Energy Fuels - Q4 2021

Transcript

Operator (participant)

Good afternoon, ladies and gentlemen. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Energy Fuels fiscal year 2021 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. To withdraw your question, simply press the star followed by the number two. I would now like to turn the conference over to Mr. Mark Chalmers, President and CEO. Please go ahead, sir.

Mark Chalmers (President and CEO)

Thank you, Michelle. Good morning or good afternoon, wherever you're joining this call from. We're very excited today to talk about our 2021 achievements and also a number of achievements that we've made early in 2022. There is a lot to talk about. For those that cannot join the call today, we'll have replays available for two weeks on our website, and those should be up either later today or tomorrow. I'm really happy to report that we continue to make extraordinary progress on many fronts. Energy Fuels has absolutely emerged as the clear leader in U.S. critical mineral production at a time when this has never been more important. Today, I will break this down in two parts.

First, I'll talk about the highlights that are included in our press release for 2021 results, and then I'll follow that up with an updated corporate presentation. Let's get started with the highlights. Firstly, we were very pleased to be able to report net income of $1.5 million for 2021. I don't believe there is any other of our peers that will report net income in 2021, and I think it's an extraordinary accomplishment in these, what were difficult circumstances. Certainly, a lot of that was attributable to the monetization of some of our non-core assets. Again, a win is a win, and we'll take it.

Second, at the end of December 31st, 2021, we reported a very robust balance sheet of approximately $143 million of working capital, including $113 million in cash and marketable securities and $31 million of inventory, plus no short-term or long-term debt. If you look at what those inventories are worth today at current prices, the inventories are up to $60 million and perhaps north of that. We've gotten a very nice bounce off of increased uranium and vanadium values. Our working capital that reported at the end of 2021 also does not include the value of the shares that we hold in Consolidated Uranium, which are restricted shares at this time.

If you take into account what we reported for year-end, look at the increased current metal prices and the value of Consolidated Uranium shares, you can see we're being very conservative and actually have in the order of around $200 million if you combine those all together. Everything that Energy Fuels produces or has the ability to produce is going up rapidly. At the end of 2021, uranium prices had increased by 38%. The neodymium and praseodymium, NdPr, had increased at the end of 2021, 112%. Vanadium was up 62%. That trend just continues into 2022, particularly with the developments in Russia with the invasion of Ukraine and Russia being a major supplier of nuclear fuel to the United States of America.

We didn't sell any uranium in 2021, but we are now actively engaged in pursuing selective long-term uranium sales contracts like we haven't seen for many, many years. Last year, we produced 270 metric tons of rare earth carbonate, which contained about 120 metric tons of total rare earth oxides. Energy Fuels is more advanced than any other company in North America when it comes to producing rare earth material. We are also continuing with numerous active discussions with several sources of natural monazite sands around the world, and I hope that we can be able to report with some updates on that in the not too distant future, but certainly during 2022. It's my goal.

At the beginning of 2022, in the first quarter, the company began commercially separating lanthanum and cerium at a small scale, but commercial scale, with our rare earth carbonate using an existing solvent extraction circuit at the mill. This represents the first commercial separation of rare earth carbonate that has occurred in the United States for many years. We still are planning to install full separation circuit at the White Mesa Mill to produce both lights and heavies in the coming years, and we're focusing on advancing that as quickly as possible. We also have hired Carester for a full scoping study for the White Mesa Mill through separated oxides. We had done some work with Carester. Initially it was sort of a small scoping study, but now we're moving into full scoping study with Carester.

We believe and hope that the materials that we receive from Carester from the full scoping study will be adequate to advance our permitting initiatives at the mill. Late in 2021, we announced a strategic venture with Nanoscale Powders, and this is looking at novel technology for the production of rare earth metals. Still early days, but we're looking beyond separation of the oxides. The company sold a small amount of vanadium in 2021, but we expect to sell more vanadium as the price of vanadium increases, and we may well go back into vanadium production by extracting vanadium out of our tailing cells in the next year or two, but it'll depend on market conditions and some of the other activities we have.

