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.

Hey there. Can you guys hear me okay? Yeah, Heiko. We got you. Cool. Thanks for taking my questions and congratulations on getting this very transformational deal done. Speaking of, tomorrow it'll officially be a month since you closed the base resources deal. probably a decent amount of time for the teams to, you know, get to know each other, work out maybe minor kinks. In that process, have there been any surprises, either positive or I assume nothing really negative, but anything positive or negative that you encountered? Any efficiencies that you're encountering that maybe you didn't really expect?

No, Heiko, I think it's all going as scheduled. I mean, we've got to get the teams together. And, you know, you've got two separate companies, and it always takes some time to blend that together. I was down at the close for about a week. We've got people going back and forth between both entities. And so I don't think there's any surprises. But there's these opportunities, like, for example, in Brisbane this week on the Donald Project, We had a workshop where we had five people from base working with the technical experts from Astron and their consultants looking at all the assumptions being made in the FID process and design and recoveries and operability and all that. So we're putting people to work. I think that's the main thing is we're putting people to work between the two companies and But it is, you know, an integration is an integration. And what I tell people is, you know, we have two teams here that are very proud of what they do and how they do it. That is a great thing. That's a great thing. So we've got people that want to make things happen, and both organizations are doer-focused, doer-focused, focused on profitability, focused on accomplishing significant things.

Fair enough. Good answer. Okay. Building on something that came up earlier on this call, you mentioned that you sold 250,000 pounds. I think you said $91 in spot market this year. Just following up on that, the long-term contracts with utilities that you're currently, not even necessarily yours, but just in general, the long-term contracts that you're seeing with utilities that are getting done, have there been any changes related to pricing and the duration versus where we would have been called 12 months ago?

Yeah, I think the utilities are starting to understand that the market isn't going to retreat back to $30, $40. And so if you go back to, there was kind of a couple cycles, like when you had the Russian-Ukraine conflict, there was like a flurry of contracts that were done a month or two after that. And those are, generally speaking, lower priced contracts. And then as time has progressed and as uranium prices have gone up to 105 and 80 and stayed there, you know, I think you're definitely seeing an increase in the floors and the ceilings and, you know, prices are going up. So I think that the utilities are accepting that the nuclear industry is growing. The demand is growing. The focus on data centers, artificial intelligence is growing. The restarts of reactors around the world is growing. And I think they're getting a bit nervous because they see that. And the thing about the uranium industry is it doesn't respond quickly. You know, it's hard to get projects up and it's hard to get through the steps. of integration in the nuclear fuel cycle through conversion and enrichment. So, yeah, I think people are getting used to these higher contract prices, and that also creates an opportunity for us going forward. Cool.

I'll get back in queue. I think I exhausted my questions here. Thanks for taking them, and I'll talk to you soon. Thank you, Heiko.

Thank you. And your next question comes from the line of Justin Chan from SAP Resource Finance. Please go ahead.

Hi, Mark. Great to talk to you. Yeah, thanks for taking the call. I guess my question is on your thoughts on your inventory in next year. You've got 800,000 pounds in various inventory. I guess what's your current thinking on production next year? on where we are with spot and maybe you give us some color on the volumes and timing. Is there any constraints on timing through the year for your contract uranium sales next year?

Yeah, we haven't given formal guidance for next year yet, Justin. You know, as I said, between finished and work in progress, we've got about a million pounds and ores showing up at the mill every day. I mean, you get to a point to where, you know, you try to get in an equilibrium. Like if we process this, you know, in the order of a million pounds and we're bringing more material in, you know, it should reach an equilibrium or close to equilibrium in my mind in due course as we get the flywheel going. Our contracts that we have next year are towards the end of the year. And as I said, around 300,000 pounds total. So we're pretty wide open. But the contracts start ramping up the following years, Justin. But we're going to be looking at contracts, spot, uranium prices, try to maximize it, kind of like what we did this year, where we sold 250 in spot, 200 under contract. But we're focusing on ramping it up to a couple million pounds per year. probably the following year or two, you know, 26-ish, 7-ish, somewhere in there. But we should be – I believe we're going to be pushing, you know, well north of 1 to 2. You know, well, we always said we're going to be doing that by the end of the year. But, yeah, I don't want to give guidance yet, and we'll get back to the market due course.

