Energy Fuels - Q3 2020

Transcript

Operator (participant)

Good afternoon. My name is Colin, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Energy Fuels Q3 2020 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. 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 two. Thank you. Mr. Chalmers, you may begin your conference.

Mark Chalmers (CEO)

Thanks, Colin, and good afternoon, everybody. Thank you for joining us today. Before I get started, I just wanna apologize for the glitch we had with the conference call yesterday, and we decided it was better to restart the conference call today and do it when everybody could get access to both the presentations and the audio here. Look, and I know the past couple days with election yesterday and post-election, it's a busy time for everybody, so thank you for taking the time to join the call. For those that wanna rewatch the presentation, we will have replays for this presentation available on our website for two weeks.

We have a lot of really interesting things going on right now at Energy Fuels, and some of you would have seen that yesterday, Energy Fuels officially became a U.S. producer of rare earth elements this past weekend. It was at production scale in its early days, and we'll discuss it a lot more in this presentation, but we're very excited about this, and we think we have first-mover advantage in establishing low-cost, near-term rare earth supply chain in the United States, and we're making spectacular progress. We're also making great progress on our uranium production, and we'll talk about that as well. Joining me today is Dave Frydenlund, CFO and General Counsel, and Sarah Letts, that our recently hired on as our controller.

Before I begin, I would like to remind you that you are controlling the slides and the presentation, and it is controlled from your own device, and I will endeavor to tell you when to advance to the next slide. Next slide. I will likely be making some forward-looking statements, and the appropriate disclaimers are included on page 18 to 20 of this presentation. Next slide. Okay, let's talk about the investment themes, and many of you have seen this before. They do change a little bit over time, but I'll try to go through them fairly quickly. Certainly, most of you are aware that our first and foremost business is uranium. We're the largest producer of uranium in the United States, and we have more assets and capabilities to respond quicker and faster than others.

2020 production will be around 175,000 lbs of uranium. That is really not large uranium production, but it is the largest production in the United States. We also have the ability and the only primary vanadium production capabilities. We were the leading producer of vanadium in 2019, and we produced about 1.7 million-- Well, we currently have 1.7 million lbs of vanadium in inventory. Rare earths, which again, we'll talk about more, moving very quickly. We're very excited about that, and particularly how we can use the mill to produce rare earths, as it is with existing equipment.

There's also U.S. government support for critical materials, uranium, vanadium, and rare earths, so we think we're in a very unique spot when it comes to filling the needs of these critical materials that the United States needs so desperately, just not just for our industry, but also for the U.S. government. In financial strength, we're very proud of the fact we believe we have, at least in our peer group, the strongest balance sheet and zero debt. Next slide. Again, many of you have seen this slide before. Just showing our footprint. It's a large footprint from Wyoming all the way down to South Texas. We have our three production areas, all fully paid for.

The Nichols Ranch ISR facility in Wyoming is on standby, as is our ISR facility in South Texas, Alta Mesa, and White Mesa, that blue star, and then some of the surrounding properties to these production centers. We're the only company that has three production centers, at least in our peer group, in the United States. I just wanna remind people that, you know, the United States gets 20% of its electricity from nuclear power, and that's 55% of the carbon-free electricity in the United States. Next slide. We have, you know, this is sort of our front line of production assets, the White Mesa Mill, which has become our flagship. The uranium, we have the ability to produce uranium, vanadium, rare earths, and land cleanup.

It's the only conventional mill in the United States. It's produced, in current metal value of uranium, vanadium, and alternate feeds, around $2 billion worth of revenue over the 40 years. So it's a substantially proven facility, and it's also the facility that, we had the picture, and we'll show it again in a bit into the presentation of the rare earths that we produce, the concentrate we produce. Nichols Ranch, this is the project that's on standby in Wyoming, and ISR facility, as is Alta Mesa on standby in Texas. And what we used to call the Canyon Mine, which is also on standby, we've renamed that, Pinyon Plain.

The reason we renamed it is too many of the environmental groups were always associating Canyon with the Grand Canyon, and that was a huge misrepresentation, so we've changed that. Next slide. Now, this is a really exciting slide, and it shows the pilot scale testing that we've done, on the rare earths. And, for those of you that are watching this, you can click on the button on the left, and you can watch, as we peel off some of the rare earth concentrate that we made, this was last weekend. And this is, very exciting for us, and I say, you know, a picture tells a thousand words. And the filter press, so this is all commercial-sized equipment.