In 2021, in about the middle of 2021, we announced the execution of a strategic alliance with RadTran LLC for potential recovery of thorium and radium for the production of medical isotopes for cancer therapies. We're very excited about that. It's early days, but this is something that we can potentially capitalize on because we have the radium and the thorium at the White Mesa mill. In September of 2021, and this is a long list here, so I'm gonna get through it and move on to the corporate presentation, but we're very proud of these highlights. We set up the San Juan County Clean Energy Foundation, specifically designed to contribute to the communities surrounding the mill in San Juan County, one of the poorest counties. Well, the poorest county in Utah, one of the poorest counties in all of the United States.

Approximately half of those people are Native Americans, and the poverty level is like 30% or 40%. We're very excited about the foundation. In October, we completed the sale of certain non-core uranium assets to Consolidated Uranium and that's what we were able to report a gain in value of that transaction of approximately $35 million. We look forward to working with Consolidated Uranium as they progress their plans to further define the resources there and also potentially go back into uranium production, which will be milled at the White Mesa Mill. Early this year, we're very proud that we're able to appoint Ivy Estabrook as a director of Energy Fuels.

Ivy holds a doctorate, and she also has extensive experience in biotech research and development, program leadership, and technology solutions, so we're very proud to have Ivy join the board of Energy Fuels. Now lastly, it wasn't included as a highlight, but it's still core to Energy Fuels, but we continue to focus on our industry-leading recycling programs for uranium and vanadium. This is a remarkable thing that we do at Energy Fuels when it comes to recycling natural uranium and vanadium to reduce carbon emissions. Now I'll move to the corporate presentation. The corporate presentation, I just wanna remind all of you that you will be controlling the slides, so you'll have to advance your slides on your own. I'll try to remind you when to advance them. If for some reason I forget, I apologize in advance.

At the end of the presentation, the corporate presentation, Dave Frydenlund will join me to answer any questions that I might not be able to answer. Anyways, let's move on to the corporate presentation. Now, the first slide should be the slide of the White Mesa Mill, where it says, America's leading producer of critical minerals. Next slide. I may be making some forward-looking statements. Those are included at the back of the presentation. Next slide. Energy Fuels. I tell people that there really is no investment like Energy Fuels. Typically, if you wanna invest in the uranium industry, you invest in a 100% uranium-focused company. Or if you wanna invest in rare earths, you invest in a 100% rare earth-focused company. With Energy Fuels, you get both. Matter of fact, you get both and a bonus called vanadium.

Basically, all the things we do, if you look at the uranium, the rare earths, vanadium, medical isotopes, recycling. The common denominator is one thing, it's radioactivity, and the ability to recover uranium and the ability to recycle, and produce a number of the critical elements required for decarbonization and electrification. We're very proud of this. This is a good news story. Lastly, I'll talk about it more, is our substantial financial strength and zero debt. Next slide. I already mentioned it, but the establishment of the San Juan County Clean Energy Foundation, this is a very significant initiative for the company.

We're very focused on ESG, we're very focused on sustainability, and we're very excited about the foundation because we deposited $1 million into the foundation last year, and we plan to fund the foundation going forward with 1% of the annual revenues from the White Mesa Mill. This could and should be a very substantial source of funds for the foundation going forward that can make material difference in a very poor region. Next slide. Most of you have seen this slide many times, but our footprint is large from Wyoming down to Texas. The White Mesa Mill is the blue star in the Four Corners region. Nichols Ranch and Alta Mesa are on standby but could be starting up soon because of the price of uranium.

We have a number of permitted assets throughout the Western United States. The focus on nuclear power is increasing by the day to reduce carbon emissions. It's a very, very interesting time to be in the uranium business, but also in the rare earth business and the vanadium businesses as well. Next slide. Again, many of you have seen this picture, but it shows the three fully paid for producing assets, the two in situ recovery assets in Texas and Wyoming. The White Mesa Mill in White Mesa is where we produce uranium, vanadium, and the rare earths and do the recycling. Of course, the Pinyon Plain Mine in Arizona, which I built back in the late 1980s, and it is the highest grade conventional underground mine in the United States. Next slide.

