Energy Fuels(UUUU) - 2020 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion for Energy Fuels Inc ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Energy Fuels Inc. presents unaudited condensed consolidated financial statements for Q2 2020, detailing financial performance, position, and cash flows Financial Performance Q2 2020 revenues were $0.40 million, with a net loss of $8.2 million, an improvement due to reduced inventory impairment | Financial Metric | Three Months Ended June 30, 2020 (USD) | Three Months Ended June 30, 2019 (USD) | Six Months Ended June 30, 2020 (USD) | Six Months Ended June 30, 2019 (USD) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $0.395 million | $3.071 million | $0.788 million | $4.741 million | | Total Operating Loss | ($6.470) million | ($11.504) million | ($14.276) million | ($21.626) million | | Net Loss | ($8.190) million | ($9.314) million | ($13.854) million | ($21.448) million | | Basic and Diluted Loss Per Share | ($0.08) | ($0.10) | ($0.12) | ($0.23) | - For the three and six months ended June 30, 2020, the company recorded inventory impairment losses of $0.43 million and $1.51 million, respectively, a significant reduction from the $4.91 million and $6.08 million impairments recorded in the same periods of 2019[42] Financial Position As of June 30, 2020, total assets increased to $188.1 million, driven by cash, while liabilities decreased, boosting equity | Balance Sheet Item | June 30, 2020 (USD) | December 31, 2019 (USD) | | :--- | :--- | :--- | | Total Current Assets | $57.020 million | $43.172 million | | Cash and cash equivalents | $26.635 million | $12.810 million | | Inventories, net (Current) | $26.576 million | $22.808 million | | Total Assets | $188.125 million | $175.720 million | | Total Current Liabilities | $18.977 million | $22.638 million | | Total Liabilities | $42.228 million | $45.113 million | | Total Equity | $145.897 million | $130.607 million | Cash Flows Net cash used in operations was $15.8 million, offset by $27.1 million from financing activities, significantly increasing cash | Cash Flow Activity (Six Months Ended June 30) | 2020 (USD) | 2019 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | ($15.830) million | ($22.992) million | | Net cash provided by investing activities | $3.051 million | $16.116 million | | Net cash provided by financing activities | $27.096 million | $9.050 million | | Change in Cash, Cash Equivalents and Restricted Cash | $14.317 million | $2.174 million | Notes to Financial Statements Notes detail the company's exploration status, Cdn$20.86 million debentures, legal challenges, and $20.24 million in surety bonds - The company is classified as an exploration stage mining company under U.S. SEC Industry Guide 7 as it has not established proven or probable reserves[33] - The company has Cdn$20.86 million in floating-rate convertible unsecured subordinated debentures maturing on December 31, 2020, with half (Cdn$10.43 million) redeemed on July 14, 2020[51][55] - The company faces legal challenges from environmental and tribal groups regarding its White Mesa Mill license renewal and its Canyon Project operations[83][84][87] - As of June 30, 2020, the company has posted $20.24 million in surety bonds as collateral against a total undiscounted asset retirement obligation of $41.75 million[90] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses business strategy, recent developments, market outlook, and financial results, highlighting improved liquidity Overview and Recent Developments The company leverages its White Mesa Mill for uranium and REE processing, acquired PFN technology, and monitors U.S. government initiatives - The company is evaluating processing Rare Earth Element (REE) ores at its White Mesa Mill to produce a commercially viable REE concentrate, providing a crucial link in a potential U.S. REE supply chain[110][119][121] - On July 14, 2020, the company redeemed Cdn$10.43 million of its outstanding convertible debentures to take advantage of favorable exchange rates and reduce interest payments[114] - The President's Budget for fiscal year 2021 proposes establishing a U.S. Uranium Reserve with appropriations of $150 million per year for 10 years to support domestic production[128] - The company acquired Prompt Fission Neutron (PFN) borehole logging technology and equipment, critical for accurately measuring uranium ore grades in ISR deposits[116] Market and Operations Outlook Uranium spot prices rose 21% in Q2 2020, with the company producing U3O8 for inventory while