Energy Fuels Inc. (TSX:EFR) ("Energy Fuels" or the "Company") today reported its
financial results for the three and nine months ended June 30, 2013. The
Company's Quarterly Consolidated Financial Statements, along with Management's
Discussion and Analysis, have 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
June 30, September 30,
$000's 2013 2012
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Financial Position:
Working Capital $ 33,785 $ 41,934
Property, plant and equipment $ 127,494 $ 119,524
Total assets $ 207,729 $ 223,844
Total long-term liabilities $ 34,060 $ 37,921
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Three months Nine months
ended ended
June 30, June 30,
$000, except per share data 2013 2013
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Results of Operations:
Total revenues $ 4,954 $ 47,968
Net Income (loss) $ (5,532) $ (13,478)
Basic & diluted net income (loss per share) $ (0.01) $ (0.02)
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Financial and Operational Highlights for the Quarter-ended June 30, 2013
("Q3-2013"):
-- Sold 50,000 pounds of U3O8, all of which was pursuant to term contracts
at an average realized price of $58.75 per pound.
-- Sold 315,000 pounds of V2O5 at an average realized price of $6.21 per
pound.
-- Production at the White Mesa Mill totaled 511,000 pounds of U3O8 and
490,000 pounds of V2O5. U3O8 production included 95,000 pounds of U3O8
from alternate feed materials and 416,000 pounds of U3O8 from
conventional ore, primarily from the Company's Beaver, Pandora, Arizona
1 and Daneros mines.
-- As of June 30, 2013, the Company had working capital of $33.8 million,
including cash and cash equivalents of $7.9 million, marketable
securities of $0.2 million and 502,000 pounds of uranium concentrate
inventory which, based on spot market prices as of June 30, 2013, had a
market value of $19.9 million.
-- On June 11, 2013, Energy Fuels and Strathmore Minerals Corp.
("Strathmore") entered into a definitive arrangement agreement whereby
Energy Fuels will acquire by way of a plan of arrangement in accordance
with the Business Corporations Act (British Columbia) all of the issued
and outstanding shares of Strathmore (the "Transaction"). The
Transaction is expected to create value for both companies' shareholders
as a result of significant operating synergies as outlined in the May
24, 2013 joint press release. Korea Electric Power Corporation
("KEPCO"), the largest shareholder of both Energy Fuels and Strathmore,
has signed support agreements agreeing to vote their shares of both
companies in favour of the Transaction. The shareholders of Energy Fuels
approved the Transaction at a special meeting held on August 13, 2013.
The shareholders of Strathmore will be asked to approve the Transaction
at a special meeting to be held on August 20, 2013.
-- On June 13, 2013, the Company announced the completion of a Cdn$6.6
million bought deal private placement. A total of 47,380,791 units were
issued at a price of Cdn$0.14 per unit. After strong investor interest,
the offering was increased from the previously announced maximum of
Cdn$5.8 million. Each unit consists of one common share of the Company
and one-half of one common share purchase warrant, entitling the holder
thereof to acquire one common share of the Company at a price of
Cdn$0.19 at any time until June 15, 2015.
Energy Fuels Outlook for the Fiscal Year Ended September 30, 2013 ("FY-2013")
Energy Fuels continues to pursue 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 believes that near- to medium- term
uncertainty in the market could lead to continued sluggishness in uranium
prices.
Energy Fuels remains focused on its relatively lower cost sources of production
from its Arizona Strip mines and alternate feed materials. These production
sources, along with the Company's existing uranium concentrate inventories, will
provide Energy Fuels with the U3O8 required for near-term deliveries 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.
During the quarter-ended March 31, 2013, the Company determined that it could
realize production efficiencies by milling its entire stockpile of conventional
ore during Q3-2013, and therefore the Company completed the processing of
essentially all stockpiled ore in June 2013. The Company's stockpile of
conventional ore is currently being replenished with mined ore from its Arizona
1 and Pinenut mines (Pinenut commenced production in July 2013), and the Company
currently expects to resume conventional ore processing during the second half
of FY-2014. The processing of alternate feed materials is currently expected to
continue through the remainder of FY-2013 and into the fiscal year ended
September 30, 2014 ("FY 2014"). Mining activities are expected to continue on
the Arizona Strip at the Arizona 1 and Pinenut mines 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. At the same time, the Company is regularly monitoring
market conditions and adjusting growth plans accordingly. Consistent with this
strategy, Energy Fuels expects to complete the acquisition of Strathmore on
August 28th, 2013. Energy Fuels believes the Transaction will result in
significant value creation for the shareholders of both companies, through
numerous synergies between the companies' assets in the Colorado Plateau
district and in Wyoming. In addition, the Transaction offers the Company the
opportunity to further its relationship with KEPCO, including the appointment of
a director, nominated by KEPCO, to join Energy Fuels' board of directors. Energy
Fuels believes that KEPCO is a global leader in the nuclear power sector.
