Energy Fuels (TSX:EFR) Q2 2026 Earnings Call

0:00 Good day, ladies and gentlemen, and thank you all for joining us for this Energy Fuels Second Quarter twenty twenty six Conference Call. As a reminder, all phone participants are in a listen only mode to prevent any background noise. But later, you will have the opportunity to ask questions. As a reminder, today's session is being recorded. It is now my pleasure to turn the floor over to President and CEO, Mr. Ross Bapu. Welcome, sir. Good morning, and thank you for joining our second quarter earnings call. I'm joined today by Nate Bennett, our CFO and Nathan Longenecker, our Chief Legal Officer. After today's prepared comments, I'll be happy to take questions. Our earnings release and today's slide presentation are available on our Investor Relations website and a replay of today's discussion will also be available on the website.

0:54 Before we begin, I'd like to turn your attention to our Safe Harbor statements. During today's call, management may use forward looking statements. All forward looking statements are based on current assumptions and beliefs as of today. Such statements are subject to risks and uncertainties, and for a detailed list of such risks, please refer to our Risk Factors section within the 10 Qs and 10 Ks filed with the SEC. Energy Fuels is under no obligation to publicly update forward looking statements after the date of this call, except as otherwise required by applicable legislation. Well, it's been exactly a year since I joined Energy Fuels as president and just over a hundred days since I became the CEO. Before we get into this quarter's results, I wanna take a little bit of time to first share my reflections on the last twelve months.

1:43 I joined this company because of its unique position with the industry. Energy Fuels has a deep history and foundational strength within uranium. And in The US, we're the largest producer of uranium and we own the only permitted fully operational uranium processing facility, Arkwhite Mesa Mill in Blanding, Utah. Over the course of our history, the company has also discovered the ability to process both light and heavy rare earth elements. The company has identified and acquired as well as partnered on projects that will supply rare earths to the White Mesa Mill for processing. These projects, the Varamata project, the Bahia project, and the Donald project, along with our agreements with Chemours were hand selected as the most complementary feedstock sources to the future of commercial expansion of the mill.

2:31 That was the stage when I joined the company last year. A great portfolio of assets ready for the next phase of growth. I spent significant time with the team to determine how best to deliver on our ambitions from a view both of operational feasibility and of value creation. As part of our strategic planning process, the picture became quite clear. Red earth elements are paramount to the future of industry and defense. We have access and ability to mine these critical materials and industry leading ability to process them into oxides. A major squeeze point in the rare earth magnet manufacturing value chain has long been midstream metalization and alloy making. So we took a hard look at the opportunity set and in January, we announced the acquisition of Australian Strategic Materials, ASM as it's called.

3:20 A deal that's advancing well and we expect to close late this month, only a few weeks away. ASM is a fully operational producer of metals and alloys that will be supplied by our rare earth oxides. Combining these capabilities solves a critical step and a significant pinch point in the value chain, allowing for full integration which leads to significantly improved economics. In addition, across the geopolitical landscape, it's become quite clear that the West is very limited in its ability to produce rare earth magnets required for rapidly growing industries including automotive, data centers, robotics and defense. In fact, there are very few companies with this capability that can do so at scale. The largest Western company with these capabilities is vacuum schmeltz, more commonly referred to simply as VAC.

4:09 Our due diligence quickly revealed that VAC's robust capabilities and 100 history of operations, which accentuated the long term potential when combined with energy fuels and ASM. The company has been producing rare earth permanent magnets for over forty years and in the past decade has produced over 1,000,000,000 magnets. Let me repeat that, it's produced over a billion magnets in the last ten years. Keep in mind that these magnets are not what you experimented with in your science or chemistry class. Rather, these are highly engineered and uniquely made for each customer, for each specific application like electric vehicle drive motors, actuators for airplane aileron deployment, smartphones, earbuds and the list goes on and on. These are prolific in our everyday lives and VAC has over 1,000 current customers producing over 2,000 individual parts.

5:02 When we looked at where we are and where we want to be in five years time, this acquisition made incredible sense and our respected growth profiles fit like a hand in glove to create a fully integrated Mind to Magnet platform. We expect the VAC transaction to close in early twenty seven, subject to customary regulatory approvals. When that happens, we'll have all the pieces of the puzzle to make us completely vertically integrated resources, processing, separation, metallization and alloy making and now magnet manufacturing. As we move through the approval and closing processes of these two incredible organizations, we are readying ourselves to put these pieces together and realize significant value creation across the supply chain.

