Energy Fuels Inc. (AMEX:UUUU) Q2 2024 Earnings Call Transcript

Energy Fuels Inc. (AMEX:UUUU) Q2 2024 Earnings Call Transcript August 5, 2024

Operator: Good afternoon. My name is [Ludi] (ph), and I will be your conference operator today. At this time, I would like to welcome everyone to the Energy Fuels’ Second Quarter 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session, where you’ll be able to ask one question and one follow-up, should you desire. [Operator Instructions] Thank you. Mr. Chalmers, you may begin your conference.

Mark Chalmers: Thank you for the introduction, Ludi, and also, good morning, good afternoon wherever you join this call from. And thank you for joining the Q2 conference call of Energy Fuels today and webcast. We are always excited to discuss our results and significant accomplishments. And we continue to make major accomplishments every day. For those who cannot join the call today, we’ll have replays of this presentation. It’ll be available for two weeks on our Web site starting later today or tomorrow. Every quarter I say we’re making extraordinary progress on many fronts. And certainly, this quarter is no exception. Energy Fuels is likely one of the biggest building success stories on decarbonization electrifications, while we also emerge as a clear leader in diversified U.S. critical mineral production at a time when this has never been more important.

We are a unique investment. There is no other company that has the ability to advanced uranium, vanadium, and rare earth production capabilities, while at the same time advancing our medical isotope aspirations, and continuing to maintain a very strong balance sheet of plus-$200 million with zero debt. Currently, and particularly over the past few days, the world has been experiencing substantial equity volatility, and even more so in the uranium space. This volatility, while surprising to me at the moment, is not unique to other times in my career that I or companies I have worked for have had to navigate. It is also one of the reasons Energy Fuels is not 100% focused on a single element, which directly influences our company’s strategy to maintain our strength in the uranium market.

And while at the same time diversifying into these other complementary critical mineral markets. Energy Fuels is playing a long game here. This is a lesson I’ve learned over 48 years in this business. In addition, right now, we are producing uranium from multiple mines, getting others ready, have finished uranium available for sale, about 300,000 pounds, and another approximately 700,000 pounds to be processed at the mill with long-term sales contracts, and have demonstrated substantial margins on our uranium sales to date. We also don’t need hundreds of millions of dollars to advance our uranium strategy. So, today, in more detail, I’ll elaborate on our accomplishments for the quarter and give some forward-looking insight to the rest of the year.

And I’m pleased to say that you do not have to control your slides today. Kim Casey, who is our Investor Relations Manager, I should say the beautiful Kim Casey, is advancing the slides for you, and I’m saving you actually some work here today. At the end of the presentation, we’ll be open for questions. David Frydenlund, our Executive Vice President and Chief Legal Officer; and Nate Bennett, our Interim CFO and CAO, will be available to help answer any questions I cannot answer. So, let’s jump right into the presentation. And this first slide, that clean energy starts with us, and I always say, on steroids. And I love this picture because it’s taken in San Juan County, not far from the White Mesa Mill. Next slide. I may be making some forward-looking statements, and those are included on slide two of this presentation.

Next slide. Our business objectives, now many of you have seen this slide before, but everything we do is centered around uranium. And our why is really that we are America’s leading experts in recovering critical elements from naturally radioactive ores. That’s our secret sauce. And that’s what we bring to the table that others do not, with our strategy. So, we’re very proud of that, and it is really important to how we’re advancing our strategy as we speak. Next slide. So, again, many of you have seen this slide. Everything we do is a high-value product line. We have a long history of producing uranium. We produced approximately two-thirds of uranium produced in United States over the last six to seven years. We’ve also been one of the largest producers of uranium over the last 10 or 15 years.

We’re advancing three of our mines to be at a production rate and this is from newly mined ore between 1.1 million and 1.4 million pounds of uranium per year at the end of this year. On the rare earth front, again, most of you understand these are elements required for the powerful magnets required in electric motors, wind and other technologies. We installed our circuit. Our Phase 1 circuit is capable of producing 1,000 tonnes per annum of NdPr, which has the ability to provide the elements required for up to 1 million electric vehicles. The heavy mineral sands sector for us is expanding rapidly in both the rare earth, the titanium and zirconium minerals. It provides us with a low cost source of monazite for our rare earth sector as a byproduct of ilmenite, rutile and leucoxene, and zircon.

Vanadium, we have a long history of producing vanadium when the prices are high. We have the only primary vanadium circuit in United States, but we can go back into vanadium production when the price is justified. And we also have a long history of recycling uranium and vanadium. But all this product line is built on substantial financial strength, no debt, significant cash and inventory and ongoing uranium sales. Next slide. So, let’s talk about, I mean the core areas of what the products that we do cover this energy transition, whether it’s nuclear fuel assemblies, high efficiency electric motors, defense or wind turbines. Next slide. So, this is a sort of a snapshot of the world and the blue basically shows the assets that Energy Fuels currently has as our company.

