00:00 We all believe in the story. We truly believe that we're going to emerge as the dominant US rare earth mining, metals, alloys, magnet producer in the United States, just because we have commercial capacity at every step of the supply chain. Some of our peers are trying to develop that capacity internally.
00:24 But again, after seeing this facility in South Carolina, wow, it is complex. Trying to make a magnet that meets the specifications of end users is a complex advanced manufacturing function. Trying to develop that internally or organically would be very very difficult. So, our approach has been let's go just purchase the market leaders in this very very scarce space.
00:52 >> [music] >> Hey everyone, this is Steve Yang here, Natural Resource Stocks. And with me I have Curtis Moore, senior VP of marketing and corporate development with Energy Fuels. Curtis, how are you? >> I'm doing well, Steve. Thanks for having me on. >> For our listeners, if you can start off by giving us your ticker, your website, and how people can find you.
01:18 >> Sure. So, Energy Fuels is dual listed on the New York Stock Exchange under the ticker symbol UUUU and also on the Toronto Stock Exchange under the ticker EFR. And our website is www.energyfuels.com. >> So, Curtis, as we've talked off camera, I want to tell our listeners that I have invested in Energy Fuels in the past, in and out.
01:46 And I'm kind of curious cuz I wanted to get back in cuz I'm a big uranium guy. But my understanding also is that you guys are more than just a uranium company. If you can be so kind as to kind of give us the history and where you guys are in terms of how you guys have evolved over the past several years. >> Yeah, happy to. Happy to.
02:05 So as you say, we are primarily a uranium company. In fact, we're the largest producer of uranium in the United States. We did about a million pounds of U3O8 last year. We're going to do about 2 million pounds this year. But over the last several years, we've started to get into the rare earth industry, which is of course another critical sector.
02:28 I guess if you go back in history about 7 or 8 years, Energy Fuels was trying to figure out what do we do to try to maximize our capacity utilization at a facility that we own in Utah, the White Mesa Mill. The White Mesa Mill is the only conventional uranium mill in the United States, but at that time, as you know, or if you recall, the price of uranium was very low.
02:50 And so the facility was mostly shut down. It wasn't producing a whole lot. And so we were trying to figure out what are maybe some other metals that we could process through that facility. And the one that really rose to the top was rare earths. One of the things that a lot of people don't realize is that rare earth minerals, when you dig them up out of the ground, they're naturally radioactive.
03:11 Every single one of them have concentrations of uranium and thorium and radium and other radionuclides associated with them. And as you start to process those minerals, you start to build up those radioactive components in your process streams and your tailings and all that. So you need special licenses and capabilities to be able to handle it.
03:28 Well, we have a uranium mill. So we started looking at rare earths. There's one mineral in particular called monazite, which is a little higher in the radioactive components. And so a lot of rare earth companies shy away from it. But it actually is the best rare earth mineral because it has great concentrations of both the heavy and the light rare earth oxides.
03:50 And so we've started just processing and building up commercial capacity and honestly today I would say that Energy Fuels is probably the leading rare earth company in the United States, well ahead of some other well-known names out there because we are vertically integrating across the entire supply chain from mines all the way down to magnets.
04:10 So I'd love to be able to talk a little bit more about that in this conversation, but this is all on top of our US industry-leading uranium portfolio as well. >> So, in regards to uranium, rare earths, I think I also saw is it heavy mineral sand, medical isotopes? I wasn't sure if you can kind of help me piece them together.
04:30 What why did you evolve beyond uranium? And then do you see these becoming businesses of their own or are they just complementary to the uranium story? >> Well, it's all been an evolution, honestly. Like I said, early on we recognized that rare earths might be an industry that we can play a unique role due to the radioactive component.
04:52 But then when we realized that we could produce this monazite mineral at commercial scale at our facility in Utah, we needed to go procure monazite. And at that time we thought that — so monazite is actually produced as a byproduct of heavy mineral sand mining. And so heavy mineral sand mines primarily target titanium and zirconium minerals.
05:14 And they also have this monazite byproduct, which honestly until about 20 years ago was a radioactive waste of titanium mining. Being ahead of the game as they often are, China recognized that look, monazite is an exceptional source of rare earths. And so they went to these heavy mineral sand operations around the world and said, "Hey, sell us your tailings."