5:49 Now, our story is about execution. As a first step, we announced the commencement of construction on our Phase 1b and 1c expansion at the White Mesa Mill and the addition of a rare earth MREC processing circuit, MREC is mixed rare earth carbonates. Upon completion, the mill will be equipped to process uranium and rare earth simultaneously and at commercial scale. This alleviates the decision point that we currently have today, processing either uranium or rare earth minerals, but importantly, it allows us to readily supply our midstream operations at the ASM facility, who will ultimately supply VAC for its magnet manufacturing needs. We have a lot to do, but the path is quite clear and my job is to make sure we continue to execute.

6:34 We have a tremendously experienced leadership team at Energy Fuels and we will be joined with an equally talented leaders from both ASM and VAC with the required expertise for operating these key facilities. Mind to magnets is a term that gets used quite frequently in our industry. We view ourselves as not just a mind to magnets player, but rather a mind to engineered solutions provider. I can confidently say that we're on a clear path and we will be the first company in the West and certainly North America to have operational and commercial scale facilities that will make us truly vertically integrated from mines to magnets. I will continue to update you on our progress in future calls, but now let's turn to our second quarter results. Q2 twenty twenty six was a strong operational quarter for Energy Fuels.

7:23 To highlight, we announced support from the US government with a conditional $725,000,000 loan from the Office of Strategic Capital. We announced the transformative acquisition of VAC. We progressed on the ASM acquisition, which we anticipate closing at the end of August, subject to formal closing procedures. With the closures of these acquisitions, we'll be the West's leading mine to magnet provider. We mined 365,000 pounds of uranium and produced more than 860,000 pounds. We ended the quarter with 2,270,000 pounds of uranium in inventory. From a financial perspective, we have a robust balance sheet with nearly $1,000,000,000 of liquidity, and during the quarter we recorded $25,000,000 of revenue from a combination of contract and spot sales.

8:10 We achieved an industry low production cost of $23 per pound of uranium. This quarter's financial results were weighed by a few heavy one time items attributable to transaction related costs that Nate's going to walk you through momentarily. I spoke briefly about the clear path that Energy Fuels has ahead of us. As you can see, it's certainly ambitious. However, it's thoughtful and calculated. And as Mark Chalmers, our previous CEO would say, we're ambitious, but not reckless. As we progress through the remainder of 2026 and into the years ahead, we've staged capacity and production growth across feedstock processing and separation and magnet manufacturing to ensure our ability to seamlessly integrate our upstream, midstream and downstream capabilities.

8:58 When we enter 2028 with a completed phase 1B and 1C expansion of the White Mesa Mill, we'll be able to source 100% of our feedstock for processing to rare earth oxides. That capacity will be sufficient for 70% of the capacity for use at ASMs, metallization and alloy making facilities which will supply sufficient magnet alloy for over 100% of VAC's 2,000 tons of magnet capacity at their manufacturing facility in Sumner, South Carolina. The largest rare earth permanent magnet facility in The United States. To put it in perspective, this volume will provide magnets needed for 800,000 electric vehicles or 4,000,000 conventional vehicles or 1,000,000,000 smartphones. These are just amazing levels of production.

9:43 We anticipate increasing our magnet making capacity at Sumter six fold through 2,031 to 12,000 tons per annum, by far the largest planned facility in the West. As we execute our expansions across each of the pillars of our supply chain, including activating rarest mining projects that are currently in development and additional expansion of the White Mesa mill, we expect the ability to supply over 100% of our facilities within our fully integrated mine to magnet supply chain. This is a capital intensive plan and we're not shy about that. We've put considerable thought into not only what we intend to do, but also how we can achieve these important milestones. Importantly, our plan is strategically staged and disperses our capital across the next five years.

10:33 We're also starting from a position of strength within our balance sheet, with our balance sheet at quarter end of nearly $1,000,000,000 in liquidity, as mentioned previous. In addition, to our own balance sheet, we have access to multiple government funding sources, as well as a term loan facility from Goldman Sachs. This allows us to be tactical in our capital deployment strategy, with multiple levers to pull as we assess the financing of each project. Lastly, a plan is only as good as the team that's leading it. In the past year and also through the ASM and VAC acquisitions, we are assembling a team with deep operational and execution based experience. This group possesses not only the required technical expertise, but have also been the drivers of transformative projects and acquisitions across our value chain.