In blue, the most of blue are uranium assets in the United States and the White Mesa Mill and also Bahia project that we acquired a little over a year ago in Brazil. The red is the projects that we plan to acquire through the combination with Base Resources with the Toliara project and the Kwale project in Kenya and Madagascar and also base’s headquarters in Perth. But also, we have the Donald joint venture, which is a 49% joint venture that we’re advancing to a final investment decision in Victoria, Australia. Next slide. So, this slide really kind of highlights where we’re going as a company and our ability to process radioactive feed streams. For example, in situ recovery where we can extract the uranium from the ground and advance that uranium towards nuclear energy supply chain, nuclear fuel supply chain, our conventional mines, which produce uranium and vanadium going to the White Mesa Mill also producing uranium for the nuclear supply chain, the rare earth oxides, which come from the heavy mineral sands in the monazite and the vanadium in the medical isotopes.

But in addition, the heavy mineral sands also have a product that has a significant cash flow, the ilmenite, the rutile, the leucoxene and the zircon, which helps deliver monazite at either zero cost or very low cost, which puts us at a distinct advantage. Next slide. So, let’s talk about our core business uranium. So, our core business uranium and all of you are aware that we have a long history there and I’ve been doing this for decades. We’re building up our uranium production up to 2 million pounds of uranium production per year. You can see the picture of the White Mason Mill and this is really our critical mineral hub where we can process both the uranium, the vanadium, the rare earth elements and also recover radium because we have a research and development license to do so.

The Pinyon Plain mine in the lower left is the highest grade uranium mine in the United States, I believe in history. And I built that mine in 1987. And I can say that it is substantially advanced producing uranium right now and we’re advancing our development of that mine with the level access to the ore body and also preparing to do additional drilling in what we call the Juniper zone. And I’m also proud to say that the ore grades are exceptional and we’re very pleased with that. Nichols Ranch mine in Wyoming is in situ recovery mine. It’s currently on standby, but we are currently doing or have been doing delineation drilling at the Nichols Ranch mine preparing it for future production. La Sal Complex is also in production with two mines there, the Pandora and La Sal Incline and those are uranium, vanadium mines that are mining right now and hauling to the White Mesa mill.

Next slide. So, in addition to that, we have a number of development pipeline assets that includes the Sheep Mountain project in Wyoming, the Henry Mountains project in Utah and the Roca Honda project in New Mexico. Next slide. Uranium sales and I’m just going to stop here for a second because I do not see our financials in this presentation.

Kim Casey: We will find those and get those included, and I believe they are up on our website at the moment.

Mark Chalmers: Okay. Well, I’m just pointing out. So, anyways, those listening, I do not see the financials in our presentation at this moment, and so we will follow-up with those at the end of the presentation. Next slide. Well, let’s say stay on this slide. So, anyways, uranium sales, we’ve signed a number of long-term contracts and we’ve done spot sales. Last spot sale we did was at $86 per pound in July of just recently. And I also want to say that we have four long-term contracts with U. S. Utilities. We just recently signed a new contract at very favorable pricing and we’re very proud of that contract that gives us additional strength. So, we continue to look at how we position ourselves with the market and how through a combination of our contracts and spot sales, how we deliver the best outcome for our shareholders and maintaining our substantial cash position.

Next slide. Growth drivers. Next slide. On the rare earth front, we’re focused on the processing of monazite, recovering as a byproduct of heavy mineral sand, as I mentioned, focusing on NdPr, Dy, and Tb and they also contain uranium and thorium which can be monetized by the company at least the uranium can. It’s the facility in the United States able to process monazite into advanced rare earth materials. And we have 40 years of experience basically using solvent extraction to do this. We have our Phase 1 separation plant up and running and commissioned. We’re very excited about that. That is already producing on spec separated NdPr in 2024, and we are currently advancing a strategy to engineer and eventually construct a facility, what we call Phase 2 and Phase 3, which was upwards of 6,000 tonnes of NdPr per year and also substantial quantities of Dy and Tb. The monazite, as I mentioned earlier is a low cost byproduct from heavy mineral sand production, and we’re doing this without diminishing our uranium production capabilities.

Next slide. Just pictures of the on spec separated NdPr at the White Mesa Mill here, a picture from just a month or so ago. And this is not in a beaker. This is not in a small bag. These are in bulky bag containers. So, we’re very excited about that. We’re able to commission this plant with limited issues. Matter of fact, when I asked the guys at the mill what they would have changed, they really don’t have any material changes on that front. And so, we’re really excited because a lot of people told us that we would not be able to commission a plant without significant problems and we didn’t have any. Next slide. So, again, on our rare earth supply chain sending the monazite from these other sites around the world, monazite to the White Mesa Mill, we have an existing relationship with Chemours.

