Energy Fuels - Earnings Call - Q1 2025

Transcript

Operator (participant)

Good morning. My name is Konstantin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Energy Fuels Curtis Moore 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session where you will be able to ask one question and one follow-up question should you desire. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. There will be a video that will be played within the conference that will last for two minutes.

If you are on the phone as well as on the webcast, and at the time at the end of the video, you see only a black screen, please refresh your webcast. Thank you. Mr. Chalmers, you may begin your conference.

Mark Chalmers (President and CEO)

Thank you, Konstantin, and thank you for that introduction. Again, Mark Chalmers, I'm the CEO of Energy Fuels. We are really appreciative of people joining the Q1 2025 conference call today, and it is always a pleasure to update everyone on our remarkable progress on building the largest critical mineral company in the United States. We are also very, very pleased to announce that we've increased our 2025 production and finished goods inventory guidance by 22% and 193%, respectively. That is quite unusual because many companies are actually going the other direction at this point in time. We are really excited about upgrading the guidance. We also are happy to report that we have a very strong working capital position of $214 million. We continue to advance our high-grade and low-cost U.S.

Uranium production, including a record production in April that was after the quarter of 151,000 lbs at an average grade of 1.64%. I want to point out something, that it's 1.64% in a reserve zone in the main zone of 0.58%. The grades that we're currently mining are almost three times what we had expected in that area. Very excited about that. We continue to advance our world-class rare earth and heavy mineral sand projects and capabilities and no debt. There is a lot going on. Now, Kim, are they advancing their slides or are you doing it?

Kim Ronkin Casey (Investor Relations Manager)

No, I'm doing it.

Mark Chalmers (President and CEO)

Okay. I'll keep you queued on advancing your slides. There will be a conference replay available after the conference call is concluded on the website. As always, as Konstantin mentioned, there will be time for questions at the end. Today, I'm being joined for questions by Nate Bennett, our CFO, and we will just tag team that as required. Let's get going. This first slide, I always say I love this slide, but I love this slide. This is taken not far from where the White Mesa Mill is in Utah. Next slide. I may be making some forward-looking statements, and those are covered on page two. Next slide. Many of you have seen this before, but I think one of the things that people do not understand is that Energy Fuels has really got three different core businesses.

We have this long history in the uranium business, as people know, and that is going remarkably well. We've added on the rare earth elements and the heavy mineral sands. You are really getting an investment in three companies in Energy Fuels, an investment in Energy Fuels. I also want to mention that we have the current capability or will have the capability to commercially recover at least 10 of the critical elements on the list of 50 at the White Mesa Mill, and that is a key differentiator. Next slide. All of our products are in demand for energy, defense, mobility, or health. Uranium, as I said, long history of doing that. Now we are in large-scale production. The rare earths, we are also leading producer at NdPr oxide, and we currently have a lot of that product out for validation.

We also have the technology to produce heavy rare earth oxides, which in itself is very, very unique. Heavy mineral sands, again, advancing our world-scale, world-class rare earth titanium zirconium mineral sands projects globally. I could not be more excited about that. Vanadium, we do have a vanadium circuit. We do have vanadium mines. We are not currently recovering vanadium, even though we are producing it at the La Salle Complex as we speak. Lastly, the medical isotopes. We are still forging ahead on the R&D work we have for recovering of radium. Next slide. Now, again, if you ask the question, the world is your oyster, Energy Fuels can obviously say that we are asset-rich. When you look at the assets we have in the United States, certainly most of them are uranium.

The White Mesa Mill, kind of in that, it's kind of a purplishly red color where we can do all this processing of these critical elements. When you look down in the Southern Hemisphere with the heavy mineral sands projects, the Bahia Project, the Donald Joint Venture, our office in Perth, and the world-class, world-scale Toliara Project, we have an absolutely fantastic pipeline to feed the White Mesa Mill and Dew Corps with a number of these critical elements going forward. Next slide. This graphic, and we do this graphic to kind of show where the processing of these critical elements actually happens. Certainly the uranium is mined in the region and processed through the White Mesa Mill, and it comes out the back end as U3O8 or vanadium.

Or at the same time, or when we flip the mill over, we can process the rare earths, and the rare earths, mainly the monazite and the xenotime, can also be processed in the rare earth processing facility, which is the White Mesa Mill, and out comes the rare earths on the back end. The heavy mineral sands do not have to go through the mill, but they are also critical elements, but they also are recognized as such, and that is how we get a list of 10 plus. The rare earths, there are other elements that can be extracted if there is an economic reason to do so. Now, our phase II plant that we are currently doing engineering work and feasibility work on will actually separate that rare earth processing step and the White Mesa Mill into two separate processing facilities. Next slide.

