The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes, which have been prepared in accordance withU.S. GAAP, included elsewhere in this Quarterly Report on Form 10-Q. Additionally, the following discussion and analysis should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial statements included in Part II of our Annual Report on Form 10-K for the year endedDecember 31, 2022 . This Discussion and Analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. See "Cautionary Statement Regarding Forward-Looking Statements."
All dollar amounts stated herein are in
Operations Update and Outlook for 2023
Overview
We responsibly produce several of the raw materials needed for clean energy and advanced technologies, including uranium, rare earth elements ("REEs") and vanadium.
Our primary product is U3O8 (also known as natural uranium concentrate or yellowcake), which, when further processed, becomes the fuel for the generation of clean nuclear energy. According to theNuclear Energy Institute , nuclear energy provides nearly 20% of the total electricity and more than 50% of the clean, carbon-free electricity generated in theU.S. The Company generates revenues from extracting and processing materials for the recovery of uranium, vanadium andREEs for our own account, as well as from toll processing materials for others.
Our natural uranium concentrate is produced from multiple sources:
•Conventional recovery operations at the
•Processing ore from uranium mines; and
•Recycling of Alternate Feed Materials, which are uranium-bearing materials that are not derived from conventional ore; and
•In Situ Recovery ("ISR") operations.
The Company is also currently producing an intermediate REE product called mixed RE Carbonate. In 2020, the Company began evaluating the potential to recoverREEs at the Mill. ByOctober 2020 , the Company had produced a mixed RE Carbonate, ready for separation, on a pilot scale from natural monazite sands. InDecember 2020 , the Company entered into a contract to acquire natural monazite sands from a heavy mineral sands operation inGeorgia , for the recovery of uranium and production of a commercially salable mixed RE Carbonate containing approximately 71% total rare earth oxide ("TREO"). InMarch 2021 , the Company began ramping up commercial-scale production of mixed RE Carbonate from these natural monazite sands. InJuly 2021 , the Company announced the signing of a definitive supply agreement and began commercial shipments of RE Carbonate to a separation facility inEurope , which is the next step in producing usable REE products. OnFebruary 10, 2023 , the Company closed on its previously announced mineral rights transfer agreements to acquire 17 mineral sand concessions in theState of Bahia, Brazil totaling approximately 37,300 acres or 58.3 square miles (the "Bahia Project "). Based on significant historical drilling performed to date, it is believed that theBahia Project holds significant quantities of heavy minerals, including monazite, that will feedEnergy Fuels' quickly emergingU.S. -based REE supply chain. See "Rare Earth Element Initiatives," below for more information. The Company is also in discussions with other entities around the world to acquire additional supplies of natural monazite sands and has worked withU.S. government agencies and national laboratories on various REE initiatives. The Company is currently modifying and enhancing its existing solvent extraction ("SX") circuits at the Mill to be able to produce fully separated REE oxides, including NdPr oxide, in addition to uranium, as soon as late-2023 or early-2024. The Company is also evaluating other downstream REE activities, including metal-making and alloying at the Mill or elsewhere in theU.S. , and is actively pursuing federal grants to help fund such efforts. The Company also has a long history of conventional vanadium recovery at the Mill. The Company has several existing mines that contain vanadium resources, and the Mill has produced considerable quantities of vanadium during its operating history. From late 2018 to early 2020, the Company completed a campaign to recover vanadium from solutions in the tailings management system at the Mill ("Pond Return") from which it recovered over 1.8 million pounds of high-purity V2O5. 27 -------------------------------------------------------------------------------- Finally, pursuant to a strategic alliance with a technology development company, the Company is evaluating the feasibility of recovering radioisotopes from the Mill's existing process streams for use in the development of medical isotopes for the potential treatment of cancer. This involves evaluating the potential to recover Th-232, and Ra-226 from the Company's existing RE Carbonate and uranium process streams at the Mill and the feasibility of recovering Ra-228 from the Th-232, Th-228 from the Ra-228 and concentrating Ra-226 at the Mill. Recovered Ra-228, Th-228 and Ra-226 would then be sold to pharmaceutical companies and others to produce Pb-212, Ac-225, Bi-213, Ra-224 and Ra-223, which are the leading medically-attractive targeted alpha therapy ("TAT") isotopes for the treatment of cancer. Existing supplies of these isotopes for TAT applications are in short supply, and methods of production are costly and currently cannot be scaled to meet the demand created as new drugs are developed and approved. This is a major roadblock in the research and development of new TAT drugs as pharmaceutical companies wait for scalable and affordable production technologies to become available. Under this initiative, the Company has the potential to recover valuable isotopes from its existing process streams for use in treating cancer, thereby recycling back into the market valuable materials that would otherwise not be recoverable. The Mill, located nearBlanding, Utah , processes ore mined from the Four Corners region ofthe United States , as well as Alternate Feed Materials that can originate worldwide. The Mill is the only operating conventional uranium mill in theU.S. and the only operating facility in theU.S. with the ability to recover vanadium from primary ore sources. The Mill is licensed to process an average of 2,000 tons of ore per day and to produce approximately 8.0 million pounds of U3O8 per year. The Mill has separate circuits to process conventional uranium and vanadium ores, as well as Alternate Feed Materials andREEs . For the last several years, no mines have operated commercially in the vicinity of the Mill due to low uranium prices. As a result, in recent years, Mill activities have focused on processing Alternate Feed Materials for the recovery of uranium under multiple toll processing arrangements, as well as Alternate Feed Materials for our own account. Additionally, in recent years, the Mill has recovered dissolved vanadium through its Pond Return program from the Mill's tailings management system that was not fully recovered during the Mill's prior forty years of operations. During the three months endedMarch 31, 2023 , Mill activities focused primarily on processing monazite sands for the recovery of uranium and production of RE Carbonate. The Company is actively pursuing additional monazite sands and Alternate Feed Materials for processing at the Mill. The Company continues to pursue additional sources of feed materials for the Mill. For example, a significant opportunity exists for the Company to participate in the clean-up of abandoned uranium mines in theFour Corners Region of theU.S. The U.S. Justice Department andEnvironmental Protection Agency announced settlements in various forms in excess of$1.5 billion to fund certain cleanup activities on theNavajo Nation . Additional cleanup settlements with other parties are also pending. Our Mill is within economic trucking distance, and is uniquely positioned in this region, to receive uranium-bearing materials from these cleanups and recycle the contained U3O8, while, at the same time, permanently disposing of the cleanup materials outside the boundaries of theNavajo Nation in our licensed tailings management system. There are no other existing facilities in theU.S. capable of providing this service. During 2019 to 2022, the Company received shipments of material generated in the cleanup of a large, historically producing conventional uranium mine located in northwestNew Mexico . In addition to generating revenue for the Company, this project demonstrates the ability of the Mill to responsibly cleanup projects similar to those on theNavajo Nation .