Basically, what we do is we extract the uranium out of the uranium ores and the radionuclides, and make a concentrate that is high in rare earths. This is the material on the filter press. This is before it's actually gone to the dewatering process, and before it goes to separations. And to our knowledge, this is the first rare earth concentrate from monazite sands in around 20 years' time. So this was a significant accomplishment for our company and for rare earths in the United States. And it's hard to overemphasize how important this is, and some experts have said that when they saw this video, that they thought that this was the missing link for U.S. rare earth production.

The pilot scale was approximately 1 ton of monazite ore, and we began testing in the middle of October, actually about October nineteenth, and we made this concentrate very quickly, and this was absolutely the first batch, and we're very pleased how it came out. We have another 3 tons or so of monazite that we're gonna run through the pilot and get more information so that we'll be better prepared for the next step, which is commercial production. Next slide. So really, the emerging rare earth opportunity at Energy Fuels, it, as I said, is very exciting to us, and it is, and our goal is to commercially start producing rare earth concentrate from these existing North American, with our main focus on North America, monazite ore sources.

Monazite is a high-value, high-grade, natural, rare earth, and uranium ore, and so it is ideally suited for processing at the White Mesa Mill. The other thing is, it is, you know, White Mesa, being an existing facility with the ability to handle these uranium ores, has all existing licenses required to make a concentrate. We are currently in discussions with a number of entities to supply monazite to the Energy Fuels and the White Mesa Mill, and we're currently in advanced stages with some of those companies, and we hope to be able to report on that in the not-too-distant future. We're also talking to people that could potentially buy the concentrate from Energy Fuels.

So we are targeting rare earth commercial production in early 2021, and that is rocket speed in the rare earth space. We only announced in April of this year that we are getting into the business, and to be producing potentially commercially early next year is quite remarkable and something we're very proud of. Next slide. So now I wanna talk a little bit about our collaborations, because we know that we are uranium and vanadium producers and have a long history of doing that. I have a very strong conviction of making sure that you team with the right people when you enter into a new sector, and we're very proud of the relationship that we have with Neo Performance Materials. And again, we've talked about this in the past.

Many of you will know Constantine Karayannopoulos, who's one of the most successful—I think he actually is the most successful person in the rare earth space, in the entire world. And so we have a number, we have a letter of intent, and we have a number of meetings with him on a weekly basis with both Constantine and his team, to help us with our strategic and technical plans. We also received an award from the U.S. Department of Energy, with regard to coal-based resources that we're currently working on with the Department of Energy and Penn State. We think that fits in nicely with our core business and this rare earth sector that we're embarking on. Brock O'Kelley, some of you will know Brock.

Brock worked at Mountain Pass for nearly 35 years, and he's currently Associate Professor at the Colorado School of Mines, focused on rare earth recovery. Then lastly, Jack Lifton. Jack Lifton has been around in the rare earth industry for many decades. He's also helping us with our strategies and the technical side of the business. I also want to add that in addition to these people, which is quite a team and world-renowned. We're always looking for other experts to help us in other aspects of the rare earth business. For example, we're currently talking to people with regard to the next steps after creating a concentrate, which is separation and potentially metals and alloy production. So, you know, we're going after this in a very serious way, a very focused way, and a very professional way, so watch this space. Next slide.

Look at Energy Fuels, you know, I talked about this a bit already, has many advantages because, again, we believe we're quicker to the market, we're gonna be lower cost, and we can be very scalable using existing equipment, you know, the improving technologies. It's because it's an existing facility, and it has the licenses to treat and recover uranium from natural uranium, that is something that takes years, if not decades, to secure those licenses. So we are focusing, even though there's rare earths from different type of sources, we're focused on, as I said, these monazite ore sources, with the priority being to North America. And currently, this material is being shipped to China. We think that makes no sense when we have a processing facility in the United States that can now treat and process this material.

And we believe that by taking our business plan forward, that we will be one of the lowest cost rare earth producers in the Western world, and that is very important. We hope to have positive, modest cash flow from rare earths within the next 12 months. I mean, some of you would have seen that on October first, the president issued an executive order with regard to critical materials and, the importance of that to the United States of America. Next slide. Now, let's talk about a bit about the U.S. government support for uranium mines and talk about uranium. This is, again, our core business. You know, we're very excited about the rare earths, but uranium is where we have spent the last 40 years, and we're very comfortable with the uranium business, and we've got our own experts internal.