Again, we continue to grow our portfolio of uranium sales contracts. We have four contracts with three nuclear utilities, deliveries between 2025 and 2030. In 2025, we only have about 220,000 lbs of deliveries, and we have yet to fill those deliveries. We also have entered into an agreement to purchase third-party uranium ore from a company that is not too far from the mill. Our contracts are really light in 2025, and they ramp up to around 800,000 or 900,000 lbs in 2026, but they are all concluded in 2030 on the current contracts that we have. Next slide. Let's talk more about the uranium highlights, and I want to emphasize that some people get confused with what we mine, what we process, the alternate feeds, and how that all fits together.

Towards the end of this presentation, I have a table that I think simplifies that significantly. When you look at the conventional mines, in Q1, we mined 115,000 lbs of unprocessed uranium. It is uranium ore, and that was from Pinyon Plain and La Salle and the Pandora mines, and that is now being stockpiled at the mill. Now, when you talk about how much we plan to mine in 2025, we have upgraded this guidance. We are looking at mining between 875,000 lbs-1.4 million lbs of uranium, and we can process that as we select to do at the mill in due course. We are still working forward to increase our production up to about 2 million lbs per year, subject to market conditions. We are certainly making significant steps in that direction as we speak.

Now, when you look at what's processed at the White Mesa Mill, for Q1, we processed 150,000 lbs of finished goods. We are now saying that this year, our guidance for finished goods processed at the mill is 700,000-1 million lbs. We will be, at the same time, we have the optionality to build up inventory. I will go into more detail at the end to sell the uranium when the markets support that. We have taken a position to not sell uranium at $63, $64, $65 per lbs, and that's a good thing because we actually bought uranium at that price range, and we now have uranium prices about $70 a lbs. Just in the last month or two, the price of uranium, or at least on the spot price, has gone up by 10%. Next slide.

Again, the White Mesa Mill and the remarkable facility that it is with both the capability to produce uranium and rare earths, and never has it been more important to have a White Mesa Mill as the only operating conventional mill in the United States. It is the largest uranium processing facility in the United States. It's fully licensed, permitted, producing, and has employees there. It has a licensed capacity of 8 million lbs per year. It has the ability to process and recycle uranium-bearing alternate feeds at very low cost, 40 years of operational experience. We also have the opportunity to assist the U.S. government and the Navajo Nation on cleanup of abandoned uranium mines on the reservation that had no connection to our company. We're really looking forward to helping the Navajo Nation on that front, hopefully this year.

It is the only facility that can process monazite for production of rare earth oxides in the United States. Next slide. You have seen this slide, but it has been modified a little bit, but the current ore is coming out of the Pinyon Plain Mine, and highest-grade uranium mine in the history of the United States. That ore is now being shipped across the Navajo Nation with our agreement. The La Salle Complex is really a complex of several mines. It is about 11 mi of trend. Ore is also being transported to the mill from the La Salle Complex. We are also looking at refurbishing a couple of other mines on the La Salle Complex. The combination of those two projects, we plan to mine between about 55,000 tons-80,000 tons in 2025.

We're still doing drilling at Nichols Ranch, our ISR operation in Wyoming, and we'll restart that when the market supports. Next slide. This is an exciting slide here because Pinyon Plain is starting to hit on all cylinders, and we're currently mining the main ore body zone. I already mentioned that in April, we had record production of 151,000 lbs at the 1.64%. I mentioned that the average grade in that zone was about 0.58, 0.59, and we're mining about 1.6. We are getting extraordinary grades there, and we think that will equate to a larger resource reserve mined because of these extraordinary grades that we're hitting. In addition, many of you would have seen that we announced exploration results on the Juniper ore zone. The Juniper ore zone is just below that main zone, but it's only 200 ft. It's 200 ft away.

It is very close. Look at those grades. 13 ft of 7%, 7.5 ft at 7.5%, 9.3 ft at 2%, 17.5 ft of 5.7%, including 4 ft of 20%. These are grades that are unheard of in the United States. I could not be happier to be reporting this success that we are having. There will be additional drilling happening in the Juniper zone. There is still a lot of runway to continue to add, but we are going to have to drill because you can fit a lot of uranium in a very small area with those types of grades. Next slide. This will be a bit of an experiment, but we want to take you down into the Pinyon Plain ore body. We are going to try to show you a video. Let us take a look at the video now.