The Company's ISR operations consist of our
While the current spot price of uranium has not supported production for many global uranium producers over the past several years, having resulted in significant production cuts, the spot price of uranium has improved in recent years to levels that we believe could support production if these prices are sustained and result in long-term supply contracts with nuclear utilities. To date, the Company has entered into three long-term contracts withU.S. nuclear utilities with deliveries occurring from 2023 to 2030 at supportive pricing and other terms. In anticipation of potential price recoveries and additional contracts, we continue to maintain and advance our resource portfolio. We stand ready to resume wellfield construction and resume production at ourNichols Ranch Project and mine and process resources from ourLa Sal Project ,Whirlwind Project and/orPinyon Plain Project . We believe we can bring this new production to market within approximately twelve to eighteen months of a positive production decision. Longer term, we expect to develop our large conventional mines at Roca Honda and/orSheep Mountain .
Update on Rare Earth Element Initiative
As previously disclosed, in early-2022, the Company began commercial-scale partial separation of lanthanum ("La") and cerium ("Ce") on a small scale from our RE Carbonate, resulting in a higher-value carbonate ("Partially Separated RE Carbonate") using an existing solvent extraction ("SX") circuit at the Mill, which represents the first commercial level REE separation to occur in theU.S. in many years. The Partially Separated RE Carbonate, which is now our salable product, is an even more advanced RE Carbonate than was produced in 2021, as it contains a higher concentration of valuable neodymium and praseodymium ("NdPr") ("High Value TREO"). 28
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Rare Earth Element Initiatives
The Company is in advanced discussions with several groups holding natural monazite properties to secure additional supplies of monazite sands by offtake or otherwise, which if successful, would be expected to allow the Company to increase production of RE Carbonate, along with separated REE oxides in the future. The Company continues to make progress toward full REE oxide separation capabilities at the Mill to produce both "light" and "heavy" separated REE oxides. The Company is currently separating La and Ce from its commercial RE Carbonate stream utilizing existing Mill infrastructure to produce an RE Carbonate product with higher concentrations of NdPr and "heavy" (samarium ("Sm")+)REEs .Energy Fuels is also proceeding with the modification and enhancement of its existing Mill infrastructure ("Phase 1") to expand its "light" REE separation facilities to be capable of producing commercial quantities of separated NdPr oxide by later this year or early 2024, followed by planned further expansions to further increase NdPr production capacity ("Phase 2") and to produce separated dysprosium ("Dy"), terbium ("Tb") and potentially other REE materials in the future ("Phase 3") from monazite and potentially other REE process streams. In 2022, the Company began construction on its "Phase 1" REE separation facilities, which includes modifications and enhancements to the SX circuits at the Mill. "Phase 1" is expected to have the capacity to process approximately 8,000 to 10,000 tonnes of monazite per year, producing roughly 4,000 to 5,000 tonnes TREO, containing roughly 800 to 1,000 tonnes of recoverable separated NdPr oxide per year, or sufficient NdPr for 400,000 to 1 million EVs per year. BecauseEnergy Fuels is utilizing existing infrastructure at the Mill, "Phase 1" capital is expected to total approximately$25 million . "Phase 1" is expected to be operational later this year or early 2024, subject to receipt of sufficient monazite supply and successful construction and commissioning. During "Phase 2,"Energy Fuels expects to expand its NdPr separation capabilities, with an expected capacity to process approximately 15,000 to 30,000 tonnes of monazite per year and expected recovery of approximately 7,500 to 15,000 tonnes of TREO, containing approximately 1,500 to 3,000 tonnes of NdPr oxide per year, or sufficient NdPr for 750,000 to 3.0 million EVs per year. "Phase 2" is also expected to add a dedicated monazite "crack-and-leach" circuit to the Mill's existing leach circuits. The Company expects to complete "Phase 2" in 2026, subject to licensing, financing, and receipt of sufficient monazite feed. During "Phase 3,"Energy Fuels expects to add "heavy" REE separation capabilities, including the production of Dy, Tb, and potentially other REE oxides and advanced materials. The Company will also evaluate the potential to produce La and Ce products. The Company expects to have additional "heavy" REE feedstock stockpiled from "Phase 1" and "Phase 2." as feed for "Phase 3" REE separation. The Company expects to complete "Phase 3" in 2027, subject to licensing, financing, and receipt of sufficient feed. In addition, the Company completed its purchase of theBahia Project inBrazil onFebruary 10, 2023 .The Bahia Project is a well-known heavy mineral sand ("HMS") deposit that has the potential to supply 3,000 - 10,000 tonnes of natural monazite sand concentrate per year for decades to the Mill for processing into high-purity REE oxides and other materials. WhileEnergy Fuels' primary interest in acquiring theBahia Project is the REE-bearing monazite, theBahia Project is also expected to produce large quantities of high-quality titanium (ilmenite and rutile) and zirconium (zircon) minerals that are also in high demand. Natural monazite of 3,000 - 10,000 tonnes contains approximately 1,500 - 5,000 tonnes of TREO, including 300 - 1,000 tonnes of NdPr and significant commercial quantities of Dy and Tb. The Company is focused on monazite at the current time, as it has superior concentrations of these four (4) criticalREEs compared to other REE-bearing minerals. These REE's are used in the powerful neodymium-iron-boron ("NdFeB") magnets that power the most efficient electric vehicles ("EV"), along with uses in other clean energy and defense technologies. For reference, a typical EV utilizes approximately one (1) to two (2) kilograms of NdPr oxide in its drivetrain. Based on this assumption, monazite from theBahia Project alone is expected to supply enough NdPr oxide to power 150,000 to 1 million EVs per year. The uranium contained in the monazite, which is expected to be comparable in grade to typical Colorado Plateau uranium deposits, will also be recovered at the Mill. The acquisition of theBahia Project is part of the Company's efforts to build a large and diverse book of monazite supply for its rapidly advancing REE processing business. The Company expects to procure monazite through Company-owned mines like theBahia Project , joint ventures or other collaborations, and open market purchases, like the Company's current arrangement with The Chemours Company. The Company is currently in advanced discussions with several additional current and future monazite producers around the world to supplyEnergy Fuels' initiative.
