Non-dilutive sale of asset expected to
materially enhance Energy Fuels' balance sheet and help to fund the
rapid advancement and expansion of near-term U.S. uranium and rare
earth production
LAKEWOOD, Colo., Nov. 14,
2022 /PRNewswire/ - Energy Fuels Inc.
(NYSE American: UUUU) (TSX: EFR) ("Energy Fuels" or the
"Company"), a leading U.S. producer of uranium and rare earth
elements ("REE"), is pleased to announce that it has entered
into a definitive agreement to sell three wholly-owned subsidiaries
that together hold Energy Fuels' Alta Mesa ISR Project ("Alta
Mesa") to enCore Energy ("enCore") for total
consideration of $120 million (the
"Transaction"). The Transaction is expected to close by the
end of 2022 or early 2023.
The Transaction is significant for the Company, as the cash
received is expected to fully finance much of the Company's
uranium, REE, vanadium and medical isotope business plans for the
next two to three years without diluting shareholders. These plans
may include:
- Ramping-up uranium production at one or more of the White Mesa
Mill, the Nichols Ranch ISR Project, the Pinyon Plain mine, the La
Sal Complex, and/or the Whirlwind mine which total up to two (2)
million pounds of U3O8 per year of near-term, lower cost U.S.
production capacity in order to fulfill commitments under existing
and future long-term uranium supply agreements and as market
conditions may warrant;
- Accelerating the licensing and development of the Company's
larger-scale uranium mines, including the Sheep Mountain,
Roca Honda, and/or Bullfrog
projects, which together will add over five (5) million pounds of
production capacity in the next several years;
- Establishing an "ore purchasing" program to secure additional
feed to the White Mesa Mill, from others in the region as uranium
mining picks up in the region, thereby maximizing the facility's
existing eight (8) million pounds per year licensed uranium
production capacity and having sole ownership of this
production;
- Financing the construction of "first to market" in the U.S.
"Phase 1" REE separation infrastructure (up to 2,500 –
5,000 MT per year TREO capacity,
including 500 – 1,000 MT per year of
NdPr oxide or oxalate expected) at the White Mesa Mill;
- Advancing the design, engineering and permitting of a planned,
large "world significant" "Phase 2" crack-and-leach and "light" and
"heavy" REE separation facility (up to 15,000 mT per year TREO capacity).
- Developing the Company's Bahia heavy mineral sand and REE
project in Brazil upon successful
acquisition of the project; and
- Acquiring additional monazite supply to feed the Company's
rapidly growing REE business.
The $120 million of total
consideration will be paid by enCore to Energy Fuels as
follows:
- $60 million cash at closing;
and
- $60 million in a secured
convertible note (the "Note"), payable in two years from the
closing, bearing annual interest of eight percent (8%). The Note
will be convertible at Energy Fuels' election into enCore shares at
a 20% premium to the 10-day volume-weighted average price of enCore
shares ending the day before the closing. enCore is currently
traded on the TSXV and has applied for a listing on the NASDAQ. The
Note will be guaranteed by enCore Energy Corp., will be fully
secured by Alta Mesa, and enCore will not be permitted to further
encumber Alta Mesa with any third-party indebtedness, royalty or
stream while the Note is outstanding. Unless a block trade or
similar distribution is executed by Energy Fuels to sell the enCore
common shares underlying the Note, Energy Fuels will be limited to
converting the Note into a maximum of $10
million principal amount of the Note per thirty (30) day
period.
Furthermore, enCore will assume all reclamation liabilities
associated with Alta Mesa (approximately $10.3 million) and pay Energy Fuels the cash
collateral on the existing reclamation bonds (approximately
$3.6 million). Once the reclamation
liabilities are transferred to enCore, Energy Fuels will be nearly
60% collateralized on its remaining reclamation obligations. The
Company also estimates that the sale of Alta Mesa will reduce
Energy Fuels' cash burn by approximately $2
million per year.
Energy Fuels acquired Alta Mesa in 2016 for approximately
$13.6 million of shares, and
currently carries this project on its balance sheet at $8.2 million. The Transaction represents an
exceptional return on investment for Energy Fuels, and the value
metrics of the Transaction compare favorably against precedent
transactions within the uranium sector. Energy Fuels expects
to replace the expected uranium production from Alta Mesa through
permitting and production from its existing larger mining projects,
ore purchases, toll milling arrangements, additional alternate feed
and clean-up material, and potentially other transactions as market
conditions may warrant.