Again, just to give people insight of the mine. Again, I highlight that the grades have been averaging mined in that 1%-2% range. Again, when you put that in perspective, I mean, that's like 2-4 ounces per ton gold. This is really high-grade, high-value product that we're getting out of the Pinyon Plain mine. Let's talk a little bit more about some of the development pipeline. Again, you've seen this slide where we have the Sheep Mountain Project in Wyoming, which is fully permitted. We also have the Henry Mountain Project in Utah, Bullfrog, which is in pre-permitting. I'm very pleased to announce that our large Roca Honda project in New Mexico, which is also underground and high-grade, is about 0.5%.

It's still a high-grade mine by uranium standards, but a very significant project. It was also selected by the Trump administration on this FAST-41 covered project. It is being recognized as a national security critical mineral project. We're really excited to get that designation on one of our projects and our pipeline projects. We've been advancing the feasibility study on that, or actually, it's the EIS on that. We think now is an ideal time to get that wrapped up in advance so we have another significant permitted project. Next slide. We'll shift gears a bit and go around the world here, talk a little bit about the rare earth production and assets that we have in heavy mineral sands. Next slide.

We haven't left the country yet, but just some pictures of the solvent extraction circuit for extraction of the rare earth oxides at the White Mesa Mill. Again, this is a facility that the team at White Mesa built on their own without consultants, without people advising them. They came up with the designs for this, and they built a very significant solvent extraction facility and commissioned it for under $20 million. I know there are companies out there that have pilot plants that are $100 million and do just a fraction of what this will do. I mean, some of these pilot plants that are pushing $100 million will do like one ton of NdPr per month. This project, when it has enough feed, will be doing like 70 or 80 tons a month. We built it for $20 million.

Also, look at the bags of NdPr oxide in bulky bags. It's not in a beaker. We're doing it at commercial scale. Next slide. Again, we continue to focus on integration as we step down through the supply chain there with the mining, bonification, crack, leach, separation. We are still very keen to advance into the metal making and alloy steps. I've always mentioned Deb Bennethum's working for us from General Motors. She came to work for us, and she's helping us with that back end. She's been a great, great addition to our team to help us on that back end. Again, we'll collect the monazite from these multiple projects, including material from Chemours. We have diversified supply and feed to the White Mesa Mill globally at scales equivalent to Lynas in due course. Next slide.

Also, recent news, certainly in March, we signed a collaboration agreement with POSCO International in South Korea on a collaboration on providing them with feed materials. We also signed a strategic alliance with Chemours in March, also collaborating on bolstering U.S. critical mineral supply chains. In April, we made the announcement that we have the technical capability and skills to produce six of the seven heavy rare earths subject to current China export controls. Next slide. Okay, we'll talk a bit about financials. Next slide. Again, at the end of the quarter, March 31, we continue in our producing low-cost uranium. We're developing this tier one critical mineral and heavy mineral sand assets, and we're maintaining our strong balance sheet.

Excellent liquidity with over $210 million of liquidity at the end of the quarter made up of cash, marketable securities, interest-bearing securities, very liquid, $20 million of trade and other receivables, and about $35 million of inventory. At current prices, you can actually increase the value of those inventories by about $12 million. At the end of the quarter, we had nearly 600,000 lbs of finished uranium. We continue to add to that. We still have vanadium inventory. We still have some rare earth inventory, and we have zero debt. Now, the net loss for Q1 of 2025 was driven on a very aggressive program of advancing all these projects and also electing not to sell uranium at current prices. As I mentioned, in the first quarter, the uranium prices were languishing spot between $63-$65. Now they're about $70.

By holding on to that uranium, that value of that product spot is 10% higher. We really still do not have a lot of interest in selling uranium at $70 a lbs. The last uranium we sold on the spot was $80 a lbs. That is kind of our goal to get back with an eight handle on it going forward. We did sell the residual heavy mineral sand products from Qualay, Ilmenite, Rutile, Zircon for about $15.5 million. We did have a net loss of $26.3 million, about $0.13 per share, because other than the sales of largely the heavy mineral sand products, we did not try to generate any additional revenue. Next slide. Again, talking a bit more about the quarter, we are actively mining uranium as I talk. We are actively processing uranium ores. We are opportunistically buying uranium on the spot market.

