Energy Fuels Inc. (TSE:EFR, NYSEMKT:UUUU) said it expects to file an updated preliminary economic assessment for its 100%-owned Roca Honda project.
Roca Honda is one of the largest and highest-grade uranium projects in the United States. It is located in northwest New Mexico, adjacent to the Mount Taylor mine, which is a large, developed, high-grade uranium mine held by a wholly owned subsidiary of San Diego-based General Atomics. The company is currently in the process of permitting Roca Honda, so that it can be ready for development in improved market conditions. Due to Roca Honda's proximity to the company's 100-per-cent-owned White Mesa mill, the uranium to be mined at the project is expected to be trucked to the company's mill to be processed and concentrated into finished uranium product that will be sold into the global nuclear energy market. The White Mesa mill is the only fully licensed and operating conventional uranium mill in the US today.
The new PEA primarily reflects an update to Roca Honda's ownership status based on:
- The company's acquisition of 4,580 acres of adjacent properties in August, 2015;
- The company's acquisition of the 40% ownership interest of the company's former joint venture partner in May, 2016, thereby increasing the company's ownership in the project to 100%.
The PEA is entitled "Technical report on the Roca Honda project, McKinley county, state of New Mexico, U.S." and is dated Oct. 27, 2016.
In comparing the new PEA with the previous one dated Feb. 27, 2015, the project economics have improved, including estimated operating costs dropping by 11% to $33.27 per pound of uranium. The PEA also demonstrates that Roca Honda is expected to have a nine-year production life with an average annual production rate of 2.6 million pounds of uranium per year. The first year of production is expected to total 1.4 million pounds of uranium, followed by an average rate of production of 2.8 million pounds of uranium per year thereafter. Life-of-mine capital costs (including upfront capital, sustaining capital, and closure and reclamation) are expected to total $13.88 per pound of uranium.
The mineral resource estimate for the project is unchanged from the 2015, report, including 1.51 million tonnes of measured and indicated mineral resources with an average grade of 0.48% eU3O8 (uranium equivalent) containing 14.6 million pounds of uranium. Roca Honda is also estimated to contain 1.2 million tonnes of inferred mineral resources with an average grade of 0.47% eU3O8 containing 11.2 million pounds of uranium.
As previously disclosed in the company's May 28, 2015, news release, there is an existing, partially sunk mine shaft located on the project, which was constructed by Kerr-McGee in 1982 to a depth of 1,478 feet. The company expects to evaluate whether this shaft can be used. In addition, the PEA describes a significant historical uranium estimate for the project that is not included in the current NI 43-101-compliant resource estimates described above. Because the company continues to pursue significant cost-saving initiatives in today's low-uranium-price environment, the additional work to convert these historical estimates into current NI 43-101-compliant mineral resources has not been completed.
These historical estimates are not equivalent to current mineral resources or mineral reserves as defined in NI 43-101. The historical estimates should not be relied upon, but are considered relevant, as strong potential exists to add resources to the project, and if confirmed, such resources could be important in the early stages of the project life and cash flow.
The company has also filed a prospectus supplement to its effective US registration statement on Form S-3 in order to re-establish its at-the-market program (ATM). Concurrently, the company has entered into a sales agreement with Cantor Fitzgerald & Co., pursuant to which the company may, at its discretion from time to time, sell up to $20mln of common shares, with sales only being made on the NYSE MKT at then-prevailing market prices. The ATM is substantially similar to the one the company used to raise $3.39-million of cash from Sept. 29, 2015, to March 15, 2016.
In the event the ATM is used, the company intends to use the net proceeds to provide the company with additional financial flexibility and enhanced options with respect to any or all of the following:
- To continue to finance the evaluation of the high-grade uranium and copper mineralization and the previously announced shaft-sinking at the company's Canyon mine project in Arizona;
- To finance wellfield construction at the company's Nichols Ranch ISR project in Wyoming, as market conditions warrant;
- To continue permitting of the company's projects, including Roca Honda and Jane Dough;
- To repay principal on outstanding indebtedness;
- For general corporate needs and working capital requirements.