Energy Fuels Inc. (TSX:EFR) ("Energy Fuels" or the "Company") today
reported its financial results for the quarter and year-ended
September 30, 2012 ("FY-2012"). The Company's Audited Annual
Consolidated Financial Statements, along with Management's
Discussion and Analysis and Annual Information Form, have been
filed on the System for Electronic Document Analysis and Retrieval
and may be viewed at www.sedar.com. Unless noted otherwise, all
dollar amounts are in US dollars.
Transformational Year for Energy Fuels
The past year was transformational for Energy Fuels, as the
Company attained a dominant production and resource position within
the uranium sector's single largest market, the United States. In a
period of less than six months between February 2012 and July 2012,
Energy Fuels augmented its business, successfully capitalizing on
growth opportunities in a highly dynamic market environment. Within
this short period of time, Energy Fuels became the largest
conventional uranium producer in the US, one of the largest holders
of NI 43-101 compliant uranium resources in the US, and completed
two capital market financings that raised aggregate gross proceeds
of over Cdn $30 million.
Through the acquisition of all of the US-based uranium mining
and production assets of Denison Mines Corp. (the "Denison
Acquisition") in June 2012, Energy Fuels now owns and controls the
White Mesa uranium mill ("White Mesa Mill"), which is the only
operating uranium mill in the US. When combined with the Company's
large, proximal resource base, the White Mesa Mill positions Energy
Fuels to provide a long-term supply of uranium production from
conventional ore as market conditions warrant.
In addition, through its February 2012 acquisition of Titan
Uranium Inc. (the "Titan Acquisition"), Energy Fuels acquired the
Sheep Mountain Project, one of the largest uranium development
projects in the US. The Sheep Mountain Project has 30.3 million
pounds of uranium oxide ("U3O8"), contained in approximately 12.9
million tons of Measured and Indicated Resources with an average
grade of 0.12% U3O8. Shortly after completing the Titan
Acquisition, Energy Fuels completed a pre-feasibility study on the
Sheep Mountain Project. Using a 7% discount rate and a $60 per
pound uranium price (which is the current Ux long-term price of
uranium), the Sheep Mountain Project's estimated net present value
is $161 million which, in itself and excluding Energy Fuels' other
assets, represents a substantial premium to the Company's current
market capitalization.
Despite being the world's largest producer of nuclear energy,
the US currently imports over 90% of the uranium required to fuel
its reactors. The Company believes its US-based portfolio of assets
represents a important source of domestic supply, which should be
expected to grow in strategic importance following the expected
discontinuation of the US-Russia HEU agreement in December 2013,
which currently provides approx. 45% of the uranium supply for the
United States.
Selected Annual Information
The following selected financial information was obtained from
or calculated using the Company's consolidated financial statements
for the following fiscal years:
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Year ended Year ended Year ended
$000, except per share September 30, September 30, September 30,
data 2012 2011 2010 (1)
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Results of Operations:
Total revenues $ 25,028 $ - $ -
Net income (loss) 16,973 (3,567) (4,315)
Basic and diluted
earnings (loss) per
share 0.06 (0.04) (0.05)
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As at As at As at
September 30, September 30, September 30,
2012 2011 2010 (1)
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Financial Position:
Working capital $ 44,080 $ 6,788 $ 3,158
Property, plant and
equipment 133,085 33,292 480
Total assets 239,808 43,493 33,793
Total long-term
liabilities 38,447 452 333
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(1) As reported under Canadian GAAP
Financial and Operational Highlights for FY-2012
-- Completed the Denison Acquisition and Titan Acquisition on June 29, 2012
and February 29, 2012, respectively.
-- Energy Fuels' sales, following completion of the Denison Acquisition,
were 447,000 pounds U3O8 at an average realized price of $55.83 per
pound for the quarter and year-ended September 30, 2012. Approximately
44% of these sales were under existing uranium supply contracts.
-- Energy Fuels' production at the White Mesa Mill, following the
completion of the Denison Acquisition, totaled 310,480 pounds of U3O8
for the quarter and year-ended September 30, 2012. Production included
79,764 lbs U3O8 from alternate feed materials and 230,716 lbs U3O8 from
Arizona 1 and Daneros conventional ore. Production cash cost was
$44.26(1) per lb U3O8 for the quarter and year-ended September 30, 2012.
