Advancing rare earths strategy. Energy Fuels contemplates minor modifications to its operations to enable the processing of uranium and rare earth ores at its White Mesa mill. Ores would be sourced from third parties, either through ore purchase, tolling, or other arrangements, and Energy Fuels would seek to produce concentrates, while also recycling and recovering uranium from the ores. The concentrates could be sold to third party rare earth element (REE) oxide separation and recovery facilities and/or refined, separated, and recovered at White Mesa. Additional investment could be required to enhance White Mesa’s readiness and capability in this respect.Energy Fuels’ rare earth strategy is timely. We note that rare earth minerals producer MP Materials recently announced an agreement to merge with a special purpose acquisition corporation (SPAC). Along with a New York Stock Exchange listing, the new company to be named MP Materials, is expected to have a post transaction equity value of $1.5 billion. While MP Materials is not directly comparable, we anticipate more activity in the rare earths and critical minerals space which could shine a light on Energy Fuels’ strategy.Building inventories. Based on existing inventories of 515,000 pounds of finished uranium concentrates and planned production, the company expects to have between 640,000 and 690,000 pounds of finished uranium in inventory at the end of 2020. The company’s vanadium inventories amount to 1.6 million pounds. Recent prices for uranium and vanadium were roughly $33 and $5 per pound, respectively.Rating is Market Perform. Until there is greater visibility on a path to profitability or near-term government support in the form of uranium purchases, our rating remains Market Perform. While the company’s strategy for processing rare earth elements is early stage, it could offer another avenue of growth complementary to uranium and vanadium. The company recently redeemed 50% of its outstanding convertible unsecured debentures with the remaining $10.4 million of debentures due on December 31, 2020. The redemption enhances the company’s financial flexibility and management expects the company to be debt-free by year-end.Read More >>