We don't have to go out to experts externally for this. As I said, we plan to produce around, you know, nearly, 200,000 lbs, probably in the range between 170,000-200,000 lbs this year. We will have, outside of Cameco, the largest inventory of uranium of any other company in the United States. We'll have in the order around 700,000 lbs at the end of the year, so that's pretty substantial. We're holding that because we believe the price of uranium will just go up. When we talk about the U.S. uranium reserve, we're still, working with Congress, through appropriations to secure the, $150 million per year, over a 10-year period, that totals about $1.5 billion.

The DOE is very aggressive at assisting with these appropriations, even though the timing is somewhat unknown. Also in October, you know, there was more clarity on the Russian Suspension Agreement. It was extended, and this reduces imports of Russian material into the United States over time, and it avoids the threat of unlimited Russian uranium entering into the United States. There is bipartisan support for nuclear in the U.S. The Democrats have a platform that supports nuclear for the first time since 1972. So we do not think it's coming to the end of the world if the Democrats get into power. There also is a number of bipartisan legislation that supports nuclear and nuclear fuel also in the Congress. Next slide. Now, I'll talk a little bit about the uranium market.

You know, wait a second, I've got the two slides here. I talked a little bit about the uranium market. Look at the price of uranium has dropped a little bit over the last quarter. It went from $33 a pound to $31 a pound. You know, the long-term price also fell a couple dollars, but spot volumes were up and long-term volumes were down. We're still seeing impacts from COVID on supply impacts. I mean, we did see a number of mines shut down early in the first round of COVID. Now you're seeing some startups with the Cigar Lake in Kazakhstan. But we did see, or we have seen, a reduction in global supply, and we think that there's potential for further shutdowns from COVID surges.

Long term, the persistence of these lower prices, even though that $30 is higher than it was a year or two ago, you know, we think that demand continues to significantly outstrip production. It is estimated by TradeTech, in 2020, the shortfall is nearly 70 million lbs, which is huge. When you look out to 2030, the uncovered supply is nearly 1 billion lbs. While at the same time, mines are depleted, they're being shut down. Ranger Mine, Cominak, shutting down in 2021. BHP recently announced that they are not expanding the Olympic Dam in Australia, and there's a lack of general investment in production overall around the world. So long-term supply risks are getting greater, not less. So a bright future for uranium.... Next slide.

We'll talk about vanadium, and I mentioned that we produced, you know, nearly 1.9 million lbs of vanadium in 2019. We still have about 1.7 million lbs of high purity vanadium in inventory, valued at current prices, that's nearly $9 million. We still have 1.5 million lbs-3 million lbs of vanadium that's recoverable from our tailings facility, and the current price of vanadium, though, is about $5.35, which is low, but we can restart fairly quickly if the price increases. There's a Section 232 that was filed by two companies here in the United States.

We did not file that petition, but we have participated at a certain level because we certainly would be benefactors if there is some movement and the president, whoever that new president is, signs it into impose trade remedies, if any, you know, early in 2021. Next slide. Now, let's talk about market position. I think it's important to let you know that even though we've got this market position relative to our peers, I really don't think there really is a peer to Energy Fuels. We are so different from everybody else that primarily or is a hundred percent uranium focused. Look at our market cap is about $200 million, so if you look in that table, we're kind of in the mid-tier there.

From a working capital perspective, and this is after, you know, this is including the liability of paying off our debt, we have around $45 million of cash or working capital, which again, in itself is a differentiator. If you look at debt, zero debt. Most of our peers have substantial debt, and we have no debt with exception of Denison and Peninsula. We also have the inventory that I talked about, which again, gives us the ability to move material at higher prices very quickly. But when you move over to the right there, you know, and you start looking at what we do, you can see why I say there are no peers for Energy Fuels. We have ISR and conventional production. Only Cameco has both.

If you move over to vanadium, we have the vanadium plant at White Mesa, with a proven history of being able to produce vanadium. Alternate Feed, which many of you have heard me talk about, generally is between $5 million-$15 million per year of revenue, where we can recycle, low-level natural uranium and create, you know, in power or, or fuel for nuclear power plants. And then lastly, and this is a huge one, a huge one, rare earths. Nobody on that list is advancing like we are with rare earths or has the ability to potentially go into commercial production next year. So I think that our optionality, we are critical mineral central, and we've got so much optionality.

