Earnings Labs

Energy Fuels Inc. (UUUU)

Q4 2023 Earnings Call· Mon, Feb 26, 2024

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Transcript

Operator

Operator

Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Energy Fuels Fiscal Year 2023 Conference Call. [Operator Instructions] Thank you. Mr. Chalmers, you may begin your conference.

Mark Chalmers

Analyst

Thank you, Joelle, for that introduction, and good morning or afternoon, wherever you're joining this call from. I really appreciate you joining the conference call and webcast today for Energy Fuels 2023 annual results. We are very excited to discuss what has been an extraordinary 2023 and a very busy start to Q1 of '24. For those that cannot join the call today, we'll have replays of this presentation available for two weeks on our website either later today or tomorrow. I don't believe I have ever been more excited to update you on both our 2023 results as well as a snapshot of where we are driving the company in 2024. I hope it is apparent based on our actions that Energy Fuels has emerged as the up-and-coming leader in U.S. uranium and critical mineral production at a time when this has never been more important. Many of you have heard me say we will always be aggressive but not reckless. And I believe 2023 is a testament of how our company is striving to build a world-significant uranium critical mineral company in a way that is unique to Energy Fuels, assets and our expertise. In short, we believe 2023 clearly demonstrates that we are company builders, not promoters. Our goal is to become a company that generates sustainable and significant high-margin cash flows from the production of advanced critical materials centered around uranium and other elements found in nature with uranium. 2023 represents a major step in that direction. Just a few highlights from the press release and year-end financials, net income of nearly $100 million, $222 million of working capital, $37 million in sales of both uranium vanadium, rare earths and no debt. We have over $1 billion worth of assets. If you add or you can…

Operator

Operator

Thank you. [Operator Instructions] Your first question comes from Mike Heim with Noble Capital Markets. Please go ahead.

Mike Heim

Analyst

All right. Thank you. Good morning. Mark, let me - a couple of questions, let me start with the rare elements. Some of the verbiage in the press release talks, about the 25 to 35 tonnes of NdPr oxide in the second quarter. And then says that, you expect to begin processing uranium after that. Is the implication that, you probably are not going to be doing more NdPr oxide, after the second quarter?

Mark Chalmers

Analyst

Yes. Michael, that's correct. I mean, right now, the only source of monocyte we have, is from Chemours. And so, we have secured about 500 tons of material that's ready to be processed, to allow us to commission Phase 1. And so yes, we plan - to commission the Phase 1 plant and then switch it back, switch the mill back over to uranium production, and we plan to run as much uranium through the mill. Particularly at a period where the price uranium is so high, to maximize the revenue and profitability, while we're securing larger longer-term sources of monocytes. So again, right now, rare earth prices are quite a bit down, from where they were a year or two ago, and we're going to maximize our profitability, by pushing as much uranium through that mill in the meantime. But we'll continue to do this Phase 2, Phase 3 engineering. We'll continue to advance Bahia potentially the Donald project in Australia, and other projects to be ready, to bring in significant quantities at world scale, but we'll be pushing the uranium through, in the meantime.

Mike Heim

Analyst

Is there kind of a date in mind, when you have a go decision on Phase 2, while you're doing all this prepping?

Mark Chalmers

Analyst

Well, what we're doing is getting the engineering completed. We'll have to submit that, to the state of Utah. And so, as - from our perspective, we're doing all that work right now. The go decision is get the engineering done, be ready to submit it to the regulatory bodies, and so, we're not holding back on that at all.

Mike Heim

Analyst

Can you talk a little bit more about the under budget on Phase 1? And specifically, would that have any implications for the cost of the Phase 2 expansion?

Mark Chalmers

Analyst

Well, I think the key thing about Phase 1 and the fact that we're doing this work in Utah, a low cost of doing business area with very, very skilled people that understand solvent extraction, that, yes, we were able to do a lot of that work internally, in a very efficient way. And it does - I think it does bode well for Phase 2 and Phase 3. I don't want to extrapolate out that far on those at this point in time, because Phase 1 is where we actually added, additional solvent extraction capabilities, in the existing SX building at the mill. So Phase 2, Phase 3 will be completely separate new facilities. So it will require complete new buildings and whatnot, where Phase 1 didn't require all that. But again, I think it bodes well when you look at, what we can do in a jurisdiction like Utah, Southern Utah, as compared to others in the other parts of the world, particularly in places like Australia, where people are seeing significant cost overruns on their projects.

Mike Heim

Analyst

And then one question on uranium, and I'll get back in queue. And I almost hate to ask this, because you've done so much. But given what's going on with uranium prices, if we were to try and expand even faster, what are the bottlenecks, to getting production going even faster than what you're projecting?

Mark Chalmers

Analyst

Well, on our existing sort of stable of permitted projects, there really aren't any bottlenecks. We can get up to about 2 million pounds per year. When you start going greater than that for us, it requires a combination of a couple of things. It requires larger capital expenditures. And it also requires securing, some of these additional permits on things like Roca Honda, Bullfrog and Sheep Mountain is partially permitted. So our bottlenecks, as we can get to about that 2 million pounds, maybe a little higher with capital investment, but to go to 5 million pounds per year. We're going to need both significant capital investment, and additional permits from our - for our company.