Gotcha. No, thanks. That's helpful, Culler. And maybe just a bit more – as a follow-up, you know, on mill activities for next year as you're thinking of it. So, I mean, will most of the year be uranium? Do you have any more monazite to run a rare earth campaign? And then just trying to get a sense of how you think about the calendar year. Like, will uranium processing start kind of early in the year? Will it kind of switch between rare earths and uranium? I realize that you don't have guidance. I'm just trying to get a sense of maybe your thinking.

Yeah, the focus next year is going to be on uranium production. At this moment, the only monazite we get is from Chemours. And monazite is coming from Chemours right now. I mean, we've got monazite showing up. We're just stockpiling it. And that's the unique thing that we have here is we've got this big facility. We've got know uranium ores and from different mines different you know alternate feed and then we've got monazite so the focus will be on uranium uh we don't have any current plans to go back into processing the monazite that could change depending on what we secure um and and so when you look at when we go back into processing um a monazite at a at a larger scale I mean, kind of be thinking towards like 2027, but there could be a run in between, depending on, you know, how much uranium ore we have to process versus how much monazite we have to process.

Gotcha. Okay, thanks, Mark. That's really helpful, and I'm sure we'll follow up at some point after this call. Thanks very much. I'll see you at the line. Thank you, Justin.

Thank you. And your next question comes from the line of Joseph Rehore. From Roth Capital Partners, please go ahead.

Hey, Mark and team. Thanks for taking my questions. I think most of the things were already touched on, but just two more quick items. One on the ongoing negotiations with the Navajo Nations. At what point would you guys consider an alternative shipping solution here?

Really, We think that we're going to get there with the existing shipping, you know, highways and whatnot. So, yeah, I mean, right now we're very encouraged with how these discussions are going. You know, a big part of it has been education, making them comfortable. And so we think we're going to get there. And as I said, we're looking at something holistic. That's a win-win for both groups. We're looking at the cleanup, which is really exciting for me. I mean, I think tying sort of there's a tie between those. It's just an extraordinary, again, I know I use extraordinary a lot. So, but it'd be a great outcome. It'd be a really, really good outcome. And what's interesting too on this whole, these negotiations and stuff is very little cleanup has been able to happen on the reservation. because they didn't have a way to deal with the cleanup. And we give an outlet to the Navajo Nation, which we think is very powerful for them. So, you know, watch this space. But, you know, I don't want people to be fearful that we're not going to get there, because I really do think that people in the room talking are trying to get there.

Okay, fair enough. And then last thing, just a housekeeping item. Post the special dividend to the base resource shareholders, how much cash did you guys get in the acquisition?

Let me ask Nate.

What do we got? So as far as cash goes, so they will continue to operate the quality line, and that will wrap up here at the end of 2024. So they're using... the cash that they have plus the revenue that they're going to sell in the fourth quarter which should be around 40 to 45 million in the fourth quarter so all of that cash and operations is going to use to wrap up the production in the fourth quarter and then also to perform the reclamation obligations from a quality mine so all that stays within base the cash that they had to finish up operations and the reclamation liability so we didn't actually

transfer the cash or move the cash to energy fuels that clarifies your question okay uh quick follow-up to that um so will you guys book that revenue um on your income statement then since the transaction closed during the quarter that is correct so we will you will see the fourth quarter

of base resources consolidated into our energy fuels financial statements that we'll file at year-end. And that'll include just the fourth quarter and include that revenue that you'll see from base in the fourth quarter.

Okay. Thanks. I'll turn it over.

Thank you. And your next question comes from the line of Noel Parks from 2B Broaders Investment Research. Please go ahead.

Hi, good afternoon. I just wanted to ask about the white mill pre-feasibility study. There was a mention in the queue that that was being looked at just for expansion of the ultimate output capacity. Please talk about what's involved in that and if you have any sense of timeframe, that'd be great.