05:33 And so all of the world's monazite tailings from titanium mining started to flow into China. And it supports — even I think today it probably supports 10 or 15% of China's rare earth industry is effectively tailings from titanium mining. And we realized that we could replicate that. And so we figured that if heavy mineral sand miners — think about like a Tronox and an Iluka, Rio Tinto, companies like that that have these heavy mineral sand mines — if they had a choice between
06:02 sending it to a US company or a Chinese company, they would probably, at least some of them would send them into the US. Well, then all of a sudden the price of monazite went through the roof. And so we realized that we needed to get involved in our own heavy mineral sand operations.
06:19 And so over the last couple of years, we've acquired a project in Australia, a project in Madagascar, and a project in Brazil. And again, these are mainly titanium mines, but our primary interest in those mines is to get that monazite to come to our facility in Utah. And so that's kind of how it all fits together.
06:38 That these are all minerals and all metals that are either naturally radioactive on their own or they're found next to minerals that are naturally radioactive in the same mines. That's kind of the common theme. >> So, Curtis, if you can tell us first of all where you are. I know that you have different projects everywhere.
06:56 If you can kind of give us the big ones you guys are working on. >> Yeah, absolutely. So, we're headquartered in Denver, Colorado. We're a US company. That's where I live and that's where our CEO, that's where all our management is. We have this White Mesa Mill, which is in Southeast Utah. Again, it's the only conventional uranium facility in the United States.
07:15 The largest uranium production facility in the US. That's where all of our production is coming from — our 2 million pounds is going to come out of Utah. That's also where the rare earth mineral processing will occur. Honestly, White Mesa, it's like a big chemistry set.
07:31 It's a big hydrometallurgical mineral processing facility that's actually pretty flexible. And of course, we have the expertise and the people and the tailings and the licenses, importantly, to be able to handle naturally radioactive minerals and metals and things like that. Our other big assets — so we have some uranium mines that are in operation today.
07:53 We have our Pinyon Plain mine in Arizona, which is the largest and highest grade and lowest cost by quite a wide margin uranium mine in the United States. Right now we're producing uranium and this is mining, milling and transportation costs. So let's say project costs. We're doing it at about 20, 23 dollars per pound right now, which is very very low cost compared to a lot of our peers out there.
08:18 So that's a great mine. Unfortunately, it's a small mine, so it's probably going to be depleted by about 2030 or so. I wish it would go on for 50 years, but it's not. That's just the nature of these deposits. A lot of people don't realize that America's best uranium deposits are in northern Arizona, honestly.
08:35 They're these funny little deposits called breccia pipes, but they're very small confined uranium deposits, but they're super high grade, very low cost, very easy and low impact to mine. We have two other mines we're mining in Utah at our La Sal complex. There are two mines kind of a little south of Moab if you're familiar with that part of the world.
08:55 We have a number of other development projects and standby projects in the western US. We have an ISR facility in Wyoming called Nichols Ranch and that sort of thing. But then you move over into let's say the heavy mineral sand rare earth side of our business. We have a project which is a joint venture in Australia called the Donald project that we're looking to do a final investment decision on here in probably the next month or two.
09:25 And again, it's a great project because it's got a lot of monazite associated with it and it has excellent distributions of both the light and the heavy rare earth oxides. And honestly with rare earths, the heavy rare earth is really where the game is at. Because there's no other source for these heavy rare earth oxides besides China.
09:47 So Energy Fuels will hopefully get that project up and running. We'll get that monazite, produce both heavy and light rare earth oxides at our mill. We have a project in Madagascar called Toliara, which is widely considered to be the largest undeveloped heavy mineral sand project in the world. It's a wonderful project.
10:05 A little bit more political risk being in Madagascar versus say US or Australia, but it's still a great project. It could go for 100 years. It's that big and that good. We have another one in Brazil, another heavy mineral sand project. All the monazite and rare earth concentrates will come to the mill in Utah for processing.
10:24 But then we've also announced two acquisitions that are ongoing right now. So, these are not our current assets, but these are some assets that we'll own hopefully in the next few months here. When you produce monazite concentrates, you're producing rare earth oxides. So, these are separated oxides like NdPr oxide, terbium oxide, dysprosium oxide, and really what you're trying to do with those is make permanent rare earth magnets that are used in EVs and hybrid EVs.
10:55 They're used in advanced robotics, humanoid robots that are going to start to be deployed here, defense technologies, a lot of energy technologies. The next step after oxides is rare earth metallization and alloying. And so, we are acquiring a company that has a metallization and alloying facility in South Korea.