I was very pleased that Dave Talbot from Eight Capital said we were the top uranium pick in all of North America, and I believe, and hopefully in time, due course, as we move forward, we can also be a substantial rare earth pick in North America as well. So I think that says a lot about where we can kind of fit in, and I don't know anyone who has that capability because the rare earths that we're processing have substantial quantities and are uranium ores that we can process at the White Mesa Mill. Next slide. All right, and again, many of you have seen this slide many times. I think it speaks volumes as a proven uranium producer. Over the last 15 years, the blue, the light blue is production from Cameco Corporation's operations in Wyoming and Nebraska.

The blue is uranium production from Energy Fuels assets. Then down below, you see uranium production from Ur-Energy, and that really light blue, and then the red was the Uranium One Willow Creek production in Wyoming, and there's a few others. Between Cameco and Energy Fuels over 15 years, the two companies produced 85% of the uranium in the United States. If you add Ur-Energy and Uranium One, it's closer to 97%. We know we can produce uranium. We have decades of experience producing uranium, and we have produced it, and we continue to produce more than anybody else. So I think when you're looking at making an investment in uranium or any of these commodities, it's important that you deal with people that have a track record of successful delivery. Next slide.

Now, this has been on our deck for a while. It's still there. This is the opportunity to participate in government cleanup of abandoned uranium mines in the Four Corners region. If you look at this, you can see the stars is White Mesa at the top of that graphic, the picture, in southern Utah. That's the Four Corners region. The red dots are mines that were either never reclaimed or poorly reclaimed. And then there's a star down by Albuquerque, by Grants, a green star, on a project that's not on Navajo land that we're currently cleaning up. So the orange is the Navajo Nation, and the U.S. government has an interest, about $1.7 billion to clean up the Navajo Nation, and we would love to help them with this.

The White Mesa Mill is fully licensed and capable of assisting with that cleanup now, and we are, in fact, hauling ore from a uranium mine, that Green Star down there in New Mexico, to White Mesa. It's a small job for us, but it's around $200,000 per month, and it could be ten times that with no problem.

So we have a couple of ongoing projects, the one that I just mentioned, at the private mine in New Mexico, but we've also volunteered to clean up some of the Navajo Nation, a small project, for free, to try to get more material from the Navajo Nation, coming our way, and we can both process it, recover the uranium, recycle the uranium, clean it up now, and really do a service for those mines that need to be addressed and haven't been properly addressed over time. Okay, next slide. This is a bit more on our financial circumstances and situation. You know, you can see the nearly $45 million of cash or working capital at the end of the quarter, the inventories of approaching 700,000 lbs of uranium, the 1.7 million lbs of vanadium.

I wanna point out that if you look at the value, how we're carrying our working capital, we're valuing the uranium on our books at $23.13 a pound. So when you look at the $29.90 current price, 30% higher, we're actually very conservative on our working capital numbers because of the fact that we carry it on our books at $23. So, you know, you know, and I still wanna reiterate the fact that, you know, having zero debt, it wasn't easy, but we're glad we did it, and we're glad it's behind us because it's not good to have debt in any kind of it.

Well, look, I'm not against debt, but I certainly don't support having debt that you may not be able to cover depending on market circumstances, and we're completely clean of that. Okay, next slide. We talked about this as well. We're currently looking at the potential of divesting some non-core assets, and we've got two or three fully permitted conventional mines with substantial resources and strong production histories. We have a number of companies that are interested in that and are going through due diligence on that. We're also looking at offering a milling agreement, a favorable milling agreement at White Mesa, which nobody currently has. So if somebody purchases these properties, you know, and as I said, they're fully permitted, and they have a long production history.

You know, the reason we're looking at divesting these assets is we've got so many assets that we don't get credit for it, and we think that this is a great way of getting some value recovery. They still would use the mill when the price recovers, and we can still participate in it by having potentially share ownership in the company that acquires some of these properties. So watch this space. We'll see how it goes. We will not sell these assets unless we get attractive offer for them. But, as I said, there's substantial amount of interest already, and we're very encouraged with the people who've shown up at the door. So next slide.