Following the closing of the Transaction, Energy Fuels also looks forward to
working with Sumitomo Corporation of Japan, Strathmore's joint venture partner
at the Roca Honda uranium project ("Roca Honda") in New Mexico. Roca Honda is
one of the largest and highest grade uranium development projects in the US.
Energy Fuels believes that operational synergies can be realized by utilizing
Energy Fuels' White Mesa Mill to process ore from Roca Honda, thereby negating
the need to permit and develop a new uranium mill in New Mexico.
Development of the Canyon mine in Arizona continued through Q3-2013. Permitting
at the Sheep Mountain Project also continued through Q3-2013, advancing a second
potential major production center for the Company. Following the closing of the
acquisition of Strathmore, Energy Fuels will evaluate the co-development of
Sheep Mountain in conjunction with Strathmore's Gas Hills and Juniper Ridge
uranium projects in Wyoming. Energy Fuels is confident that operational
synergies can be realized through this co-development strategy. The Company is
also pursuing potential new supplies of alternate feed materials for the White
Mesa Mill (which carry no mining costs), and will continue to evaluate
additional toll milling and/or ore purchase agreements with third-parties who
own uranium properties within trucking distance of the White Mesa Mill. Energy
Fuels will also continue to evaluate growth through accretive acquisitions.
As outlined below, Energy Fuels provides the following updated outlook for
FY-2013 and provides the following outlook for uranium sales and production for
the quarter-ended September 30, 2013 ("Q4-2013"):
-- FY-2013 Sales: As previously announced, the Company expects to sell
997,000 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. Vanadium sales are estimated to be
1,537,000 pounds of V2O5, or equivalent in the form of ferrovanadium,
during FY-2013.
-- Q4-2013 Sales: The Company expects to sell 257,000 pounds U3O8 during
Q4-2013, all of which will be sold pursuant to term contracts.
-- FY-2013 Production: The Company expects to produce approximately
1,150,000 pounds of U3O8 during FY-2013, from both conventional ore and
alternate feed sources. Conventional ore production includes ore mined
from the Beaver, Pandora, Arizona 1 and Daneros mines. Given the
processing of
Beaver and Pandora ores, Energy Fuels also anticipates production of
1,537,000 pounds of V2O5 in FY-2013.
-- Q4-2013 Production: The Company expects to produce 125,000 pounds of
U3O8 during Q4-2013, sourced from alternate feed materials.
-- FY-2013 Mining Activities: As previously announced, 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. During Q3-2013, the Company
continued development of the Canyon mine in Arizona. 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
continued permitting activities at the Sheep Mountain Project in Wyoming
during Q3-2013, 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
Near- to medium-term uncertainty continues to lead to sluggishness in the
uranium market. However, despite low contract volumes, uranium prices were
relatively stable during Q3-2013. According to price data from TradeTech, the
uranium term price remained at $57.00/lb., while the spot price of uranium
dropped $2.70/lb. from $42.25/lb. at the end of the prior quarter, to close on
June 30 at $39.55/lb. Although the spot price dropped to $35.00/lb on July 31,
it has since rebounded to $35.75 as of August 9, 2013. TradeTech's long-term
price indicator dropped from $57.00/lb to $54.00/lb during that same period. The
continued shutdown of Japanese reactors and the resulting build-up in
inventories and lack of demand are largely responsible for this continued market
sluggishness. The anticipated restart of those reactors is expected to be an
important catalyst to the market.
In spite of the near- to medium-term uncertainty in the market, long-term demand
fundamentals within the uranium sector remain strong. China, Russia, India,
South Korea, the U.S., the UAE and Brazil continue to construct nuclear power
plants. The World Nuclear Association reports that there are now 68 nuclear
reactors under construction, an increase of 2 units from the prior quarter, and
478 nuclear reactors planned or proposed. The 68 reactors under construction
will require about 100 million lbs. of U3O8 for initial cores and an additional
35 million lbs. of U3O8 annually, once they are generating. China and India plan
to begin operation at eight nuclear reactors this year.
Although long-term fundamentals continue to be strong, Energy Fuels believes
near-to medium- term uncertainty could continue to lead to sluggishness in the
market, particularly during the summer months, when market activity is typically
low. However, despite the challenging industry environment, Energy Fuels
believes it is well positioned to execute the Company's business plan, and to be
able to respond rapidly and aggressively to improved uranium prices.
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
Energy Fuels (TSX:EFR)
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