Yeah, well, we did this pre-feasibility year or so ago that was looking at around 3,000 tons of NDPR processing capacity previously. And that was before we had the base transaction and whatnot. So because of the successes that we've had with gathering these significant projects that have the ability, if they're developed to these larger quantities, we're going to this larger scale. We're currently working with a couple engineering companies trying to advance with the engineering companies to help us with those feasibility studies to get to that 6,000 tons. We're having discussions with them right now. There's been a lot of work done. We have a huge amount of data because of what we've done in the laboratory, what we've done with this phase one commercial operation. So, I mean, I believe we'll have a feasibility study in the middle of 25 with this Phase 2 in hand. That's the goal. And once we get that in hand and get the flow sheets and whatnot, we're going to advance the permitting with the state of Utah. They're expecting it, that it's going to be coming soon. So assume it takes us the middle of the year to finish up the engineering feasibility work, start going right into permitting, to get the permitting. So in that 2027-28 time period, when you start seeing material quantities of monazite heavy mineral sands from these projects that we've acquired, the timing aligns quite well. Now, the one thing that I can say is that because we do have the phase one plant constructed, that we do have the ability, if we have monazite sooner than that, we can process that. We can shift the mill back into rare earth mode and process that. So, you know, it's not very often that you have a uranium plant, a phase one plant, a phase two plant that's work in progress and have that flexibility. So, you know, we're in a unique position there to be flexible.

Great. Thanks. Go ahead.

Thank you. Once again, should you have a question, please press start and the number one on your telephone keypad. Your next question comes from the line of Michael Zak from Cantor Fitzgerald. Please go ahead.

Yeah, good afternoon, Mark and team. Just one question for me. That new contract that you signed in the quarter with the U.S. utility, Where did the floors and ceilings print on that contract? And if you can't give me the exact price to the dollar, I understand. I don't want to get you in trouble. Maybe if you could round it to the nearest $5 per pound, I'd appreciate it. Thanks.

I don't know if I can round it to $5 a pound. My CFO is shaking his head, and I think my lawyer is too. So, yeah, look, the contract – and this is a unique one for us – We have the ability to do contracts that others are not able to. A lot of these companies that are starting up, they need like a six, eight-year contract because they're trying to get their project financing. And this fourth contract that we signed, it's got like a two-year term and then an option to extend for two years. So it's a two plus two to four. And it gives them the ability to kind of, put that out another two years if they want to. But definitely the floors are increasing and the ceilings are increasing. And Mike, I think you talking to other uranium producers, uranium wannabes producers, they'll confirm that. But the utilities tell us not to give out those financial terms, and so we can't. So there is a trend, increasing floors, increasing ceilings. But we have unique flexibility in that we're not having to go out and raise or fund a $500 or billion project. And we can do a two-year, three-year, four-year, whatever. And it isn't tied to financing. But it's very encouraging. And we like this new contract we have. Curtis was in Kansas City at this last conference, and he says utilities are out there. They're out there, and they're looking at needing more product. So I believe the trend's going to continue, Mike.

I appreciate that, Collar. Maybe, and I totally understand not being able to provide the dollar amounts. Maybe if I could follow up, though, would you characterize your material specifically versus other contracts that you're hearing that are being signed, would you characterize your material as getting a premium or in line with contract terms more recently?

I think they're very attractive for our circumstances.

Fair enough.

We're not being penalized. Let's put it that way. We're not being penalized because we signed the contract. I think they're I think they're very attractive to us as a company and how we can fit that into our production profile.

Okay. I appreciate that. Thank you.

Thank you. And your next question comes from the line of Aaron from CU Boulder. Please go ahead.

I appreciate you taking my question and for all your time today. A couple quick questions on the rare earth side. You mentioned that 29.88 per kilogram NDPR processing costs. I just wanted to clarify whether that was driven by the low-cost monazite procurement or that it will be driven further down by low-cost monazite procurement.

