Date: May 3, 2018
Since uranium heavyweight, Cameco cut production in January, the International Energy Agency and the World Nuclear Association have been expecting a rise in demand for uranium. Uranium producer, Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) (“Energy Fuels”) is well poised to capitalize on this expected increase. The company is known to be able to scale production seamlessly as soon as uranium prices rise.
Energy Fuels is the owner of the only fully permitted and operational conventional uranium mill in the U.S., the White Mesa Mill. The mill has an annual capacity of 8 million (M) lbs. of uranium, and in 2017 produced 366,000 lbs. of uranium concentrate, and re-processed a further 946,000 lbs.
In addition to uranium, the White Mesa Mill is the only facility in the U.S. with the near-term ability to resume the recovery of vanadium. Vanadium prices have increased more than 300% over the past 24 months due to rising demand, especially from China. The company’s Whirlwind Mine and La Sal Complex are also close to the mill and contain large, high-grade vanadium resources. As a large producer of vanadium in the past, Energy Fuels is evaluating several near-term production opportunities to capitalize on an improving market. Being able to capitalise on rising vanadium prices, should be seen as a good hedge against potential uranium price volatility.
A consideration of the company’s other operations, we note that the majority of these projects are permitted, contain large resources and have the ability to ramp up production quickly should uranium prices improve.
The Nichols Ranch in-situ recovery (ISR) facility produces uranium from 9 wellfields and produced 259,000 lbs. in 2017. It has an annual capacity of 2M lbs. and is able to ramp up production within 6 months.
Due to recent lower uranium prices, the Alta Mesa ISR facility was placed on care and maintenance in 2013, but US Energy Fuels has confirmed that the facility is fully permitted and ready to resume production within 12 months of a production decision. It has an annual capacity of 1.5M lbs. and large resources with potential for expansion through exploration.