We also have the Bahia project that we are advancing. We have the Kwale project, if assuming the combination is completed and we think it will be on the Base acquisition and the Toliara project and the Donald project joint venture, which is work in progress, as I said, moving to final investment decision. So, when you look at this integration strategy, we are in and it was completed or working on the mining beneficiation today, the Kraken leach today, the separation today, and we’re also advancing the strategy to move forward with metal making and alloying as we speak. So, we are focused on full integration of the rare earth supply chain in time in logical steps over time. Next slide. So, this is the timeline of the rare earth feedstock pipeline, which shows us in currently about 2024 and we have on the very bottom level above the years there, we have third party monazite purchases from Chemours and potentially others.

We have the Donald project, a joint venture that I mentioned that’s moving towards final investment decision in about 2026. And we also have the Bahia project that we’re advancing our resources on, that also would come online somewhere in that ’27-’28 and then the Toliara project. Now, I want to mention, which is really exciting for me, that with the culmination or combination with Base Resources, we have Base Resources helping us with these other projects, particularly Donald and Bahia because Base Resources has all the skill sets required to develop our heavy mineral sand side of the business and they are beginning to help us right now, and we see that as a significant benefit with this combination. But on that time line, you can see in ’26-’27, the Phase 2 expansion.

Now this is where our plans are to have a plant up to about 6,000 tonnes of NdPr per annum and that is equivalent to what [Rinus] (ph) is currently doing with a follow-up by a Phase 3 expansion that includes the ability to separate the Dy and the Tb, which are the heavy elements used in electric motors. Next slide. So, the preliminary economics of our rare earth strategy is the Phase 1 separation plant. As I mentioned, it has been commissioned successfully, quickly producing NdPr right now at the moment. We built that for $16 million to $18 million investment, which is absolutely unheard of. We built it in our existing solvent extraction building where we extract uranium and vanadium, all in one building and we had it budgeted for $25 million and we did the complete project for much less than that.

And again, it’s a testament of our people and our skills and able to do this type of thing, particularly using the solvent extraction technology. We also have a CE international Class 4 prefeasibility study that estimates the cost of recovery NdPr is approximately US$30 per kilogram. So the cost of us producing rare earth oxides and other elements is effectively that depends on the cost of our feed of monazite to the White Mesa Mill. So, if in the case of having our own sources of monazite with heavy mineral sands, we have the ability to potentially get the monazite for free. And if we don’t get it for free, we believe we’ll get it at a discount to market. And so if you said it was free and you add $30, you can get an idea of what the production cost could be, assuming the credits that we get from other parts of the heavy mineral sand business.

If it’s greater than that, you can add $30 to it. So, we see this putting us in a substantial advantage when it comes to the business strategy that we’re executing by having the control of the molecules in the ground at the mine sites, and with the development team like Base to assist us in that regard. So, I think they’re putting up this other presentation that I believe will have the financials in it. And I apologize for this hiccup, but we will get it done. So, hold on one second. [Audio Gap] Okay, we go back to the go back to the slide — go back to the financials? Previous, previous —

Kim Casey: Yes.

Mark Chalmers: I mean, is that the new presentation, the right one?

Kim Casey: Yes, I don’t believe so. So, let me get you the — I can certainly do it on a PDF, but I think I’d have to send it to them.

Mark Chalmers: Go back to previous one.

Kim Casey: Okay.

Mark Chalmers: Well, look, we’ll go back to the previous presentation and I will give the financials verbally off of what I have in front of me. And again, I apologize, I have no idea how that got mixed up. So, go back to where we were at on the economics. Okay. Now, next slide. Okay. And we’ve talked about this before, why monazite is because we have these structural advantages to recover the uranium from the monazite, which has about the same grade of uranium as our traditional ores, and we have the ability to deal with the tailings, we have the deal to recover the uranium, and we have the ability to remove the uranium and other radionuclides to come up with a pure carbonate, which can then be separated into NDPR as we currently are doing.

So, this is a major advantage. Outside of China, as far as I know, we are the only company outside of China that is actually looking to monetize the uranium as we process. So, that’s a distinct advantage. If you look at the [leucas] (ph) that are also looking at processing monazite, they are not recovering the uranium and have no intention of doing anything with the thorium. And we have complete intention to recover the uranium and potentially could recover the thorium in due course if the need arose. Next slide. Let’s talk about some other growth opportunities. So, we’ve talked about vanadium in the past. It’s another critical mineral. We’re currently not recovering vanadium. We have a long history of doing so. It is mainly used for steel hardening and also for grid flow batteries for energy storage.