This slide, it should be a picture of uranium production in the United States over the last 15 years. This is a very important slide because it shows who has produced uranium in the United States at significant levels over a long period of time. When you look at this slide, you can see in sort of the light blue, 25 million, that is Cameco's production from their U.S. assets. When you look at the darker blue, the 15.6 million, that is uranium that was produced from Energy Fuels assets. Between Cameco and Energy Fuels, 86% of the uranium produced in the United States over 15 years was produced by two companies. Number three on that list, if you add up all the production, Energy Fuels was 5x number three.

We definitely stand out amongst the crowds when you look at the amount of uranium we have produced in the past and the uranium we will produce in the future. Next slide. This next slide just shows kind of where we sit in our peer group, and we are in the middle, but as I just mentioned, we have a very long history of producing uranium, and we'll produce a lot more uranium in the future.

I wanna point out a couple things, that when you look at like the cash working capital inventories, that $144 that I mentioned, which I believe very conservative for the reasons I pointed out earlier in the highlights, you know, we're in a very strong financial position to carry out all our activities going forward rapidly without any worry that we're not gonna be able to fund our activities. I also wanna point out that we have about 700,000 lbs of finished uranium that we produced. We didn't buy. Most people on the list have purchased uranium. That was a good plan because a lot of people purchased it at prices, but we produced our uranium.

We have the ability, looking out over the next few months or the next six months to a year, of producing more uranium probably quicker, faster than anybody else because we have uranium stockpiles and alternate feed material that we can run through the mill, in a very short course of action when we decide to process that. The main thing on this slide that I wanna point out is you look at our peer group in the uranium space. All of us are focused on uranium, but no one on that list, except for Energy Fuels, is producing rare earths. Nobody on that list has a vanadium circuit and can produce vanadium or the medical isotopes or has the ability to do the recycling. We really are in a class of our own.

There is really no peer group for Energy Fuels. Next slide. I've talked about how uranium and rare earths fit perfectly together because the best rare earths contain uranium, and we have the ability to recover the uranium at the White Mesa Mill. Certainly, the focus on electrification is going in leaps and bounds, and the forecasts are saying up to fivefold increase in the next 10 years. Constantine Karayannopoulos, which I've mentioned a number of times, continues to say that Energy Fuels could be the missing link for rare earth production, not just in the United States, but in the world. We did enter commercial production last year. As I said earlier, nobody else is advanced as we are with the way we can process at the White Mesa Mill of these rare earth carbonates and the first stages of separation.

We are still absolutely focused on full integration at the White Mesa in the next few years, and we're gonna be focused to get to the separated oxides, as I mentioned, lights and heavies in due course, and potentially metals and alloys. Next slide. Our main focus continues to be on monazite, and particularly monazite sands. We're focused on that because it is a byproduct of heavy mineral sand production around the world. It's very high grade. It has great distributions of the total rare earths, and high in oxides and the neodymium, the praseodymium, and the heavies, the dysprosium, and the terbium. It's much higher grade and has better distributions than other sources of monazite like bastnäsite, which is also a good source, but not nearly as good a source as monazite. You know, watch this space.

Again, you know, we think that it fits perfectly into our capabilities because of the fact that we can monetize uranium and potentially the thorium in due course. Next slide. Just a picture of the mill. Again, I've, you know, shown this slide a number of times. The production of rare earths will just take up a fraction of the capacity of the mill 'cause the mill is licensed to produce or to process 700,000 tons of ore per year. Even if we achieve the likes of Lynas' capacity in due course by securing adequate sources of monazite, you're only talking a few percent of the capacity, maybe 3%, 4%, 5%, 6%. We have ample capacity to ramp up the rare earths and also produce significant quantities of uranium and vanadium. Next slide.

