements. And then now, heavy mineral sands. And we believe we will and are well on the path to being globally significant in the titanium and zirconium areas with the ability to also recover monazite. So that's what Energy Fuels is. And I always say this. We are valued as a uranium-only company, but this is moving forward in leaps and bounds. Next slide. We talk about our Q3 financial highlights. Next slide. We had a net loss of $12 million for the quarter. That was really largely a result of transaction costs. And that was offset a bit by uranium cells. We elected to sell 50,000 pounds of uranium. And really, we elected not to sell any more than that because the prices were lower. But that is just a matter of timing because we're currently mining this uranium and hauling it to the mill. in stockpiling and so it's really a point of catching up as the mill restarts and the mill is running right now on uranium feeds from both our alternate feed and some of the low-grade material that we have from a project in new mexico so we can and are in the position to do potential additional spot sales as required we don't have any other contractual terms this year and we have some lighter contractual terms next year. So we're really getting the flywheel moving. So when you look at it in whole, we have nearly $0.2 billion in liquidity. As I said, working capital of $183 million at quarter end. When you look at our product inventories at current prices, you can add another $10 million or so there. The inventories, we have $235,000 pounds of uranium inventories is finished, excuse me, about 900,000 pounds of vanadium. And we have over 800,000 pounds of work in progress that can be processed at the mill. So when you add up the finish and the work in progress, we have north of a million pounds of uranium either finished or in the process of being finished. And then in addition to that, we have some rare earth carbonate and we have about 38 tons of NDPR in inventory and no debt, no debt. And we're very proud of that. Next slide. So the big news in October was the closing of the transaction acquisition of BASE resources on October 2nd. We had a separate conference call in that regard a few weeks ago, and we were just so excited about that because we think it is the foundation of being a company maker with these other parts of our business strategy. And BASE has now become a wholly owned subsidiary of Energy Fuels. They have a very experienced management team that is proven in the heavy mineral sand business. And that comes with this combination, which again, we think gives extraordinary momentum and expertise there. And they have an exceptional track record on safety, environmental stewardship, and profitability. So with that also comes 100% ownership of the Toliar project in Madagascar. which we believe is one of the best heavy mineral sand deposits globally. And we also, I believe, it is one of the biggest sources of monazite out there in the world. And I believe in due course, it has the ability to be one of the lowest cost rare earth mines in the world. It is a massive resource that has opportunity for further expansion. As I mentioned, it's both a titanium and zirconium project. containing monazite and xenotime, which are the rare earths that will come along with the mining of that. And we believe also represents a source of monazite where effectively because the byproduct of the monazite, it comes along for free. And that monazite xenotime that is produced will be processed at the White Mesa Mill facility in Utah. Next slide. So you look at this slide. And the blue, and the blue is what we have had for years. When you look at the uranium assets that we have, we're headquartered in Denver, as many of you know, the White Mesa Mill in Utah. And these are all assets that we've managed for decades. So we have the team in place here in Denver to manage those assets like we have for years. Now in the Southern Hemisphere, we're the head office in Perth. with BASE taking the management of the heavy mineral sands, which they've been doing for the last decade plus. Certainly, they have the Toliara project that we believe is advancing in a very positive way with the Madagascar government. We don't have an exact date we can provide, but we still believe we're in a good position there, but also managing the final days of the Qualia project in Kenya. and also the base team is already doing work and participating with the Donald Joint Venture in Victoria, Australia, that we're moving towards the FID decision, and they're also weighing in on the exploration at the Bahia Project in the southern hemisphere, or in Brazil. So I think the point I want to make, if people think we're overstretching ourselves, We already have the history of managing the blue in the northern hemisphere, which is really the hydrometallurgy and the uranium projects and the rare earth value add of processing in the southern hemisphere. The physical metallurgy is being managed by base with their long history. And this is where it is a unique combination. And that's where it is so complementary to our plans going forward. Next slide. This is a real interesting slide, and Tim Carstens from BASE put this slide together, and I really like it. But it shows how, on the left-hand side, the mines, the uranium mines that we have, and then you look at the mineral sands projects that we've accumulated or the relationships we have with companies