We produced back in 2019, and we have the ability to go back online, as I said. But we’re currently not doing so, but we can. The medical isotopes, when we’re processing uranium ores and also the monazite, we solubilize a lot of various elements, including particularly Radium-226 and 228. And we have the ability with the research and development license to recover the medical isotopes. It’s still early stages here, but it’s very encouraging with what we are seeing with the market and the demand and desire to secure radioisotopes, particularly Radium-226 and Radium-228. Next slide. Community. Next slide. We are still making significant advances in the region and with our employees, and also with our rare earth expansion. Most approximately half of our employees are indigenous and the recycling programs, that is the reason the White Mesa Mill has stood the test of time, is a key part to our business strategy, not the main focus right now, but the recycling is an important strategy.

Next slide. Community outreach, the San Juan County Clean Energy Foundation that we set up a few years ago is doing wonderful things. We’ve made grants to date of in excess of $400,000 to a number of very worthy grants for the region, and these are long-term commitments to improve the quality of life in San Juan County. We established a foundation with about $1 million, a couple of years ago, and we’ve committed 1% of our revenues from the mill. And most of these grants are supporting education, environment, health, wellness, economic advancement, and Native American priorities. You can see on the right-hand side there solar panels that were installed on the Dinosaur Museum in Blanding to help keep that facility open during the winter months.

Next slide. Financials. So, our financials for Q2, driven really mainly have been higher. We reported a $6.4 million net loss, which is about $0.04 of share. That was really driven by cost, but they were offset by uranium sales, and that’s really with regard to acquisition of base resources and final negotiations on the Donald Project. We sold 100,000 pounds of uranium on the spot for a net profit of $4.9 million. And so, it still keeps us in a very strong operational position because we had net income last quarter and we had a $100 million of net income last year, so we still are able to use our uranium cells in a very opportunistic way as we build up momentum on our uranium business. And so, our balance sheet, again, very strong, north of $200 million or $0.2 billion of liquidity at current commodity prices.

When you look at the strong cash, cash equivalents and marketable securities, including inventory and product inventory, if you adjust to current value of uranium product inventory, you can add approximately $14 million onto that $200 million. And we have no debt, and we have approximately 300,000 pounds, 285,000 pounds of finished uranium, and we have around 700,000 pounds of uranium in inventory that is ready to be processed when the rare earth Phase 1 separation ends, which is in the next month or so, and we will flip the mill over to uranium production for the next year or two and process as much uranium as we can. Now, I also want to note that when we — while we’re mining this uranium ore at the La Sal Complex, at the Pandora and the La Sal and at Pinyon Plain, we are building up inventories of uranium to be processed later this year or into next year.

So, even though we’re processing at around — we’ve given guidance to process new uranium between, I think it’s 150,000 to 500,000 pounds for this year. That is processed uranium. We are building up additional inventories on top of our current existing finished goods and the material yet to be processed. So, we are in a very strong position with uranium to feed the mill later this year and into next year with these other three mines feeding the mill as we speak. There are actually ore going out of these mines right now as we speak to be processed later this year or next, as I mentioned. Next slide. So, our focus and guidance, I mentioned the 150,000 to 500,000 pounds of finished uranium production. While we’re mining this other uranium to add on top of the inventories we have at the mill, we have 100,000 pounds that we sold in Q2 for nearly $86 per pound.

That helped offset some of our transaction costs that I mentioned before with the base resources, and also the Astron/Donald Project joint venture. We have no further contract sales currently in the schedule. There is 100,000 pounds of one utility may call on later this year. We’re continuing to evaluate the spot market for spot market opportunities. The ramp up of production I talked about that 1.1 million to 1.4 million pounds of uranium per year by the end of the year, we’re well along in reaching those quantums, and we’re advancing to build up our uranium production capabilities towards that two million pounds per year. The commissioning, as I mentioned, of Phase 1 separation plant is largely complete, and we’ll shift the mill over to uranium production here in a month or two.

The Phase 2 and Phase 3 expansion projects is work in progress and underway, and will be the main focus for us. And absolutely, the drilling of the Bahia Project and advancement of the base transaction, and the Astron final investment decision are right front and center for the remainder of the year. So, I’ll now open it up for questions. And again I apologize for the confusion. This will all be up on the Web site. But I think the financials sort of speak for themselves, as do our actions as a company in terms of advancing a multi-pronged strategy. Questions?

Q&A Session

Operator: Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Heiko Ihle with H.C. Wainwright. Please go ahead.

Heiko Ihle: Hey there. Can you hear me alright?

Mark Chalmers: Yes, Heiko, I hear you.