11:18 It's one of only two in the world outside of China or Chinese control. So we're very excited to get that project into our portfolio. And we just announced an acquisition of a company called Vacuumschmelze, or VAC, a little easier to say. It's a German company that's one of the only rare earth magnet manufacturers in the western world.
11:44 Well, let's say outside of China. There's four in the world. There's three in Japan and VAC in Germany. That's really it. VAC has an existing operating facility in South Carolina that we're going to own. I actually just visited that facility two weeks ago and it's unbelievable. It's a $600 million facility.
12:07 It's 3-400,000 square feet full of equipment making these rare earth magnets. They also have a facility in Germany, one in Finland, and one in Slovakia. So I think we're kind of jumping to the front of the rare earth magnet space right now. >> Do you eventually see a spin-off of another separate company or is the goal just to kind of — or is it kind of a TBD? >> TBD.
12:33 We're always going to do what's in the best interest of our shareholders and if it makes sense to split up into a uranium company and a rare earth company and a mineral sand company, we'll do it. I think we'd want to advance those businesses a little bit farther before we think about something like that and let's get these projects and cash flows going before we think about that.
12:56 >> So in terms of what you guys are and have become, when I used to think of you guys, I thought of you guys as a uranium company. Is that still the right way to think of you guys or is there a different way to think of you? >> That's a great question. I think we're more at this point a critical material company, a critical mineral company, right? All these things are critical minerals, whether it's uranium or rare earths or vanadium or medical isotopes, they're all critical minerals, right?
13:24 But what we've been able to do is build it on the top of our uranium company. So, I'd say today we're still a uranium company that does a lot of stuff in rare earths. But I think if I were to look in 5, 10 years, I think we're probably going to be viewed as a rare earth magnet company that also does uranium.
13:40 One of the things that we've often had to think about is that as a US uranium company, look, we have a little bit of trouble competing with some other jurisdictions like Kazakhstan and Uzbekistan and Russia and some other, even Canada and Australia.
14:00 US uranium is always going to be a very strategic endeavor. >> Yeah. >> However, we're never going to be as low cost as some of these other companies. It's always going to be difficult for US companies to compete. Now, Pinyon Plain is an outlier, honestly. I mean, the fact that we're able to produce as — that is competitive with like Kazakhstan.
14:24 But as I said, it's going to be depleted by 2030. So the rest of our assets are probably in that fully loaded cost, it's probably that 60, 70, $80 per pound range, which is kind of like everybody else out there in the US. In rare earths, however, we see an opportunity to be globally competitive and globally low cost, the hallmarks of a tier one producer that can produce in really any market.
14:49 >> Yeah. >> That we just don't see in the uranium industry. Really no US company in our view. >> So, how much of this rare earth direction has been pushed and driven by just the fact that China's so dominant, one, and the relationship between the US and China hasn't been — is seemingly becoming more unfavorable.
15:13 And then when you say become dominant, is this a lot more of a blue ocean opportunity here where not as many people are in the game? What gives you the edge where you think you guys can dominate like you're talking about? >> Well, again, we're not going to dominate China.
15:31 China is going to be the dominant producer of rare earths and rare earth magnets for a long, long time to come. There's no question about that. And look, they do a nice job with it, honestly, and a lot of people say that a lot of their advantages are due to government support or lesser environmental regulations, things like that.
15:50 A little bit of that is true, but honestly, China has been smarter than we have been over the last many years. >> They foresaw this a long time ago. >> Yeah, and so you have to acknowledge that, right? And again, we're not here to take down China. Nobody's going to do that anytime soon, right? But what we have heard through customers, they're looking for just more diverse supply chains.
16:12 They don't want to be dependent on a single source for their rare earth magnets. If you're a Mercedes, a General Motors, a Hyundai, a Toyota, or something like that, they want to have diverse supply chains, right? >> Yeah. >> Or if you're making robots for a manufacturing facility or humanoid robots, you want diverse supply chains.
16:32 And so that's the area that we're looking to fill. And so, outside of China, we think we can be the dominant producer outside of China, and be that supplier of choice. And again, we're not here to compete against China or take them down or anything like that, believe me. I think that wouldn't end well for us, but still, I think there is an opportunity to make a great business out of being a diverse supply chain participant.