We bought some for $64, $75, about 50,000 lbs. We'll continue to look at when that makes sense or not. We did enter into that purchase agreement for third-party ore with another party not too far from the mill. We're still increasing our ramp up to that 2 million lbs of uranium production with existing assets. We're also advancing these other large-scale uranium projects, which can increase our production up to about that 4-6 million lbs with additional permits and investment. We're continuing to do the R&D recovery on radium. Next slide. I think people have struggled to kind of understand how the mining and the processing and the alternate feeds all fit together.

If you look at that top line which says mined, and you look at what was our guidance, previous guidance, and our revised guidance, it's up from the midpoint of 22%. Again, most people's are going down. If you look at that, that's mine product. If you go to the next line, alternate feed. For example, in our guidance, it hasn't changed for the alternate feed, but 160,000-200,000 lbs, that is about 20% of our feed for the White Mesa Mill. That is a beautiful sweetener in our production profile. Then go down to the third line with the process lbs, we're saying 700,000-1,000,000 lbs, up 278%.

One of the reasons it's up so big is we are actually looking at not processing some of that ore because of some of the work we're doing on the radium front. We have decided to process some of our feed, our uranium feeds, and that's why it jumped. Contract sales are very light for 2025 at around 220,000 lbs. That's down a little bit. That doesn't really upset me because I'm still looking for these higher uranium prices in due course. Finished goods, we plan to have between 925,000 and 1.2 million by the end of the year. That's up 193%. We are going to have a lot of finished goods. Look at those inventories because not only can we select the time we want to process that ore, we can also store it in stockpile and process it later.

We do not have to spend that money if we have it sitting at the mill in inventory. We plan to have between about 2-2.5 million lbs of inventory or to-be-processed inventory, which is up about 14%. Now, some people might say, "What does it cost to process the unprocessed inventories?" It varies. I mean, it can vary between $15-$20 a lbs. Sometimes it can be $10 a lbs. Sometimes it can be $35 or maybe up to $40. It is very easy and low cost for us to process that inventory when we want to put it into the market. We can do it quite quickly.

Now, having these significant inventories is also putting us in a great position that we can flip the mill back and process rare earths potentially early in 2026 by having enough inventory to meet our contractual agreements and also having material to put out on the spot market if we elect to do so. Next slide. We'll talk about the rare earths and sort of the titanium zirconium products. As I said just a minute ago, we may go back into rare earth production in 2026. We're building up inventories of monazite as we speak. We're advancing the phase II expansion at the White Mesa Mill. This is a separate plant, separate from the uranium mill with a capacity of up to 6,000 lbs of NdPr per year, equivalent of Lynas, and also recovering about 225 metric tons of Dy and 75 metric tons of Tb per year.

That update will also come up with updated capital and operating costs for that. We are currently piloting Dy and Tb. When we talked about that we had these capabilities to separate additional rare earths, including these heavy rare earths, we can do that. Again, remarkable capabilities at the White Mesa Mill. Toliara project is moving towards FID. It should be expected in the first half of 2026. We are continuing to start to look at pursuing potential offtake, sales, and financing options. We are also pursuing final agreements to enshrine and agree fiscal terms on Toliara with the Madagascar government. We are really excited about that to keep pushing that along. The Madagascar government wants this project. We want this project. It is an important project for the United States of America on securing world-scale critical minerals.

When you look at our scale of our project, of our goals as we move this forward, we can produce between 50-100% of 10 critical elements for the current demand of the United States of America. So it is absolutely significant. The Donald project's also moving forward with FID. We're continuing with drilling on the Bahia project in Brazil. And we're continuing to develop our final comprehensive project finance strategy. That's it. Any questions?

Kim Ronkin Casey (Investor Relations Manager)

Konstantin?

Operator (participant)

Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two.

If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your first question comes from the line of Katie Lachapelle from Canaccord Genuity. Please ask your question.

Katie Lachapelle (Managing Director of Equity Research)

Hi, Mark. Thanks for taking my question. It's great to see the increase in expected uranium production for 2025. I do, however, want to focus a bit on the rare earth segment. We've seen your balance sheet improve quarter over quarter with some activity on the ATM. On our numbers, we're still seeing a pretty significant gap between the projected capital costs and your current balance sheet. How are you thinking about the potential funding stack for the phase II expansion at White Mesa in addition to advancing Toliara and Donald?