Mike Heim

Analyst

All right. Thank you, Mark.

Mark Chalmers

Analyst

Thank you.

Operator

Operator

Your next question comes from Joseph Reagor with ROTH MKM. Please go ahead.

Joseph Reagor

Analyst · ROTH MKM. Please go ahead.

Hi, Mark and team. Thanks for taking the questions. So first thing, on that $16 million to $18 million guide for the total cost for the Phase 2, how much of that was spent as of year-end, so we can kind of have an idea of what's left for this year?

Mark Chalmers

Analyst · ROTH MKM. Please go ahead.

Let me ask Nate Bennett, our interim CFO, Chief Accounting Officer. Nate, do you - can you give me a number of what was spent to year-end?

Nathan Bennett

Analyst · ROTH MKM. Please go ahead.

Yes, I can. Yes, I can pipe in there. So, we've spent $8.2 million through the end of 2023, and the rest of that will be spent in 2024.

Joseph Reagor

Analyst · ROTH MKM. Please go ahead.

Okay. Thanks. That's helpful. And then looking at the - as you're doing the separation of it as well with us, what do you expect kind of the pricing to be on these, 25 to 55 tons that you're going to sell?

Mark Chalmers

Analyst · ROTH MKM. Please go ahead.

Well, because it's -- Joe, because they're talking very small quantities and everything, it really isn't even appropriate to say what the pricing is going to be on it right now. But we - one of the reasons that we're securing these other large projects, is that we get both the revenue from the heavy mineral sands, and absolutely low cost, in some cases, no cost for monocytes. So with Chemours, we've said this publicly. We've been working with them, to kind of reconcile the fact they've been short on supplying this monocyte. And so, we're going through a couple exercises there on how we rectify that. It's not over yet. So I'm not prepared to tell you what it's going to cost for this run the small run. But what it does demonstrate, is it will demonstrate that we can do this commercially, at the required purities, if everything goes as per our plans. And that in itself is extremely material. We will secure additional monocytes, and that's all part of our strategy, is how we come up, with a blended price that, is very attractive in a world perspective.

Joseph Reagor

Analyst · ROTH MKM. Please go ahead.

Okay. Fair enough. And then I realize with the uranium production guidance that, it's all dependent on when you get started with producing. But can you tell us, what are the assumptions that, lead to like the 150,000 pounds, versus the 500,000 pounds, like is there a certain month that you would need to start up - by to get to 500,000 and then a certain month, you're assuming it's a way, to start up to get the 150,000?

Mark Chalmers

Analyst · ROTH MKM. Please go ahead.

Yes. It's really timing. We're going to get this Phase 1 commissioned, as I mentioned, running this 500 tonnes through it. And when that is complete, we'll flip the mill over to uranium production and depending on how much time is remaining in the year, we will put more uranium through if we're able to flip that sooner rather than later. We have the alternate feed and the sources to basically get well in that range. And we're also planning to be delivering, or currently delivering feed from our other mines like La Sal and soon the other sites like Pinyon Plain. So there's a lot of moving parts of just making sure, the timing is an order. It's all coming together, and we're just being, what I believe, quite conservative given that range, at this point in time. It's my personal goal, and - I make that - it's a personal goal to do better than that, but we just have to see, how the year kind of rolls out here.

Joseph Reagor

Analyst · ROTH MKM. Please go ahead.

Okay. And one final one. So you contracted near term to sell an additional 100,000 pounds this quarter, at kind of spot prices. Yes. Are you planning to do more of that in Q2, Q3, Q4? Or are you guys planning, to just stick to the long-term contracts?

Mark Chalmers

Analyst · ROTH MKM. Please go ahead.

It is our goal to opportunistically sell uranium as we have it, taking into account what our contracted deliveries are, looking out next year and following years, and maximize the benefit of these higher prices, in a way that others can't, because they don't have one, the inventory two, the ability to produce this year. So just watch this space, I don't want to make promises that I can't keep, but we are going to be looking at how to absolutely maximize our company position, with these higher uranium prices.

Joseph Reagor

Analyst · ROTH MKM. Please go ahead.

Okay. Sounds good. Thanks, Mark. I'll turn it over.

Operator

Operator

[Operator Instructions] There are no further questions at this time. Please proceed.

Mark Chalmers

Analyst

Yes, I'd just like to thank those of you that have joined the call. I hate to use the word extraordinary too many times, but we really are on a focused path, for a long-term critical mineral hub. There really is no investment like Energy Fuels that can - on the back of uranium adding on the ability, to produce rare earths, for a very significant - world significant strategy, is our objective. Look at our balance sheet, look at the fact that we're producing uranium now. We've got very good margins on our uranium sales, and cost. It is a very exciting time, and I cannot tell you, as I said at the beginning of the call, how excited I am, to present this story and just watch this vehicle, because we are focusing on building a company. We are not promoters. If you want us to be promoters, we're not going to be promoters, because we're building a company, and we're doing it step-by-step. So, thank you very much. And again, I look forward to further updates in due course during the year.

Operator

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.