Mark S. Chalmers, President and
CEO of Energy Fuels stated: "This is a unique transaction for
Energy Fuels. Not only does it allow us to monetize the Alta Mesa
Project for $120 million, it allows
our company to focus and accelerate our higher priority uranium and
rare earth projects without dilution to our shareholders. This
non-dilutive transaction will add cash to Energy Fuels' significant
working capital position, which was $122
million at September 30, 2022.
Energy Fuels will also retain some exposure to short-term market
upside and optionality at Alta Mesa and enCore through the
convertible note.
"With recent uranium market strength and having secured new
long-term uranium contracts with major U.S. nuclear utilities
earlier this year, the Company is beginning to perform the work
needed to recommence production at one or more of our projects,
with production expected to start as soon as 2023. We have already
hired about 20 people, and the cash we receive from the Alta Mesa
transaction will help further fund this ramp-up. On top of this,
the Company plans to establish an "ore purchasing" program from
future uranium mining from others that maximizes the underutilized
uranium production capacity of the White Mesa Mill with the uranium
produced going 100% to our account in a way that others cannot.
Energy Fuels absolutely intends to retain our position as the
leading producer of uranium in the U.S. through our remaining
outstanding portfolio of ISR and conventional uranium assets, and
this transaction with enCore helps to both finance and focus our
plans in this regard without dilution associated with equity
financings.
"This cash also helps facilitate our plans to install rare earth
separation infrastructure at our White Mesa Mill, including the
expected capacity to produce approximately 500 – 1,000 tonnes per
annum of separated 'light' rare earth oxides (or oxalates) by the
end of 2023 or early 2024. We are also working on a number of
fronts to secure additional monazite supply to feed our new rare
earth infrastructure, and we expect this cash to significantly help
finance purchases of monazite, fund our Bahia project in
Brazil upon successful completion
of that acquisition, and otherwise help in this regard. If we are
successful with our rare earth initiatives, we have the potential
to be the 'first-to-market' in the U.S. for the sale of commercial
quantities of separated NdPr oxides (or oxalates), a raw material
for rare earth permanent magnets used in electric vehicle
drivetrains, wind energy systems, and defense applications. For
reference, high-efficiency EVs each require about one to two
kilograms of NdPr oxide. Therefore, in the next 12-18 months, if we
are successful in constructing our Phase 1 rare earth separation
capabilities, Energy Fuels could be domestically producing enough
magnet material for 250,000 to 1 million EV drivetrains per
year.
"I also believe this Transaction represents an important step
forward for enCore Energy. Alta Mesa is a fully permitted and
developed U.S. uranium project, and enCore's President and CEO,
Paul Goranson, knows it well, having
constructed and operated it himself about ten years ago. To us,
this appears to be a value creative transaction for both Energy
Fuels and enCore."
The closing of the Transaction is expected to occur by
December 31, 2022. If the Transaction
is not completed due to certain circumstances, enCore is required
to pay to Energy Fuels a $6 million
break fee.
Cantor Fitzgerald Canada Corporation is acting as Energy Fuels'
financial advisor and Dorsey & Whitney LLP and Dentons are
acting as Energy Fuels' legal advisors in connection with the
Transaction.
About Energy Fuels: Energy Fuels is a
leading U.S.-based uranium mining company, supplying
U3O8 to major nuclear utilities. The Company
also produces vanadium from certain of its projects, as market
conditions warrant, and is ramping up to full commercial-scale
production of RE Carbonate. Its corporate offices are in
Lakewood, Colorado near
Denver, and all its assets and
employees are in the United
States. Energy Fuels holds three of America's key uranium
production centers: the White Mesa Mill in Utah, the Nichols Ranch ISR Project in
Wyoming, and the Alta Mesa ISR
Project in Texas. The White Mesa
Mill is the only conventional uranium mill operating in the U.S.