Sale of
OnFebruary 14, 2023 , the Company closed on its previously announced definitive agreement to sell three wholly owned subsidiaries that together hold theAlta Mesa ISR Project to enCore Energy Corp. for total consideration of$120 million . The transaction is expected to help the Company fully finance much of its uranium, REE, vanadium and medical isotope business 29 --------------------------------------------------------------------------------
plans for the next 2 to 3 years without diluting shareholders. See Note 5 -
Property, Plant and
Known Trends or Uncertainties
The Company has had negative net cash outflows and net losses in previous years in part due to depressed uranium and vanadium prices, along with smaller quantities of monazite to process into salable RE Carbonate which hasn't allowed the Company to realize economies of scale. We are not aware at this time of any trends or uncertainties that have had or are reasonably likely to have a material impact on revenues or income of the Company other than: (i) recent strengthening of uranium markets, which could result in the Company selling inventories at increased prices and/or signing additional contracts with nuclear utilities for the long-term supply of uranium; (ii) the recently implementedU.S. Uranium Reserve Program, which could result in improved uranium sales prices; and (iii) the Company's REE and TAT radioisotope initiatives, which, if successful, could result in improved results from operations in future years. We are not aware at this time of any events that are reasonably likely to cause a material change in the relationship between costs and revenue of the Company.
Continued Efforts to Minimize Costs
Although the Company is pursuing two new initiatives - its REE and TAT radioisotope initiatives - in addition to its existing uranium and vanadium products, which will likely require the Company to grow certain of its operations, the Company will continue to seek ways to minimize the costs of all its operations where feasible while maintaining its critical capabilities, manpower, and properties.
Uranium Market Update
According to monthly price data fromTradeTech LLC ("TradeTech"), uranium spot prices rose modestly during the Quarter. The uranium spot price began the Quarter at$47.60 per pound onDecember 31, 2022 and rose 6% to$50.60 per pound byMarch 31, 2023 . During the Quarter, the uranium spot price hit a high of$51.85 per pound during the week ofFebruary 24, 2023 and a low of$47.60 per pound at the beginning of the quarter.TradeTech price data indicates that long-term U3O8 prices were flat during the Quarter at$53.00 per pound. OnApril 28, 2023 ,TradeTech reported a spot price of$53.75 per pound and a long-term price of$53.00 per pound U3O8.
The following important developments in the uranium and nuclear industries occurred during the Quarter:
-Under South Korea's 10th Basic Plan for Electricity Supply and Demand, finalized by thePower Policy Council onJanuary 11, 2023 , nuclear is expected to provide nearly 34.6% of the nation's electricity generation by 2026, compared to 27.1% in 2021. The Plan also calls for the construction of Units 3 and 4 at the Shin Hanul Nuclear Power Plant to resume (TradeTech , NMR, 1/13/2023). -Support for nuclear power inJapan continues, where local authorities representing communities surrounding the Ohma Nuclear Power Plant visited theMinistry of Economy, Trade, and Industry to show support for the resumption of construction of the nuclear power plant inJapan's Aomori Prefecture (TradeTech , NMR, 2/10/2023). -OnFebruary 10, 2023 ,Japan's Cabinet formally adopted a plan to implement a Green Transformation policy, which will allow for the operation of nuclear power plants beyond their current 60-year limit (TradeTech , NMR, 2/17/2023). During the week ofMarch 3, 2023 , theCabinet approved bills to allow commercial nuclear plants to operate beyond their current 60-year limit (TradeTech , NMR, 3/3/3023). -U.S. SenatorsJohn Barrasso (R-WY),Joe Manchin (D-WV),Jim Risch (R-ID),Martin Heinrich (D-NM),Cynthia Lummis (R-WY),Chris Coons (D-DE), andRoger Marshall (R-KS) introduced bipartisan legislation to ban Russian uranium imports. This is a companion bill to H.R. 1042, which was introduced inFebruary 2023 byU.S. RepresentativesCathy McMorris Rodgers (R-WA), andBob Latta (R-OH) (TradeTech , NMR, 3/10/2023). -During the week ofMarch 10, 2023 , Unit 3 at the Vogtle Nuclear Power Plant inGeorgia reached criticality, according toGeorgia Power , a subsidiary of Southern Company. Initial criticality is an important step during the startup testing sequence (TradeTech , NMR, 3/10/2023). -TheU.K. government has classified nuclear as "environmentally sustainable" in order to attract investment for the energy sector. This follows the E.U. decision inJuly 2022 to label nuclear energy as green technologies needed for the energy transition. (TradeTech , NMR, 3/17/2023). TheU.K. government announced its "Powering Up Britain" plan, which would increase the share of nuclear generating capacity from 15% to 25% by 2050 (TradeTech , NMR, 3/31/2023). -TheU.S. International Trade Commission has determined in a "sunset review" that termination of the suspended trade investigation on Russian uranium imports "would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time." As a result, onMarch 23 , the ITC said the Russian Suspension Agreement would remain in place (TradeTech , NMR,March 24, 2023 ). 30 -------------------------------------------------------------------------------- The Company continues to believe that certain uranium supply and demand fundamentals point to higher sustained uranium prices in the future, including significant production cuts in recent years, along with significant increased demand from utilities, financial entities, traders and producers. Globally, the Company believes that nuclear energy is seeing greater acceptance by governments and policymakers as a solution to addressing the issues of climate change and energy security. The Company believes that financial entities purchasing uranium on the spot market for long-term investment continue to represent a fundamental shift in the uranium market due to increasing demand and removing readily available material from the market that would otherwise serve as supply to utilities, traders, and others. Further, the Company believes thatRussia's ongoing invasion ofUkraine has sparked a widespread trend away from Russian-sourced nuclear fuel supply. The Company also continues to believe that a large degree of uncertainty exists in the market, primarily due to transportation issues, trade issues, the life of existing uranium mines, conversion and enrichment bottlenecks, the opaque nature of inventories and secondary supplies, unfilled utility demand, geopolitical risks includingRussia's ongoing invasion ofUkraine , and the market activity of state-owned uranium and nuclear companies. No additional new uranium agreements were entered into by the Company during the Quarter. However, the Company continues to closely monitor uranium markets and seek additional opportunities to enter into long-term sales contracts with utilities at prices that sustain production, cover overhead costs, and provide a reasonable rate-of-return to investors while also providing the Company and its shareholders with exposure to further upside price movements. The Company is also continuing to evaluate its ramp-up back into production at certain of its conventional mines in anticipation of its fulfillment obligations, as well as the timing and method for the purchase and disposition of its existing uranium inventories, including selling into the spot market, selling to theU.S. Uranium Reserve Program, or as a part of one or more term contracts.
