Energy Fuels is making a bold bet on uranium and vanadium — investors are taking notice

Date: Nov 15, 2018

Shares of the miner have more than doubled since April, not on recent results but on future prospects in uranium and vanadium.

The mining industry has been a difficult place to make a living over the past five to eight years. But one player has seen its stock more than double since April 2018, and now is betting that it can continue to reward its shareholders by hoarding its uranium inventory and establishing itself as a significant player in the vanadium industry.

On November 5, 2018, Lakewood, Colorado, uranium miner Energy Fuels Inc (NYSE: UUUU) released its third-quarter 2018 results, and the stock exploded nearly 18% higher on three times its average daily volume. But the $325 million company’s soaring share price had nothing to do with the prior quarter’s profits, and everything to do with future expectations.

Energy Fuels reported $5.5 million in total revenue for 3Q 2017, but that figure dropped to $451,000 for 3Q 2018. And the company’s net loss ballooned from $4.9 million in 3Q 2017 to nearly $14 million in the most recent quarter.  For 3Q 2018 the company reported no scheduled uranium contract sales and elected not to sell any uranium at the spot market. The company’s approximately $450,000 in revenue came from fulfilling alternate feed contracts.

Suffice it to say that from a numbers standpoint, Energy Fuels’ latest results look terrible. But, again, investors didn’t bid the stock up 18% based on the prior quarter’s figures. Investors reacted to what the CEO Mark S. Chalmers said about the company’s prospects.

BIG PICTURE: Energy Fuels nudges higher as it outlines opportunities to lift uranium output

Chalmers is making a bold bet that he can sell the company’s uranium inventory for more money in future quarters. Here’s what Chalmers had to say regarding his decision to hang on to his company’s uranium:

“At the end of the quarter, we held about 385,000 pounds of U3O8 inventory; all U.S. origin. At today’s uranium spot price of $28, we could have sold this material on the spot market, and perhaps allowed the company to realize over $10 million in revenue for the quarter. However, we made the conscious decision not to sell any of our inventory, as we believe it will be worth more in the future due to improving uranium market conditions. And, U.S.-origin uranium could be worth considerably more if relief is granted under Section 232. Therefore, we continue to build unhedged uranium inventory until the end of the year, giving us the ability to benefit from the future uranium price increases we expect quickly.”

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