Energy Fuels set to become the largest uranium producer in the US in 2017

Energy Fuels Inc (TSE:EFR) sold 60,000 lbs of triuranium (U3O8) at an average realized price of US$58.28 per pound (lb) in the first quarter.

The sales were made under a long-term contract.

“Energy Fuels continues to enjoy meaningful insulation from price weakness in the uranium spot market,” declared Stephen Antony, president and chief executive of Energy Fuels.

The timing of sales was not helpful to the company in terms of putting a buff on the first quarter numbers, as one day after the quarter ended Energy Fuels delivered 200,000 pounds of triuranium through long-term contract arrangements, trousering US$13mln in the process.

The above largely explains the dip in first quarter revenues to US$3.76mln in the first three months of 2017 from US$18.00mln the year before.

During the quarter, the company began fulfilling a toll processing contract that is expected to result in US$6.50mln in 2017, of which just US$260,000 was realized by the company during first quarter.

The company produced 92,000 lbs of U3O8 during the quarter. It expects to crank out 675,000 lbs over the course of the year, down from previous guidance of 800,000 lbs.

The guidance was lowered because of lower initial recoveries of pond returns of 25,000 lbs of U3O8, a delay in receipt of some alternate feed materials (now expected to arrive in 2018) and lower-than-expected recoveries at the company’s Nichols Ranch project.

The company expects to extract and recover around 300,000 pounds of U3O8 from the Nichols Ranch project in 2017, of which 58,000 pounds were recovered in the first three months of the year.

The net loss attributable to the company widened to US$10.51mln from US$8.81mln the year before.

The loss per share narrowed to 15 cents from 19 cents a year earlier.

“Our contract sales and other sources of revenue enable the company to maintain a strong working capital position and overall balance sheet. In addition, Energy Fuels is likely to become the largest uranium producer in the US in 2017, based on published company guidance,” Antony noted.

The company ended the quarter with US$23.8mln of working capital, including cash and cash equivalents of US$12.2mln, on top of which it has some 550,000 pounds of uranium concentrate in its inventory.

“We are proud to take the position as the largest uranium producer in the US, especially during a time when our industry demands high degrees of efficiency,” Antony said.

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Antony said the company’s operations continue to perform to high standards.

The company brought a new cost-efficient, in situ recovery (ISR) well-field on-line at Nichols Ranch in March, and head grade and production volumes are consequently on the rise.

“We also prudently finished other key permitting and development activities during first quarter 2017,” Antony revealed.

“We completed permitting for the Jane Dough well-fields at the Nichols Ranch project. As a result, we now have 26 permitted well-fields and significant ISR resources in front of us at Nichols Ranch that we can place into production in the future. We now have a valuable permitted asset in hand, and that cash requirement has stopped,” Antony said.

“We also now have substantially finished the production shaft and underground drilling at the Canyon mine during Q1 2017, where we have encountered large areas of high-grade uranium and copper mineralization,” Antony revealed, adding that the company believes it has significantly increased the size of the uranium resource at the Canyon mine.

“This should translate into low overall costs per pound, in line with the lowest-cost conventional uranium mines operating in the world today. Monetizing the copper will further reduce our uranium cost per pound,” he added.

“Completion of these milestones has resulted in a reduction in the work force and a significant reduction in cash outlays at the Canyon mine during the evaluation time period. Nichols Ranch and the Canyon mine, along with the fully permitted Alta Mesa project, now on standby, are ideally positioned to quickly increase the company’s low-cost uranium production in improving markets,” the Energy Fuels boss concluded.

Story by ProactiveInvestors