Look, just in closing, you know, Energy Fuels' unmatched ability for uranium production to increase uranium production quick and fast from our existing fully paid for facilities, more facilities, more production capability, more production experience than any other company in the United States. The rare earth opportunity moving very quickly to be able to make a concentrate in a little over six months from when we announced we're getting into that, unheard of. Key government support in this area and key bipartisan government support as well. We're well positioned financially with the balance sheet that I explained with zero debt. We're evaluating the potential divestment opportunity and, you know, then we've got the vanadium, the alternate feed, the land cleanup, and other potential opportunities for upside that nobody else has. So thank you very much.

Now I'll turn it over for any questions that anybody that's listening to the conference call might have for myself or my team.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star, followed by one on your touchtone phone. You'll hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star, followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Okay, so your first question comes from Mark Reichman of Noble Capital Markets. Mark, please go ahead.

Mark Reichman (Senior Research Analyst)

Well, congratulations on moving from concept to reality in a short timeframe. My first question, I really just have two. First question is, if you could elaborate on which rare earth elements does the concentrate include? And, I'm kind of assuming cerium and maybe thorium, and maybe if you could maybe talk, speak a little bit about kind of the pricing of those particular elements and kind of maybe how, it may be too early, but kind of how you're thinking about, you know, what kind of margin you might generate from the sale of the concentrate.

Mark Chalmers (CEO)

Yeah. Well, thanks, Mark. Look at the rare earths and the uranium rare earth ores contains uranium. The main value driver of these concentrates is the NdPr. These are fairly high grade with the magnetic elements, but it also has cerium and lanthanum. You know, this is, this is, you know, pretty high-grade stuff. You know, when you look at the concentrate, and I don't wanna be quoted on the actual number, but, you know, we believe it'll be in that, you know, concentrate between that 40%-50% TREO, somewhere in that order, with very high distribution of the NdPr, which is the big value driver.

You know, one of the advantages of the value of the material that we're looking at, the ores from the monazite is it is relatively high grade. The uranium content is about what we typically mine on the Colorado Plateau. And because it has higher grades, you can transport it further than you can if it's, say, had a 1% or 2% TREO grades. So we think we have an advantage by having higher grade rare earths feed, or at least that's what we're seeking to secure for the mill. When it comes to margins, it's pretty early on. We've got to secure adequate quantities to kind of get the order, you know, the scales that we need to get the best margins we can get.

We are planning that by securing adequate supplies, that we will start looking at separation at White Mesa and perhaps metal and alloys. When you go further down the chain, you actually get better margins, okay? So, but we do think that with relatively modest quantities of this material, we can be cash neutral at the mill, while we're processing that material. So we're very excited about it. And as I said, we believe we can be with the types of material we're testing, that we can be world competitive.

Mark Reichman (Senior Research Analyst)

Well, the NdPr, that's an important point. The second question I had was, you know, you have a fairly significant amount of inventory, both of uranium concentrate and vanadium. And, you know, understanding that inventory kind of helps your working capital, you know, to perhaps bolster the balance sheet. I was just wondering, with the retirement of the debt, does that change at all your thinking on when you might decide to draw down your inventories?

Mark Chalmers (CEO)

You know, I think the main driver on when we draw down those inventories is more price dependent.

Mark Reichman (Senior Research Analyst)

Okay.

Mark Chalmers (CEO)

You know, we think that uranium prices should, you know, increase more than they're gonna decrease over time. You know, so we wanna be in a position to where we can, you know, opportunistically, be able to fill certain, you know, demands, with that material. But, you know, there's no real 100% game plan of what we do and how we treat those inventories. But you know, we're in a position where we can, you know, fill a contract or fill a spot price, or fill the national stockpile that we've been talking about for the last, you know, year or so, very quickly, and we can do it at a scale that's larger than anybody else.

You know, we showed that we have it on our books at $23 per pound. You know, if all of a sudden we're getting some number with a 5 or 6 handle, you know, you can imagine what that does to our balance sheet. It helps us substantially. So, Dave, I don't know if you have anything you'd like to add to that, our CFO or counsel?

Dave Frydenlund (CFO)

No, Mark, I think you've captured it well. You know, we get credit on our balance sheet for working capital. We wanna maintain adequate working capital at all times. So we normally wouldn't consider a dollar-for-dollar trade of inventory for cash. I think it makes sense for us to hold onto it for rising, to sell on rising commodity markets. It gives us more flexibility for contracting and other things as well on the rising market.

Mark Reichman (Senior Research Analyst)

Well, thank you. That's very helpful.

Operator (participant)

Your next question comes from Joseph Reagor of Roth Capital Markets. Joseph, please go ahead.

