Published on Friday May 16 2014 (AEST)
U.S. uranium producer Energy Fuels (NYSE MKT:UUUU)(TSE:EFR) reported Tuesday its first quarter financial results, in which it revealed an increased working capital position alongside lower profit and revenue amid sustained pressure on uranium prices.
At the end of March, the company had working capital of $42.27 million, up from $33.48 million at the end of 2013. The gain was mainly a result of Energy Fuels freeing up over $12 million in cash via a bond restructuring.
It also posted a net loss of $6.34 million, or 32 cents per share, compared to a net loss of $5.9 million, or 40 cents per share, in the year-ago period. Revenues fell to $11.36 million from $34.09 million.
Production during the quarter from the company's White Mesa mill, the only conventional uranium mill currently operating in the U.S., totaled 125,956 pounds of uranium, all of which was from alternate feed materials. It also sold 191,667 pounds of uranium, under term contracts at an average realized price of $58.53 per pound.
Energy Fuels delivers purchased uranium into term contracts, allowing it to purchase uranium at prices lower than its production cost and to realize significant margins between the spot purchase price and the contract sale price. This allows the company to extend the life of its mines by preserving its uranium resources, reducing operational risk and allowing it to implement additional cost-cutting measures amid the weak uranium market.
The uranium market has been hurt by the sharp decline in both the spot and term prices for uranium oxide ever since the earthquake and tsunami that struck Japan in March 2011, which led to the shutdown of nearly all the reactors at the Fukushima-Daiichi atomic power plant. Prior to the March 2011 catastrophe, Japan relied on nuclear power for about 30% of its electricity, according to stats from the World Nuclear Association.
Spot prices and long-term prices for uranium began the year at $34.50 and $47.00 per pound, and are currently down at $29.00 and $45.00 per pound, respectively.
The company said Tuesday that though prices in the short and medium term are under pressure from excess supplies, it believes that prices will improve in the longer term on the need to fuel expectations for global growth in nuclear energy. It therefore plans to continue to strengthen its position as a "leading uranium company in the United States."
Its main goals for this year are to produce and procure sufficient uranium to fulfill its delivery obligations under existing uranium sales contracts, and maintain its mines on standby as well as continue to permit new projects, thereby positioning Energy Fuels to increase production should market conditions improve.
Should markets get better, the company said it will consider the acquisition of additional properties in the U.S., and evaluate the sale of non-core assets. Maintenance activities will continue at its White Mesa mill, which is expected to be placed on standby in August of this year.
Energy Fuels is forecasting 2014 sales of approximately 800,000 pounds of uranium, of which 191,667 pounds were sold during the first quarter. All of the 800,000 pounds of projected sales are to be delivered into its three existing long-term contracts, it said.
The company is currently America's largest conventional uranium producer, supplying about 25% of the uranium produced in the U.S. in 2013. Its White Mesa mill is capable of processing about 2,000 tons per day of uranium ore, and has a licensed capacity of over 8 million pounds.