Energy Fuels Inc. (NYSE MKT:UUUU) (NYSE:EFR) says it earned a gross profit for the first quarter of 2015, while also reporting a solid balance sheet, positioning the company strongly for when uranium markets rebound.
The US uranium producer, which reports in US currency, posted gross profit of US$3.65 million on revenue of $7.6 million for the three months to March 31 for a margin of 48%.
Even as it realized a net loss of US$2.36 million, the company said 116,667 pounds of U3O8 sales were completed by the Company at an average realized price of $59.95 per pound, pursuant to an existing term contract.
The Company believes it has sufficient cash and resources to carry out its business plan beyond calendar year 2015 and as of March 31, 2015, the Company had $35.20 million of working capital, including cash and cash equivalents of $6.54 million and 816,408 pounds of uranium concentrate inventory.
"As our first quarter results demonstrate, Energy Fuels continues as a leader among U.S. uranium companies on account of our uranium production, balance sheet, contract portfolio, and capability to significantly ramp-up production in the future as market conditions improve….As a result, we are generating gross profits from our mining and milling operations and maintaining a strong balance sheet. This has provided us with a solid growth platform, yet also allowed us to avoid the need for an equity financing since 2013," said Energy Fuels' President and CEO, Stephen P. Antony.
Energy Fuels expects to sell an additional 683,333 pounds of U3O8 during the remainder of the year under existing contracts which will generate significant cash for the Company's operational needs.
While uranium spot prices have edged up since last summer, they are still far off from their heyday back before an earthquake and tsunami led to the shutdown of all the reactors in Japan.
But new reactors in Europe, the Middle East, and Asia, along with the expected restart of Japan's reactors, are setting up a longer-term supply-demand imbalance within 10 years, with significant increases in uranium prices anticipated.
Energy Fuels said that for the long-term, the company continues to believe that the fundamentals of the nuclear energy sector will result in uranium demand surpassing supply. But in response to the short-term uncertainty, it will continue its cash conservation efforts until additional sustained improvement in uranium market conditions are seen.
Production at the company's White Mesa mill totaled 197,116 pounds of uranium in the latest quarter.
The uranium miner is forecasting fiscal year 2015 sales of 800,000 pounds, all of which will be sold into its three existing long-term contracts, it said, at an anticipated average price of $57.45 a pound.
For 2015, Energy Fuels intends to complete the acquisition of Uranerz while continuing the current Mill campaign to process alternate feed materials into mid-2015:
"Finally, with the expected addition of Uranerz to our corporate family later this year, we will further enhance Energy Fuels' torque to uranium price increases. Wyoming's Powder River Basin, where Uranerz' Nichols Ranch Project is located, is among the best ISR uranium production districts in the U.S., with over two-thirds of all U.S. uranium production coming from this district in 2014. We believe that with appropriate investment in development and production expansion, timed to the expected market recovery, the Nichols Ranch Project can achieve its production potential. Indeed as prices recover, we believe our acquisition of Uranerz will give Energy Fuels the potential to produce more uranium, sooner. Despite the continued challenge of today's uncertain uranium markets, I am more optimistic than ever about the future of Energy Fuels," said Antony.
The Company expects to continue mining at the Pinenut Mine until the economic resources are depleted, which is expected to occur in the middle of this year. Pinenut ore is being shipped to the White Mesa Mill and is expected to be processed in 2016.
Finally, in April, Energy Fuels had its right to continue development and production at the high grade Canyon Uranium Mine upheld by a United States Federal District Court in Arizona. The company said that the plaintiffs failed to make any assertions about substantive environmental, health or safety issues or violations while acknowledging that the USFS has performed extensive environmental studies and consultations concerning the project.
Energy Fuels intends to shift mining operations at the Canyon property from its currently producing Pinenut mine, as the latter's resources become depleted.
The Canyon mine is estimated to have 1.63 million pounds of inferred uranium resources with an average grade of 0.98%, according to a 2012 technical report.
Energy Fuels is the largest conventional uranium producer in the United States. It owns the White Mesa mill, which is the only conventional uranium mill operating in the U.S. and is capable of processing 2,000 tons per day of uranium ore and 8+ million lbs. of U308 per year.
In light of weak uranium prices, the company is only selling uranium under its long term contracts, though it is maintaining and building its ability to increase production as uranium market conditions continue to improve.
The company, which reports in US currency, posted its financial results for the year ended December 31, 2014, exiting the year with $38.6 million of working capital and cash and equivalents of $10.4 million, along with reporting a gross profit for the year of $16 million.
Energy Fuels was trading 2.11% percent higher this morning on the NYSE MKT, with a three month high of C$5.42/share.