In 2021, you know, we launched this U.S.-European supply chain. You know, we are securing material from Chemours. We're looking at other sources of supply that will be many times greater than what we're currently receiving from Chemours. We're making the carbonate, and we're shipping that material to Neo at their Silmet facility in Estonia because there is no separation in North America. That's a plan that got us to market very quickly. It impressed a lot of people because we creatively bolted together three companies to get to integration, at least through separated oxides. Our long term will still and will continue to be U.S.-centric, where we have full integration. I already mentioned the fact that we have started a more extensive collaboration with Carester.

Carester is the world leaders in processing, cracking and leaching and separating of monazite. We're very excited about that and as I said, going into full scoping as we speak. Advancing the Nanoscale Powders. Lastly, we have a long history of dealing with solvent extraction at the White Mesa mill. We're very well equipped. We have the experience to move to separated oxides because of the fact of our long history of solvent extraction. We understand it very well. Next slide. This slide just shows, you know, what we've accomplished in the last couple years, 'cause we've only been actively advancing the rare earth business in the last two years. You can see the top line existing where we've got Chemours.

We've got our cracking and leaching at White Mesa Mill, shipping that to Estonia, to Silmet and Neo, and then they have the ability to value add going down the chain. We also have a relationship I'd like to mention with Hyperion. Hyperion, they changed their name in Tennessee. We believe that in due course, they're gonna also have material quantities of monazite sands to feed to White Mesa. Looking down below the line of existing, the planned area, we're looking and talking to people all over the world, North America, South Africa, Madagascar, Australia, New Zealand, and South America. We believe that this year will be a very important year where we show that we have substantially increasing supplies of monazite sands to ramp up production at the mill.

If we had that monazite right now, we could probably produce 10,000 tons a year of monazite or greater right now if we had it. It's quite important that we're able to secure material sources of monazite going forward, and then it all fits together from there. I am certain we're gonna get there. I don't know exactly the date or the quantity, but I can tell you there are a lot of people interested in what we're doing around the world. Next slide. This just shows some pictures of the carbonate heading off to Estonia, in the bulky bags.

It also shows some of the lab pictures of the lab, the crack and leach in the internal of the mill. At the lower right-hand corner, we are doing separations at lab scale 24/7 with the chloride route. We're also building out a full-scale separation plant at this pilot scale for nitrate approach to separations and again running 24/7. We are doing it right now, and we have the ability to do it right now because we have the people that know how to do it, and at the same time, we have the facilities to do it at our own pace, which is most people don't have. Next slide. This slide just shows additional pictures in the mill. Lower left-hand corner is a picture of Constantine Karayannopoulos.

On the far right, Logan Shumway, the mill manager, and myself at the packaging facility for the rare earth carbonate. Next slide. I already touched on the collaboration with Nanoscale Powders. It's early days, but again, we're very excited about potentially advancing a revolutionary technology that will produce less greenhouse gas, require less energy, and it could be significant to the metals making a step of the process using this new technology. Next slide. Why will Energy Fuels succeed where others have failed? Well, number one, we have the permits. The permits to recover the uranium and deal with the radionuclides are very, very difficult to get now in the United States or anywhere else in the world. We're focused on the monazite, which I mentioned has the great distributions, very high grade.

It is mined around the world, and it's a byproduct. It is the process in a monazite is straightforward if you have the ability to deal with the radionuclides. It's very low capital and operating costs relative to other feeds of rare earths. We have the history, as I mentioned, with solvent extraction technology, and we're moving forward with separation technologies using SX, which are well understood by us. Lastly, Utah is a great place to do business, and we look forward to making Utah a very, very significant world-scale jurisdiction for rare earth production globally. Next slide. This slide just kinda shows sort of like the slide I had on our Uranium Peer Group, kind of where we fit in with the Rare Earth Peer Group, where Energy Fuels fits in.

You can see that the likes of Lynas and MP have market caps from $7 billion-$8 billion. You can see that Lynas or MP is focused on bastnäsite, which is a lower basket value than the monazite. But you can see that Lynas and Iluka and us, and particularly with the current prices of rare earth oxides, the monazite has a very high basket value, which helps in the economics and reduces processing costs. Next slide. Vanadium. As I said, uranium, rare earths, and vanadium's a bonus. Vanadium prices have gone up dramatically. In current prices of around $12.25, we have around $20 million of vanadium in inventory. We're looking at how to best play the vanadium card.