Rare Earth Element Market Update
REEs are a group of 17 chemical elements (the 15 elements in the lanthanum series, plus yttrium and scandium) that are used in a variety of clean energy and advanced technologies, including wind turbines, EVs, cell phones, computers, flat panel displays, advanced optics, catalysts, medicine, and national defense applications. Monazite, the source ofREEs currently utilized by the Company, also contains significant recoverable quantities of uranium, which fuels the production of carbon-free electricity using nuclear technology. According to industry analyst Wood-Mackenzie, most demand for REE's is in the form of separatedREEs , "as most end-use applications require only one or two separated rare earth compounds or products." (Roskill, Rare Earths, Outlook to 2030, 20th Edition). The main uses forREEs include: (i) battery alloys; (ii) catalysts; (iii) ceramics, pigments and glazes; (iv) glass polishing powders and additives; (v) metallurgy and alloys; (vi) permanent magnets; (vii) phosphors; and (viii) others (Adamas Intelligence). By volume,REEs used for permanent magnets (neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb)) and catalysts (cerium (Ce) and lanthanum (La)) comprised 60% of total consumption, yet over 90% of the value consumed. Typical natural monazite sands from the southeastU.S. average about 55% TREO and 0.20% uranium, which is the typical grade of uranium found in uranium mines that have historically fed the Mill. Of the 55% TREO typically found in the monazite sands, the NdPr comprise approximately 22% of the TREO. NdPr are among the most valuable of theREEs , as they are the key ingredient in the manufacture of high-strength permanent magnets which are essential to the lightweight and powerful motors required in EVs and permanent magnet wind turbines used for renewable energy generation, as well as in an array of other modern technologies, including mobile devices and defense applications. Monazite also contains higher concentrations of "heavy" rare earths, including dysprosium (Dy) and terbium (Tb) used in permanent magnets, relative to other common REE ores. The Company is currently primarily focused on NdPr and, to a lesser extent, La, Ce, Sm, Dy and Tb. The REE supply chain starts at a mine.REEs are mined both as a primary target, like the Mountain Pass REE mine inCalifornia , and as a byproduct, which is the case for Chemours' Offerman Mineral Sand Plant, where the natural monazite sands are physically separated from the other mined sands. Mining creates an ore, which in the case of the Chemours material is the natural monazite sands that are physically separated from the other mined mineral sands. The ore then goes through a process of cracking and cleaning at the Mill that may include acids or caustic solutions, elevated temperature, and pressure to recover the uranium and free theREEs from the mineral matrix. After removal of the uranium, which will be sold into the commercial nuclear fuel cycle for the creation of carbon-free nuclear energy, this solution is cleaned of any remaining deleterious elements (including remaining radioactive elements) and made into an RE Carbonate, which is a form acceptable as an SX feedstock for REE separation. SX facilities then use solvents and a series of mixer-settlers for the separation of theREEs in the RE Carbonate from each other and to create the desired purified REE products (often as oxides) for the market or particular end user. Separated REE products are typically sold to various markets, depending on the use. Separated REE products can be made into REE metals and metal-alloys, which are used for magnets and other applications. To date, the Mill has produced an RE Carbonate, substantially all of which has been sold to Neo Performance Materials ("Neo"). The Mill is currently modifying and enhancing its existing SX facilities to result in an SX REE separation circuit at the Mill, which, based on engineering to date, is expected to be capable of producing up to 1,000 tonnes of separated NdPr oxide 31 --------------------------------------------------------------------------------
per year. The Company is also currently evaluating the potential to produce
other downstream REE materials, including REE metals and alloys, in the future
at the Mill or elsewhere in the
REEs are commercially transacted in a number of forms and purities. Therefore, there is no single price forREEs collectively, but numerous prices for various REE compounds and materials. The primary value that the Company expects to generate in the short- to medium-term will come from NdPr, Dy, Tb, Ce, and La, as the price the Company receives from the sale of its RE Carbonate is tied to the prices of those REE oxides. In addition, the Company expects to produce separated REE oxides in the future. According to data from Asian Metal, NdPr Oxide (Pr6O11 25%; Nd2O3 75%) mid-point prices inChina dropped approximately 26% during the Quarter from ¥710 RMB/kg (about$103 /kg) to ¥525 RMB/kg (about $76kg). The price for NdPr Oxide asApril 28, 2023 was ¥443 RMB/kg (about$64 /kg). Ce Oxide (99.9%) mid-point prices inChina dropped approximately 13% during the Quarter from ¥7.05 RMB/kg (about$1.02 /kg) to ¥6.15 RMB/kg (about$0.90 /kg). The price for Ce Oxide as ofApril 28, 2023 was ¥5.60 RMB/kg (about$0.81 /kg). La Oxide (99.9%) mid-point prices inChina price dropped approximately 16% during the Quarter from ¥6.95 RMB/kg (about$1.00 /kg) to ¥5.85 RMB/kg (about$0.85 /kg). The price for La Oxide as ofApril 28, 2023 was ¥5.35 RMB/kg (about$0.77 /kg). Dy Oxide (99.5%) mid-point prices inChina dropped approximately 19% during the Quarter from ¥2,490 RMB/kg (about$360 /kg) to ¥2,025 RMB/kg (about$295 /kg). The price for Dy Oxide as ofApril 28, 2023 was ¥1,900 RMB/kg (about$275 /kg). Tb Oxide (99.99%) mid-point prices inChina dropped approximately 29% during the Quarter from ¥14,000 RMB/kg (about$2,022 /kg) to ¥9,950 RMB/kg (about$1,449 /kg). The price for Tb Oxide as ofApril 28, 2023 was ¥8,450 RMB/kg (about$1,222 /kg). The REE market is dominated byChina , which produces approximately 83% of refined REE products with otherAsia Pacific operations providing an additional 15%. According to WoodMackenzie, "Prices for rare earths in the years to come will follow different trajectories based on their involvement with the magnet industry." WoodMacKenzie forecasts that prices for magnet elements, including neodymium (Nd) and praseodymium (Pr), will remain elevated through 2050, supporting new primary and secondary supply. Prices for elements used as additives or fillers in magnets, namely terbium (Tb) and dysprosium (Dy), will see "short-term price support followed by a steady decline as supply availability improves." Prices for other non-magnet elements, including cerium (Ce) and lanthanum (La), will remain stable at roughly the cost of production. WhileChina consumes the mostREEs in its manufacturing industries, much of it is consumed in the manufacture of end-use goods for export and by non-Chinese companies operating withinChina . REE separation facilities are additionally located inVietnam ,India , as well as Silmet inEstonia , and use a variety of feedstocks and sources, with small-scale or experimental operational facilities located elsewhere (Russia included). The Company sees its commercial production of RE Carbonate as the first step in an effort to restore the REE supply chain in theU.S. , where one currently does not exist. Multiple potential domestic sources of mined mineral sands, including monazites, exist inNorth America and are potential feedstocks for the Mill; in addition, there is one producer ofREEs from hard rock mining inCalifornia , which currently ships its material toAsia . On a global level, there is a potential to acquire natural monazite sands from the following locations:Australia ,South Africa ,Madagascar ,New Zealand ,the Philippines ,Indonesia ,Brazil ,Malaysia ,Thailand ,India ,Russia , and others. As demand for clean energy technologies and other advanced technologies, increases in the coming years, the Company expects demand and prices forREEs to increase. Increases in supply sources forREEs are expected in conjunction with anticipated rising REE prices.