That's just kind of the cost of it. If you have a ton of monazite and process it at the mill, it's around $30 per kilogram. The point is that If you take a project like Toliara that supports itself without any credit for monocyte. I mean, it generates cash. Their feasibility studies said around 200 million of EBITDA over 38 years or something without any credit for monocyte. Now, when you look at the PFS that they did on the addition of the rare earths and the monocyte, is very, very low strike rate to actually recover the monocyte. So depending on how you account for it going forward, if the heavy mineral sand project is really able to carry the load and get monocyte for free and transport it to the mill, you can basically add that onto the $30. So if the monocyte was actually free, delivered, You could say 30 plus zero if you have to pay for the shipping. There's different ways you get there. But I think the bottom line is we believe that our strategy with having the molecules in place and having heavy mineral sand projects that stand on their loan without any rare earth credit, this is where it is poised for a great outcome to have $10 or $20 or nothing on the $30. So each project will be different. And as we get these projects advanced, we update our studies and have the ability to disclose this, we'll disclose it to the market in due course.

Gotcha, gotcha. I appreciate that, Mark. And then just looking down the timeline for the phase two and three rare earth separation plants, uh, just wondering why, uh, yeah, what goes into the decision to produce NDPR versus separating those two out from each other? Is that just due to the economics of, um, like the price delta between separated ND and separated PR versus, uh, NDPR together? Um, and then also just, uh, wondering if you could provide any type of scale on how much building those phase two and three plants will take compared to the 19 million for phase one.

Yeah. Yeah, I think whether we split out and separate to ND and PR separate, and I don't have my mill guy here, but I think the ratio, and I think the ratio is about 75-25 or something. It seems to be adequate for most of these metals, alloys and magnet manufacturers, the current ratio. Could they split them out? I think they can, but right now we're trying to just keep them together. And as I said, we're doing the piloting on the phase three, which is the DUI and the TB as we speak. So I'd have to talk to him about what it would take to split them out separately. But the ratios are, we believe, adequate for the market. When you look at the capital costs, we don't have those numbers revised. Now, the fact that we were able to build phase one for $19 million We built it in the existing solvent extraction building, so we didn't have to build a new building. We did put a roof on it, and that's included in the cost, I think. So we got a new roof on top of the SFX building. And we were able to do it because we used existing infrastructure. Now, looking to the future, and I don't have the feasibility. The pre-fees on the $3,000 was like $350 million. Is that what it was? And so certainly if we double it, it's going to be larger than that. But I think there's also things that, you know, you saw what we could do with phase one plant. And we've got some real creative people.

I have an answer from Deb. You do? Okay. And she says that the magnets measured by an NDPR oxide, but not the individual PR and NDPR oxide.

Okay, there you go. Our people are messaging in as we speak on the NDPR question. So we don't have a number, but I think something north of 350, 500-ish. I don't know. I don't want to be tied down to a number, but we've got to get the engineering complete. The other thing I want to point out, though, is that when you look at the cost of doing business in Utah compared to places like Western Australia, we're at a real advantage here because we get water for effectively free. We've got good sources of water. Power costs are low. Labor costs, great work ethic. Not fly in, fly out. Lesser social costs in some of these other jurisdictions. We'll be at a strike rate. We'll be far, far less than in than people like Linus and Luca when it comes to building the plant. So we're not expecting a $2 billion plant here like some of the others.

Great, yeah. And then congratulations on the $19 million phase one. It's really impressive. Really appreciate your time today, Mark.

Yeah, and I've seen, I won't mention companies, but I know one company is building a pilot plant for $50 million. And it won't be a commercial plant, it's a pilot plant, to do the same thing.

Thank you. And your next question comes from from . Please go ahead.

Hey, Mark. Just had a question on conventional versus ISR. I know you're prepping the Nichols Ranch ISR, but some of the U.S. peers have been struggling with ISR. Just talk to us about the advantages and disadvantages of each technique. from an operational perspective, because I know you're pushing the conventional assets first. Just want to understand how that could be a strategic advantage for you. And then I know you mentioned some of the people at site. Maybe just talk to us about how you've been able to fill the labor needed for each asset, because that's something that's always talked about for U.S. production as well. Thanks.