like Chemours, and you see how that kind of marches across here. The uranium goes to White Mesa Mill. gets further processed. The uranium ores get processed into yellow cake on the right-hand side there, the end products. And then you also have the monazite, also goes to White Mesa. It gets processed into the rare earth oxides. And then you have the heavy mineral sands. And so what we've accumulated here, and you can really say we are asset-rich as a company, is we have the control of our molecules in the ground to go forward to further value-adding at White Mesa. Now, currently in Phase 1, the White Mesa mill, the Phase 1 separation plant, and the uranium plant are all one plant. I mean, we have separate solvent extraction circuit for the rare earths, and in Phase 1, though, we share the mill. When we move to Phase 2, we will separate the mill from the rare earth processing facility and there'll be two complete separate facilities. But it isn't holding us back at all when it comes to our current plans for the next few years. So when you look at, again, this graph and move to the right, the end products is you end up with around 10 critical element products, uranium, vanadium, advancing towards uranium, medical isotopes, rare earth oxides, titanium and zirconium. And I want to point out that we already know and have produced uranium for years. We have produced vanadium for years. The medical isotopes is new. The rare earth oxides, we have demonstrated we can do that commercially recently with the commissioning of the phase one plant. And then you look at The base team has a long history of producing the titanium and the zirconium. So this is not a dream here we have, folks. This is a plan for a world-significant critical mineral hub that with the proven expertise and with proven mines and the proving pipeline of mines, we are focused on building something of world significance. Next slide. So we'll talk a bit more about uranium, which has been our core business for decades and will continue to be our core business for decades. Next slide. We have a total of four contracts that we have signed to date. I mentioned the uranium inventories, the work-in-progress finished goods, so somewhere north of a million pounds of uranium inventory in different stages. We did sell in the first quarter, 200,000 pounds under long-term contracts are about $75 per pound. But we've also sold this year about 250,000 pounds of uranium on the spot for around $91.50 a pound. Meanwhile, the spot price at the end of the quarter was about $82. This morning, I think it's $79.50. When you look at the marginalized sales price of the under contract versus the spot, I think it was around $84 or something like that, $85. So it's certainly been greater than the spot market, and that is one of the advantages, having a blend of contracts and the ability to sell into the market. We're also looking to expand the production, and I'll talk about that more, with reinitiating drilling at the Nichols Ranch in Production Area 2, and also advancing the Whirlwind project in Colorado. Next slide. So again, many of you have seen these slides where we're ramping up our uranium production over the next year or two, up to a 2 million pounds subject to just the continued strong market environment we're here, the White Mesa Mill. And as I said, uranium ore is going into the mill right now. The Pinion Plain Mine in Arizona, the highest grade mine that I know of in the history of the United States. We're doing advanced development there, and we're also doing drilling in what we call the juniper zone. We're also working through, I believe, in a very collaborative way with the Navajo Nation on the transport. We believe it's very positive, and we believe that the concerns the Navajo Nation has had about transporting uranium ore, the negotiations we've been having, have been very productive. And we're also trying to tie that in to have a win-win with also assisting them with some of the cleanup of the abandoned uranium mines on the Navajo Nation, which are legacy mines, nothing to do with energy fuels, but we're trying to come up with a long-term outcome here. It's a positive for the company and for the Navajo Nation, and we're very excited about that. Nichols Ranch, I mentioned, we're doing drilling. We're looking at a restart there in due course. And then LaSalle Complex, We have two mines operating there as we speak. And those are uranium, vanadium mines. And as I mentioned, it's not in any of our lists, but the Whirlwind mine is also a mine that we're looking at advancing. And it is not too far from La Salle, but it's in Colorado. Next slide. You look at the development pipeline. The Sheep Mountain Project in Wyoming is an open-pit underground mine. It is fully permitted. It's fully permitted. It's a very material mine. A project, the Roca Honda project, we're advancing the EIS at the Roca Honda. Again, very material project in New Mexico. Very high grade for the United States, around 0.5% or so, but very high grade. And then the Henry Mountains project, the Bullfog project, we're also initiating activities there. So this development pipeline in itself is significant and has the ability to increase above that 2 million pounds depending on the timing of those projects when they can be put into production of up to 5 or 6 million pounds of total production. So those are very exciting developments and we're moving all these projects