Joseph Reagor (Managing Director and Senior Research Analyst)

Hey, guys. Thanks for taking the questions. And obviously, congrats on getting this far so fast. I guess the first thing on the rare earths, you know, what should we look for as the, you know, the future milestones now that the, you know, initial pilot has been run, maybe, say, over the next 12 months?

Mark Chalmers (CEO)

Okay. Well, Joe, you know, the first thing we wanna do, and I mentioned it, you know, we wanna get, you know, supply agreements for providing material, you know, hopefully for, you know, several years, you know, at scale, to White Mesa for processing. You know, in addition, we're looking for an outlet, at least at this point in time, when we don't have the ability to separate, potentially to go to somebody like Neo, who has a facility in Estonia, because there is no separation plants in the United States currently, and that's why we may actually have to be the ones to build the first separation plant here, to start integrating this.

So look, Joe, it's my goal that in the next month or two or three, we can announce that we have a substantial supply agreement, where we can get this monazite sands ore stream, that we can start producing commercially at White Mesa. So I think that's the first step. Another step could potentially be that we've got an outlet for selling the concentrate for the next step, which is separation. But I think it's also interesting too, because the only company that's currently doing this in the world that I know of is CNNC in China. So the monazite streams are going to China, and they're going to China because, one, the Chinese wants it, two, there's no other alternative.

We're making White Mesa an alternative, or that's our goal to, not, not at the scale of CNNC, but at a modest level, giving an alternative for U.S.-focused and processed rare earths. So, you know, I'm hopeful we're gonna have good news flow, but I would expect the next bit would hopefully be a supply agreement of some substance and magnitude.

Joseph Reagor (Managing Director and Senior Research Analyst)

Okay, fair enough. Switching gears to uranium. You mentioned in your prepared remarks that you see bipartisan support for the first time in a long time for the nuclear sector. You know, we don't know who's gonna be president yet, but, you know, I think, you know, we've gotten to see four years what Trump might give you as far as help. What kinds of things do you think a Biden win might mean for avenues to improve the U.S. nuclear industry?

Mark Chalmers (CEO)

Well, I think he's expressed an interest in you know, new reactor technologies and that he hasn't bad-mouthed nuclear power like he has hydrocarbons, okay? You know, we're gonna continue to push for you know, in a bipartisan way you know, the funding of the National Reserve. We have support from Neo Performance Materials. We believe we have support from utilities to have this stockpile. And we think that's gonna be helpful with the change of administration. You know, we know that you know, if the new administration is focused on you know, zero carbon emissions in 15 years, there is no way they can get there without nuclear and without supporting uranium mining and being tougher on some of these state-owned enterprises in Russia and China.

Joseph Reagor (Managing Director and Senior Research Analyst)

Okay. Helpful. And then, one final thing, if I could. Obviously, there's been a lot of news about fusion and out there lately. You know, given that it's not really commercialized yet, could you help me and investors with, you know, an understanding of what that might look like, you know, if fusion is successful, where, you know, what does the demand for uranium look like in the world? How does it change?

Mark Chalmers (CEO)

You know, Joe, I've been in this business for 45 years, and they've been asking that same question since I got in the business 43 years ago, you know? You know, it's been around for a long time. I'm not, you know, overly concerned about how that impacts anytime in the near term. So, you know, I don't know if I can give you any other feedback on that. You know, I think the key focus that I see that's very exciting is with these small modular reactors using HALEU, which is this 20%... You know, typically, these reactor loads are about 5%, U-235, and the new reactors are gonna be fueled with 20%.

That, that gives them, you know, longer life when it comes to refueling and things like that. So, you know, I haven't heard people talking about fusion for the small modular reactors at all. But, look, Curtis, you're on the call. Do you want to say anything in that regard?

Curtis Moore (SVP of Marketing and Corporate Development)

No, I don't, I don't really have anything to add. I think, yeah, I think you, you covered that. I mean, yeah, I mean, there's, there's, there's always, you know, talk about some of these new technologies. You know, fusion is something, you know, we've heard about, but, you know, again, it's something to- one thing to, to, to, to test it and another to actually bring it to full commercial, production and deployment. So, we'll certainly continue to follow it, but, yeah, it's not something we're planning around right now.

Joseph Reagor (Managing Director and Senior Research Analyst)

Okay. Fair enough, guys. I'll turn it over. Thanks for the call.

Mark Chalmers (CEO)

Thanks, Joe.