Heiko Ihle: Perfect. Thanks for taking my questions, Mark. And welcome to Kim. It was nice to catch up with you last week when we first spoke. You guys are obviously ramping up in a pretty meaningful way. Your two-pronged production profile that you state in that presentation, you’re a pretty major market player. And in the meantime, my [fabled] (ph) opinion on U.S. sourced product is not a secret to any of you. Anyways, building on all that, can you give some color on how much pricing power you’re seeing from your customer base given the large scale output that you bring into a market that’s plagued by geopolitical turmoil. And obviously, the news this weekend potentially may exacerbate that even more, and especially now that you have such a large scale output, what are you seeing at the negotiating table?

Mark Chalmers: Well, I mean I think it’s kind of evolved, Heiko, in stages. Like, for example, at the beginning of the Ukraine conflict there was a sort of a rush of particularly U.S. utilities looking to establish long-term contracts with companies like ourselves. And we signed some contracts at that point in time. And then, it softened up a bit. It’s still going on. But I think, over time, as you’ve seen the long-term [true] (ph) market increasing, beginning up to about — I think it’s around $80 a pound right now. And in this most recent contract that we signed in the quarter, was really an excellent contract for us. And I think it reflects what you’re talking about, that it is very good terms for our company and where we’re positioned.

Because, for example, we have the ability in this new contract, it’s not like an eight-year contract, it’s shorter than that. And we can deliver into that contract because we have mines that are producing right now that we can ramp up without substantial capital investment. So, I think there is an increasing, growing commitment by the utilities to sign deals that are attractive for U.S. producers. But I’d still say that the world, and I say this before, is addicted to cheap, and everybody wants cheap. But I am seeing some signs around the perimeter that shows that there are people willing to pay a bit more to just make sure that they have secured supplies from, like ours, with a long history producing uranium. So, does that answer your question, Heiko?

I think it’s improving.

Heiko Ihle: Yes. No, what I was going to say, yes, it does. And I’m surprised it’s only a bit. But, okay, fair enough.

Mark Chalmers: Yes, I mean as you’re aware, these contracts, we can’t go into the terms, but I can tell you they are, I believe, quite favorable for the circumstances. But they also — all these contracts have their own specifics that each utility has their own requirements, and we try to build around that. So, I’ve been saying that I think that it’s improved over the last year or so, year-and-a-half. And I think it’s good reason for that improvement.

Heiko Ihle: Okay. Completely different question, and I’m pretty sure the answer is no, but just to double-check. For uranium, is there a maximum inventory level that you are allowed to keep at site?

Mark Chalmers: At the mill, no, I mean you’ve got make sure that the material is adequately stored, stockpiled, eliminate the dust. But I think going back a number of years, we’ve had substantial quantities. I mean I’m going to say a million tonnes or something in that order. I’m not expecting to get up to that level in today’s case. But as I said, right now, finished goods and unprocessed material, we have north of 900,000 pounds. And since the end of the quarter, that continues to increase, so it’s building. But we have that around one million pounds that either be sold or processed. And we’re adding to that everyday, as I said earlier.

Heiko Ihle: Perfect, very helpful. I’ll get back in queue.

Mark Chalmers: Thank you, Heiko.

Operator: And your next question comes from the line of Joseph Reagor with ROTH Capital Partners. Please go ahead.

Joseph Reagor: Hey, Mark, thanks for taking the questions. I guess first thing is, I saw a report on Friday that you guys agreed to temporarily stop shipping ore, I guess, from Pinyon through a Native American reservation. Could you give us any color on how that might impact guidance for the year, if at all? Or is just simply, instead of shipping it that way you go around it, and is that going to result in any cost increase if that’s the option?

Mark Chalmers: Yes. No, thanks, Joe. And yes, there’s been a fair amount of media on this Navajo Nation concerns over shipments. And to start with, I just want to say that, over decades, with our company or predecessor companies, there’s been tens of thousands of uranium haul trucks that have hauled across a reservation with out a single incident, including up until about 2022 was the last shipment. And during that period of time we actually had members from the Navajo Nation go to one of those mines to witness the loading and the unloading at the mill so that they were comfortable with those shipments. Now, these communications that are being made out or put out by the Navajo Nation president, it’s unfortunate. But I have to say that one of the reasons they have these concerns is they have this long legacy of uranium issues that have nothing to do with Energy Fuels, nothing to do with us.

Most of them were created by legacy arrangements with the U.S. government during the Cold War. But because they have those concerns, Joe, we are working with the Navajo Nation to address them. And if you look at these executive orders and stuff, they talk about the biggest issues for them is they want safe transport of materials across the Navajo Nation, and we absolutely respect that. We absolutely respect that it has to be done safely. We have done it over time. And we plan to sit down with them to make sure that it is safely transported. And I want to say too, we’ve already gone up and beyond on every level of transporting across the reservation as in the past. I mean we’ve done more this — for the Pinyon Plain Mine than we’ve ever done previously.