11:20 I'm confident that we have the right people in place to deliver on our ambitious plans. As I turn the call over to Nate to cover our financials, I'd like to leave you with a couple of thoughts. Before an EV, an electric vehicle vehicle can move, there's a rare earth magnet. Before a reactor can produce power, there's uranium. Before stronger steel can carry greater loads, there's vanadium. And before robotics and advanced technologies, there are rare earth minerals. The world talks about what comes next. Energy fuels works to deliver on what comes first. Now I'll hand it over to Nate Bennett. Thanks, Ross. Before I get into the numbers, I encourage everyone to review today's discussion alongside our form 10 q and other public filings as those documents provide additional detail and context around our results, risk factors and disclosures.

12:14 As we continue to grow and diversify the business, it is important to remember that we manage and evaluate our operations by commodity line. Today that primarily includes uranium, while our rare earth and heavy mineral sands, metals, alloys and magnet businesses continue to advance through development activities and the pending ASM and VAC acquisitions. For uranium specifically, there are three key metrics we discuss each quarter, pounds mined, pounds processed and pounds sold. Those metrics do not always move together in a given quarter and understanding the distinction is important when evaluating our results. Mining reflects the amount of uranium extracted from our deposits. Processing reflects the amount converted into finished U308 at the White Lisa Mill.

13:02 Sales reflect pounds delivered into the market under long term contracts or spot transactions. Because we strategically build and draw inventory over time, these metrics can vary from quarter to quarter while still supporting our long term operating and commercial plan. With that context, let me walk you through the quarter. Turning to our financial results, Energy Fuels remains in an exceptionally strong financial position. At 06/30/2026, we had approximately $996,000,000 of working capital and 1,530,000,000 of total assets, which we believe represents one of the strongest balance sheets in the global uranium and critical mineral sector. During the second quarter, we reported a net loss of $33,600,000 As we've discussed before, quarterly earnings can be influenced by the timing of uranium sales, product mix, strategic investments and transaction related expenses.

14:02 Importantly, the fundamentals of the business remain strong. Our uranium segment generated 25,000,000 of revenue, approximately 14,000,000 of gross profit and a 57% gross margin during the quarter. The segment continues to generate positive operating income while supporting exploration, development and corporate costs, demonstrating that our uranium business provides a solid financial foundation for the company. The losses incurred with our rare earth elements and heavy mineral sands businesses, primarily reflect planned investments to advance these projects towards future production, including engineering, permitting, infrastructure development, and organizational growth.

14:47 We also incurred approximately 10,700,000 of acquisition and integration related costs associated with the ASM and BAC transactions. These expenditures support our strategy of building a fully integrated critical minerals platform, spanning mining, processing, separation and downstream magnet manufacturing. Overall, our financial strategy remains unchanged, maintain a strong balance sheet, generate cash flow from our uranium business, preserve commercial flexibility and invest prudently in the growth initiatives that we believe will create significant long term shareholder value. Turning to uranium inventories and costs. One of the most encouraging trends we continue to see is the decline in uranium inventory costs, driven largely by the strong production performance and low cost profile of pinion planting.

15:43 At quarter end, our finished U308 inventory carried an average cost of approximately $33.92 per pound, down from approximately $36 per pound at the end of the first quarter and continuing the downward trend we have seen over the past several quarters. Looking ahead, we expect inventory costs to continue declining as additional low cost pinion plane production moves through inventory. This is consistent with the operating and economic benefits we have expected from pinion plane, including higher grades, increased production volumes and continued operating efficiencies. Our uranium inventory remains a significant strategic asset with approximately 2,270,000 pounds of U308 in inventory at quarter end, we have the flexibility to support long term contract deliveries, pursue spot market opportunities when market conditions warrant and manage production and sales activities maximize value.

16:45 Overall, we believe our declining inventory costs, future production base and substantial inventory position continue to strengthen the profitability and strategic flexibility of our uranium business. Looking at operations moving forward, the White Mesa mill successfully completed the current uranium processing campaign during the second quarter, producing approximately 1,700,000 pounds of finished U3O8 during the first half of twenty twenty six and achieving our annual process production guidance range ahead of schedule, the mill has now transitioned into a planned maintenance period with uranium processing expected to resume in the fourth quarter of twenty twenty six or early twenty twenty seven.

17:32 Pinyon Plain continues to perform exceptionally well and is delivering the low cost production profile we anticipated. During the campaign, our average mining and transportation costs were approximately $14 per pound of recovered U3O8, while the mill processing costs averaged approximately $9 per pound. Combined, those costs resulted in a total weighted average production cost of approximately $23 per pound of recovered U3O8, which was at the bottom end of our previously communicated cost range of $23 to $30 per pound. We believe these results demonstrate both the high grade nature of the Pinion Plain deposit and the efficiency of our integrated mining and milling platform.

