Uranium stocks rise as some of the Nuclear Fuel Working Group’s recommendations are reported

According to a December 5 Bloomberg report, the US Nuclear Fuel Working Group (NFWG) has released its results to the President. This led to a nice surge in the leading three US uranium miners, including Energy Fuels Inc., which surged 19% higher on the news. The purpose of the NFWG is to make recommendations to President Trump on how to protect and plan for defense infrastructure needs, and to support domestic nuclear fuel supply.

The Nuclear Fuel Working Group’s findings are not yet public; however, based on Bloomberg’s report this is what we know so far:

  • President Donald Trump to direct the Federal Government to buy more uranium from domestic producers. This would primarily be purchases of uranium by the U.S. Defense Department.
  • US uranium purchases to boost the national uranium stockpile.

Note: Bloomberg reports: “Domestic uranium miners have asked the government to ensure production of as much as 10 million pounds per year through measures such as the creation of a new “Federal Uranium Security Stockpile.”

Some background on the US uranium story

The US continues to face a massive uranium supply threat due to relying on adversary countries for supply. For example:

  • US nuclear power plants provide 20% of the US’s electricity. These plants rely on uranium fuel imported from overseas.
  • The US is mostly dependent on outside countries to source uranium.
  • The U.S. uranium production is very small; meaning 90%+ of the US’s uranium is imported.
  • Russia and its allies provided 44% of the uranium that U.S. utilities purchased in 2018.
  • Free market uranium production in Canada is in decline for the same reasons as U.S. production – low prices brought on by oversupply from Russia and its allies. Only one uranium mine still operates in Canada and it has an expected remaining life of less than 10 years. Uranium mines in Australia are also slowing production and moving toward shutting down.

Given the above, it should not be surprising to know that ‘uranium’ is among the 35 critical minerals.

The US Nuclear Fuel Working Group

Under Section 232 of the Trade Expansion Act, President Trump concluded that trade barriers on uranium imports were not warranted. The President formed the Nuclear Fuel Working Group to examine the entire fuel supply chain and conduct a fuller analysis of national security issues therein. There are two major issues this Group should address:

  1. Protect and plan for defense infrastructure needs.
  2. Provide some sort of assistance to support domestic uranium supply.

Energy Fuels – A US uranium producer with the ability to ramp up quickly

Energy Fuels Inc. (TSX: EFR | NYSE American: UUUU) is very well positioned to benefit from any positive recommendations from the NFWG, as they are one of only three US uranium miners still in production. Energy Fuels state that they are “the leading US producer of both uranium and vanadium”.

Energy Fuels is a leading integrated U.S. uranium mining company, supplying U3O8 to major nuclear utilities. Energy Fuels also has the largest uranium resource portfolio in the U.S. among producers.

Energy Fuels holds three of America’s key uranium production centers:

  • The White Mesa Mill in Utah.
  • The Nichols Ranch Processing Facility in Wyoming.
  • The Alta Mesa Project in Texas.

The 100% owned White Mesa Mill in Utah is a fully-licensed and operating conventional uranium mill. It has a licensed capacity of over 8 million pounds of U3O8 per year.

The Nichols Ranch Processing Facility is an in-situ recovery production center with a licensed capacity of 2 million pounds of U3O8 per year.

Alta Mesa is an in-situ recovery production center with a licensed capacity of 1.5 million pounds of U3O8 per year, which is currently on care and maintenance due to low uranium prices.

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