LAKEWOOD, CO, Sept. 22, 2016 /CNW/ - Energy Fuels Inc.
(NYSE MKT: UUUU; TSX: EFR) ("Energy Fuels" or the "Company"), a
leading producer of uranium in the United
States, is pleased to present a Letter to Shareholders from
President and CEO, Stephen P.
Antony:
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http://photos.prnewswire.com/prnh/20160920/409746LOGO)
Dear Fellow Shareholders:
I don't have to tell you that these are frustrating times in
global uranium markets. As you are likely aware, spot uranium
prices are presently at about $25 per
pound. These are the lowest levels observed since early 2005
– or earlier, if you adjust for inflation. The simple fact is
that the World is currently oversupplied with uranium.
Utilities appear to be well-covered for now. When fuel buyers
purchase uranium today – at least in relatively small quantities –
it has been widely available to them on the open market at low
prices. There is even a view among some that nothing will
change for the foreseeable future and hence, prices will remain low
and oversupply will persist indefinitely. 'Complacency' is a
word that comes to mind. As a result, there is limited
urgency for utilities to cover the large uncovered needs that start
to emerge later in this decade and early next decade.
However, many of us who have worked in this industry for a long
time have seen this type of behavior before. In earlier times
of low prices, uranium production dropped, exploration expenditures
plummeted, and there was little new investment in needed large new
mines. The last time these conditions prevailed was in the
early 2000's – right before the last major increase in uranium
prices which peaked in June 2007. In my view, today's market
activity is laying the groundwork for the next recovery in uranium
prices, and uranium buyers are being complacent at their peril.
We recently completed a second round of financing this
year: $15 million
(gross). The two financings Energy Fuels has completed this
year were our first major financings since 2013, and as a partial
result, our share price has declined in the equity markets.
Therefore, I felt compelled to reach out to you to discuss why we
strongly believe our recent actions are in the best interests of
our shareholders. Please also keep in mind that Energy Fuels'
shareholders include our Board and Management who are substantial
shareholders themselves. Indeed, I am a significant
security-holder. The terms of the financing were a reflection
of the difficult state of the equity market for uranium, and I can
assure you that this financing was carefully considered. But,
the primary purpose of the financing was to enable us to properly
invest in our best and lowest-cost projects, preparing the Company
for a better future.
From the perspective of advancing our projects and expanding our
uranium production capabilities, things are very positive at Energy
Fuels. This financing allows us to complete the shaft and
resource evaluation at our Canyon Mine, which is expected to have
the highest-grade uranium resources in the U.S. It allows us
to complete the current wellfield at Nichols Ranch, and delay any
wellfield development expenditures for a year or more, while
maintaining current levels of production. And, it allows us
to keep our key asset portfolio and production profile intact, so
that we can continue to offer investors leverage to anticipated
increases in uranium prices. As we stated in our September 12 operational update, we believe that
investing in the Canyon Mine and the Nichols Ranch Project are
investments in the future of the Company. For instance, if
the ongoing evaluation at the Canyon deposit is able to
significantly increase the mineable resource and lower projected
costs of production, we believe we will have significantly enhanced
shareholder value. If we are able to maintain production
levels at Nichols Ranch without incurring significant sustaining
capital expenditures, we believe we will have enhanced shareholder
value.
Our acquisition earlier this year of Mesteña is another good
example of this strategy, as we expect the Alta Mesa Project to be
one of the lowest cost sources of sustained uranium production in
our entire portfolio. We are also cutting other costs and
rationalizing our asset portfolio, including the pending sale of
two non-core assets – Gas Hills and Juniper Ridge – for cash.
We are seeking new sources of uranium production and revenue,
including the pond returns discussed in the September 12 news release, which we expect to
result in approximately 300,000 pounds of production in 2017 at a
low cost. We are working on acquiring additional sources of
alternate feed material, which have no associated mining costs, and
which we expect to bring additional funds into the treasury.
Finally, we are continuing to explore new and imaginative
contracting practices and joint venture possibilities. All of
these activities – and more – are responses to today's market
realities. But, they also represent rational investments that
we believe will create shareholder value over the long-term.
Despite today's very low prices, there remain positive long-term
market fundamentals in the space, including most recently, the UK
approving the Hinkley Point C proposal, Kazakhstan announcing that they will not be
increasing uranium production for the foreseeable future, continued
production cuts and delays at certain major uranium mines around
the World, and a Chinese government official announcing that
China plans to build 30 new
reactors in the next five years and 60 in the next decade.
The key in today's uranium mining market is having the "staying
power" to last until the expected uranium price recovery
occurs. To get from here to there, we must manage our assets
and operations conservatively. And, we may need to do
financings from time-to-time, though I hope not at the size or
frequency of the last two.
As shareholders, together we own a one-of-a-kind uranium asset
portfolio, including near- and long-term production capabilities
with attractive costs. There are no other junior uranium
companies with three licensed and operational production
centers. Indeed, there are not many companies left in the
junior uranium sector, which is a testament to what we (including
our shareholders) have accomplished in this tough market.
The management team and I are proud of what we have built, and
together we believe in the long term outlook for uranium
markets. However, today's uranium market continues to be
difficult. Spot and mid-term prices are not incentivizing
current production – much less new project development or
exploration. As uranium resources are mined, there is little
to indicate that they will be replaced. There are some
attractive, large deposits that get a lot of people excited, but
they are not likely to go into production for many years, due to
price uncertainties, permitting timelines, and financing
constraints. Yet, because nuclear reactor construction and
uranium demand is increasing, we fully expect that uranium markets
will recover. And, Energy Fuels plans to be one of the first
companies to benefit when this happens.