forward to be in a position to produce as the uranium market supports. Next slide. Mike SanClements, Will talk about the rare earths and heavy mineral sands here next slide. Mike SanClements, And i've talked about the phase one facility that has been commissioned at the white mason mill has a capability to process up to 1000 tons of NDP are per year. And we had a few other residual costs in there, and the costs are about $19 million now. I think I'd said $16 million. But, again, extraordinary to be able to build a facility like that for $19 million. Most people ask me to repeat that. And they usually ask two or three times. One, you know, it was 16. They go, 19, 91, you know, 200. You know, they don't believe it. And they can't believe it, but we did it. And the team at the mill did an extraordinary job there. So because of the successes that we've had with our securing of heavy mineral sands projects, we are looking to uprate that phase one production capability up to 6,000 tons of EPR, which is about equivalent to what Linus currently can produce in and also be able to recover the DY and the TB in very material quantities. Now that is the ability to have the elements required for these electric vehicles of up to about 6 million electric vehicles per year. Now let's put that in context. The General Motors and Ford are looking at getting that up to around 2 million electric vehicles per year at each of those. So 6 million is a big number. I want to make another comment, too, that some people say, well, the EV business isn't moving forward like it should be or was planned to be. But what's interesting is that the plug-in hybrids require the same amount of rare earths as an electric vehicle. And so we believe that the fundamentals have never been stronger, and so we're going to be in a great position to move forward with that. So we're advancing... Our focus on a feasibility study to ramp up the project, we did the pre-feasibility study showing that the operating cost of a kilogram of NDPR around $30 a kilogram. The current price is around $60. And if you get the monazite for a very low cost, which we think through our strategy, we can have what we believe will be very, very attractive operating costs globally for and I believe could be very enviable in the business. And we're doing this without diminishing our ability to produce uranium, and I think people still get confused with that, but that is the case. Next slide. So the heavy mineral sands, I already talked about the combination with BASE October 2nd, the Toliara project in Madagascar, and again, I see that as just an unbelievable project to add into our quiver here going forward. The Qualia project, as I mentioned, is scheduled to finish mining at the end of 2024 and is getting in the final reclamation mode. We've secured through the combination the base resource management, the Donnell project, as I mentioned, moving to FID decision in 25, and Bahia. So really, when you look at the heavy mineral sand side of our business, we are getting significant interest around the world. I've had people come up to me and say, you have acquired the projects we wish we had acquired from heavy metal sands companies. So watch this space. Next slide. Yeah, looking at our strategy of integration from mining, from cracking, leaching, and separation, We have done those already and have the ability to do those. You know, I've mentioned to many of you, we have Deb Benethen from General Motors who joined us, and she's helping us with these next steps, metals, alloys, towards magnets. We are very focused on advancing our integration strategy to include the metals and alloys. So watch this space. You know, you can see the little map of how these projects will feed back into the White Mesa mill. a global footprint, including Chemours. And so we are having a very diversified supply chain, or we're building a diversified supply chain for our rare earth business, and that gives us some country risk diversification, and again, building it to a very significant scale. Next slide. So this slide is pretty similar to what we've done in the past. You know, showing both Donald and Bahia and Toliar. And when you look at the sum of, and the Chemours at the bottom line there in the gray, that gets us, we believe, well-placed for up to 6,000 tons of NDPR per year. But what we've added on the bottom there is we are advancing our uranium strategy. And we plan to be at about 1.1, 1.4 million pounds by the end of this year. but building that up over time to about 2 million pounds. And then with these other development projects in time, and it does take time, we build up with having this uranium strategy advancing rapidly while we're getting all the other pieces into place with our rare earth strategy and our heavy mineral sand strategy. So this is exciting. So you see phase one there, and you see phase two there in that 27, 28, and phase two and phase three, and we are piloting heavies right now at the White Mason Mill. So it is an aggressive strategy, but I can say watch this space, watch the momentum, and see how we unfold this, because now is the time to demonstrate our ability to execute. Next slide. So longer-term growth opportunities. Next slide. The medical isotopes, I always say that when you're processing uranium ores, you're processing monazite, you solubilize a number of elements. And a couple of the elements that you solubilize is radium-226 and 228. We