Vanadium Market Update
Vanadium is a metallic element that, when converted into ferrovanadium ("FeV") (an alloy of vanadium and iron), is used primarily as an additive to strengthen and harden steel and make it anti-corrosive. According to market consultantFastMarkets , over 90% of FeV is used in the steel industry. In addition, vanadium is used in the aerospace and chemical industries, and continues to see interest in energy storage technologies, including vanadium redox flow batteries.China is the largest global producer of vanadium, with additional production coming fromRussia ,South Africa , andBrazil (Roskill). During the Quarter, the mid-point price of vanadium inEurope rose 7%, beginning the Quarter at$9.44 per pound V2O5 as ofDecember 31, 2022 and ending the Quarter at$10.13 per pound V2O5 as ofMarch 31, 2023 . The price of vanadium was at its high of$10.80 per pound V2O5 betweenFebruary 3, 2023 andFebruary 16, 2023 . The price of vanadium was at its low of$9.44 per pound V2O5 betweenDecember 30, 2022 andJanuary 12, 2023 . As ofApril 28, 2023 , the price of vanadium is$9.75 per pound V2O5. Early in the Quarter,FastMarkets reported "vanadium pentoxide and vanadium nitrogen prices increased amid stronger downstream demand and more optimism from market participants due to vanadium batteries gaining more attention in the energy storage industry," along with "spot tightness due to production cuts at several major vanadium producers for maintenance."China's vanadium price increases amid tight spot availability, optimistic outlook,January 13, 2023 . However, by the end of the Quarter, sentiment was somewhat muted with Fast Markets reporting "vanadium pentoxide prices fell amid weak demand" with "some traders actively destock[ing] amid bearish market sentiment." However, one Chinese trader 32 -------------------------------------------------------------------------------- indicated that "we have not seen any signs of recovery in downstream sectors, but some market participants believe this may improve in April when some basic infrastructure projects start."China's vanadium price drops on weak demand,March 31, 2023 . Operations Update and Outlook Overview The Company continues to believe that uranium supply and demand fundamentals point to higher sustained uranium prices in the future. The Company believes that nuclear energy, fueled by uranium, is experiencing a global resurgence with an increased focus by governments, policymakers, and citizens on decarbonization, electrification, and security of energy supply. In addition,Russia's invasion ofUkraine and the entry into the uranium market by financial entities purchasing uranium on the spot market to hold for the long-term has the potential to result in higher sustained spot and term prices and, perhaps, induce utilities to enter into more long-term contracts with non-Russian producers likeEnergy Fuels to foster security of supply, avoid transportation issues, and ensure more certain pricing.
In 2022, we entered into three long-term uranium contracts with major
The Company continually seeks new sources of revenue, including through its emerging REE business, as well as new sources of Alternate Feed Materials and new fee processing opportunities at the Mill that can be processed without reliance on current uranium sales prices.
The Company is seeking additional sources of natural monazite sands to supply feedstock to its emerging REE projects (in addition to the recent acquisition of theBahia Project discussed in Note 5 - Property, Plant andEquipment and Mineral Properties ). The Company is also evaluating the potential to recover radioisotopes from its existing process streams for use in the development of TAT medical isotopes for the treatment of cancer, and continues its support ofU.S. governmental activities to assist theU.S. uranium mining industry, including expanding the newU.S. Uranium Reserve Program, supporting efforts to restore domestic nuclear fuel capabilities, and advocating for the responsible sourcing of uranium and nuclear fuel.
We continually evaluate the optimal mix of production, inventory and purchases in order to retain the flexibility to deliver long-term value.
Mill Activities
During the three months endedMarch 31, 2023 , the Mill focused on its mixed RE Carbonate production and produced approximately 250 tonnes of high-purity, partially separated mixed RE Carbonate, containing approximately 115 tonnes of TREO. while working to secure additional monazite ore feedstock to increase production. During the three months endedMarch 31, 2023 the uranium recovered from processing monazite ore was retained in circuit and was not packaged as final U3O8 product. The Mill did not recover any vanadium during the quarter. During the first half of 2023, the Company expects to process approximately 600 tonnes of monazite delivered late in 2022 from Chemours and recover approximately 150 to 170 tonnes of TREO at the Mill in the form of approximately 315 to 365 tonnes of high-purity, partially separated mixed RE Carbonate (of which approximately 250 tonnes of high-purity, partially separated mixed RE Carbonate were recovered in the first quarter of 2023 containing approximately 115 tonnes of TREO). The Company expects to receive an additional 400 to 700 tonnes of monazite later in 2023, which the Company expects to process for the recovery of uranium and production of separated NdPr and a heavy REE (Sm+) RE Carbonate upon commissioning of the Mill's Phase 1 REE separation circuit in late 2023 or early 2024 (see "Rare Earth Element Initiatives" above). The Company is also in active discussion with several parties globally to acquire additional quantities of natural monazite ore, which if secured and delivered to the Mill, could result in significant additional quantities of uranium and separated NdPr and heavy REE (Sm+) Re Carbonate production in 2024 and beyond.