Mark Chalmers (President and CEO)

Yeah. Katie, as I said at the end, we're putting together a comprehensive financing strategy.

We've already got some debt advisors on Toliara and Donald. We're looking at adding a significant U.S. bank to help us with that. In addition, we're making the rounds across D.C. with places like the DOD, Exim Bank, DOE, and all that. As I said, we're looking at potential offtakes. There could be potential people willing to fund in some of these projects. Katie, it's really going to be from a number of sources. Our strong balance sheet allows us to advance all these projects through this FID process to get all the accurate numbers and estimates for bankable purposes. I do believe that when you look at the scale and the low-cost nature of what our plan and strategy is, when I talk about 50%-100% of U.S. requirements, we will secure funding.

Now, it does not mean it is going to be easy and it is complicated. We plan to have that strong balance sheet get to these FIDs. We are multitasking on a number of fronts when it comes to how we are going to finance these projects. I want to point out too one thing. The Toliara Project is so remarkable that it funds itself. It does not fund itself, but it can stand alone as a heavy mineral sands project only without any credits for the rare earth. It is a really significant project, really low-cost structures. We still have a lot of work to do.

Katie Lachapelle (Managing Director of Equity Research)

Understood. Maybe just one unrelated follow-up. You did not make any uranium sales in the quarter. Kind of two questions. Can you provide us with a level that would trigger you to make some additional sales into the spot market this year?

On the cost side, there were no reported costs for this quarter. How are your costs tracking right now? How do you expect them to track through the remainder of this year?

Mark Chalmers (President and CEO)

Yeah. As I said earlier, I really do not like to sell uranium at these prices because I think it is below the cost of replacement. I would like to see something with an eight handle on it or greater. When you look at our cost for the quarter, we are really just ramping up some of the mining. We had the delays with the ore transport across the Navajo Nation. Our most recent estimates are that the combined cost going forward and for the year are going to be between about $35-$40 per lbs, Katie.

Katie Lachapelle (Managing Director of Equity Research)

Perfect. Thank you, Mark.

Operator (participant)

Your next question comes from the line of Heiko Ihle from HC Wainwright.

Please ask your question.

Hi, Mark. It's actually Case on behalf of Heiko. How are you? Okay. All right. Awesome. Just a quick question on Pinyon Plain. It seems like things are going pretty well. Could you maybe give us any color on if there's been any unforeseen supply chain issues throughout the process? And have any idea of how much money you plan to spend at the site during Q2?

Mark Chalmers (President and CEO)

There have not been any issues at the site since we signed the agreement with Navajo Nation. One of the issues has been just getting the trucks pulled up to haul the ore to the mill, which we're working to resolve. We indicated that for Q2, we already had this 150,000 lbs mined. That's continuing on. I mean, I got a text from the mine this morning. It's actually going higher than that.

As I said to Katie, homogenized basis, we're looking at that $35-$40 a lbs. The mine is largely developed. A lot of the expenditures there are just focused on producing ore and shipping it to the mill. Did I cover that all for you?

Yeah. No, that's great. I guess to touch on the earlier question, we like seeing you buy uranium below $65 a lbs and with a great cash balance. Do you anticipate converting any more cash into inventory Q2 and beyond? Is there possibly a mental maximum price for doing so?

I wish I'd bought more at $64. Yeah, we're going to just play it by ear.

I mean, if we're giving our going forward cost at $35-$40, that kind of gives you an idea of what we can put it in a drum, finished goods. Again, we're going to always look at mix and match. If we think we can pick up some product at a price that we can turn around and sell, we'll consider that.

Awesome. Thank you. Great color. I appreciate it. That's it for me.

Operator (participant)

Your next question comes from the line of Justin Chan from SCP Resource Finance. Please ask your question.

Justin Chan (Director and Head of Research)

Morning, Mark and team. Thanks for hosting the call. My first one's regarding just reading through your 10Q. You noted that part of the logic for bringing forward uranium processing is you're thinking of doing a rare earth processing campaign next year or bringing up the mill for circuit changes.

I was wondering if you could just give us more color on what your current thoughts are for next year on the rare earth side of things and what are the key moving parts.

Mark Chalmers (President and CEO)

Yeah. Exactly. As I said, if we have this inventory, we can elect on how to process uranium or rare earths. I mean, our thoughts were to go ahead and build up our inventory, which we can do very quickly with the product out there to process, have this other inventory that we can process later with the switch over the mill if we need to. Looking at in 2026, we're still getting material from Chemours, but we're also looking at other sources of feed of monazite. Right now, we're getting a lot of inbounds from the U.S. government saying, "What can you produce rare earths now?