-- As of September 30, 2012, the Company had working capital of $44.1
million, including cash and cash equivalents of $13.7 million,
marketable securities of $1.6 million and 225,000 pounds of U3O8
inventory. Based on spot market prices at September 30, 2012, this
inventory had a value of $10.5 million.
-- Raised aggregate gross proceeds of Cdn $30.2 million through a Cdn $8.2
million equity financing in June 2012 and a Cdn $22 million unsecured,
subordinated convertible debenture offering in July 2012.
-- Subsequent to September 30, 2012, Energy Fuels announced that, in order
to manage the current challenging uranium market environment, the
Company would focus on its lower cost sources of production at its
Arizona Strip mines and alternate feed production. As announced on
October 17, 2012, the Company placed its Daneros and Beaver mines on
standby. In December 2012, the Pandora mine was also placed on standby.
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in
this news release. These measures are not defined under
International Financial Reporting Standards ("IFRS") and should not
be considered in isolation. The Company believes that these
measures, together with measures determined in accordance with
IFRS, provide investors with an improved ability to evaluate the
underlying performance of the Company. The inclusion of these
measures is meant to provide additional information and should not
be used as a substitute for performance measures prepared in
accordance with IFRS. These measures are not necessarily standard
and therefore may not be comparable to other issuers.
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(1) Cash cost of production per pound is a non-GAAP financial measure
defined as the costs of mining the ore fed to the mill in the year,
which include fair value adjustments to beginning stockpile
inventories, plus the costs of milling less a credit for vanadium
produced in the period and excluding depreciation and amortization,
divided by lbs. of U3O8 produced during the year.
Energy Fuels Outlook for FY-2013
Energy Fuels will continue to manage its operations in a
prudent, conservative manner until the expected improvement in the
uranium market is observed and sustained. This strategy entails
operations that will focus on lower cost sources of production and
levels of output that are generally tailored toward fulfilling the
Company's delivery requirements under its uranium supply contracts.
As such, Energy Fuels expects that 90-95% of its FY-2013 sales will
be pursuant to existing term contracts. Development and maintenance
of the Company's asset portfolio is expected to continue to
position Energy Fuels to increase production upon the occurrence of
improved market conditions. Highlights for Energy Fuels' outlook
for FY-2013 are as follows:
-- FY-2013 Sales: Uranium sales are estimated to be 1,000,000 to 1,050,000
lbs U3O8, of which 957,000 lbs is expected to be sold under uranium
supply contracts and the remainder is expected to be sold into the spot
market. Vanadium sales ("V2O5") are estimated to be between 1,900,000
and 2,000,000 lbs.
-- FY-2013 Production: Uranium production is estimated to be approximately
1,000,000 lbs U3O8 sourced from both conventional ore and alternate feed
sources. Conventional ore production is expected to include the Beaver
and Pandora ore contained in stockpile as of September 30, 2012, as
well as the Beaver and Pandora ore mined during FY-2013. Given the
expected U3O8 production from Beaver and Pandora ores, Energy Fuels
estimates that it will produce between 1,900,000 and 2,000,000 lbs of
V2O5 in FY-2013.
-- FY-2013 Mining Activities: Mining on the Arizona Strip is expected to
continue during FY-2013 at the Arizona 1 and Pinenut mines, although
this ore is not expected to be milled until FY-2014, in addition to the
Daneros ore currently stockpiled. Effective October 17, 2012, the
Company placed the Daneros and Beaver mines on standby. The Pandora mine
was previously expected to be shut down in mid-2013 but was placed on
standby in December 2012.
-- FY-2013 Project Development: Energy Fuels plans to invest in high
priority development projects and maintain general permitting and
exploration activities in FY-2013. Development of the Canyon mine in
Arizona is planned to continue in FY-2013, with the start of shaft
sinking planned to begin in early FY-2013. The estimated cost of
development activities at the Canyon mine is expected to be $4.4 million
for FY-2013. Energy Fuels plans to continue permitting the Sheep
Mountain Project at an estimated cost of $1.1 million for FY-2013. Other
permitting and exploration expenditures are estimated to be $1.8 million
for FY-2013.