Yeah. Yeah, Paneen, as you know, I've got experience with both. and a lot of people don't. You get the ISR miners, that's all they've done. You get the conventional miners, that's all they've done. So I've done both, and there are advantages to both. Okay, one of the advantages of conventional that gets, I think, underappreciated by the ISR folks is that with the conventional, I can go mine a ton of ore, and then I can mine it, and I can either not mine it, or I can ship it out and put it at the mine on stockpile. I can ship it to the mill and put it in stockpile, and then I can process it, but I can stop it at any place. I can stop a conventional mine today. If I said stop the mines, I can stop it right now, and they stop. That's an advantage. It's an advantage because you're not having to be all in for five or ten years in a cycle to produce a pound of uranium. And people don't appreciate that advantage. And that is one of the reasons we started up our conventional projects. And it's not just the only reason because, you know, we see the Pinion Plain Mine, this high-grade mine, is very, very cost-effective. And we also have the ability to start and stop, as I said. When you do ISR, you have to put in the well fields and you have to Extract the uranium, takes two to three years to get the uranium out. Now you're looking at three, four years. And you don't get uranium out if you don't keep going, okay? And then you have to restore those aquifers, and that can take a long time. I won't extrapolate there, but it can take a very long time. So you're really committing to a pound of uranium for 10 years, and you can't start or stop. Now, with long-term contracts and more security of supply, in terms of the people that are going to buy your product, having long-term contracts, eight-year contracts, whatever, that starts fitting into the world of ISR better. But the other thing with ISR, and I think a lot of people are experiencing it in Wyoming, is the cost of drilling has gone up significantly. And the cost of putting in a pattern becomes a big part of what it costs you to produce a pound of uranium. so there's they're they're different animals and and then lastly with isr you you it's it can be very variable depending on how the uranium solubilizes underground it comes to the surface if i mine a ton of ore in a conventional sense i can literally walk it through the process plant and i can tell at each step what recovers i'm getting what my reagent consumptions are what kind of heat do i need retention time and everything so they're very different so On the ISR front, finding people, I think places like Casper where you've got three or four companies competing for bodies is creating issues because people are poaching from each other. And so that makes it difficult for people and with the skill sets of actually operating a successful ISR project. When you go down to White Mesa and our uranium mines, you know, the Blanding is a very stable community workforce, very tight community. And we haven't had any real issues with people getting poached from White Mesa, but also because it's a very tight team that works really well together. Miners, miners are hard to find. We're training a lot of miners. People that call themselves miners aren't necessarily have all the skill sets that are required. So it is a different world. It is harder to start up now than I have ever seen in my career because of the shortage of skills. We're making progress, but it has not been easy. I don't know. It's kind of long-winded. And, Puneet, if you ever want to take it offline on the pros and cons of ISR, I'm happy to do that with you.

Yeah, yeah, I know, right, as your email. I just wanted to see the advantage because everybody else is doing ISR, right? You're doing conventional to start, so I think you do have an advantage yourself there, but labor has just been hard all around. So just had to ask the question. Thanks.

But there are real advantages depending on which method is selected and what environment is selected. And, you know, there are people that say ISR is the only way to mine, and it's wrong. It's conventional. also a good and proven methodology. And in a lot of cases, it's the only methodology to be used. And in our cases like Pinon Plain, you're not going to ISR Pinon Plain. You're going to mine it conventionally. And Cameco is conventional. And Olympic Dam is conventional.

Yeah, exactly. Thanks, Mark.

Thank you. Once again, should you have a question, please press start, then the number one on your telephone keypad. Your next question comes from the line of Dave Costland. Please go ahead.

Oh, hey, thank you very much. Boy, I've got about eight questions, but I want to concentrate because I was an investor about six years ago at Linus, and I gave up because of the Malaysia issues and stuff like that, but And when you got involved with Bahia, I said, oh, my God, this is so great. We really need RE production here in the United States to get us away from relying on China for permanent magnets. In any case, it's a huge step. It's going to take a lot of money, and you're around the world involved in it. But when I started looking at your news, you were involved with a company called Nano Powders, and all their scientists came from Cabot Corp. associated with your pre-getting, before you got actually into extracting NDPR out of monazite. How important has their contribution been to what you're doing there? Kind of sounds like you're a more conventional acid leach still. I mean, it sounded like from a news release that the technology that they were trying to develop for you would be your technology and you would control it, might give you a competitive advantage. And if not, you can possibly even sell it to other people because let's face it, breaking down something that's so permanent, like monazite, mother nature has been trying to break it down for millions of years and it's kind of what's left, you know, and getting particular atoms out of it. And you don't, it's not like getting jelly beans out of a, can of sugar. So where did the nanopowders deal fit in? Or is it behind you? Because I think you spent a decent amount of money on it.