But we are willing to take our game up one additional notch to give the Navajo Nation complete comfort that we are doing this at the highest standard, working with them to move forward. So, I’m not expecting any long-term delays here. We voluntarily made that pause because we didn’t want them to be uncomfortable with those shipments. We have, like I said, done it for decades. We believe we have all the licenses and the rights to do so. But we want to do it in conjunction with a respectful dialogue with the Navajo Nation to get to a resolution. And they have said the same. They are looking for a resolution on moving forward and we’re working with them on that. So, right now at the mine, we are doing our development work on these various levels and we’ve got probably the one zone is about two-thirds developed and we’re continuing to do that.

We’re also doing work and getting ready to put in a drill station on extra exploration drilling on what we call the Juniper Zone. So, we’re not being held back at all, but we want to make sure that the Navajo Nation is comfortable and we can come to an arrangement that works for them and us and start shipping as soon as possible. But we will do that in steps, as I mentioned and but we do respect the fact that they have concerns and we will do everything possible to address those as quickly as possible.

Joseph Reagor: Okay. And then, just on the point of, is there an alternative route that you guys could use if necessary?

Mark Chalmers: Well, there are and those will all be part of the discussions, Joe. But the route that we have across the reservation is a route that has been studied extensively and it is really the best route and we plan to continue down that path, but let us continue with our discussion with the Navajo Nation because again, we are respectful and there are concerns and let’s figure out how to alleviate those concerns.

Joseph Reagor: Okay. And then, the other question I had was, during your prepared remarks, you mentioned a uranium sale in July. Is that in addition to the one in June or were you referring to the one in June?

Mark Chalmers: There may have been — may have been a typo. There’s one sale. There was one sale in this quarter and it was the one for $85.90. And we made 200,000 pounds of sales in Q1 and that was under contract and that was around 75-something a pound and we made a spot sale of 100,000 in Q1 which was around $103 a pound. So, I mean I think it reflects, Joe, the sale that we made in Q2 that we made 200,000 pounds of contract sales and we made 200,000 pounds total over the two quarters and spot sales and the result is if you come up with a fairly reasonable blended cost of both spot and contracts.

Joseph Reagor: Okay, but no sale yet this quarter as of yet?

Mark Chalmers: Well, no, we haven’t made any uranium sales in Q3.

Joseph Reagor: Okay, thanks. I’ll turn it over.

Operator: And your next question comes from the line of Justin Chan with SCP Resource Finance. Please go ahead.

Justin Chan: Hi, Mark and Jim. Thanks for the update and Curtis, if you’re on there somewhere. Just maybe following up on some of the commentary on where you are with mine development, so it sounds like you’re pre-developing Pinyon Plain. For the other assets, can you maybe give us a similar update on where they are development-wise and then for all of them, when do you expect to start stoping?

Mark Chalmers: We expect to start stoping.

Justin Chan: Yes.

Mark Chalmers: Okay. Well, I mean, let me just take it step-by-step. Pinyon Plain, we’ve been doing a spiral incline that goes around the ore body and doing sub-levels and we have, I think three sub-levels that we’ve stubbed into the ore body and we mine some ore as we develop those sub-levels. And I believe that in the course of the next couple of months, two or three months, will largely have the development of that initial ore body developed from what we call the 1.5 level to the 1.4, so those are two levels in the shaft, and but we can mine right now, Justin, we can mine ore from those sublevels as we speak, but we’re going to go ahead and complete that development work, so the entire sort of block is ready to be mined later this year in a bigger way and into next year.

So, and then we’re starting this drilling, what we call the Juniper Zone, where we have some areas that aren’t covered from previous drilling. We’re very excited about that because I think there’s great opportunities to expand the resource. So, we can mine right now, and we plan to ramp up that mining rate in the coming weeks or so. And the Pinyon Plain mine, just say 750,000 to 800,000 pounds per year, looking out over the next number of years. Okay. So, that’s kind of where Pinyon Plain fits in at La Sal and Pandora, we are currently mining uranium, vanadium ores right now and with the view to ramp that up to around 400,000 pounds per year of uranium, but not including any vanadium credits. So, those are happening as we speak. We’ve got the Whirlwind project, which is fully licensed to go into production and that’s not too far from where La Sal Complex is.

