Energy Fuels (NYSE: UUUU) - I Believe in New Beginnings, by @CruxInvestor

Interview with Mark Chalmers, President & CEO of Energy Fuels (NYSE: UUUU).

Off the back of the promising NFWG report, Chalmers was keen to talk about what this could mean for US uranium producers and Energy Fuels. The report talks about restoring America's competitive nuclear energy advantage.

What is Chalmers' take on the report? Energy Fuels was one of the two American uranium CEOs (Ur-Energy was the other company) to petition under section 232 petition, he must be feeling quite pleased of himself. They managed to get a Nuclear Policy document out of the US Govt Department of Energy.

Chalmers states it not very often that a sector can be this impacted by something like a report from the US government, but uranium is a unique case. Was the document what Chalmers was expecting? He thinks it's the boldest position the US government has taken on the nuclear fuel cycle in decades. Many uranium retail investors have been concerned at the lack of detail in the document, but Chalmers is clear: this is a policy document. There are still things that need to be filled in, but the language and narrative that is being created appear to be strong: American uranium mining and operations must be supported.

For Energy Fuels, a company ready to pull the production trigger, this latest catalyst could lead to real growth. They have 500,000lbs of material in inventory at surface, and as much as 700,000 by the end of this year, waiting to be processed at the right time, in the right price environment. If the US Govt does re-energise its nuclear industry, American uranium producers who are ready to move will benefit the most. Those are the companies that will be able to sit at the table with utility companies and negotiate long-term supply contracts. The uranium juniors that are left floundering around with lengthy permitting processes and explorative drilling will be left out in the cold. Energy Fuels appears primed to move; its White Mesa Mill is capable of processing 2,000t of material per day. This is likely to be key to rebuilding the North American uranium industry: the only fully-functioning conventional mill in the entire country.

The first step will be U308 purchases, but Chalmers is observing the situation calmly. Chalmers thinks the government needs to focus on a few producers by being selective, rather than spreading uranium budget to lots of small uranium explorers and developers. Does America need to focus on the few to restore its uranium prestige? Chalmers states the regime of the government should be a buying schedule focussed on a limited number of ISR projects and the White Mesa Mill: the government should not be giving everyone a piece of the pie.

The spot price is up around c. US$33/lb, but Chalmers points to the price he feels is fair for "a pound of uranium produced in the western world:" US$60, or greater. This appears to be the "sustainable" figure that an industry can be rebuilt upon, though not all uranium companies will survive in such a price environment. Chalmers feels the US uranium space will continue to struggle until it hits long-term prices around US$60/lbs. Chalmers states that while Cameco may negotiate some contracts at US$40/lbs, the uranium giant will struggle unless prices rise much higher. The message is definitive: utility companies need to stop being used to dirt cheap uranium.

Moving onto specifics for Energy Fuels, what is the short-term focus? Cashed-up with 3 good assets, an experienced management team, and a great mill, Energy Fuels has a lot going for it, but what will it do to add value for shareholders? Chalmers will seek clarity from the DoE on the report and will advocate for themselves, being the producers of 35% of American uranium supply in the last 15-years. Selling inventories and working on alternate feed remain are other priorities; the rare earth elements play could be a real gamechanger.

Interview highlights: