Energy Fuels (NYSE: UUUU) VP Curtis Moore on Entry into Rare Earths and Outlook for Restarting ISR & Hard Rock Uranium Projects

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the VP of Marketing and Corporate Development for Energy Fuels (NYSE: UUUU)(TSX: EFR), Mr. Curtis Moore. Curtis, how are you? First and foremost, you and your family, everyone safe?

Curtis Moore: Yep, everything's good. Thanks for having me on, Gerardo.

Gerardo Del Real: Thank you for coming back on. We touched base publicly a couple of months ago, and it seems like it's a different world, so I'm glad to hear that everyone on your end is healthy. You just had a very, very interesting conference call yesterday. I got a lot of questions, some that we'll touch on, regarding Energy Fuels' entry into the rare earth element sector. So I want to get to that. 

But first and foremost, I want to give you the floor and give you the opportunity to make crystal clear that Energy Fuels' focus is exactly where?

Curtis Moore: It's uranium. Yeah, I don't want anybody to think that we're jumping ship from uranium and trying to move over into some sort of other mineral. We always have been and we always will be a uranium miner, uranium producer, the biggest producer in the United States with more capacity, more resources, more production than anybody else. However, if we have other ways to generate revenue in businesses that are related to uranium, we're always going to look at that. Rare earths is actually one of those possibilities right now.

Gerardo Del Real: Let's get right into the rare earths aspect, and then I want to have an in-depth discussion about the uranium upside. Obviously, we're at 4-year highs. There is momentum in the space, cuts left and right, and I want to talk about how Energy Fuels is positioned to benefit from that. 

But let's get into the rare earths aspect of it. Where do you see that going?

Curtis Moore: Well, this is very early in the process for us. Over the last year or so we've been approached by a number of entities, private entities that are in the rare earth space, but also the US government, who's looking for ways to bring the rare earth business back to the United States. The reason that they've approached us is because we have the White Mesa Mill. The White Mesa Mill is, again, the only conventional uranium mill in the United States. It's also the only conventional vanadium mill. 

It has a 40-year history of handling and processing and recycling basically low-level radioactive materials. A lot of rare earth ores have low levels of radioactivity associated with them, including uranium and thorium. So folks have started to inquire about what our capabilities might be out there. The more we started looking at it, the more we started testing some materials in our labs and all that, we started thinking, "Man, we think we could actually play a role in this." 

I want to be clear. We're not looking to run out and become rare earth miners. However, we think that our facility could be used for a lot of different types of rare earth processing. And so, again, it's early days, but we're excited about where this might be able to go.

Gerardo Del Real: Let's talk uranium. I reached out to some of my Twitter followers and friends, and they had some questions and I wanted to make sure I got them in there. 

One was people want you to discuss the ISR projects. How quickly can you get those producing in a favorable environment, one I think we're coming into, and what uranium price do you need for that to be an option?

Curtis Moore: Yeah. ISR needs probably north of $50 per pound. That's really just what it costs in the United States.

Gerardo Del Real: Yep.

Curtis Moore: Again, that's all-in cost. That's a sales price, $50. So our cost is, of course, lower than that. But if you want to cover your operating costs, your capital costs, your sustaining capital, and, of course, the company that supports that production, you really need $50 a pound. North of that, actually. 

If you look at our projects, we have two ISR facilities. One is the Nichols Ranch facility up in Wyoming. And we also have the Alta Mesa project down in South Texas. Both good facilities. They're both proven. Nichols Ranch has produced about 1.2 million pounds during its history. Alta Mesa has produced almost 5 million pounds during its history. 

Nichols Ranch, it was in operation until just this past March. So it's in good shape to ramp up. We did place it on standby just in the last couple weeks, but it could ramp up production very quickly. We basically just need to go out and hire some workforce and install some wellfields. We'd see increased production probably just within a few months' time. But to really get some momentum to get production levels up to the higher levels that need to be, it'd probably take about a year to get there because we'd have to install a few wellfields and that sort of thing.

Alta Mesa, it would be right behind that. It's been sitting on standby since about 2013, so there's a little bit of refurbishment that needs to go on. We need to do a little bit more exploration to get some more resources out ahead of us and design some more wellfields. But, again, it could be up and running really quickly. Again, just hire some workforce, put in some wellfields, again, within say 6 to 12 months. It's a pretty short period of time. I don't think anybody else, maybe Ur-Energy, but I don't know if anybody else can claim to be able to bring things back that quick.

Gerardo Del Real: Let me ask you about the NFWG, and I have other acronyms because I'm tired of waiting on the recommendations. Any feedback there? I know you have your finger on the pulse, obviously. Have you heard anything?

Curtis Moore: The only thing we are hearing, we continue to hear, it's coming out any day. But we've been hearing that now for 6 months.

Gerardo Del Real: Every day, right?

Curtis Moore: Every day, yeah. At this point, we'll believe it when we see it. Certainly the Trump administration has a lot on their hands right now. I'm not sure that uranium mining is at the top of that list right now. We'll see. 

We did get the uranium reserve. I think that's one recommendation out of the working group. Negotiations are ongoing for the extension of the Russian Suspension Agreement. I think that's probably a recommendation in the Nuclear Fuel Working Group. Of course, I haven't seen the report. We haven't seen it, but I'm just speculating here. Both of those things I mentioned, the US uranium reserve and the Russian Suspension Agreement, could significantly help us. So we'll see. Uranium prices are rising on their own, anyway. That's certainly helping.

Gerardo Del Real: And quickly and a lot of supply is being taken off the market, obviously. We talked ISR. What price of uranium do you need to start up hard rock mining was another question I got.

Curtis Moore: Yeah. Actually, likely a lower price. A lot of people think that ISR is always lower priced than hard rock, but we have our Canyon Mine down in Arizona. The costs out there all in is probably $30 per pound on a go forward basis. So, we could start up for lower. We don't want to. The US, I would say, and actually the world needs prices probably north of $60 or $65 per pound to be sustainable. There's certainly some lower cost stuff that could come online. We have some of it. Again, Ur-Energy, they've got some of it, and I'm talking mainly the US here, but it's not sustainable. We could gut shot our best deposits, and then they're all gone.

So, yeah, we could do Canyon Mine for quite a bit cheaper. We're going to hold out for the opportunity to hopefully mine it and sell that material for more. And that could be up and running really quick, too. I mean, basically, it's a mostly developed conventional mine in Arizona. We have a little bit more underground development to do out there. We've got the shaft constructed. All the surface facilities are in. So we probably could get back into ore production out there within, I'd guess, 9 to 12 months we'd be producing ore. 

But then the thing is, we need to produce enough ore, ship it to the mill and have a large enough quantity to have a critical mass of ore to justify a mill run of a couple months. So that would probably take 6 months to get going. So it might take 18 months to get actual uranium in the can to sell. But it would be nice, low-cost uranium.

Gerardo Del Real: Have you seen more activity behind the scenes – I know you're active, Curtis – from the utilities? A lot of the brightest minds in the space speculate that this move higher in the uranium price and the cuts that we've seen is going to force some movement finally, right? Are you seeing that in calls, in inquiries?

Curtis Moore: I have. Yeah, definitely. Some of the utilities are coming back. I don't know that they've come back in a big way yet. Again, they're probably not going to contact us if they need 5 million pounds a year or something, huge quantities. 

I understand that they are looking to come back in and buy some uranium just because they see the price moving up. They see supplies getting tight here a little bit with all the production cuts. And who knows how long these mines are going to be shut down. They talk about being shut down for 4 weeks or 6 weeks or 2 months or whatever it is. But who knows? They might be shut down for 6 months. We don't know. So, yes, the price move up, I think, has been driven not just by traders and producers but also utilities.

Gerardo Del Real: You mentioned toll milling for rare earths. Another question I had was how about uranium, is that an option?

Curtis Moore: Absolutely. The White Mesa Mill is the only conventional uranium mill in the United States. So if somebody has a conventional deposit or a conventional mine, they have two options. Do a toll milling agreement with us or go build their own mill, which would cost them 10, 15 years to permit and who knows how many hundreds of millions of dollars to build. So, yeah, we're certainly open to that. 

It's a big mill. White Mesa processes 2,000 tonnes of ore per day. That's a lot of tonnage. The mines in the United States, the hard rock mines, tend to be small. They produce a few hundred tonnes per day. The White Mesa Mill could support quite a few mines, and we're absolutely open to talking about toll milling.

Gerardo Del Real: Excellent.

Curtis Moore: Let me make something real clear. We have no toll milling agreements in place right now. There are a few companies out there that talk about using White Mesa to mill their ore, but we have nothing in place right now. Nobody has the right to use the White Mesa Mill at this time.

Gerardo Del Real: What's the treasury look like? I know that you did a financing back in February that, I'll be very honest, I was not a fan of at the time. It was done at $1.47 per share, and then the world changed and everything fell apart. And I thought it was a brilliant move, and it was a good thing that you did it when you did it But what does that look like right now?

Curtis Moore: Yeah. We did get some criticism for that, and it was a extremely tough decision at the time. I mean, we're looking like geniuses right now, but sometimes it's better to be lucky than good, I guess. What we were looking at is that we have some debt that's coming due at the end of the year, and we wanted to make sure that we had cash to cover it. We didn't know what was coming up with the Nuclear Fuel Working Group. We didn't know what was coming up with uranium prices. 

Look, we're really optimistic about things, but you don't want to bank the company on hopes and dreams here. You have to prepare for the downside and get your downside covered off. That's really what ultimately drove that financing. 

But, that being the case, at December 31st, we had about $40 million of working capital. That's cash of about $18 million and the rest in uranium and vanadium inventories. In Q1 2020, we raised a net amount of $19 million, and that included the financing and a little bit of usage on our ATM. So that's almost $60 million in our war chest that we have access to. And to make matters even better is that because uranium prices have gone up, and actually vanadium prices have ticked up a little bit, we probably have another $4 or $5 million dollars of working capital just in terms of appreciation of our inventory. 

Now we do have $16 million that we have to cover off at the end of the year that's now a current liability, but I don't think there's anybody, certainly in the US, that has the strength of our balance sheet.

Gerardo Del Real: Fantastic. Curtis, before I let you go, I'd like to give you the floor and let you make a pitch for Energy Fuels. Thanks for coming on today.

Curtis Moore: Oh, you're welcome, Gerardo. Thanks again for having me. Energy Fuels, the largest uranium producer in the United States. More uranium capacity, more in-ground resources, will be quicker to the market than anybody else. Low cost plus a whole lot of diverse businesses that are related to uranium, including vanadium, rare earths, alternate feed recycling, land cleanup. I don't think there's any other company in the US like Energy Fuels. Thanks again for having me.

Gerardo Del Real: Well said. Thank you for coming on, Curtis. Appreciate it.