most facilities remain on standby - Uranium spot prices increased by 21% during Q2 2020, from $27.30 to $33.00 per pound, while long-term prices rose from $34.00 to $39.00 per pound[132] - For the full year 2020, the company expects to recover between 125,000 and 175,000 pounds of U3O8[140] - The company has no uranium sales commitments for 2020 and plans to add all production to its inventory, which is fully unhedged against future price increases[141][151] - The Nichols Ranch ISR facility was placed on standby in Q1 2020, with other conventional mines and the Alta Mesa Project also remaining on standby pending improved market conditions or government action[136][138] Results of Operations Q2 2020 revenues were $0.40 million, with a net loss of $8.2 million, an improvement due to reduced inventory impairment charges | Metric | Three Months Ended June 30, 2020 (USD) | Three Months Ended June 30, 2019 (USD) | | :--- | :--- | :--- | | Total Revenues | $0.40 million | $3.07 million | | Impairment of Inventories | $0.43 million | $4.91 million | | Standby Costs | $2.73 million | $1.25 million | | General & Administration | $3.17 million | $3.73 million | | Net Loss | ($8.19) million | ($9.31) million | - The decrease in revenue was due to the absence of any uranium or vanadium concentrate sales in Q2 2020[159][164] - Standby costs increased to $2.73 million in Q2 2020 from $1.25 million in Q2 2019, primarily due to reduced recovery activities at the Nichols Ranch facility[171] Liquidity and Capital Resources The company's financial position strengthened in H1 2020 with $38.04 million net working capital and $26.64 million cash, funded by share issuances - At June 30, 2020, the company had net working capital of $38.04 million, including $26.64 million in cash and $1.68 million in marketable securities[183] - For the six months ended June 30, 2020, the company raised $27.86 million in net proceeds from the issuance of common shares[189] - The company holds approximately 575,000 pounds of finished uranium inventory and 1,675,000 pounds of finished vanadium inventory[183] - Subsequent to the quarter end, from July 1 to July 31, 2020, the company raised an additional $8.5 million in net proceeds from its ATM program[182] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company faces market risks from volatile commodity prices, interest rates on convertible debentures, and foreign currency exposure from Canadian dollar debt - The company is subject to commodity price risk as all future uranium sales will be at spot prices until new long-term contracts are secured[207] - Interest rate risk exists on the Convertible Debentures, where the annual interest rate fluctuates between 8.5% and 13.5% based on the spot price of U3O8[208][209] - The company has foreign currency risk exposure on its Canadian Dollar denominated Convertible Debentures, with a total exposure of approximately $10.9 million as of June 30, 2020[210][211] ITEM 4. CONTROLS AND PROCEDURES Management concluded disclosure controls were ineffective as of June 30, 2020, due to a material weakness, with remediation expected by year-end - Management concluded that disclosure controls and procedures were not effective as of June 30, 2020, due to a material weakness in internal control over financial reporting disclosed in the 2019 Form 10-K[215] - The company expects to complete the remediation of this material weakness prior to the end of fiscal year 2020[217] PART II – OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, unregistered equity sales, and mine safety ITEM 1. LEGAL PROCEEDINGS No new material legal proceedings are reported beyond those previously disclosed in the company's 2019 Form 10-K or this 10-Q - There are no new material legal proceedings to report that were not already disclosed in the Company's Form 10-K for the year ended December 31, 2019, or in this Form 10-Q[219] ITEM 1A. RISK FACTORS No material changes have occurred in the company's risk factors since those outlined in the 2019 Form 10-K - No material changes have occurred in the risk factors from those set forth in the Annual Report on Form 10-K for the year ended December 31, 2019[221] Other Part II Items This section covers no unregistered equity sales or senior security defaults, with mine safety disclosures in Exhibit 95.1 and a list of exhibits - The company reported no unregistered sales of equity securities or defaults on senior securities during the period[222][224] - Mine safety disclosures are provided in Exhibit 95.1, as required by the Dodd-Frank Act[226]