What can you produce now? You know what? We're the only ones that can produce now if we want to. In addition to our ability to also do these heavy rare earths, we're trying to position ourselves so we can show that we have this incredible flexibility, that this flexibility allows us to be and produce whatever they may need. If they need a samarium or whatever, we can actually do that. We can't just wiggle our nose and do it, but give us a few months or six months and some support, and we have remarkable flexibility on that. Justin, this gives us that opening to be able to do either. I mean, if we decide we want to be producing uranium, we'll do it. If we want to switch over to rare earths, we'll do it.

Justin Chan (Director and Head of Research)

Gotcha.

Maybe just reading between the lines, probably the key determinant right now is perhaps some signal from the government absent a huge price response or NdPr or something like that.

Mark Chalmers (President and CEO)

Yeah. I think that's correct. I mean, if we get a signal from the government, we want to say we're going to deliver in the United States, in Utah.

Justin Chan (Director and Head of Research)

Gotcha. On Toliara, could you give us an update on how things are going in country and I guess what the next 12 months looks like between now and FID in terms of so we can track progress over the next four quarters?

Mark Chalmers (President and CEO)

Look, I've got Tim Carstens here. Tim, calling you on the spot here. Okay. He's here. I might as well bring him in.

Tim Carstens (EVP of Heavy Mineral Sands Operations)

Quick question with that, notice. Hi, Justin.

Justin Chan (Director and Head of Research)

Hey, Tim. Speaking of Toliara.

Tim Carstens (EVP of Heavy Mineral Sands Operations)

Yeah, exactly. Yeah.

There are sort of three key focuses at the moment in Toliara. One is, as Mark mentioned earlier, it's finalizing the agreements to lock in the fiscal terms with government. That is all making good progress. The government's amending its large mine investment regime at the moment in good consultation with us. I am comfortable with the direction that's taking. On ground, we're doing a lot of work with government on, I guess, community—I won't say sensitization, but more just sort of making sure that we've got full community on side.

We've got the various, I guess, engagement and dialogue structures in place, tripartite dialogue structures between ourselves, government, and communities to make sure any issues are addressed adequately, that we avoid the influence of the opponents of the project that aren't really motivated around the project, but as you know from the past, have attempted to use the project as, I guess, a football for their own objectives. We've been working really closely with the government in managing that. Got a really good position, excuse me, on that now. On-ground work is now starting to happen as we head towards FID. That being one of the challenges we've experienced over the last five years is well in hand now. On the project side, there's quite a lot of work that needs to be done over the next 12 months or so as we head towards the FID.

Quite a bit of geotechnical drilling that needs to be done, particularly in relation to the bridge and the port facility. They are kind of long lead time items for that. We are busily building the team at the moment. As you know, our approach is to bring on a lot of the operational people early and embed them in the project. People like our GM operations are already in place. They are starting to assemble their team to sort of drive our input in project execution. That is coming together quite well. Quite a significant spend over the next 12 months, as you would expect for a project of this scale. At this stage, we are well on track for an FID, as Mark said, in the first half of next year.

Justin Chan (Director and Head of Research)

Gotcha.

Is there a plan to kind of put out updated CapEx and, I guess, high-level economics? And roughly when along that timeline do you think that would be?

Tim Carstens (EVP of Heavy Mineral Sands Operations)

Yeah. We're in the process of completing that now. The intent is to release a full updated DFS in, I think it's due in June, maybe early July, which will sort of form the basis of the next phase of execution of the project. That will get released to the market with a full update. It also forms the basis of the debt funding. That will become the debt funding model.

Justin Chan (Director and Head of Research)

Okay. That's June, early July this year, like in a couple of months?

Tim Carstens (EVP of Heavy Mineral Sands Operations)

Yeah. Yeah. A couple of months. We're in the final stages of that now.

Justin Chan (Director and Head of Research)

Okay. Gotcha. Thanks very much. All right. Thanks very much.

I'll stay up the line and rejoin if I have any more questions. Thank you.

Mark Chalmers (President and CEO)

Thank you, Tim.

Operator (participant)

Your next question?

I'm sorry. Your next question, sir, comes from the line of Zack Perry from Robertson Stephens. Please ask your question.