Thank you for your continued support.
Sincerely,
Stephen P. Antony
President, CEO and Shareholder in Energy Fuels
About Energy Fuels: Energy Fuels is a
leading integrated US-based uranium mining company, supplying
U3O8 to major nuclear utilities. Energy
Fuels holds three of America's key uranium production centers, the
White Mesa Mill in Utah, the
Nichols Ranch Processing Facility in Wyoming, and the Alta Mesa Project in
Texas. The White Mesa Mill is the only conventional uranium
mill operating in the U.S. today and has a licensed capacity of
over 8 million pounds of U3O8 per year.
The Nichols Ranch Processing Facility is an ISR production center
with a licensed capacity of 2 million pounds of
U3O8 per year. Alta Mesa is an ISR production center currently
on care and maintenance. Energy Fuels also has the largest NI
43-101 compliant uranium resource portfolio in the U.S. among
producers, and uranium mining projects located in a number of
Western U.S. states, including one producing ISR project, mines on
standby, and mineral properties in various stages of permitting and
development. The Company's common shares are listed on the
NYSE MKT under the trading symbol "UUUU", and on the Toronto Stock
Exchange under the trading symbol "EFR".
Cautionary Note Regarding Forward-Looking
Statements: Certain information contained in this
news release, including any information relating to: the Company
being a leading producer of uranium in the U.S.; the
Company's expectations with regard to global uranium markets,
current and future supplies, current and future prices, and utility
and fuel buyer behavior; the use of proceeds for the recently
completed financing; the Company's opinions and beliefs about the
costs and production potential of its projects, including the
Canyon mine, the Nichols Ranch ISR Project, the Alta Mesa ISR
Project, and the Company's alternate feed business; the Company's
expectations with regard to increasing shareholder value; the
Company's beliefs with regard to other uranium juniors; the
Company's expectation that it will be one of the first companies to
benefit from an improvement in uranium markets; and any
other statements regarding Energy Fuels' future expectations,
beliefs, goals or prospects; constitute forward-looking information
within the meaning of applicable securities legislation
(collectively, "forward-looking statements"). All statements
in this news release that are not statements of historical fact
(including statements containing the words "expects", "does not
expect", "plans", "anticipates", "does not anticipate", "believes",
"intends", "estimates", "projects", "potential", "scheduled",
"forecast", "budget" and similar expressions) should be considered
forward-looking statements. All such forward-looking
statements are subject to important risk factors and uncertainties,
many of which are beyond Energy Fuels' ability to control or
predict. A number of important factors could cause actual
results or events to differ materially from those indicated or
implied by such forward-looking statements, including without
limitation factors relating to: the Company being a leading
producer of uranium in the U.S.; the Company's expectations
with regard to global uranium markets, current and future supplies,
current and future prices, and utility and fuel buyer behavior; the
use of proceeds for the recently completed financing; the Company's
opinions and beliefs about the costs and production potential of
its projects, including the Canyon mine, the Nichols Ranch ISR
Project, the Alta Mesa ISR Project, and the Company's alternate
feed business; the Company's expectations with regard to increasing
shareholder value; the Company's beliefs with regard to other
uranium juniors; the Company's expectation that it will be one of
the first companies to benefit from an improvement in uranium
markets; and other risk factors as described in Energy
Fuels' most recent annual report on Form 10-K and quarterly
financial reports. Energy Fuels assumes no obligation
to update the information in this communication, except as
otherwise required by law. Additional information identifying
risks and uncertainties is contained in Energy Fuels' filings with
the various securities commissions which are available online
at www.sec.gov and www.sedar.com. Forward-looking
statements are provided for the purpose of providing information
about the current expectations, beliefs and plans of the management
of Energy Fuels relating to the future. Readers are cautioned
that such statements may not be appropriate for other
purposes. Readers are also cautioned not to place undue
reliance on these forward-looking statements, that speak only as of
the date hereof.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred
Resources: This news release contains
certain disclosure that has been prepared in accordance with the
requirements of Canadian securities laws, which differ from the
requirements of U.S. securities laws. Unless otherwise
indicated, all reserve and resource estimates included in this news
release have been prepared in accordance with Canadian National
Instrument 43-101 – Standards of Disclosure for Mineral Projects
("NI 43-101") and the Canadian Institute of Mining, Metallurgy and
Petroleum ("CIM") classification system. Canadian standards,
including NI 43-101, differ significantly from the requirements of
U.S. securities laws, and reserve and resource information
contained in this news release may not be comparable to similar
information disclosed by companies reporting only under U.S.
standards. In particular, the term "resource" does not equate
to the term "reserve" under SEC Industry Guide 7.
United States investors are
cautioned not to assume that all or any of Measured or Indicated
Mineral Resources will ever be converted into mineral
reserves. Investors are cautioned not to assume that all or
any part of an "Inferred Mineral Resource" exists or is
economically or legally minable. Energy Fuels does not hold
any Reserves as that term is defined by SEC Industry Guide 7.
Please refer to the section entitled "Cautionary Note to United
States Investors Concerning Disclosure of Mineral Resources" in the
Company's Annual Report on Form 10-K dated March 15, 2016 for further details.
SOURCE Energy Fuels Inc.