18:18 Our priority remains consistent, convert low cost ore into reliable uranium pounds, continue to improve efficiency across the system and do so without compromising safety or compliance. Turning to our guidance, our uranium production performance through the first half of the twenty twenty six positions us very well relative to our full year outlook and we are maintaining our 2026 guidance. Having processed approximately 1,700,000 pounds of finished U308 during the first six months of the year, we have already achieved production within our full year finished uranium production guidance range of 1,500,000 to 2,500,000 pounds of U308.

19:04 We also remain on track to achieve our 2026 uranium sales guidance. Consistent with our commercial strategy, we expect a combination of opportunistic spot market sales and deliveries under our remaining long term contractual commitments to drive sales during the remainder of the year. Planned maintenance at the White Mesa mill during the second half of twenty twenty six provides an opportunity to complete improvements that support future uranium operations, continued rare earth element initiatives, including beginning construction to expand our phase one circuits, and overall long term operating efficiency. We currently expect uranium processing to resume in the fourth quarter of twenty twenty six or early twenty twenty seven.

19:50 This operational flexibility remains a significant advantage of the White Mesa mill. While the mill undergoes planned maintenance, our mining operations remain fully active and we continue to expect to mine more than 2,000,000 pounds of contained U308 in 2026, while maintaining our focus on safe, disciplined execution. We also expect uranium grades to improve during the second half of twenty twenty six as mining advances into higher grade zones at Pinon Plain. As we have noted previously, grade variability is a normal characteristic of underground mining operations, and is fully reflected in our mine plans, production forecast, and annual guidance expectations. Overall, we believe the combination of strong first half production, low cost performance, continued mining activity and improving grade positions us well to execute on our strategy and create long term value for our shareholders.

20:47 With that, I'll turn it back to Ross. Thank you, Nate. With that, I'd like to conclude with a few comments and summary about where we are in 2026. First of all, we remain The US largest producer of uranium, a position we intend to hold for an extended period. Importantly, with rare earths, we've piloted up both dysprosium and terbium, and that work is complete and now we've moved on to gadolinium and potentially other heavy rare earth oxides. The phase one rare earth expansion at the mill is underway and we expect to commercially produce heavy rare earth oxides in late twenty twenty seven and that's going to include both terbium and dysprosium. The phase two expansion at the mill is advancing. As you recall, we released our feasibility study results earlier this year and demonstrated a total capacity of up to over 6,000 tons of NDPR, about 300 tons per annum of dysprosium and 80 tons per annum of terbium oxides.

21:46 Permitting is underway and we planned on commissioning this facility in late twenty twenty nine. The Donald project FID is expected as early as Q3 twenty twenty six, so here in just the next few months, including potential offtake in sales and financing options. We continue to pursue permits and government approvals and suitable stability agreements with the government of Madagascar to support an FID on the Varamala project in the near future. And finally, we've obtained exploration permits in 2025 for our Bahia project that has allowed us to restart drilling. We hope to have a resource estimate later this year or in early twenty twenty seven. So, with that, I'd like to thank you for joining the call today. I appreciate your interest and I appreciate your support of Energy Fuels, and we will now take questions from the audience. Thank you.

22:49 At this time, we will begin the question and answer session. Your first question comes from Brian Lee with Goldman Sachs. Your line is open. Hey guys, good morning. Thanks for taking the questions. Maybe this is semantics, but it sounded like on the Donald FID timing, you mentioned as early as Q3, which is in the next couple of months. In the past, thought you had kind of characterized it as by Q3. So wondering if there is an update, any incremental visibility on what's happening there in terms of Donald.

23:41 And then to the extent that Donald doesn't come online as quickly as you'd like, can you give us a sense of what the strategy would be in terms of sourcing monazite and feedstock outside of internal sources? First of all, Brian, thanks for joining us and always appreciate your questions. So, yeah, Donald FID has been delayed a bit this year unfortunately, but I think we're making very good progress. The key for us is finalizing our financing program, and I think we've made great progress on that. We continue to work with the financing alternatives we have there.

24:28 We're focused on financing it in Australia. I'll be heading to Australia week after next to hopefully progress that and see what we can do to get it finalized and get that FID off as quick as we can. If there are delays, we do have backup plans, I would point you to the fact that we have an existing agreement with Chemours where we are taking monazite from Chemours and those come from Florida and Georgia, their operations there. So that will continue. We've also announced that we're putting in an MREC facility, that was the announcement we made just last week, I think it was. And that MREC facility will allow us to take feedstock from ionic clay producers. So there's a number of them in Brazil, in different parts of Asia, different parts the world. So we will source MREC, which is a mixed rare earth carbonate.