Zack Perry (Managing Director)

Hey, Mark. Thanks for the question. Quick question on the rare earth side. At scale, and how you even define that, what is your cost structure relative to other projects around the world? Obviously, if you have the feedstock and you look at the future, what would be your cost structure? Not just in the United States, but relative to other projects around the world.

Mark Chalmers (President and CEO)

Yeah. Look, we're finishing all of our studies. At scale, we believe we're going to be—if we're not the lowest cost, we're going to be the second lowest cost in the world, is what we believe. Okay.

Now, how China fits in, but certainly outside of China, we're going to be a low-cost producer. We will be producing in the United States. A lot of that is driven on the fact that the contribution of these various projects, particularly Toliara, with the scale of Toliara and the low-cost structures at Toliara, is going to provide us with a supply of monazite significant, about half of the mill's capacity. It could be more in due course if we want to upgrade it effectively for free. That is a pretty good start, Zack.

Zack Perry (Managing Director)

Yeah. It sounds like you're very low cost without Toliara, and you basically get almost free feedstock, assuming Toliara is profitable on heavy mineral sands by its own. Is that a way of thinking about it?

Mark Chalmers (President and CEO)

Yeah. It becomes a counting exercise of how you want to account for it.

Yeah, no, it's a—these pieces, as you said, at scale. That's a big part, is at scale, because, I mean, phase I at the mill is about 1,000 tons of NdPr per year. The expanded phase II is 6x that, right? That makes a difference in terms of the fixed and variable cost in terms of how you go forward. Just coming back to your point about the free monazite. I mean, Toliara just as a mineral sand project, so completely excluding any monazite revenue. In terms of revenue-to-cash cost ratio, it's about 4 to 1 revenue-to-cash cost. It's pretty much the most profitable mineral sand operation in the—or will be a profitable mineral sand operation in the world, excluding monazite.

That's one of the real strengths of that as a project and how it contributes to a relatively low-risk way for Energy Fuels to develop rare earth capability relative to anybody else because you've just got that protection.

Zack Perry (Managing Director)

All right. No, that makes a lot of sense. With that, assuming the U.S. government wakes up and if they're going to get in a trade war with China would want to get your project up and running, how quickly could you get a separate REE line up and running, assuming if the government showed up and said, "Do it tomorrow"? I mean, what's the timeframe of actually getting it up and running if you have full funding and everything?

Mark Chalmers (President and CEO)

Yeah. Phase I, a couple of months, okay? That'll do an NdPr. And we're currently piloting the Dy and Tb.

We've been telling the government that some of these specialty products, if they want one or two or three, it'd probably take us 6-12 months. But we are looking at a phase I-B, which is the addition of other circuits to recover some of these other products if the government wants them, that we can provide them with a custom-built solution for that. When it comes to the phase II mill, we've been talking about a phase II rare earth plant of having it up and running in 2028. And that's kind of where it is on the current scale. But it isn't impossible to think that the government might not want to fast-track that. But we also have to make sure that that ties in with the mines and when these mines are up and producing. So there's a little bit of juggling.

One thing that's kind of interesting is there are sources of monazite out there in the world that people are looking at sending to us because they believe it makes a lot of sense for them to send it to White Mesa. We're still exploring some of those options and opportunities so that we have a larger run of rare earth and being able to, again, process the rare earth at the mill or the uranium and being flexible. Yeah, we're kind of just keeping our options open on how we go, Zack. There's a number of pieces to this that we can orchestrate as required.

Zack Perry (Managing Director)

Great. Thanks. Yeah. I mean, it looks incredibly exciting. It's a fast timeframe without a push by the U.S. government. If I was in the U.S. government, I would be pushing for it to go faster.

It looks pretty interesting. Thanks, guys.

Operator (participant)

Thank you. Your next question comes from the line of Noel Parks from Tuohy Brothers Investment Research. Please ask your question.

Noel Parks (Managing Director of Energy Research)

Hi. Good morning. I just wanted to check back on the Navajo Nation cleanup. The process of unlocking the dedicated funds for that, is that something that would involve any financial commitment from Energy Fuels on the capital or operating side? If so, just wondering about the scale of it. Is it just a few thousand in G&A or something larger?

Mark Chalmers (President and CEO)

Yeah. The agreement that we did with Pinyon Plain, we agreed to 10,000 tons. We'd haul it and take it for free with the option that can be expanded later on. There really is no capital investment required. Last I checked, there was about $2 billion in trust for the Navajo Nation to clean those sites up.