17:01 >> Curtis, if you can walk us through your share structure a bit, where are you guys with shares outstanding, fully diluted, any meaningful options and warrants, if you can go over that with me? >> That's a — >> [laughter] >> I don't have that number at our fingertips. I'd have to look at our 10-K, 10-Q.
17:18 >> Yeah. >> Yeah. >> No worries. Can you tell me how ownership breaks down? Do you guys have meaningful — I mean, what's your — >> We don't have meaningful options, for one. Now we do have a debenture that we completed last year that matures in 2031, I believe.
17:36 So, it's still out there in the future and it could be converted into shares. With the capped call options that we purchased, that conversion price would be about $31 per share. So, hopefully shareholders would be happy with $31 per share if we decided to convert that into shares.
17:59 I believe we're on the order of 60-70% institutional ownership, the rest being retail. Management holds 2 or 3% of our shares, I believe. But that's kind of where we break down right now. Our CEO just went out and bought a million dollars of shares about 2 weeks ago. I don't know if you saw that.
18:22 We all believe in this story. We truly believe that we're going to emerge as the dominant US rare earth mining, metals, alloys, magnet producer in the United States just because we have commercial capacity at every step of the supply chain. Some of our peers are trying to develop that capacity internally.
18:46 But again, after seeing this facility in South Carolina, wow, it is complex. Trying to make a magnet that meets the specifications of end users is a complex advanced manufacturing function. Trying to develop that internally or organically would be very very difficult. So, our approach has been let's go just purchase the market leaders in this very very scarce space to give us that leg up.
19:16 >> So, in terms of purchasing, being the leaders, giving you the leg up, is there another part of the strategy — what's the overall big picture? Is it just acquire as many of these as possible? >> No, I think we've got what we have. When you're getting into rare earth metallization and alloying and magnet making, >> Yeah.
19:37 >> there's — the universe of actual producers is tiny. There's two rare earth metallization and alloying facilities in the world outside of China right now, one in the UK and this one that we're acquiring in South Korea. In terms of magnet makers, there's really only four.
19:57 There's Vacuumschmelze which we're acquiring and then three — two maybe three producers in Japan. But they're pretty well captive to the Japanese market and the Japanese auto industry and that sort of thing. They don't have additional capacity outside of Japan. And so that's really it at this stage.
20:15 There's some others out there that are looking to develop this capacity in the next few years, but again, I think it's going to take them a long time to achieve that, but we'll see. >> Curtis, you talked about being one of the biggest, a big fish sort of thing, a big player in the rare earth space.
20:34 If you can tell our listeners who aren't as familiar with rare earth and what that's all about, just kind of why you see this upward — why you're so bullish on this moving forward. >> Absolutely. Well, yes, for those of you that don't know what rare earths are, I don't blame you. There's a lot of confusion out there.
20:54 So, rare earths are 17 elements on the periodic table, basically the second to last line on the periodic table, plus yttrium and scandium. I have my three things everybody needs to know about rare earths. Number one is they're not rare. >> [laughter] >> They are actually very common in the Earth's crust.
21:15 But what's very rare is the ability to mine them and process them economically. I bet it's probably every day I get an email or a phone call from somebody saying they've got some great rare earth deposit somewhere. And again, I'm polite and I'm nice to them and all that, but typically my first thought is, "Yeah, of course you do. Everybody does."
21:35 This stuff is not uncommon. In fact, rare earths are so common that they're often produced as byproducts of other mining, like what we're doing. It's byproducts of titanium and zirconium mining, right? In my view, a lot of these rare earth mines that are just rare earth mines, they're already at a bit of an economic disadvantage because they have to apply all of their costs to rare earths.
22:02 You don't spread it across multiple commodities, multiple markets that each may have their own price cycles and that sort of thing. My next thing everybody needs to know about rare earths is that every rare earth mineral is naturally radioactive. Whether it's monazite and xenotime, which we're focused on, bastnäsite, which is what most of the US rare earth mines are — they're mining bastnäsite — ionic clays, those are the rare earth deposits in Southeast Asia and South America primarily. They all have some
22:35 uranium and thorium and radium in them, and as you start to process them, you start to build up those radioactive components, and you have to be able to number one, get rid of them. You don't want to produce radioactive rare earth products, and you have to do it properly. Number three is that vertical integration is the key to success in rare earths.
22:56 It's a very niche market, and to be able to internalize all the margins across the entire supply chain is the key to competitiveness. China doesn't look at the rare earth industry smartly. They don't look at it as okay, you mine something then you sell it for a margin, then you process it, sell it for a margin, you separate it, sell it for — it just becomes wildly economic very, very quickly.