25:26 We'll source that MREC to feed that facility and that should be operational late next year or early twenty twenty eight. So we do have backup plans. In addition, we had a lot of discussions with different heavy mineral sands producers that have historically either put their monazite in waste dumps or they send it to China because they don't have other options. And again, we have the ability to process that. So we do have backup plans, we're very hopeful and very confident that we'll be able to finalize our financing and get the final FID made here in the next couple of months. So yeah, very, very active on that right now. Yeah, that's great. Helpful context. And then maybe just a question on the operations. Cost improved nicely.

26:15 Kudos there. I would be curious as you near your next processing campaign, is this the sort of cadence we should expect from a cost perspective, know, pounds increasing quarter to quarter and then cost starting out a little higher but then coming down sequentially? Or is this the new cost level that we should expect, you know, kind of into 4Q and the year? Thanks guys. Yes, thank you again, Brian. Look, our cost maybe so simple, we're working out higher cost inventory. So our overall cost of sales, cost of goods sold is reducing because we're kind of catching up with the current cost. So the costs have been dropping. I think they will equalize or equilibrate here over the next couple of quarters.

27:07 We've been very fortunate with the Pinion Plain Mine that we're mining high grades and those results in low cost operations. We're confident that at least in the near near term, we're going to continue seeing costs sort of in the neighborhood of where we've been experiencing. Yeah, it's really a function of very good grades at that mine, as long as those continue, we'll maintain a low cost profile. Look, just one other thing on that is the White Mesa Mill continues to operate very effectively and efficiently. I would just remind listeners that the White Mesa mill has a higher capacity than our mines do, so that's why we campaign it. And that's why, as Nate mentioned, we ran the mill for the first half of the year.

27:55 We're now replenishing our stockpile for the mill, and that's why we're going to start it up again later later in Q4. So hopefully that answers your question, Brian. Absolutely. Appreciate the additional color, and I'll pass it on. Thanks, guys. Thanks. Your next question comes from Nick Giles with B. Riley Securities. Your line is open. Yes, good morning, guys. Thanks for taking my questions. Maybe just my first one on the OSC facility, what are the kind of remaining conditions to close? And when would you expect that first disbursement? Just curious on what kind of some of those steps are between now and then. Yeah, first of all, Nick, thanks for joining us.

28:44 Thanks for the question. I'm not sure exactly what we've disclosed, but there are a number of conditions precedent to drawing down on that facility. We're in the middle of legal work, legal documentation, but there are a few conditions precedent that we've also been focused on. Advancing some of the projects is part of that. I think there's a few different steps we have. Recall that the OSC financing is meant for the White Mesa Mill expansion that we just announced, so the phase 1B and C is included as part of that. The phase two expansion, which we're working on our permitting for that, so we wouldn't draw money down on that until we're further advanced on permitting.

29:35 And then the third category of use of those funds is of the American metals plant, which is effectively replicating what we have in South Korea and building a sister plant here in The US to process metals and alloys. We need to advance on that as well. So the drawdown of the funds in the near term or the nearer term would be for the phase 1B and C, which again we announced last week, and we'll be progressing on that construction over the course of the rest of this year and through 2027. So to be honest, we don't need the funds probably until early in 2027, when we would hope to be able to draw down on them.

30:23 Understood. Thanks for that color, Ross. And maybe just a follow-up. It was good to see the announcement the other day of construction commencing. Have you disclosed just how much capital will be spent across the balance of 2026 versus what would be left in 2027? No, I don't believe we've provided that. And I'm just trying to think through Nate, correct me if I'm wrong. I don't believe we've provided cash flows or capital expenditures. No, we haven't. But just kind of thinking how you spread it out over the construction period. I mean, it's $104,000,000 We probably expect about a fourth of that through 2026 and the remaining amount of that during 2027 as you plan out the project and spend over the construction phase.

31:17 Got it. Okay. Thanks for that. And then maybe switching gears, I could. You've talked about the path roughly 5,000,000 pounds of uranium production. So, you know, if if we see term prices continue to strengthen, what would it take to bring Whirlwind and Nichols Ranch back, both from a kind of capital perspective and then what kind of the timing of that decision would look like? Yeah, so Nichols Ranch, for example, is fully permitted. It's fully constructed. It's sitting really on care and maintenance on standby. To be honest, it'll take probably four to six months once we make the decision to restart that operation.

32:04 The CapEx requirements are going to be fairly low. I think the bigger issue is getting the crews in place and getting the team in place to get it operational. Whirlwind, I think, be a bit longer. So look, I think we're in very good shape if prices start to increase or increase a fair bit, which we anticipate they'll do over the course of the next couple years, we would bring those back into production fairly quickly. CapEx requirements, again, pretty minimal for Nichols Ranch. We're talking a fairly low amount, to be honest with you. I don't have an exact number, I hate to throw one out without having the hard data in front of me.