One of our goals, working with the Navajo Nation, is we put out this offer for the free material so that they can be comfortable and see how it actually works. There is no cost to us. We can take it right now. We will probably start taking some of that material, that 10,000 tons, this year. It is really about them deciding which site they would like us to take it from. That material contains uranium. We can process it. We get free feed. The initial 10,000 tons, we are hauling it to the mill. There are a number of different ways this can roll out. We have had, with the new administration, discussions with the EPA and the Bureau of Indian Affairs and the Navajo Nation. They are keen about working with Energy Fuels.

Keen because they know we can do it right now, like a lot of things, right now. There has not been a lot of action on the Navajo Nation on this cleanup. This is just a perfect way that we can work with the Navajo Nation with this ore haulage contract. They can see how the ore is hauled across the Navajo Nation. Also, they can see the good we can do helping them with some of these cleanups that have been stagnant for 50 years.

Noel Parks (Managing Director of Energy Research)

Great. Thanks for the clarification. Talking about the potential catalyst of the government deciding it does want to move forward with some of the minerals that you could produce, do you have any sense of sort of the interaction when it comes to looking for, I guess, funding overall for the various projects in the company?

Because I think of government financing in good terms, but it tends to move slow. I mean, is it possible that there could be sort of like a larger package that could help with White Mesa, help with the critical minerals there, help with Toliara, or do I really need to think of them as just sort of entirely separate thrusts?

Mark Chalmers (President and CEO)

We're actively talking to the U.S. government on every front right now, multiple groups. We're making proposals to the U.S. government on multiple fronts. They can be large or they can be small. I mean, we want to tap into whatever makes sense. You're right. A lot of the government funding takes time and is slow. You've got to look at the balance between commercial options, government options, how those fit together, how prescriptive they are in getting those funds.

are a number of different variables. No, we are actively working with the U.S. government and providing them options, just as I have discussed in this presentation. If it makes sense, we are there to deliver.

Noel Parks (Managing Director of Energy Research)

Great. Thanks a lot.

Operator (participant)

Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by the number one on your touch-tone phone. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your next question comes from the line of Richard White, private investor. Please ask your question.

Hello, Mark. Good to know you. I am doing pretty good, Mark. You mentioned you have an ore purchase contract with a third party in the region of the White Mesa Mill.

I was wondering, do you have or are you anticipating a buying schedule for the other small miners in the region who could get into production?

Mark Chalmers (President and CEO)

Yeah, Dick, first of all, good to hear your voice. It is no secret that Western has put out a press release that we are buying their ore. What we find—and you can appreciate this—is that going back 20, 30, 40 years, there were a lot of mines that could feed into a buying schedule. Now there are not that many, okay? We have kind of taken an approach that if somebody has a mine that is fully permitted and in compliance, just come visit us, right, and see what they have got. We want to know the quantities and the grade. We will just kind of work out a special arrangement, if it makes sense to us, to go forward.

To put out a blanket buying schedule, there are so few people, it is too difficult because the variables like the grade and even the metallurgy in some cases—is it uranium, vanadium ore, what is it? If somebody has a mine, I would say, "Give us a ring. Give Curtis a ring, and we will see what can be worked out or not."

Thank you.

Operator (participant)

Thank you. There are no further questions at this time. I would like to turn the call over to Mr. Mark Chalmers for closing comments. Sir, please go ahead.

Mark Chalmers (President and CEO)

Again, thank you, everyone who joined this call or listens to the replays in the next few days. Exciting time for Energy Fuels. These pieces are starting to come together on multiple fronts. I also want to say that some people have questioned our conviction to the uranium business.

I think that the numbers that are starting to come out with our uranium production and the scale and the cost show that we're not out of the uranium business. We still have a lot of work to do. Pinyon Plain Mine, which I built in 1987, took 38 years to go from when I built it to getting the ore to the pad at White Mesa, is really paying dividends. As I said, I think it's the highest-grade uranium project I've seen in my career. Dick, if you're still listening, I know we worked at the Schwarzwälder, which had some high grades too, but not at this kind of scale. Yeah, it's an exciting time. We're pulling it together. I think we couldn't be in a better place with the critical mass we have. We're not a pretender.

We're out there to deliver an outcome that's extraordinary. Thank you.

Operator (participant)

Thank you for participating in the Energy Fuels conference call. Please reach out to the company directly for any additional investment questions. This concludes today's conference call. You may now disconnect.