I mentioned that we may potentially go back into vanadium production, when the time's right, and we can go back and produce at substantial profits based on current pricing, with the recovery of vanadium from our tailings facility. Next slide. Again, I mentioned it in the highlights, the medical isotopes and the agreement with RadTran. Again, watch this space. This could be a very substantial add-on to Energy Fuels. White Mesa is the perfect place to harvest the uranium, the radium, and the thorium, for treatments to treat cancer. We had one party tell us it's not about treating cancer, it's about curing cancer. Watch this space. It's still early days, but we're very excited about it. Next slide.

Uranium recycling has always been a very important part of our business plan, and it's done so much when it comes to reducing carbon emissions, and it will continue to be a core part of our business because it really fits into these ESG requirements, and the world needs more uranium, and they certainly need more recycling. Next slide. We're still continuing to try to advance the addressing of these Cold War legacy uranium mines that were either not reclaimed or poorly reclaimed. We still are cleaning up the project that's over by Grants, New Mexico from a private party. We've taken about 60,000 tons of cleanup material, low-grade ore, to the mill. We basically get the uranium from that cleanup project for free. We get paid a fee.

It gets transported and delivered to the mill. This is the lowest cost uranium production probably in the world because it's basically for free. We look forward to doing more of that. We can do it on the Navajo Nation, and we can do it right now, if the EPA and the Navajo Nation decides they actually wanna get the cleanups going, we can do it right now. Next slide. Sorry, I get my slides mixed up here. Now on our financial strength, and when I talked about this working capital that are, like, $144 million, that is with uranium on our books at $23.79 and vanadium on our books at $5.11. Current prices for uranium are almost $60 a pound, and vanadium is north of $12 a pound.

The price of vanadium from book value has gone up 146% for uranium and 140% for vanadium. When you make adjustments for current values, you can see that again, you know, we're being pretty conservative when it comes to our cash and working capital. Also, as I mentioned, those numbers do not include the value of the CUR shares when we divest the non-core assets. Next slide. Really, this is my last slide, and then I'll open it up for questions. There really is no peer group like Energy Fuels. You know, we have and provide our investors exposure to several critical minerals, which again, as I said, are becoming more important by the hour, now with all the instability in the world.

We have the uranium, and we have substantial ability to increase that very quickly. The rare earths, we are making progress in leaps and bounds and several people say that we make more progress in one year than most people make in 10 years. Vanadium prices are up, and we're able to capitalize on that as we speak. I talked about the medical isotopes and recycling and our substantial financial strength going forward. That's the end of the presentation. I'd now like to open it up for questions.

Operator (participant)

Thank you, sir. Ladies and gentlemen, we will now conduct the question-and-answer session. If you would like to ask a question, please press the star followed by the one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. Please stand by for your first question. Your first question comes from Robert Carlson of Janney Montgomery. Please go ahead.

Robert Carlson (Analyst)

Yeah. Thanks for taking the time to do this. Could you just put a little color on the current status of the utility industry in Europe? I guess there is some possibility that they're gonna bring back uranium into some of these utilities.

Mark Chalmers (President and CEO)

You're saying that the current status of utilities mainly in Europe is what you're saying?

Robert Carlson (Analyst)

Yes.

Mark Chalmers (President and CEO)

Okay. Well, look, certainly the war in Ukraine and the aggression from the Russians has really shook up everybody, including the utilities. And unfortunately, they're in a pickle because a lot of these utilities over the last few decades have become very dependent on uranium and nuclear products from Russia and Kazakhstan. You know, I don't know exactly where it all shakes out here, but I think it certainly highlighted to the utilities and to the public that we've become overly dependent on some of these countries that, you know, are geopolitical foes. I think that you're seeing or we're seeing right now, particularly with U.S. utilities, that there seems to be a willingness to go back in looking at long-term contracts.

