Energy Fuels Inc. (UUUU) on Q1 2021 Results - Earnings Call Transcript
Operator: Good afternoon ladies and gentlemen, and welcome to the Energy Fuels Q1 2021 Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call has been recorded on Monday, May 17 2021. I would now like to turn the conference over to Mr. Mark Chalmers, President and CEO. Please go ahead.
Mark Chalmers: Thank you very much. Good afternoon and thank you for joining our conference call and webcast today. We're excited to discuss our Q1 achievements as well as the accomplishments after the quarter closed. For those of you who cannot join the call, we will have replays of this presentation available for two weeks on our website, though should be up in a day or two. We continue to make extraordinary progress on many fronts. And we believe Energy Fuels has and continues to emerge as a clear leader of U.S. critical mineral production.
Operator: Thank you. Ladies and gentlemen, we’ll now begin the question-and-answer session. Your first question comes from Heiko with Wainwright. Heiko, please go ahead.
Heiko Ihle: Hi, it’s Heiko Ihle with Wainwright. Mark, how are you?
Mark Chalmers: Good, Heiko. You must be in Germany?
Heiko Ihle: I’m indeed. Thanks for taking my questions, and congratulations on your stock being up 50% year-to-date, you're successfully undertaking a pretty wide range of rare earth element operations for the firm, there is natural Monazite ore, there’s European rare earth production initiative to solve that extraction. In fact just added as part of my question, looking at Page 5 of your presentation actually lists seven talking points for rare earths, and only five for uranium. Share price certainly seems to approve all of this. And I'll reiterate that you're up 50% year-to-date. Now looking ahead, just conceptually, where do you see the firm in three months, three years and if you would venture or guess even longer-term, is there a world where you essentially not focused on uranium all that much and instead really just do rare earths because there's higher multiples and more demand and whatnot? Or do you think uranium will always be a core thing to Energy Fuels?
Mark Chalmers: Heiko, that's not a easy question to answer real quickly. But look, uranium is always going to be a key focus for us. And again, uranium is why this opportunity exists because our ability to process the rare earth, the Monazite sands for the uranium, I think the key thing from my perspective is that the world needs higher uranium prices, probably in the order of at least 50%, but probably more like 75% to 80% maybe up to $50 a pound or greater to truly have a sustainable uranium industry. And what we see, what we believe is that the rare earth is an opportunity right now, the prices are high enough now to have this sustainability and the profitability, probably equal to the $50 plus uranium prices that will hopefully be around the corner in the not too distant future. So, I don't want to start over speculating on where we go and how we go. But where we’re going is we're going to cash flows as quickly as we can get to cash flows. And we think that right now, the best way to get there is with the rare earths. So I don't know if that answers your question, but still with the long-term uranium focus as a company.
Heiko Ihle: That's where it does answer the question. Now since you said this question was a long winded and a big answer. I have a very simple clarification for you. The $13 million you raised under the ATM program in Q2 so far, can you just give us the average price per share?
Mark Chalmers: I think we provided it in our report. I think it was around $6, Dave or Sara, please correct me if I'm wrong, but it was about $6.
Sarai Luksch: Yes, that's correct, Mark, $6.01.
Heiko Ihle: $6.01, wonderful. Thank you guys.
Mark Chalmers: Thank you, Heiko.
Operator: Thank you. Your next question comes from Joseph Reagor with ROTH Capital. Joseph, please go ahead.
Joseph Reagor: Hey, Mark, thanks for taking the questions. I guess, first thing on the uranium front, given you just stated to Heiko, you guys want to stay in that business, and the fact that a lot of your peers are out there buying up loose supply? Would you guys consider doing the same? And if you did, would it be only if you could get U.S. supply or would you consider buying international supply just to build your stockpile?
Mark Chalmers: Yes, Joe, we’ll do whatever makes sense. And right now, because we have around 700,000 pounds, already of U.S. origin that we produce and we believe we could build to that with either stockpiles we have at the site that we can process at White Mesa or even from our ISR sites, we're not actively kind of got that in our business plan. Could we? Yes, we could. But look at I think that the fundamentals look good on a hopeful bounce on the uranium price. And we needed to bounce because we need to go back into production. So look, we’ll always keep it open. But right now, with over 700,000 pounds and ability to increase that to say 800,000 or greater, fairly quickly, we're in a pretty good spot right now with our potential lift to increased uranium prices.
Joseph Reagor: Fair enough. On the rare earth front, if you said, you guys are starting the scoping studies, especially for like the separation plant possibility. Can you give us any kind of maybe framework of where you think the capital budget is now, a lot has changed since the last time we discussed it, and I just want to make sure it's still kind of in the same ballpark. And then, as you conduct these studies, is there a certain like ROI threshold, you need to see from the third-party studies before you would go forward with it for instance, if the study suggest the ROI is sub-10%, would you guys still pursue it because of the critical nature? Or does it have to meet a certain return for Energy Fuels to spend the money?
Mark Chalmers: Yes, well look I'll start with capital. That's one of the reasons we've started this scoping is to try to get better idea of what the capital is, we've publicly stated, it could be between for separation between $150 million, to say $250 million, we may be able to do it on the lower end of that, because we may do it in phases. And we think though, that that's a very attractive strike rate for capital, because of the fact that we basically have a crack and lease facility already paid for and operating right now, that would be to put it into context, you probably be looking at a $1 billion to $1.5 billion to get a facility that say, let’s say if we invested and I'm just using this hypothetical, so don't quote me on this. So we think the strike rate for the CapEx is very good. Our initial models indicate that we have robust economics here, from an operating cost perspective, we don't yet haven't really focused on a trigger point for the ROR. But I can just say that, we believe it's higher than what you've mentioned, as a low point. And we think it's robust, and we think it's as competitive as it can be outside of China. So, we're very encouraged with what we think a robust economics, both from OpEx and the capital strike rate perspective, and we think that places in an excellent position here in North America.
Mark Chalmers: Okay, thanks. I'll turn it over.
Operator: Thank you. It appears there are no further questions at this time. You may proceed.
Mark Chalmers: Okay, well in closing, first, I appreciate your interest in Energy Fuels. As I mentioned, there is no peer for us. If you invest in Energy Fuels, you're getting the whole clean energy story and the critical mineral story with what is what I believe a very extraordinary opportunity in critical materials, in clean energy. So we're very excited about the future and we're very focused on the future, and it is our goal to become a multi-billion dollar company fairly quickly, if we can execute our strategy, the way we think we can execute, there still is always risk in everything you do in this business, but I don't think we could be placed any better at this point in time and look forward to talking to you all in the future. And I hope to have people like Heiko saying, well, you just went up another 50% in the next six months now, I can't predict the future, but we're very excited in Energy Fuels. So again, thank you in closing, and everybody stay safe.
Operator: Ladies and gentlemen, this concludes your conference call for today. Thank you participating and ask that you please disconnect your lines.