No vanadium production is currently planned during 2023, though the Company continually monitors its inventory and vanadium markets to guide future potential vanadium production.
The Company is also actively pursuing opportunities to process additional sources of natural monazite sands, new and additional Alternate Feed Material sources, and new and additional low-grade mineralized materials from third parties in connection with various uranium clean-up requirements.
Conventional Mine Activities
During the three months ended
33 -------------------------------------------------------------------------------- construction management, increased development activities, significant workforce expansion and needed rehabilitation of surface and underground infrastructure. The Company expects to continue its rehabilitation and development work on these Projects during 2023, as it prepares them for future production. Although the timing of the Company's plans to extract and process mineralized materials from these Projects will be based on current contract requirements, inventory levels, sustained improvements in general market conditions, procurement of suitable sales contracts and/or the expansion of theU.S. Uranium Reserve Program, the Company is making the investments required to put one or more of these facilities into production as soon as later in 2023. The Company is selectively advancing certain permits at its other major conventional uranium projects, such as theRoca Honda Project , which is a large, high-grade conventional project inNew Mexico . The Company is also continuing to maintain required permits at its other conventional projects, including the Energy Queen and Pandora mines andSheep Mountain project. Additionally, the Company is evaluating processing options for future production at itsSheep Mountain project and will continue to evaluate theBullfrog Project . Expenditures for certain of these projects have been adjusted to coincide with expected dates of price recoveries based on the Company's forecasts. All of these projects serve as important pipeline assets for the Company's future conventional production capabilities, as market conditions may warrant.
ISR Extraction and Recovery Activities
The Company expects to produce insignificant quantities of U3O8 in the year endingDecember 31, 2023 from Nichols Ranch. Until such time when (i) market conditions improve sufficiently, (ii) suitable term sales contracts can be procured, (iii) theU.S. Uranium Reserve Program is expanded or a combination thereof, the Company expects to maintain theNichols Ranch Project on standby and defer development of further wellfields and header houses. The Company currently holds 34 fully permitted, undeveloped wellfields at Nichols Ranch, including four additional wellfields at the Nichols Ranch wellfields, 22 wellfields at the adjacent Jane Dough wellfields, and eight wellfields at theHank Project , which is fully permitted to be constructed as a satellite facility to the Nichols Ranch Plant. The Company sold itsAlta Mesa ISR Project inFebruary 2023 . See Note 5 - Property, Plant andEquipment and Mineral Properties for more information. Inventories As ofMarch 31, 2023 , the Company had approximately 847,000 pounds of finished uranium inventories located at North American conversion facilities. Additionally, the Company has approximately 345,000 pounds of additional U3O8 contained in stockpiled Alternate Feed Materials and other ore inventory at the Mill that can potentially be recovered relatively quickly in the future, as general market conditions may warrant. During the three months endedMarch 31, 2023 , the Company completed the purchase of 120,000 additional pounds of uranium and the sale of 300,000 pounds of uranium to theU.S. Uranium Reserve Program, resulting in the Company holding approximately 847,000 pounds of U3O8 in inventory as ofMarch 31, 2023 . The Company expects to deliver 260,000 additional pounds of U3O8 under its existing uranium term contracts in 2023 resulting in expected uranium inventories to total approximately 587,000 pounds of U3O8 at year-end 2023, subject to currently unplanned uranium spot sales and purchases. The Company sold 79,344 pounds of vanadium during the three months endedMarch 31, 2023 . As ofMarch 31, 2023 , the Company holds approximately 906,000 pounds of finished V2O5 in inventory. There remains an estimated 1.0 to 3.0 million pounds of additional solubilized recoverable V2O5 remaining in tailings solutions awaiting future recovery, as market conditions may warrant.
Sales Update and Outlook for 2023
The Company continually evaluates selling a portion of its inventories on the spot market in response to future upside price volatility, for delivery into additional long-term supply contracts if procured, and/or for future additional sales into the newly establishedU.S. Uranium Reserve Program. The Company also continually evaluates the potential to purchase uranium on the spot market to replace sold inventory, meet sales obligations, and gain exposure to future price increases.
Uranium Sales
The Company entered into four uranium sale and purchase agreements in 2022: three with majorU.S. nuclear utilities and one with theU.S. Uranium Reserve Program. Under these contracts, the Company expects to sell 560,000 pounds of U3O8 during 2023 with an expected weighted-average sales price of$58 -$60 per pound, subject to then-prevailing market prices at the time of delivery. InJanuary 2023 , the Company completed the sale of 300,000 pounds of its inventories located at the Metropolis Works uranium conversion facility ("ConverDyn") to theU.S. Uranium Reserve Program, receiving total proceeds of$18.47 million ($61.57 per pound), resulting in a margin of approximately$35.85 per pound of uranium. During the remainder of 2023, the Company expects to sell 260,000 pounds of its U3O8 inventory into its contracts at an expected sales price of approximately$54 to$58 per pound, subject to inflation and spot prices in effect at the time of delivery. The three utility contracts require deliveries of uranium between 2023 and 2030, with base quantities totaling 3.0 million pounds of uranium over the period, and up to 4.1 million pounds of uranium if all remaining options are exercised. Having 34 --------------------------------------------------------------------------------
observed a marked uptick in interest from nuclear utilities seeking long-term uranium supply, the Company remains actively engaged in pursuing additional selective long-term uranium sales contracts.
To provide the Company with additional flexibility to fulfill its contract
obligations and gain direct exposure to potential future uranium price
increases, the Company purchased a total of 301,052 pounds of
Vanadium Sales
As a result of strengthening vanadium markets, during the three months endedMarch 31, 2023 , the Company sold approximately 79,344 pounds of the Company's existing inventory of V2O5 at a weighted average price of$10.98 per pound of V2O5. The Company expects to sell its remaining finished vanadium product when justified into the metallurgical industry, as well as other markets that demand a higher purity product, including the aerospace, chemical, and potentially the vanadium battery industries. The Company expects to sell to a diverse group of customers in order to maximize revenues and profits. The vanadium produced in the 2018/19 Pond Return campaign was a high-purity vanadium product of 99.6%-99.7% V2O5. The Company believes there may be opportunities to sell certain quantities of this high-purity material at a premium to reported spot prices. As such, the sales during Q1 2023 were at a$0.60 per pound premium to the average spot price for V2O5 during February andMarch 2023 .
