In a letter to shareholders that Energy Fuels Inc. (EFR:TSX; UUUU:NYSE.MKT)released on March 16, President and CEO Stephen Antony cited trends he believes bode well for uranium producers like Energy Fuels, including production cutbacks by major producers including Cameco in 2016 and Kazakhstan's state-owned Kazatomprom in early 2017.
"I would contend that when the World's largest and lowest-cost uranium producers are feeling the pain of today's prices, you know this current market pricing is categorically unsustainable," Antony wrote. Other signs that uranium prices will soon turn around include increased demand for U3O8 as new reactors come on-line, the demand for clean energy sources, and the American desire for energy independence.
Antony concluded his letter by noting that he and other members of the company's management team and board of directors had recently purchased additional shares of Energy Fuels stock. "We believe in this company, we believe in a uranium price recovery," he wrote.
Though Rob Chang of Cantor Fitzgerald acknowledges the challenges Energy Fuels has faced in coping with depressed uranium prices, he states in a March 10 research report that "we continue to view Energy Fuels as our top leverage play to the upcoming uranium recovery."
Chang expanded on his thesis in an interview with Uranium Investing News published March 16, saying Energy Fuels offers "the best leverage to the uranium price, in our opinion. . .they have the capability to produce anywhere between 3 to maybe 7 million pounds, depending on what the uranium price is, because they have a lot of assets. Many of them can be turned on within six months to maybe two years of the first decision, which means that if the uranium price jumps they will be able to respond in time to take advantage of the higher uranium price."
Given its ability to move quickly, Chang believes Energy Fuels "will be in a good position to capitalize."
Analyst Joe Reagor of ROTH Capital Partners also believes Energy Fuels is placed well to capitalize on a market turnaround in 2017. In a March 10 research note, Reagor cited company guidance for "an additional 200,000 pounds of contract sales in 2017."
He also noted that "We believe the Canyon mine could provide significant catalysts for UUUU throughout 2017. We anticipate the company will release an updated technical report on the resource estimate at the project in the middle of this year. Additionally, we believe management will begin providing information on the timing and cost of constructing the mine as well as provide metallurgical test data on the recently discovered high-grade copper portion of the deposit later this year."
In his March 1 Gold Newsletter, Brien Lundin noted that Energy Fuels "is continuing to encounter high-grade uranium and copper in its exploration program at its Canyon mine in northern Arizona." Assays from the mine "bode well for Canyon's ability to provide high-grade ore to Energy Fuels' White Mesa mill."
Lundin also commented that "Energy Fuels has enjoyed a resurgence as the uranium price has posted a mile rebound in recent months. In the expectation that this trend continues, the company is a buy near current levels."
In his research report Chang noted that, "For FY/17, the company expects to complete deliveries of 520,000 lbs U3O8 consisting of four contracts comprising 320,000 lbs under long term contracts and 200,000 lbs under a spot contract priced at the average spot price of uranium for the five weeks prior to the December 31, 2017 delivery date."
The analyst also noted that at Canyon, "the company is expecting to complete shaft sinking activities to a total depth of 1,400 feet later this month. The evaluation of core samples is on-going, recall that the best uranium intercepts (based on chemical assays and grade thickness) included 6.0 feet of mineralization with an average grade of 16.99% U3O8 and 46.0 feet of mineralization with an average grade of 1.37% U3O8."
Energy Fuels just announced that it has received the final license amendment from the U.S. Nuclear Regulatory Commission for the expansion of the Nichols Ranch project. With this amendment, the company now "holds all of the permits, licences and approvals required to expand the Nichols Ranch ISR project into the Jane Dough wellfields in the future."
Rob Chang commented on March 23 that "the expansion into Jane Dough allows for future long run production or upside optionality. . .there will be nine header houses expected to be in operation at Nichols Ranch for FY/17, with an additional four expected to be built in the future. Once the thirteen are operating, Energy Fuels expects to advance production into the Jane Dough wellfield, which contains twenty-two header houses that can be connected to the Nichols Ranch plant."
In a March 10 press release outlining Energy Fuels' 2016 results, the company reports $54.55M in revenue, 1,150,000 pounds of U3O8 sales completed "at an average realized price of $47.42 per pound," and 1,015,000 pounds of U3O8 recovered.
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1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Additional Disclosures for this Content
Disclosures from Cantor Fitzgerald, Energy Fuels, March 10, 2017
Potential conflicts of interest: The author of this report is compensated based in part on the overall revenues of CFCC, a portion of which are generated by investment banking activities. CFCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. CFCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. Although CFCC makes every effort possible to avoid conflicts of interest, readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.
Disclosures as of February 6, 2017:
CFCC has provided investment banking services or received investment banking related compensation from Energy Fuels, within the past 12 months.
The analysts responsible for this research report have, either directly or indirectly, a long or short position in the shares or options of Energy Fuels.
The analyst responsible for this report has visited the material operations of Energy Fuels. No payment or reimbursement was received for the related travel costs.
Analyst certification: The research analyst whose name appears on this report hereby certifies that the opinions and recommendations expressed herein accurately reflect his personal views about the securities, issuers or industries discussed herein.
Disclosures from ROTH Capital Partners, Energy Fuels Inc., March 10, 2017
Within the last twelve months, ROTH has received compensation for investment banking services from Energy Fuels Inc.
ROTH makes a market in shares of Energy Fuels Inc. and as such, buys and sells from customers on a principal basis.
Shares of Energy Fuels Inc. may not be eligible for sale in one or more states.
Shares of Energy Fuels Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
Within the last twelve months, ROTH has managed or co-managed a public offering for Energy Fuels Inc.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Gold Newsletter, March 2017
The publisher and its affiliates, officers, directors and owner actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Authors of articles or special reports are sometimes compensated for their services.