Our company wants to be there to work with utilities to provide a transition mechanism. We understand, as I said, they're in a pickle, and we wanna be there to work with them to provide, you know, more production from the United States of America and other developed countries that are our allies, not our foes.

Robert Carlson (Analyst)

Thank you.

Operator (participant)

Your next question comes from Heiko Ihle of H.C. Wainwright. Please go ahead.

Heiko Ihle (Analyst)

Hey, Mark. Thanks for taking my questions.

Mark Chalmers (President and CEO)

Always a pleasure, Heiko.

Heiko Ihle (Analyst)

Can you hear me?

Mark Chalmers (President and CEO)

Yeah, I hear you.

Heiko Ihle (Analyst)

Good. Good. Hey, you were talking about the medical isotopes earlier. I mean, I just went through your release from last July again, and I'm somehow getting even more excited now than I was last summer. I mean, obviously, you know, the world as we know it has changed in the last month and a half. Can you provide some color on total market size, potential exposure, et cetera? And also, in your release, you mentioned that you required a receipt of any required licenses, permits, and regulatory approvals. What exactly is it you need, and you wanna just maybe give some, you know, like, detail on your progress in receiving all of that stuff thus far?

Mark Chalmers (President and CEO)

Yeah. Look, Heiko, I can tell you that the medical isotope business is probably in the order of $1 billion a year, based on what we've discovered as we've, you know, gone further into this sector. When it comes to, you know, what required licenses we need, Dave Frydenlund's on the call here. Dave, can you chime in here and give a little bit of an explanation on where we are there?

Dave Frydenlund (EVP and Chief Legal Officer)

Yeah. You know, our focus is to evaluate recovering thorium and radium from our existing thorium and radium at the mill. We have a lot of thorium and radium in our natural uranium ores. We're just evaluating concentrating it to the purities required for use by pharmaceutical companies to make medical isotopes. The step from going from handling large quantities of radium or thorium to actually concentrating it requires some permitting at the mill. It's within our general environmental footprint. It's a question of going through, you know, making sure that we get the proper approvals for the concentration. Because each of these radionuclides have got, you know, certain characteristics that require regulatory approvals.

Heiko Ihle (Analyst)

That's fair. Thank you. Also I think very informative and something worth pointing out. Speaking of the geopolitical risk factors in the world, are you seeing an increased focus from, you know, U.S. firms looking for supply from more geopolitically safe areas? I assume there is already a premium assigned to steady and safe supply. What are you seeing both in uranium and also to a lesser, 'cause it's less relevant, extent in the vanadium marketplace?

Mark Chalmers (President and CEO)

Well, Heiko, you know, as I said, we're definitely seeing increased interest from utilities, you know, to looking at, you know, signing contracts with U.S. companies. You know, if you go back, you know, a few years ago, there wasn't that level of activity. Also I wanna point out that if you go back a few years ago, you know, the price of uranium was, you know, $20 or $25, and the industry was saying they needed, you know, north of 50, probably closer to 60 to go back in production. Not just in the United States, but around the world, including in Canada. You know, right now there is not really a very significant delta between the world prices and the cost of going back in production in the United States.

I think the utilities have moved. You know, the market's moved, and so they've moved, and certainly the instability is concerning everyone. I think we're getting very close to where this market has come full circle. As I said, you know, our goal is to work with these utilities to get the best outcomes possible under the circumstances. Unfortunately, the circumstances are not where any of us want to be, so but we wanna be part of the solution here. Now, on vanadium, same thing.

You know, with some of these sanctions that are going up and, you know, we're seeing demand for vanadium, you know, certainly, as I said, has gone up, you know, dramatically since, you know, from our book values, but also since the beginning of the year. I think you're seeing, you know, the upward pressure on all forms of commodities. I think that's also typical in a highly inflationary environment as well. There's a number of things working there that are pushing up commodities for a couple different reasons.

Heiko Ihle (Analyst)

That's fair. I appreciate your time. Thank you all.

Mark Chalmers (President and CEO)

Thanks, Heiko.

Operator (participant)

Your next question comes from Colin Healey of Haywood Securities. Please go ahead.