Oh, well, there's a couple of things. There's neo performance that we started working with early on when we announced we're getting into rare earth business in 2020. And that was where we made a carbonate. We shipped it to Estonia and Back in the days, Constantine was CEO, and we still have a relationship with NEO, and we look at what the opportunities are in the future. But nanoscale powders, that was kind of an R&D initiative that we explored that we didn't go forward with. We still have some... issues of what actually one of the guys that was involved with nanoscale powders was, has passed away. But so, so there's the NEO relationship.

No, that answers my question. That answers my question. I thought, yeah, I thought maybe what was going on at White Mill was, you know, somewhat secret because you had keys to unlock monazite that other people didn't have. Okay. But it's, it doesn't sound like that's the case.

Yep. The keys we have is that we can process this at the White Mesa Mill. We can recover the rare earths and uranium. We can deal with the radionuclides. We have the tailings facilities. And you said you were an early investor in Linus. Now, Linus also mines monazite, but it's not monazite sand. It's hard rock monazite. And yeah, they've had significant problems with the malaysian government on the the residuals and i don't know where that is at this point in time but that's one of the reasons they did a crack and leach facility in kalgoorlie western australia which was a challenge for him because of the cost of building a facility and the ability and availability of water and acid and people and all that so um yeah i mean Processing monazite for us is not a big issue at all because we want more radioactivity like uranium because we can monetize it. And it's about the same grade as our mines like LaSalle or Pandora. And that's an attribute that we welcome to be able to recover that uranium.

Thank you. And your next question comes from the line of Justin Chen.

from scp resource finance please go ahead hi mark uh hopefully i'm not breaking the rules too badly with the second question here um just i saw in the um in the quarterly there's some commentary on uh bahia and i think it said seven to ten thousand tons of monazite which sounds like you know a lot of the kind of the scoping work you've done starting to narrow to define what the project looks like. I was wondering if you could give us more color on the work you've done and what it's, you know, how the project's shaping up.

Yeah, I'm just going back and see what I did say here. We had, well, Bahia, we said three to five, and then we said Donald is up to seven in phase one. Well, okay, so you wanted me to talk about Bahia then?

Yeah, yeah, I just, I mean, I think I could be wrong, but it was the first time I've seen kind of numbers put around scale there.

Yeah, well, I'm looking at page 19 in the presentation of three to five, but the Bahia project, we bought a sonic drill rig, and we're using that right now. We've got a large land position there. We hired a country manager that was ex-Rio Tinto, Brazilian, and we've got, I don't know, 10 employees down in Brazil. We've also had support from BASE go to Brazil looking at the exploration program. We're also advancing towards the permits for putting that project into place, doing a lot of the studies that are required for that. It's still early stages. We've got to get to a resource. And we're focused on getting to a resource in 2025. and also getting, as I said, support from base, you know, with their expertise in that regard. So, you know, it's moving forward at a significant pace, but it's earlier stages than, like, the Donald project and the Toliar project have more data, more study, you know, more feasibility work, you know, more permits. I mean, Donald project effectively permitted, and... So, yeah, they're three different animals. Let's leave it at that.

Thank you. No further questions at this time. I want to hand the call back to Mr. Mark Chalmers for any closing remarks.

Yeah, thank you. Yeah, my closing comments are that was a lot of questions, and that's good. Happy to get that kind of interest in what we're doing. You know, what we're doing is different than others. I think that people are starting to understand the significance of what we're doing. We're playing a long game here, not a short game. We're building a company for the future. And that company, we are focused on being, as I said, world significant, low cost with these multiple elements. And we are proud of that. We're driving our bus. And we believe that the focus that we're taking, we think that as this becomes clear to investors, that gives us an opportunity for further re-rates in the stock and appreciation for the strategy. So I appreciate our current shareholders. I look forward to new shareholders. And I look forward to giving more updates soon. In due course, which I'm really excited and looking forward to doing, we've got a lot of work to do and we're going to keep focused on that and look forward to our future updates. Thank you very much.

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