32:53 Suffice it to say, it's a fully built, ready to go project. Of course, it's an ISR project, so as you advance that, you would do further production and recovery wells, so there's a bit of drilling expenses involved with it. But Nichols Ranch in particular, you know, is effectively ready to go once we make the decision to restart it. Understood. No. That's very helpful. Well, guys, I appreciate the update, and continue best of luck. Great. Thank you, Nick. Appreciate the questions. Your next question comes from Joseph Reagor with ROTH Capital Partners. Your line is open. Hey, Ross and team. Thanks for taking the questions.

33:39 Also, it was very helpful to have the breakout, the slide deck on CapEx spends and timing. As you guys think about all the tools that you guys have to fund the small gaps that exist, what is your preference as far as forms of capital raising as you look out both the near term aspect and the long term ones? First of all, thank you, Joe. Great to talk to you, and thanks for the question. So first of all, I think we're sitting on a very healthy balance sheet, $996,000,000,000 of liquidity, effectively cash for the most part.

34:25 That puts us in a very healthy position there. Of course, we will be using a good chunk of that for closing the VAC acquisition, will be later next year or sorry, early next year. And then we did put in place a term loan facility from Goldman Sachs for two fifty million dollars and that's really there is almost a standby facility for us to use if needed, we're not sure we're going to need it, but it's nice to have sort of in our back pocket. As we look forward, I mean, I think there's a whole host of ways that we could look at raising additional money. My goal, Joe, is to minimize dilution to the extent possible. So anytime we go back and have to raise money, I'm going to explore every option that I have available without Now, just on that, my view on dilution is maybe a bit different. I mean, if it's accretive, I hate to think of it as dilution and think of it more as accretion, but if we do come back to the equity markets, it'll be accretive to our balance sheet and developing and progressing on our business plan.

35:37 But again, I'm exploring all sorts of options that we have available to us to raise money, and continue to explore those. But look, I think we're in a very good financial position today and very confident with where we are. Keep sorry, one other thing I'd just mention, keep in mind that we will generate cash flow from the VAC acquisition and from the ASM acquisition as well. Those all get weighed into the equation. Okay, fair enough. And then the other question I had is, as you look across the landscape of rare earth projects in the world, do you see alternative potential sources out there if any one of the projects were to be delayed? Obviously, Donald's been pushed back a little bit, not meaningfully, but are there other potential sources you guys are seeing come forward that might be of interest or ways to partner with people to get a portion of a project that say isn't 100% a rare earth project?

36:43 Yeah, it's a really good point and something that we think about all the time. Once we make the commitment for phase two, we need to make sure we have feed to fill that 50,000 or 60,000 tons of monazite per year that we'll be capable of processing. So that is cross center in what we're thinking about. First of let me just say, I think we're very confident in our FID for the Donald project being made in the near term. Varamata continues to advance and we're confident that we'll have be in a position to sign an investment agreement and move that project forward here in the near term. But should those be delayed, should the Bahia project in Brazil be delayed, we are looking at alternatives. There's a number of heavy mineral sands producers out there that are either not extracting, processing their monocytes, so it's going into tailings, or they're producing monocytes and sending it to China, we would be a much better alternative for those sources of feed, and we're having discussions with a number of those different groups.

37:57 And look, we'll continue to have discussions and we want to have access to that off take. And then the third source of feed is MREC, the mixture of carbonates. And there's a number of producers of MREC that are out there that are looking for a home. One of the key differentiators is we have the ability to process radionuclides that are always contained in MRAC really in any rarest feed. And so it's a differentiator for us, it gives us a tremendous sort of leg up and competitive advantage as a buyer of those monazite and MRAC So we'll have the ability to process MREC as early as the end of next year. And again, I think there's a number of interesting sources of that out there as well.

38:46 Thanks, very helpful. I'll turn it over. Thanks, Joe. Appreciate your your Comes from Heiko Ihle with H. C. Wainwright. Your line is open. Hello, Ross and team. Thanks for taking my questions. Most have been answered, but just a few little things here. Obviously, the Australian Strategic Materials acquisition should be closing here by the end of the month. Just to clarify, what steps besides the shareholder approval are still outstanding or I guess asked differently, what regulatory issues are open and which court cases need to settle for this to close? Well, first of all, hi Heiko, good to talk to you and I appreciate the question.