Colin Healey (Analyst)

Hey, guys. Thanks as well for taking my questions. I see your guidance of 100,000-120,000 lbs of uranium production this year. But I'm just wondering, if you choose to do so, how quickly could that be ramped up? What would you say would be a reasonable 2022 kind of exit production rate if you maximize that effort?

Mark Chalmers (President and CEO)

Yeah, Colin. You know, it depends on how we juggle the balls here, obviously with rare earth production, uranium production, vanadium production, right? We'll go where we get the biggest bang for the buck for our shareholders and for the company. You know, to put it into context, yeah, that 125, you know, that's fairly low production. We already have material inventories at the mill that could be around 300,000-400,000 lbs that if we decide to go back into uranium production, we could do that very quickly because a lot of that material is sitting in front of the mill. All right. There are other sources that we could also add to that.

You know, we've got our, you know, numerous mines as you're aware of throughout the Western U.S. We're currently looking at plans on, you know, how to ramp up and where to ramp up as is prudent. I mean, that 125 I think is on the low end. It could certainly be much quicker than that, much greater pounds than that depending on how this all unfolds. We would really like to get a contract or two that kind of underpins our production efforts so that we know that it's gonna go for multiple years, not just for a flash in the pan.

Colin Healey (Analyst)

Sure, that makes sense. And on the rare earths, the 270 metric tons of RE carbonate for the 120 metric tons of RE oxide contained in that, can you give us some color on what those are worth, what they cost you and what you're selling them or transferring them for? Just trying to get an idea of margins on that.

Mark Chalmers (President and CEO)

Yeah. I mean, if you look at, it gets a little complicated, but if you look at a ton of monazite sand today, the contained value recovered, the basket value of the lights and the heavies today is about $30,000 per ton. If you look at, like, the material that we get from Chemours, okay? If you take, you know, just, you know, do the math on that, and I'm bringing up my calculator because I have a hard time of doing math and talking at the same time. You know, say, you know, you got 1,000 tons of monazite sands, you know, at $30,000 a ton, now that's $30 million for 1 million tons if you could separate to the lights and you separate to the heavies, okay?

You're looking at very valuable feed, very valuable feed. You know, I'm not gonna get into what we're paying for the monazite, but I can tell you there is a very significant margin when you can get through fully separated lights and heavy oxides. Now, the current agreement that we have with Neo is that basically, you know, we get a percentage of what we ship to them based on sort of the fluctuation of the prices of neodymium, the praseodymium, and some of the other elements. We don't get the $30,000 per ton. Neo doesn't separate the heavies. They make a concentrate that they ship to China, so it gets a little bit more complicated. But I can tell you, Colin, the margins are significant.

We need more scale though, to really fully capitalize on those margins. Dave, do you wanna say anything else in that regard?

Dave Frydenlund (EVP and Chief Legal Officer)

No, I think you captured it pretty well. We believe at current rare earth prices that when we're at full scale production, we will achieve the margins that we expect. We're in the ramp-up phase right now, so it's kinda hard to quantify anything right now, but we're very satisfied with the quality of the carbonate we're making on a commercial scale. As Mark said, if we had more monazite showed up at the door tomorrow, we could increase our production immediately and increase our scale. That's about all I'd add to that.

Mark Chalmers (President and CEO)

I can say this, Colin, that a few thousand tons of monazite we could achieve profitability on that alone, just making the carbonate in this market.

Colin Healey (Analyst)

Right. Okay. That's helpful. I know it's early days and I'm just always trying to get a little bit more color about, you know, what it means to valuation. Just to follow up on the SX circuit and the processing and separation that you're doing. You mentioned it's on a commercial scale. I'm just wondering how much you've fed through that circuit so far and how much you've produced.

Mark Chalmers (President and CEO)

Well, it depends on how much material we get from Chemours. We just started feeding it through that the small SX about a week ago I think. I believe we have currently in circuit around 300 tons. That was the latest shipment from Chemours. You know, we processed about 300 tons last year, and now we're processing about another 300 tons. So it's still early days, but we're very excited about how it's performing. Again, I think it shows that you know the creativity of the guys on the ground and the substantial infrastructure we have and our knowledge of using solvent extraction, how we can do things that others can't because they just don't know how to run those type of facilities.