Additionally, the Company intends to continue to selectively sell its V2O5 inventory on the spot market as markets warrant but will otherwise continue to maintain its vanadium in inventory.
Rare Earth Sales
The Company commenced its commercial production of a mixed RE Carbonate inMarch 2021 . All RE Carbonate produced at the Mill in 2022 was sold to Neo for separation at Silmet. Until such time as the Company commissions its own separation circuits at the Mill, which is expected to be in late 2023 or early 2024, all or a portion of RE Carbonate production is expected to be sold to Neo for separation at Silmet and/or, potentially, to other REE separation facilities outside of theU.S. To the extent not sold, the Company expects to stockpile mixed RE Carbonate at the Mill for future separation and other downstream REE processing at the Mill or elsewhere. While the Company continues to make progress on its mixed RE Carbonate production and additional funds are spent on process enhancements, improving recoveries, product quality and other optimization, profits from this initiative are expected to be minimal until such time when monazite throughput rates are increased and optimized. Throughout this process, the Company is gaining important knowledge, experience and technical information, all of which are valuable for current and future mixed RE Carbonate production and planned future production of separated REE oxides and other advanced REE materials at the Mill or elsewhere. 35 --------------------------------------------------------------------------------
Results of Operations
The following table summarizes the results of operations for the three months
ended
Three Months Ended March 31, Increase Percent 2023 2022 (Decrease) Change Revenues Uranium concentrates$ 18,470 $ -$ 18,470 * Vanadium concentrates 871 2,412 (1,541) (64) % Alternate Feed Materials, processing and other 272 525 (253) (48) % Total revenues 19,613 2,937 16,676 * Costs applicable to revenues Costs applicable to uranium concentrates 7,715 - 7,715 * Costs applicable to vanadium concentrates 551 1,229 (678) (55) % Underutilized capacity production costs applicable to RE Carbonate - 1,663 (1,663) * Total costs applicable to revenues 8,266 2,892 5,374 186 % Other operating costs and expenses Exploration, development and processing 3,096 1,173 1,923 164 % Standby 2,287 3,475 (1,188) (34) % Accretion of asset retirement obligations 346 394 (48) (12) % Total other operating costs 5,729 5,042 687 14 % Selling, general and administration Selling, general and administration (excluding share-based compensation) 4,837 4,354 483 11 % Share-based compensation 1,186 862 324 38 % Total selling, general and administration 6,023 5,216 807 15 % Total operating loss (405) (10,213) 9,808 * Other income (loss) Gain on sale of assets 116,450 - 116,450 * Other loss (1,781) (4,517) 2,736 (61) % Total other income (loss) 114,669 (4,517) 119,186 * Net income (loss)$ 114,264 $ (14,730) $ 128,994 * Basic and diluted net income (loss) per common share$ 0.72 $ (0.09) $ 0.81 * *Not meaningful. 36
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The following tables set forth selected operating data and financial metrics for
the three months ended
Three Months Ended March 31, Increase Percent 2023 2022 (Decrease) Change Volumes Sold Uranium concentrates (lbs.) 300,000 - 300,000 * Vanadium concentrates (lbs.) 79,344 229,349 (150,005) (65) % *Not meaningful. Three Months Ended March 31, Increase Percent 2023 2022 (Decrease) Change Realized Sales Price Uranium concentrates ($/lbs.)$ 61.57 $ -$ 61.57 * Vanadium concentrates ($/lbs.)$ 10.98 $ 10.51 $ 0.47 4 %
Costs and expenses applicable to revenues
Uranium concentrates ($/lbs.)$ 25.72 $ -$ 25.72 * Vanadium concentrates ($/lbs.)$ 6.94 $ 5.36 $ 1.58 29 % *Not meaningful.
Three Months Ended
For the three months endedMarch 31, 2023 , we recognized net income of$114.26 million or$0.72 per share compared to a net loss of$14.73 million or$0.09 per share for the three months endedMarch 31, 2022 . The change between periods was primarily due to (i) a gain of$116.45 million recognized on the sale of theCompany's Alta Mesa ISR Project inFebruary 2023 , (ii) sales of uranium concentrates for$18.47 million , (iii) a$1.66 million decrease in underutilized production costs applicable to RE Carbonate, partially offset by (i) costs applicable to uranium concentrates of$7.72 million , (ii) a decrease in sales of vanadium concentrates of$1.54 million and (iii) increased selling, general and administrative expenses, including non-cash share-based compensation, of$0.81 million due to increased headcount associated with ramping up operating activities. Operating loss decreased to$0.41 million for the three months endedMarch 31, 2023 from$10.21 million for the three months endedMarch 31, 2022 , primarily due to sales of uranium concentrates during the three months endedMarch 31, 2023 . There were no such sales during the three months endedMarch 31, 2022 . Revenues Uranium concentrates Revenues from uranium concentrates were$18.47 million for the three months endedMarch 31, 2023 due to the completed sale of 300,000 pounds of our inventories to theU.S. Uranium Reserve Program at a realized sales price of$61.57 per pound of uranium. There were no revenues from uranium concentrates for the three months endedMarch 31, 2022 .
Vanadium concentrates
Revenues from vanadium concentrates decreased to$0.87 million for the three months endedMarch 31, 2023 from$2.41 million for the three months endedMarch 31, 2022 , a decrease of 64% primarily due lower volumes sold and realized price between periods. Lower sales volumes (calculated as the change in year-to-year sales volumes times the prior period realized price) accounted for an approximate$1.58 million decrease in vanadium revenue between periods. Lower realized prices (calculated as the change in the year-to-year average realized price times current year sales volumes sold) accounted for an approximate$0.03 million decrease in vanadium revenue between periods.