We have a water treatment plant there, but we’re refurbishing that water treatment plant so that we can dewater that mine and there’s not a lot of water in it, so it will only take a few months and start mining there. And that’s very similar to the La Sal and the Pandora mines, the Uranium vanadium mine. We’ve been doing delineation drilling at Nichols Ranch, and that has the ability, assuming supportive markets of coming online in the next year or so. And that is somewhere in the order of 0.5 million pounds-ish and again this can all be upgraded with certain other capital investments. We’re looking at potential ore purchases from some of the parties in that region, and that can add up just into 100,000 pounds, 200,000 pounds, it depends over time, but starting fairly soon and the alternate feed that we have this long history of recycling uranium that we get from others like Cameco, [Carmadine] (ph) and others and the uranium produced from what processing we do at the monazite.

So, it’s a different story, Justin. I know you’re aware of this than others. So, it comes from multiple sources and supplies in different ways, but the combination of those put us in a position to have really attractive cost. And if you look at the uranium that we sold this last two quarters, I mean, we’ve had margins that have been between 50% to 65% margins over 400,000 pounds so that’s pretty good. And I think that’s as good as just about anybody out there, but it’s how we mix those together is how we maintain those margins as we go forward.

Justin Chan: Got you. Thanks, Mark. And just one on your stockpile levels, given that you will be ramping up mining but also running your processing campaign, do you expect your stockpiles ore levels to be pretty similar to the end of the year or, I guess, at a higher lower level depending on mining and, and your processing campaign?

Mark Chalmers: Yes. Well, as I said, we’re saying we’re going to get up to that 1.1 million to 1.4 million of newly mined material by the end of the year. The mill can out process us on that. The mill can outstrip that. It’s got 8 million pounds of production capacity. And so, our goal is to run these mines as aggressively as we can within reason, add to what we have out there, and clean up what we can. If we have to make a pause with the mill for three months or six months or whatever, we’ll make that pause and we’ll continue on with other work we can do in the rare earth space, potentially, and then we’ll be ready for another restart of the mill. So, it’s kind of a dynamic environment, Justin, and how we replenish what we process and what we mine.

Justin Chan: Okay. Thanks a lot, Mark. I think that was my question and follow-up. So, thanks very much for your time and I’ll free up the line.

Operator: And your next question comes from the line of Matthew Key with B. Riley Securities. Please go ahead.

Matthew Key: Hi, good morning, everyone, and thank you for taking my questions. Most of mine have been asked, but I guess I wanted to touch base a little bit on M&A. Obviously, you’ve been very active on the rare earth side, but how do you view M&A in the uranium space, say, could there be potentially opportunities down the line that could interest you? Thank you.

Nathan Bennett: Yes, Matthew, I mean, we look at M&A based on whatever makes sense, okay? I mean, we’re this company that is interested in multi-elements, and that includes uranium. So, we are, yes, we have been aggressive on the M&A, on the critical mineral front, the rare earths, the monazite, both in Australia and overseas in Africa, that would still work in progress. But we have not ignored opportunities for M&A in the uranium space. So, I just want people to understand that we are not looking at current possibilities that may make sense for us. And even, I can say that even in places like the La Sal Complex, we’ve actually acquired certain claims and whatnot in the vicinity of our mines to kind of fill in a few of the gaps.

So, it’s been dynamic on the uranium front. Sure, there’s been more activity on the rare earth front in the last few months, but we don’t necessarily say that that’s always going to be the same. That we will look for the opportunities that make sense for our company on whatever front M&A takes us to be a long-term, stable, profitable, critical mineral, including uranium, production company.

Matthew Key: Got it. Thank you. Thank you for that. And you mentioned that you’re updating the rare earth EFS right now to include the increased capacity of monocyte and NdPr. When should we expect those kind of updated numbers to be published? And could you maybe provide initial ballpark for the CapEx there, assuming the higher scale? Thank you.

Nathan Bennett: Yes. Well, I think the initial study at the 3,000 tonnes was about 350 million. I mean, we’ve got a lot of the design criteria completed or largely completed for what we call Phase 2 at least for the NdPr. We are looking for engineering companies to help us there. So, we’ve got a really flying start there. So, and exact timing of when all that will be done. I think it can go fairly quickly, but I don’t really have an exact time on that. But it’s a very high priority for the company and for me personally, to advance that as quickly and as efficiently as possible. And I do want to say this though, is that when you get an engineering study like we had, that we published the 3,000 tonnes of NDPR that was relatively recently completed, on a 350 million.

I’m very proud of what the guys did in the Phase 1 for $16 million. So, engineers are engineers, and we use these studies to guide us to get financing and whatnot, but we have some pretty resourceful people and operate in a very good jurisdiction with a very committed workforce. So, I’m hopeful we’re going to get some excellent results on all these studies because of the track record we already have. But right now, I’d just say that we’ve got most of our design criteria nailed down, getting an engineering company on board and having them help us package this to be able to get back to the market. So, I’m going to speculate six months or something like that, but it could be more or less, but I’m just going to throw that out.