Yeah, right now, I think, Colin, and I don't have an exact number, but I think we could process 10,000 tons a year of monazite sand right now with the infrastructure that we have in place. Well, you know, I just told you that at current prices, if you could separate the lights and the heavies, you know, that would be a lot of dollars of rare earths, right? It'd be $300 million. You know, I think you can see where we're going there or why we're so excited about this.

Colin Healey (Analyst)

For sure. I understood the scale of processing to carbonate. I was just more curious about the separation, but I realize that's early days as well.

Mark Chalmers (President and CEO)

I can tell you, Colin, that the margins are significant, very significant. I'll just leave it at that.

Colin Healey (Analyst)

That's good. On the thorium and radium radionuclides, I'm not that familiar at all with the market for those, but I'm just wondering how significant to Energy Fuels maybe future top line, like how big of a part of that business or how big of a part of your business could that be? What are those worth? What's the market like? Anything you can tell us about that initiative.

Mark Chalmers (President and CEO)

Yeah, you know, I kind of touched on a little bit a few minutes ago, but you know, we think it's you know, the business is you know, in the order of a $1 billion-a-year business, you know, potentially. It's developing quickly because of some of these FDA approvals. There are a number of parties that wanna secure sources of this material. You know, a lot of it deals with the half-lives of some of these elements that we're talking about. You know, we think it could be very material for us and, you know, it's too early to put out numbers but, you know, we think it could be.

I was gonna say it could be as material as vanadium business or maybe even the uranium business potentially in due course. Dave, do you wanna add anything here?

Dave Frydenlund (EVP and Chief Legal Officer)

Yeah. It's really exciting. You know, I mentioned earlier, we have a lot of radium and thorium at the site as a part of our normal operations. The question is concentrating it, and so we're working on that. What happens is we send the concentrated radioisotopes to pharmaceutical companies and others, and then they develop short-lived alpha-emitting radioisotopes, which can actually target cancer cells. Because these are short-lived, they basically kill the cancer cells, and they kind of decay and fade out before they can hurt anything around them.

There's abilities to research is finding peptides and other types of elements that are these radioisotopes can be attached to and injected intravenously into the body, and then the peptides take the alpha particles right to the cancer cells and ignore the healthy cells. It's amazing technology, and everyone's very excited about it. It's, you know, the problem is that it's very difficult to get some of these radioisotopes. Well, we've got them out the mill. The question is now can we harvest them and produce them. It's very exciting. How much this market will grow remains to be seen. The test results that they're getting are pretty amazing. We're very optimistic that this technology is really gonna take off, and we're in an ideal situation to be a part of it.

Colin Healey (Analyst)

Well, thanks a lot, guys. That helps me start to understand what that could be. Appreciate the time. Thank you.

Operator (participant)

Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one now. There are no more questions from the phone lines. I will turn the conference back over to Mr. Chalmers for closing remarks. Please go ahead, sir.

Mark Chalmers (President and CEO)

Yeah. Thank you. Thank you for the questions, and thank you for your interest in Energy Fuels. You know, reiterating that it's a very exciting time for our company. It's a, you know, very changing world that we live in. You know, we plan to change with the world because that's what you have to do nowadays. If you're looking at an investment on reducing carbon emissions and electrification, you get the one-stop shop with Energy Fuels, and as I said, really with the bonus of vanadium and the medical isotopes in the future, potentially. It's kind of a remarkable story.

I love telling the story, and I understand that it's a bit complicated for some, but we plan to be aggressive but not reckless, as I've said in the past, looking through to the future and this year. I look forward to providing further updates in the coming months that hopefully will be very exciting as we kind of build our strategy going forward. Thank you very much.

Operator (participant)

Ladies and gentlemen, this does conclude your conference call for today. We would like to thank you for participating and ask that you please disconnect your lines.