Energy Fuels (TSX: EFR; NYSE-A: UUUU) is increasingly pinning its future on rare earths rather than uranium, with the Colorado‑based miner now expecting most of its earnings to come from... The post SW US CEO chat: Energy Fuels pivots to rare earths appeared first on The Northern Miner .
Energy Fuels (TSX: EFR; NYSE-A: UUUU) is increasingly pinning its future on rare earths rather than uranium, with the Colorado‑based miner now expecting most of its earnings to come from the rare earth value chain in about five years and uranium shrinking to a minority contributor.
The pivot is being accelerated by up to $725 million in conditional U.S. government support to expand rare earth separation at Energy Fuels’ White Mesa mill in Utah and build downstream metals and allied production facilities.
It is also buying Australian Strategic Materials (ASX: ASM) and plans a $1.9-billion acquisition of Germany-based magnet maker Vacuumschmelze (VAC) that would advance the company further into rare earth metals, alloys and applications.
“Energy Fuels’ valuation is now substantially a rare earths and mine-to-magnet story, and the uranium division isn’t what will be driving the share price going forward,” Red Cloud Securities uranium analyst David Talbot said in an email to The Northern Miner in August.
Looking ahead five years, the company forecasts uranium will account for just 10 to 15% of its earnings, Energy Fuels CEO Ross Bhappu told The Northern Miner in a video call.
“Probably 60% [of earnings] from rare earths, and the balance will come from heavy mineral sands such as titanium products, ilmenite and rutile,” Bhappu said.
The trajectory would give the leading U.S. uranium producer an integrated rare earth business spanning mineral-sands feed and separation to metals, alloys and permanent magnets, placing Energy Fuels near the forefront of Washington’s critical minerals push. However, the strategy also depends on completing the $299-million ASM deal as well as VAC and satisfying the conditions attached to the federal loan.
The $725-million loan from the Office of Strategic Capital, announced in June, has yet to be finalized and is subject to several conditions, such as Energy Fuels demonstrating it has enough feed for the mill, Bhappu said. The government also wants to see evidence of markets for the finished products, though Bhappu had few other details about the conditions.
“The oxides that we’ll be producing will go to ASM for conversion to metals and alloys, and then hopefully in the next few months, we’ll close on our VAC acquisition,” he said. “The metals and alloys would then go to VAC for conversion into magnets, demonstrating that is important to the U.S. government and demonstrating we have sales contracts for the product.”
Energy Fuels reached an agreement in January to acquire rare earth metals producer Australian Strategic Materials in an all-share deal. ASM has the Korean Metals Plant in South Korea, among few non-China facilities producing rare earth metals and alloys. It will also receive ASM’s developing Dubbo rare earths mine and processing plant in New South Wales, Australia. The deal was expected to close by late August.
Energy Fuels announced in July that it’s building an expansion at White Mesa that would enable commercial-scale capacity to separate dysprosium and terbium, heavy rare earths that help permanent magnets maintain their strength in extreme conditions.
“Those are kind of the holy grail in the rare earth supply chain,” Bhappu said. “You don’t need very much of them but they’re incredibly important to make these magnets operate with a long life and at high temperatures and not change their magnet properties.”
The expansion, estimated to cost about $104 million, would also see Energy Fuels overcome an operational constraint at the Utah plant. While it’s the only conventional uranium mill in the U.S. that also processes rare earths, it can’t yet process both simultaneously.
“We’re building a tremendous amount of optionality in the materials that we can process, and that that will only really benefit us in the long term,” Bhappu said.
The company expects the expansion of the dysprosium and terbium circuits to be finished by the end of 2027. The samarium, europium and gadolinium circuits are to follow a year later.
Another expansion in 2029 will raise capacity further and enable the processing of monazite from its Donald project in Australia, Vara Mada in Madagascar and the Bahia project in Brazil.
For now, uranium remains Energy Fuels’ bread and butter and its Pinyon Plain underground mine in Arizona and La Sal complex in Utah are its main projects. It also holds several development-stage sites across the country.
White Mesa has enough capacity to meet a significantly larger amount of uranium production, Bhappu said. It’s permitted for 8 million lb. a year and was designed for 6 million lb. but produces only about 2 million lb. annually.
“We have plenty of excess capacity at the mill,” he said. “It’s really more a function of which mines we operate and which mines can feed profitably, and then it’s a function of uranium prices and for some of the mines we have, we’d like to see higher prices than they are today.”
Bhappu pointed to the Nichols Ranch in-situ recovery project in Wyoming, which is permitted and ready to start but the company would like to wait for higher uranium prices before it’s brought into production.
However, the supply gap isn’t unique to Energy Fuels and it’s an issue that’s the missing piece in any potential uranium restart cycle in the Southwest, Red Cloud’s Talbot said.
“We are missing ore, not licensed capacity,” he said. “Whether its Energy Fuels in the Southwest, enCore Energy (TSXV: EU; NASDAQ: EU) or Uranium Energy (NYSE-AM: UEC) in Texas, Ur-Energy (TSX: URE; NYSE-MKT: URG) in Wyoming – no one is producing at capacity.”
Pinyon Plain is Energy Fuels’ largest and lowest-cost producer and the company expects to mine out its upper Main zone over roughly the next year to 18 months before moving deeper into the Juniper zone. It estimates about another three to five years of production at Pinyon Plain, Bhappu said.
Energy Fuels continues to permit the larger Roca Honda project in northern New Mexico. The CEO noted that a shortage of experienced underground miners is an issue, and the company is looking to recruit and train high school and university graduates instead of limiting itself to searching for experienced labourers.
Looking forward, a challenge for Energy Fuels is convincing investors that the rare earth expansion adds a new business to the company rather than erasing the uranium producer they already knew.
“’I thought you were a uranium miner, and now you’re telling me you’re producing magnets,’” he said, characterizing the reaction the company sometimes receives. “It’s a real transition.”
Investors attracted by Energy Fuels’ uranium brand are now gaining exposure to “uranium and all this other stuff,” Bhappu said.
“That’s the challenge. It’s an education process.”
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