Matthew Key: Got it. I appreciate the color. That’s it for me. I’ll turn it back. Thank you.

Operator: And your next question comes from the line of [Zhuang Chang with BIP] (ph). Please go ahead.

Unidentified Analyst: Hello, Mark. Thank you for taking questions. Good job with the results. My focus on growth projects and capital allocation framework, can you speak about the Madagascar state for Toliara? And the follow-up question would be, how do you plan to fund your capital expenditure on the growth project? Thanks.

Mark Chalmers: Okay. Well, thank you. Well, so let me start with all our projects. All our projects will move through final investment decisions that will be reviewed based on their merits with the most recent information, whether it’s in the United States, it’s in Australia or it’s Madagascar or anywhere else, okay, Bahia. So, we’ll go through with the best information available to decide which projects should go forward on their merits. When it comes to financing those, I mean, we do have a very strong balance sheet, and which puts us off to a very good start. We have some companies coming to us that are interested in potential off-takes of some of these projects that could help finance them. We believe that due to the criticality of the critical elements that are produced from these sites, that they are perfect targets for non-recourse financing, whether that’s support from U.S. government, Australian government, or other governments that are interested in a diversified supply chain that’s not dependent on China.

So, a lot of it will be based on a case-by-case basis as we go forward. But I think the starting point is having our strong balance sheet, which gives us the flexibility, making sure we get to a final investment decision that makes sense, talking to various people that are interested in working with us on offtake, and looking at non-recourse financing to get these projects in place. But our plans are, are extraordinary when it comes to what kind of capacity that we are building up with these initiatives we have in place and I am not really concerned about getting those financed if those projects are in place and the final investment decisions warrant development and we have all the permits and licenses to do so. I’m not overly concerned about that.

But we will look at a relatively strong component of debt, balanced with a decent equity contribution and offtakes to get those financed. But they’ll all be done on a case-by-case basis.

Unidentified Analyst: Thanks, Mark. Just a little tiny follow-up, I’m not sure if you picked it up, but I mentioned about the status of the Madagascar negotiation. And the last one would be, like you mentioned about government funding and all that, and offtakes for strategic reasons, any conversations going on? Thank you.

Mark Chalmers: Yes, look, the update on Madagascar is there are still continued negotiations to come up with the MOU with the government on this stability agreement and final approvals with the parliament Madagascar to go forward. We still believe that the stage is set on those fronts, but nothing is certain until all these steps are completed. But the Madagascar government has passed a new mining code, and the stability agreements are routinely being applied with other companies in the country. They’re getting a lot of pressure from the World Bank and others to start economic development in the country. And we think that the alignment of base combined with Energy Fuels puts us in a much stronger position in due course to get successful outcomes to all of those things.

So, that’s kind of where it is with Madagascar, but it does have and has had a checkered history, if you know, but we think that the stars are aligning there and we’re looking very optimistically to the future. When it comes to we have been having discussions with various other government entities on possibilities for finance. We have had discussions with other companies that are interested in potential offtakes. I’m not going to go into detail there, but we’re getting a lot of attention from other parties that are watching our moves with keen interest. And we plan to continue those discussions while we advance these things. I mean, again, if you look at any of our projects, by the time you initiate a final investment decision. To start the final investment decision, it takes six months to a year before that process is completed.

So, you do have some time as these pieces come together. And as I said, the first project in the wings here is the Astron project that’s initiated. We’ve initiated the final investment decision work as we speak.

Operator: Thank you. And that is all the questions that we have at this time. I would like to turn it back to Mr. Chalmers for closing comments.

Mark Chalmers: Yes, thank you for that. Yes, firstly I apologize for the sort of the scramble on the presentation. I mean, the contents are effectively the same. As I mentioned, our financial highlights, we had — even though we had a net loss that was offset by uranium sales. And as I mentioned, the ability to kind of selectively create and add revenue from our existing contracts and spot sales will continue. We are strong balance sheet, as I mentioned, no debt. We also have building revenue from the uranium business with mines that are in production. And so, we’re in a really, really great position from that front. I’ve never been more excited with the activities that we have as a company. The volatility of the market, I understand that’s difficult for investors.

It’s difficult for the company. We don’t like to see the volatility, but it’s not our first rodeo. I’ve been through this a lot of times, and I’m confident that with all the attributes that we have as a company, and our strength and our experience and the moves that we’re making will result in a, I believe an unusual story and success story when it comes to critical minerals. So, thank you for your time, your effort, your investments in many cases in the company, and all I can say is, we’ll look forward to giving further updates in due course.

Operator: Thank you for participating in the Energy Fuels conference call. Please reach out to the company directly for any additional investment questions. You may now disconnect.