Energy Fuels UUUU shares jumped 7% to close at $7.26 on Friday as the Madagascar government’s decision lifted the suspension on its 100%-owned Toliara project. Notably, the suspension was in place since November 2019.
Energy Fuels can now develop the large-scale heavy mineral sands (HMS) project. Toliara is expected to play a key role in UUUU’s strategy to diversify beyond uranium and become a leading supplier of critical minerals. By processing Monazite from Toliara, UUUU aims to become a low-cost, globally competitive United States-based rare earth elements (REE) producer.
The global push for clean energy and technological advancement will drive significant demand for uranium and REE. Let us delve deeper into how Energy Fuels is positioning itself to ride these trends.
Energy Fuels Adds Toliara to Boost REE Capabilities
The Toliara project was added to Energy Fuels’ portfolio following its acquisition of Base Resources in October 2024. Toliara complements UUUU’s Bahia Mineral Sand Project in Brazil and a 49% stake in the Donald Mineral Sand Project in Australia. All of these are HMS projects that, upon development, will produce titanium and zirconium minerals, including ilmenite, rutile and zircon.
Subject to securing further permits and development, these projects are expected to produce monazite as a byproduct. It is one of the best sources of the magnet REEs used in electric vehicles, wind energy and other technologies.
Energy Fuels’ White Mesa Mill in Utah is the only facility in the United States that can process Monazite to produce advanced REE materials, giving the company an advantage over peers. As Monazite is a low-cost byproduct, the REE oxides produced at the mill will be cost-effective, making them globally competitive.
Per the International Energy Agency, REE may see three to seven times higher demand in 2040 from the current levels.
Due to China’s dominance in the REE sector, there has been an increasing focus in the United States to develop REE supply chains independent of China.
Energy Fuels is taking calculated steps to capitalize on this opportunity.
UUUU Continues to Focus on Boosting Uranium Capacity
Energy Fuels has four long-term contracts with major U.S. nuclear utilities that require deliveries of base quantities of 2.8 million pounds of uranium from 2025 to 2030.
The company is preparing two additional mines in Colorado and Wyoming (Whirlwind and Nichols Ranch), which could increase uranium production to a run rate of more than two million pounds per year as early as 2026. UUUU is advancing several other large-scale U.S. mine projects to raise the capacity to 5 million pounds per year to bet on the robust uranium market conditions.
Energy Fuels Capitalizes on Isotope Shortage
Targeted alpha therapies (TAT) technology is showing great promise in clinical trials for cancer treatment. It requires certain isotopes (Ra-226 and Ra-228). The global scarcity of these isotopes has been a significant hurdle to advancing and commercializing these therapies.
To address this issue and establish a U.S. medical supply chain, Energy Fuels acquired RadTran LLC. Using the latter’s know-how, the company will recover valuable isotopes from its process streams at the White Mesa mill. UUUU will recycle the material that would otherwise have been lost to disposal and contribute to producing life-saving cancer treatments.
Energy Fuels Stock Price Performance Beats Industry
Over the past month, the UUUU stock has gained 28.9% against the non-ferrous mining industry’s decline of 7.4%. Meanwhile, the Zacks Basic Materials sector has slipped 1.1%, while the S&P 500 has risen 5.5%.
UUUU is currently trading at a roughly 12% discount to its 52-week high of $8.21, reached on Feb. 1, 2024
UUUU is currently above its 50 and 200-day moving averages, highlighting a continued uptrend. This technical strength, along with sustained momentum, indicates positive market sentiment and investors’ confidence in Energy Fuels’ financial health and growth prospects.
Energy Fuels Lowered 2024 Outlook on Pinyon Concerns
UUUU has paused ore shipments from its Pinyon mine in Arizona. This was due to concerns raised by the Navajo Nation regarding the transport of radioactive materials through the Navajo lands. Mining, however, has continued at Pinyon, with the mined ore being stockpiled at the mine site.
Factoring this setback, Energy Fuels expects to produce 150,000-200,000 pounds of finished uranium in 2024, lower than the prior stated 150,000-500,000 pounds.
UUUU Boasts Debt-Free Balance Sheet
As of Sept. 30, 2024, Energy Fuels had $183.2 million of working capital, including $47.46 million in cash and cash equivalents, $101.15 million in marketable securities (interest-bearing securities and uranium stocks), $35.91 million of inventory and no debt.
This is commendable compared with the industry’s debt-to-capital ratio of 18%.
Average Target Price for Energy Fuels Suggests Solid Upside
Based on short-term price targets offered by four analysts, the average price target is $8.75 per share. The average suggests a 20.5% upside from Friday’s closing price.
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2025 Earnings Estimates for UUUU Suggest Turnaround
The Zacks Consensus Estimate for Energy Fuel’s 2024 earnings has seen upward revisions over the past 60 days. However, the estimate for 2025 has moved south at the same time.
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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The estimate for 2024 is pegged at a loss of 10 cents, suggesting a slight improvement from the loss of 12 cents incurred in 2023. Earnings estimates for 2025 of 7 cents indicate that analysts expect Energy Fuels to deliver its first year of profit since it started trading on the NYSE in December 2013.
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UUUU’s Stock Valuation Looks Stretched
Energy Fuels is currently trading at a forward sales multiple of 9.84, well above the industry average of 3.05. The company is, however, cheaper than peers Cameco CCJ and Uranium Energy’s UEC price-to-sales ratios of 10.48 and 39.73, respectively.
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Should You Buy UUUU Stock Now?
Energy Fuels seems ready to deliver its first year of profit in 2025. Backed by its debt-free balance sheet, the company is advancing with its growth plans to capitalize on the expected surge in uranium and REE demand. The achievement of the much-awaited green signal for Toliara removes a major stumbling block. Those who already own the stock may stay invested, given UUUU’s solid long-term prospects in the uranium and REE markets.
Considering its premium valuation and shipment issues at Pinyon, new investors should monitor Energy Fuels’ developments for a more appropriate entry point. The stock’s Zacks Rank #3 (Hold) supports our thesis.
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