Noble Capital Markets has repeated its 'market perform' rating on Energy Fuels Inc (TSE:EFR) (NYSEAMERICAN:UUUU), noting that the largest producer of uranium in the US is broadening its portfolio to include rare earth minerals.
In a note, Noble's analysts pointed out that the ores would be sourced from third parties, either through ore purchase, tolling, or other arrangements, and Energy Fuels would seek to produce concentrates while recycling and recovering uranium from the ores.
The concentrates could be sold to third party rare earth element oxide separation and recovery facilities and refined, separated, and recovered at the company’s facility in White Mesa (Utah),” they added.
READ: Energy Fuels to redeem half of C$20.86M debentures outstanding
The analysts also noted that they expect “more activity in the rare earths and critical minerals space which could shine a light on Energy Fuels’ strategy,” given the new formation of MP Materials, a major rare-earth player that will trade on the New York Stock Exchange.
Meanwhile, they said Energy Fuels is building up its uranium and vanadium reserves. The company expects to have between 640,000 and 690,000 pounds of finished uranium in inventory at the end of 2020 along with 1.6 million pounds of vanadium. Recent prices for uranium and vanadium were roughly $33 and $5 per pound, respectively.
The Noble analysts said Energy Fuels has the “financial flexibility” to pursue its strategy after it recently redeemed half of C$20.86 million in outstanding debentures. The company also expects to be debt-free by year’s end.
They said they are sticking with the current 'market perform' rating until there is greater visibility on profitability or near-term government support to make uranium purchases.
“While the company’s strategy for processing rare earth elements is early stage, it could offer another avenue of growth complementary to uranium and vanadium,” the analysts concluded.
Energy Fuels’ stock recently increased by 3.7% to $1.82 a share in New York in pre-market trading.
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