39:32 So the acquisition is advancing very well. There's a very well defined process in Australia when you acquire these. So I might turn it over to Nathan just to mention to talk a little bit more in detail about it. Yes. Thanks for the question. Yes, there are some steps that still need to take place, and those are in the fairly near term actually. August 12, there is a scheme meeting that's going to take place and that's where you receive the shareholder approval for the transaction. There's then another court date, August 18, where the court just takes a look at it to make sure that everything is in order. And then August 28 is really the implementation date where the transaction is final and the shares are trading.

40:21 So, you know, that's really the process and really there aren't any, you know, obviously it's all subject to the process, but there aren't any things beyond that that are major that need to take place. And incidentally, if you or others are interested, you can go on the ASM website and there's the scheme book that is on there that has all the dates and things you'd need to take a look at, but it's all happening fairly imminently. Got you. Okay. Fair enough. So it's all really just standard stuff and nothing to really even talk about. Okay. And then just a clarification on Donald. I mean, potentially, you have some some money to be spent there in you know, over the next period of time. I assume the answer is no, but you guys don't have any sort of hedges. In other words, you're just taking your chances with FX and that's it. Right?

41:20 We don't have hedges in place. Hedging a lot of these materials, Tycho, it's a very shallow market for hedging any of them. I think instead what we're focused on is off take agreements with our end users or customers, and so that's more of what we're focused on is off take agreements as opposed to hedging. It's a very shallow market, so it's But I really meant hedging to currencies for the payments. Yeah, we do not have active hedging of currencies in place. Certainly something as we make an FID, I think once we make the FID, then we'll look to probably put in some price protection on currency.

42:09 Cool. Makes a lot of sense. I'll get back in queue. Thank you, guys. Thanks, Michael. Appreciate it. Your next question comes from Anthony Tagliari with Canaccord Genuity. Your line is open. Hey, good morning, guys. Thanks for taking my questions. Maybe just on Varmada, is there anything new there that you guys could share on pushing that project forward, taking the steps in the development process? We've, yeah, first of all, thanks, Anthony. Great to talk to you and great to hear from you. We are advancing it. So earlier this year, or maybe late last year, we pulled our teams out of the field just given some of the uncertainty with the new presidential change of power that went on about this time last year, a little later this last year.

43:07 Just given sort of the uncertainty of what was happening there, we sort of took a step back and waited to see how things unfolded. We have had a very active program now in place. And we're just putting people back in the field kind of as we speak. We're gearing up a drilling program for borehole drilling for geotech work, but also for water wells for some of the local communities. So we've got a very active program that's ramped up. I think the big thing there is we need to progress on the investment agreement. So recall that we have a memorandum of understanding signed with the government of Madagascar, and so the next step is signing the actual stabilization agreement called the investment agreement, and we hope to progress that here over the next few months.

44:02 And so we have a team on the ground in Madagascar and we continue to work very heavily on it. Nathan, I don't know if you have anything to add there. Yeah, no, I think you pretty much hit it on the head. I mean, we do have support though at the highest levels of government and have regularly been engaging with our teams. And yes, look, there's obviously a number of priorities for a government that, as Ross mentioned, has not been there that long, but we do have good support and are looking to move that forward. Our target is very soon, but obviously there are things that are out of our control and you basically continue to have the meetings at the highest levels of government and move things forward, so we continue to work on it and are quite optimistic.

44:52 Okay, great. Maybe switching gears to the uranium business. I believe you guys have, I think it was 240,000 pounds of contract amendments left for the rest of this year. First part of the question is, will we see that all in one particular quarter? Or is it sort of spread between the two? And then secondly, should we expect to see any more spot sales? Obviously, that's dependent on spot price. But is there a particular price level that you'd feel comfortable selling pounds at? Yeah, thanks for those questions. We do have some contract sales through the balance of the year.

45:40 And I don't have the schedule of those in front of me, but we will be making spot sales through the balance of the year. Sorry, on track sales through the balance of the year. We're also sitting, as Nate mentioned, on about 2,200,000 pounds of uranium in inventory. We are going to be very opportunistic about how we sell into the spot market. We continue to be very bullish on uranium prices and so we'll continue to look for good opportunities to sell in into the market. So we will have some additional spot sales in addition to the contract sales that we have, but we want to be careful and just be cautious on how we sell into the spot market.