Operator (participant)

We have another question from Mark Reichman from Noble Capital Markets. Mark, please go ahead.

Mark Reichman (Senior Research Analyst)

Thank you. Just a couple of follow-ups. I think we kind of know where that the nuclear fuel working group kind of thing stand there, but was wondering if you had heard anything or had any expectations with respect to Trump's September thirtieth executive order related to you know, critical minerals. You know, I think it was a 60-day clock. I know we're in the middle of an election, but there was supposed to be a report 60 days from September thirtieth from the Secretary of the Interior. So I was just kind of curious whether you had any visibility on that or you had heard anything you know from that?

Mark Chalmers (CEO)

Well, look, it's certainly a priority in the current administration, and we've been told that it will be a priority regardless if there's a change of administrations. One of the advantages of that award that we got on the coal base-

Mark Reichman (Senior Research Analyst)

Yes.

Mark Chalmers (CEO)

Rare earth review has given us some pretty interesting visibility into the Department of Energy. I can tell you that our activities with the monazite and White Mesa and the concentrate is not going unnoticed. Matter of fact, I think the government is very excited. You know, in that comment that I made, you know, some experts have said that this may be the missing link in rare earths in the United States, that actually came out of a meeting with the DOE. So, look, I don't wanna go into that too deeply, but, you know, I think that, you know, this. You know, and we got on the map through the Section 232 and the Nuclear Fuel Working Group with White Mesa as the only conventional mill.

Now that we're piggybacking on rare earths, I think it really blows away a lot of the government people at how important that facility is to the United States of America.

Mark Reichman (Senior Research Analyst)

Mm-hmm. Well, the second question I had is really kind of to follow on Joe's question. And that is, you know, it does seem like there is an awful lot of promise with respect to these modular reactors. I mean, they kind of address some of the three major objections, and that is, one, the cost. You know, it seems like the technologies are evolving, where there'd be less, you know, waste generated, and also lower chances of a meltdown. And so, you know, I know Bill Gates is involved in that TerraPower, so it seems like that this may t- could evolve, or it takes some people by surprise.

But if you start to see more of those develop, how do you kind of compare the needs for uranium, you know, if you see more of these, modular reactors kind of displacing the large-scale reactors, or is it a little too early to even hazard a guess?

Mark Chalmers (CEO)

Yeah, it's probably too early, but I have to admit that it's surprising me how quickly it's catching on, isn't it, you know?

Mark Reichman (Senior Research Analyst)

Mm-hmm.

Mark Chalmers (CEO)

And you know, when you look at the fuel cycle, you know, this whole concept of the HALEU, you know, the 20% requiring less reloads, it has less waste to dispose of. You know, these things are built in a passive way, where they don't even have valves, and they just fail safe. You know, there's a lot of remarkable work going on. And what's also interesting is the people that are kind of leading this charge, I mean, people listen to Bill Gates, okay? You know, now, I'm not saying that I'd recommend that at all times, but, you know, we've got some really key supporters here that are saying this is the key to the future. And so I don't know exactly how it rolls out.

You know, you saw some of the awards that were made for NuScale as well. You know, NuScale is, you know, quite advanced at Idaho National Laboratory. You know, these things are, you know, a lot more flexible because, you know, they're modular, and you can bolt them together. I mean, they're... You know, historically, you know, a nuclear reactor requires a very large population base, and you start looking at these, you know, 50 MW, and you say six of them or five of them or two of them or whatever they are, you know, it's quite exciting. And not just exciting here in the United States, but in places like Canada, far north of North America, you know, places like Australia, Africa, remote locations.

Mark Reichman (Senior Research Analyst)

Thank you very much.

Operator (participant)

Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. Okay, it appears there are no further questions. Please proceed.

Mark Chalmers (CEO)

Well, in closing, those who participated, thank you very much for your time. Appreciate the questions, appreciate your interest in Energy Fuels. Again, the replays will be available for two weeks, as I mentioned earlier. I'd just like to say, everybody, that, you know, we're very excited here at Energy Fuels. We're focused on doing big things. We're focused on having the right team in place to do the significant, wonderful things that we're working on. And, you know, it's, and you know, we're trying to make big things happen. So, you know, watch this space, watch for more news flow, and hopefully, we can have more on both the uranium and rare earth fronts in the not-too-distant future that will really provide value to our shareholders. Thank you very much.

Operator (participant)

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.