23:19 And so if you can internalize all those functions, you're at an immediate competitive advantage. Now, rare earths, the main market driver are magnets. It's very, very powerful magnets that are used in a host of applications. They're used in electric vehicles, but also hybrid electric vehicles, which actually has seen pretty good consumer adoption.
23:41 Robots used in manufacturing facilities and humanoid robots, that's what it is — magnets that produce those very precise strong fast movements. It's all rare earth magnets that are doing that. Certain wind energy uses these magnets, military and defense uses these magnets plus a lot of other rare earths.
24:04 So, like I said, rare earths are 17 elements. These commercial magnets use about four out of those 17 elements. That's neodymium and praseodymium, or NdPr, as you'll hear it said. Also terbium or Tb and dysprosium or Dy. Those are used in these commercial applications, but there's other magnets like samarium cobalt magnets, or SmCo magnets.
24:29 Samarium is another rare earth. Cobalt is not a rare earth, but samarium is. Those have some commercial applications, but mostly military and defense applications, but then pretty much all the rest of the rare earths have some use in military and defense technologies. And so that's another reason why rare earths are so important.
24:51 >> Curtis, thank you for that. For those who want to follow your story and looking ahead, is there anything over the next 12 months that investors should be watching and what are some big catalysts that maybe we should keep an ear out for? >> Yeah, like I said, hopefully we'll be making some progress on production of heavy rare earth oxides.
25:10 Again, that's where the game is in rare earths, not the lights. And by the way, rare earths are categorized as light and heavy based on their atomic weight. So, the key light rare earth oxide is NdPr and the key heavy rare earth oxides are terbium and dysprosium, Tb and Dy. Be making some progress there. >> [clears throat] >> Final investment decision on our Donald project in Australia.
25:32 That will show markets that we have feedstock to come into all this. We've been getting feedstock so far from Florida and Georgia, off-taking it from a company called Chemours that has some of these titanium mines in Florida and Georgia. Not a lot, but it's gotten us off the ground. We're going to look to close that acquisition of that metal and alloy facility in South Korea.
25:54 It's owned by a company called Australian Strategic Materials. So, close on that hopefully at the end of August or so. Then we also are looking to close that VAC acquisition. That'll probably be in the first part of next year. There's some government approvals that we have to go through, but once we close those acquisitions, we're kind of off to the races.
26:17 And I don't think there's anybody really close to us at that point in terms of making these rare earth magnets. >> In terms of valuation, how much of what you're talking about do you feel like is not being priced in? >> That's a great question as well. Yeah, I feel like we don't get as much credit as we deserve.
26:40 I mean, we're the largest producer of uranium in the US, but we don't have the largest market cap of any US uranium companies. I think we've got as much or more capacity on rare earths as some of our peers, but our market cap is less. Now, again, I'll leave it to investors to decide what's the proper valuation, but I look at the acquisition of VAC, right? And I saw that facility, $600 million brand new facility, and I wish I could show you pictures of it, but there's a lot of IP in there, and so we have to be very very careful about
27:08 that. And they have two similar facilities, one in Germany and one in Finland, plus other facilities elsewhere in the world, both for rare earth permanent magnets and other magnets and other alloys. That facility in South Korea, again, it's a large operating facility with a lot of people and expertise and equipment that's operating today, making metals and alloys today.
27:32 And even our White Mesa mill in Utah, it's a unique facility, probably a half a billion dollars to build that, and probably 10 or 15 years to get a license to construct it. We have a lot of assets, and the pieces that we have put together create these supply chains that really unlocks potentially billions of dollars per year of cash flow.
27:51 Again, that's not happening next year or the year after, but by 2030, 2031, that's the kind of numbers we're talking about here. The pieces are there. Now, it's just a matter of executing. >> Well, Curtis, look forward to following your story. Again, for our listeners, I have been an investor in and out and have been intrigued about this new direction that I'm learning about.
28:16 So, Curtis, thanks for filling me in. For people who might have further questions and want to check out the ticker and website and where you're trading one more time if you can give those for our listeners. >> Yep. So, yeah, we're UUUU, four U's, on the NYSE American, and EFR on the TSX. Website is www.energyfuels.com.
28:36 >> Curtis, thanks so much for your time. >> Yep, you're welcome, Steve. >> Bye.