today, has a licensed capacity of over 8 million pounds of
U3O8 per year, and has the ability to produce
vanadium when market conditions warrant, as well as RE Carbonate
from various uranium-bearing ores. The Nichols Ranch ISR Project is
currently on standby and has a licensed capacity of 2 million
pounds of U3O8 per year. The Alta Mesa ISR
Project is also currently on standby and has a licensed capacity of
1.5 million pounds of U3O8 per year. In
addition to the above production facilities, Energy Fuels also has
one of the largest S-K 1300 and NI 43-101 compliant uranium
resource portfolios in the U.S. and several uranium and
uranium/vanadium mining projects on standby and in various stages
of permitting and development. The primary trading market for
Energy Fuels' common shares is the NYSE American under the trading
symbol "UUUU," and the Company's common shares are also listed on
the Toronto Stock Exchange under the trading symbol "EFR." Energy
Fuels' website is www.energyfuels.com.
Cautionary Note Regarding Forward-Looking
Statements: This news release contains certain "Forward
Looking Information" and "Forward Looking Statements" within the
meaning of applicable United
States and Canadian securities legislation, which may
include, but are not limited to, statements with respect to:
production and sales forecasts; the ability of the Company to
accelerate uranium and rare earth production; scalability, and the
Company's ability and readiness to re-start, expand or deploy any
of its existing projects or capacity to respond to any improvements
in uranium market conditions;; any expectation as to the timing of
the closing of the Transaction or whether the closing will in fact
occur; any expectation that the Transaction may fully finance much
of the Company's uranium, rare earth, vanadium, and medical isotope
business plans for the next two to three years; any expectation
that the Company may license and eventually produce uranium from
its Sheep Mountain, Roca Honda
and/or Bullfrog projects; any expectation as to recommencement of
production at any of the Company's uranium mines or the timing
thereof; any expectation as to the ability of the Company to secure
any new sources of ore or other processing opportunities at the
Mill through an ore purchasing program; any expectation as to
timelines for the permitting and development of projects; any
expectation that the Company will maintain its position as a
leading uranium company in the United
States; any expectation with respect to timelines to
production; any expectation that the Mill will be successful in
producing RE Carbonate and/or separated REE oxides or oxalates on a
full-scale commercial basis; any expectation that Energy
Fuels will be successful in developing U.S. separation, or other
value-added U.S. REE production capabilities at the Mill, or
otherwise, including the timing of any such initiatives and the
expected production capacity or capital and operating costs
associated with any such production capabilities; any expectation
with respect to the quantities of monazite sands to be acquired by
Energy Fuels, the quantities of RE Carbonate to be produced by the
Mill or the quantities of contained TREO in the Mill's RE
Carbonate; any expectation that the Company may sell its separated
NdPr oxide (or oxalate) to major electric vehicle manufacturers in
the U.S. and Europe; any
expectation that the Bahia Project has the potential to feed the
Mill with REE and uranium-bearing monazite sand for decades; any
expectation as to the quantities to be delivered under existing
uranium sales contracts, or that such contracts may help underpin
the Company's uranium business for many years to come; and any
expectation that the Company will generate net income in future
periods. 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,"
"budgets," "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 "have the potential to." All statements,
other than statements of historical fact, herein are 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 include risks associated with: commodity
prices and price fluctuations; processing and mining difficulties,
upsets and delays; permitting and licensing requirements and
delays; changes to regulatory requirements; legal challenges; the
availability of sources of Alternate Feed Materials and other feed
sources for the Mill; competition from other producers; public
opinion; government and political actions; available supplies of
monazite sands; the ability of the Mill to produce RE Carbonate to
meet commercial specifications on a commercial scale at acceptable
costs; the ability of Neo to separate the RE Carbonate produced by
the Mill to meet commercial specifications on a commercial scale at
acceptable costs; market factors, including future demand for REEs;
the ability of the Mill to be able to separate radium or other
radioisotopes at reasonable costs or at all; market prices and
demand for medical isotopes; and the other factors described under
the caption "Risk Factors" in the Company's most recently filed
Annual Report on Form 10-K, which is available for review on EDGAR
at www.sec.gov/edgar.shtml, on SEDAR at www.sedar.com, and on the
Company's website at www.energyfuels.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. The Company assumes no
obligation to update the information in this communication, except
as otherwise required by law.
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SOURCE Energy Fuels Inc.