acquired Radtran in August, and they're a company specialized in separating critical isotopes, particularly radium-226 and 228, to be used in targeted alpha therapies. And we've got a research and development program license, and we're planning to be recovering research and development quantities of radium-226 later this year or early in 2025, and we're getting very significant interest in the ability for companies, for pharmaceutical companies looking for sources of radium that they can put their foot on to take to that further chain of making these targeted alpha therapies for cancer treatment. So this is a sleeper. It's still early stages. And I didn't include it in those top three that are advancing rapidly. But this is also advancing rapidly. But we still have work to do. And so again, watch this space. Next slide. We talk a little bit about recycling and our commitment to the community. Excellent. You're ahead of me, Kim. You know, we continue to be one of the largest private employers in San Juan County. We currently have about 80 employees at the White Mesa Mill, and then we have 35 employees at the Pinion Plain Mine, which is not in San Juan County, but just south of it. And then you have the LaSalle Complex, where we have our own uranium mine and a contract mine And they combined, we've got about 150 people in the uranium space focused right now producing uranium. So this is a substantial effort on the uranium production front. You know, I've talked about, you know, the advancements when we start looking to the future, when we have phase two, phase three at the mill. This is going to be a big deal for San Juan County and a big deal for Utah and a big deal for the United States. when we have the capacity to produce these world quantity scale, low cost, critical elements, not one element, but up to 10 elements. And we've all seen how brutal the critical mineral space is when it comes to like lithium, graphite, cobalt, even the uranium. When uranium price went from 105, 106 to 80 bucks, the price of equities is a 25% drop in uranium price and equities dropped around 50%. So it's brutal and we're looking for diversification. So when you look at, and I mentioned the Navajo Nation with this transport agreement that we're working on, we're still front and center looking at helping the Navajo Nation on a cleanup of some of these abandoned mines. And I believe we can do so much there, which will be a really great outcome for both companies And as I've mentioned before, the ability of the mill to recover and recycle uranium and vanadium that would have been lost previously to disposal is the reason the mill has stood the test of time and is the only offerable mill in the United States. The foundation, as I've mentioned, we put a million dollars into the foundation a few years ago, and we've committed 1% of the annual revenues. for the White Mesa Mill there, and all focused on education, environment, wellness, and a large portion going to Native American priorities. Next slide. So this last slide on guidance and focus, we're looking at around 150,000 to 200,000 pounds of finished uranium at the end of the year. And the main reason that is down a bit from previous is really just this working out this agreement with the Navajo Nation on the transport, which again, I think we're advancing well on. But meanwhile, we have almost a million pounds, as I mentioned, in inventory finished and work in progress, and we're adding to that every day. When we catch up, the mill processing will be running well into next year and beyond, and there will be a bit of a catch-up. So it's really just a lag of getting the material at the site and being able to process it. So we don't have any further contract sales this year. We do have some contract sales later next year of around 300,000 pounds. So that's not really affecting us at this point in time with getting this ore to the site for further processing. We may consider other spot sales if we feel we want to sell uranium. I talked about the three mines earlier. that are already operating and the focus to increase that. I mentioned the commissioning of the phase one NDPR circuit and the 38 tons of NDPR that's been produced, which we are sending out for qualification with metals and magnet makers right now. We have substantial quantities, and we usually send them out a couple of kilograms. And if they say they need more, we say, well, you take a ton or two tons. And not many people can do that. Full speed ahead on uranium processing while we get these other projects. Full speed ahead on phase two, phase three. And full speed ahead at drilling at Brazil, integrating the base team into the energy fuels team, getting this momentum going on multiple fronts. And it is really an extraordinary time at energy fuels. So now the last slide, and I want to add one comment. The list of molecules is increasing with titanium and zirconium and the rare earths, and they all have the common denominator that there is radioactivity somehow involved with them, and that is our secret weapon here. Open for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the two. If you are using your speakerphone, please lift the handset before pressing any keys. Thank you. That is star and one to ask a question. And just a reminder, Questions will be limited to one question and one follow-up. Your first question comes from the line of Heiko Ehler from HC Wainwright. Please go ahead.