46:34 Thanks. I will pass it on. Great, Anthony. Thank you. Your next question comes from Matthew Key with Texas Capital. Your line is open. Good afternoon, and thanks for taking my questions. I did have a quick one. I was wondering, does your capacity to process EMERIC increase once you complete phase two? Or is phase two just focused on expanded monocyte processing at this time? Yeah, first of all, thanks Matthew. Great to talk to you. So the answer is that we are putting in this MRAC facility, MRAC capability that will continue through phase two. Phase two is designed primarily for monocyte, but we could expand our MRAC capacity or capability with phase two if we wanted to.

47:31 I think the view is that we just need to see what the availability of MREC is going to look like and how much additional capacity we're going to need. We have designed phase two really around monocyte from our own mines. So we don't own any mines that produce MRECs today. It doesn't mean we wouldn't in the future, but we would be sourcing our MREC from where the monocyte feed for the mill, especially for phase two, is largely going to come from our own captive mines. So that's why phase two is really designed primarily around monocyte, but we could potentially feed MREC into that circuit. The key there is MREC doesn't require cracking the way monocyte does, and so the design of phase two facility really allows for cracking monocyte at the front end.

48:27 So you could see monocyte in just after the cracking to the leach phase of that motion. No, that's helpful. Okay. And you kind of answered my second question in regards to I was wondering if you would expand it because it just seems like it would add some flexibility in terms of feedstock, but it sounds like you would consider that. Would it be included, like if you decided to kind of expand the capacity of MREC, would that cause like an increase in capital expectations for what was disclosed in Phase two? Or was it included in that number? I would have to go back and double check on that. But it's the dissolution circuit for putting MRAC into solution that's critical. And I think we would have that capacity or capability pretty well in hand, Matthew, I'd like to take that question away and come back with an answer on that.

49:29 But I would say that just off top my head, I think it'd be a pretty minimal cost if we had to expand that circuit compared to the overall cost of the project. Got it. Okay. No, that's helpful. That's everything I had. Best of luck moving forward. Great, Matthew. Thank you. Your next question comes from Noel Parks with Tuohy Brothers Investment Research. Your line is open. Hi, good morning. I apologize if you touched on this before, but I just wondered, now that we're getting very close to the closing of the ASM acquisition, Could you just sort of maybe update us on your thinking about the Korean metals plant and sort of after the close with hopefully with the access to your considerably bigger balance sheet and so forth, just sort of what the plan next steps would be for that going forward.

50:41 That's my first. First of all, thanks Noel. Noel, good to talk to you. So yeah, look, I think planning to close later this month. I actually plan to be at the Korean metals facility here in September 1 or about first or second of September to welcome them to the Energy Fuels family. So we're really excited about that. Look, the facility is operating great. We are in the process of expanding it. We've just added eight new furnaces. We intend to add to the strip casting capabilities. The facility today, I think, has 1,200 or 1,400 tons per year capacity. We're looking to double that. And that equipment's already been purchased, so it's already started on the furnace side and will expand on the strip casting side. So that is all progressing well and is funded. Funded.

51:40 And so we're excited to just get it integrated. We're excited to be shipping our oxide materials over there to our own facility. I think the integration plans are going very well. We think the integration itself is going to be pretty seamless. So we've put a lot of effort into that. Great, thanks. And I just wondered if you had any updated thinking on the Juniper ore body at Pinyon Plain? Just maybe what product has been made in sort of the analysis and perhaps the plans for drilling into it? So we've got a very active drilling campaign going on right now.

52:26 We've been continuing our works into the ore body. Of course, we're mining the upper zone now and the next phase of mining, Pinion Flame will come from the Juniper zone. So we're preparing for that. I just signed off on purchasing some additional equipment that's going to be needed as we go down into the juniper, but we do have a very active drilling campaign going on right now to just better define that ore body. Keep in mind that these breccia pipe mining is a little bit more uncertain than big open pit mines in terms of understanding the ore grades that you're going to hit.

53:11 So, so far, think we've been very happy with how that's gone, but we're really trying to drill it out as much as we can to really make sure we understand what those ore grades are going to look like from the Juniper zone. So yeah, very active campaign going on right now. Great, thanks a lot. Thank you. Good talk to you all. That concludes our Q and A session. I will now turn the conference back over to Ross Papu for any closing remarks. Great. Thank you very much. Again, just want to thank everybody for participating. Energy Fuels is on a really exciting trajectory. We had some incredible announcements when you look at Q2, the addition of VAC, the DOW, OSC financing, phase one and two, or phase 1B and C, kicking off that construction.

54:09 Is a company that is very active. It's moving very quickly. We greatly appreciate our shareholders' support, and I think the best is yet to come. So thank you and look forward to talking to our shareholders as we progress. So again, thank you, everybody. This concludes today's call. Thank you for attending. You may now disconnect and have a wonderful day.