Well-Positioned for Current Market Conditions and Future
Growth
Energy Fuels believes it is well positioned as the leading
conventional uranium producer in the US, with the potential to
become a significant uranium producer on a global scale. The
Company's current production profile accounts for approx. 25% of US
production, and the Company owns a portfolio of assets which
provides a platform for significant production growth in the
future. In the midst of relatively weak uranium spot prices, Energy
Fuels is focusing on lower cost sources of production from its
high-grade Arizona Strip mines and alternate feed materials in
order to meet the delivery requirements under its existing uranium
supply contracts. Energy Fuels has three existing contracts to
deliver substantial quantities of uranium to US and international
utilities. The in-place contracts include pricing terms which
provide a premium to the current uranium spot price, which helps
mitigate the challenges of current market conditions. In the event
uranium spot prices return to pre-Fukushima levels of $70+ per
pound, Energy Fuels believes it has the ability to substantially
increase production at the White Mesa Mill over time, through the
Company's Arizona Strip mines, Colorado Plateau mines (which would
also include significant vanadium production), Henry Mountains
Complex, and increased uranium-bearing alternate feed processing.
In addition, the Sheep Mountain Project, a large stand-alone
uranium project, is expected to produce 1.5 million pounds U3O8
from both open-pit and underground mining operations according to
its 2012 prefeasibility study. As discussed below in the Market
Outlook for FY-2013, Energy Fuels believes that uranium market
conditions are improving.
Market Outlook for FY-2013
Energy Fuels expects improvements in the uranium market during
FY-2013. It is currently seeing increased activity in the uranium
market with both spot market transaction activity recently
increasing and several long-term supply contract proposals from
utilities being tendered during the past couple of months. Demand
fundamentals within the uranium sector are strong, with China,
Russia, India, the US, the UK, Saudi Arabia and Brazil continuing
to develop nuclear power plants. Globally, there are 64 nuclear
reactors under construction, and 483 nuclear reactors planned or
proposed. The recent Japanese election results also appear to bode
well for the re-start of Japanese reactors, as the Liberal
Democratic Party, a proponent of nuclear power, won via a
significant majority. In terms of supply, the discontinuation of
the US-Russia HEU agreement in December 2013 is expected to remove
up to 18 to 24 million pounds of uranium from the market, and
recently announced delays of several new uranium development
projects are expected to further constrict supply over the medium-
to long-term. Energy Fuels believes the aforementioned market
conditions will result in modest strengthening of the uranium spot
price during FY-2013 with accelerated strengthening expected beyond
FY-2013.
Stephen P. Antony, P.E., President & CEO of Energy Fuels, is
a Qualified Person as defined by National Instrument 43-101 and has
reviewed and approved the technical disclosure contained in this
document.
About Energy Fuels: Energy Fuels is America's largest
conventional uranium producer, supplying approximately 25% of the
uranium produced in the U.S., and is also a significant producer of
vanadium. The company operates the White Mesa Mill, which is the
only conventional uranium mill currently operating in the U.S.,
capable of processing 2,000 tons per day of uranium ore. Energy
Fuels has projects located throughout the Western U.S., including
producing mines and mineral properties in various stages of
permitting and development.
This news release contains certain "Forward-Looking Statements"
within the meaning of Section 21E of the United States Securities
Exchange Act of 1934, as amended and "Forward Looking Information"
within the meaning of applicable Canadian securities legislation,
which may include, but is not limited to, statements with respect
to the future financial or operating performance of the Company and
its projects. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" "does not expect", "is expected", "is likely",
"budget" "scheduled", "estimates", "forecasts", "intends",
"anticipates", "does not anticipate", or "believes", or variations
of such words and phrases, or state that certain actions, events or
results "may", "could", "would", "might" or "will be taken",
"occur", "be achieved" or "has the potential to". All statements,
other than statements of historical fact, included herein are
generally considered to be forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
express or implied by the forward-looking statements. Factors that
could cause actual results to differ materially from those
anticipated in these forward- looking statements are described
under the caption "Risk Factors" in the Company's Annual
Information Form dated as of December 20, 2012, which is available
for view on the System for Electronic Document Analysis and
Retrieval at www.sedar.com. Forward-looking statements contained
herein are made as of the date of this news release and the Company
disclaims, other than as required by law, any obligation to update
any forward-looking statements whether as a result of new
information, results, future events, circumstances, or if
management's estimates or opinions should change, or otherwise.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, the reader is cautioned not to place undue reliance on
forward-looking statements.
Contacts: Energy Fuels Inc. Curtis Moore Investor Relations
(303) 974-2140 or Toll free:
1-888-864-2125investorinfo@energyfuels.com www.energyfuels.com
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