Alternate Feed Materials, processing and other
Revenues from Alternate Feed Materials, processing and other decreased to$0.27 million for the three months endedMarch 31, 2023 from$0.53 million for the three months endedMarch 31, 2022 , a decrease of$0.25 million or 48%, primarily due to lower Alternate Feed Materials received and processed between periods. 37 --------------------------------------------------------------------------------
Costs Applicable to Revenues
Costs applicable to uranium concentrates
Costs applicable to uranium concentrates were$7.72 million for the three months endedMarch 31, 2023 due to the completed sale of 300,000 pounds of our finished uranium concentrate at a weighted average cost of$25.72 per pound to theU.S. Uranium Reserve Program inJanuary 2023 . There were no costs applicable to uranium concentrates for the three months endedMarch 31, 2022 .
Costs applicable to vanadium concentrates
Costs and expenses applicable to vanadium concentrates decreased to$0.55 million for the three months endedMarch 31, 2023 from$1.23 million for the three months endedMarch 31, 2022 , a decrease of$0.68 million or 55%, primarily due to a decrease of approximately 150,005 pounds of V2O5, partially offset by a$1.58 increase in cost per pound sold between periods.
Underutilized capacity production costs applicable to RE Carbonate
Underutilized capacity production costs applicable to RE Carbonate were$1.66 million for the three months endedMarch 31, 2022 . The underutilized capacity production costs were due to low throughput rates as the Mill ramps-up to commercial-scale production of RE Carbonate. To date, the Mill has focused on producing commercially salable RE Carbonate at low throughput rates and has shipped its resulting product to Silmet. The Mill expects to increase its throughput rates as its supplies of monazite sands increase. There were no underutilized production capacity costs applicable to RE Carbonate for the three months endedMarch 31, 2023 .
Other Operating Costs and Expenses
Exploration, development and processing
Exploration, development and processing costs increased to$3.10 million for the three months endedMarch 31, 2023 from$1.17 million for the three months endedMarch 31, 2022 , an increase of$1.92 million or 164%. Exploration, development and processing costs were primarily related to expenses for ourBahia Project andWhirlwind Project as well as continued progression of the RE Carbonate production program at the Mill. While we expect the amounts relative to the items listed above have added future value to the Company, the Company expenses these costs in part due to the fact that the Company has not established Proven Mineral Reserves or Probable Mineral Reserves as defined by S-K 1300 or NI 43-101 through the completion of a final or bankable feasibility study for any of the Company's projects as of the year ended 2022, with the exception of itsSheep Mountain and Pinyon Plain Projects.
Standby
Standby costs related to the care and maintenance of the standby mines are expensed along with standby costs incurred when the Mill in standby status is operating at minimal levels of production or packaging.
Standby costs decreased to$2.29 million for the three months endedMarch 31, 2023 from$3.48 million for the three months endedMarch 31, 2022 , a decrease of$1.19 million or 34%, primarily due to the Alta Mesa Divestiture onFebruary 14, 2023 as well as lower costs incurred at Colorado Plateau and the Mill between periods.
Selling, general and administrative
Selling, general and administrative expenses include costs associated with marketing uranium, corporate costs and other general and administrative costs. Corporate costs consist primarily of payroll and related expenses for personnel, contract and professional services, share-based compensation expense and other overhead expenditures.
Selling, general and administrative (excluding share-based compensation)
Selling, general and administrative expenses (excluding share-based compensation) increased to$4.84 million for the three months endedMarch 31, 2023 from$4.35 million for the three months endedMarch 31, 2022 , an increase of$0.48 million or 11%, primarily due to increased salaries and benefits in connection with additional headcount incurred associated with the Company's efforts to enhance its business processes to prepare for the current and future growth in activity in our Uranium and REE operations. Our headcount increased to 134 full-time employees as ofMarch 31, 2023 from 103 full-time employees as ofMarch 31, 2022 . Share-based compensation Share-based compensation increased to$1.19 million for the three months endedMarch 31, 2023 from$0.86 million for the three months endedMarch 31, 2022 , an increase of$0.32 million or 38%, primarily due to Board approved annual 2023 grant of awards coupled with a higher grant date fair value, completion of the requisite service period for 2022 and additional headcount. 38 --------------------------------------------------------------------------------
Other Income (Loss)
Gain on sale of assets
For the three months ended
Other loss
Other loss decreased to$1.78 million , net for the three months endedMarch 31, 2023 from$4.52 million , net for the three months endedMarch 31, 2022 , a decrease of$2.74 million or 61%, primarily due to an unrealized loss on foreign exchange of$1.24 million during the three months endedMarch 31, 2022 compared to an unrealized gain on foreign exchange of$0.03 million during the three months endedMarch 31, 2023 , increased interest income of$1.02 million , decreased losses of$0.67 million on mark-to-market investments and marketable securities accounted for at fair value between periods, partially offset by unrealized loss on the convertible note of$0.20 million during the three months endedMarch 31, 2023 .
LIQUIDITY AND CAPITAL RESOURCES
Funding of Major Cash Requirements
Our primary short-term and long-term cash requirements are to fund working capital needs and operating expenses, capital expenditures and potential future growth opportunities through ongoing initiatives such as our REE program,Bahia Project , our S-X project, Pinyon Plain operational readiness and TAT radioisotope initiative as well as business and property acquisitions. We expect to be able to fund working capital and operating expenses, capital expenditures and currently planned growth initiatives over the next 12 months through available cash balances, and product inventory sales, if needed. We may also increase our working capital through issuances of Common Shares in appropriate circumstances. We intend to continue to pursue the acquisition of monazite mineral rights and other uranium producing assets.
Shares Issued for Cash
The Company has an ATM program in place, which allows the Company to make Common Share distributions to the extent qualified under aU.S. shelf registration statement on Form S-3 and one or more prospectus supplements. The Company's currentU.S. shelf registration statement was declared effective onMarch 18, 2021 and permits the Company to sell any combination of Securities (as defined therein) in one or more offerings having an aggregate offering price of up to$300.00 million . Most recently, onJanuary 3, 2022 , we filed a prospectus supplement with theSEC to ourU.S. shelf registration statement, qualifying for distribution up to$50.00 million in additional common shares under the ATM. Sales made pursuant to the above summarizedU.S. shelf registration statements and prospectus supplements are made on the NYSE American at then-prevailing market prices, or any other existing trading market of the Common Shares in theU.S. No Common Shares were issued under its ATM offering during the three months endedMarch 31, 2023 . See Note 7 - Capital Stock for more information.
Working Capital and Future Requirements for Funds
As ofMarch 31, 2023 , the Company had working capital of$143.61 million , including$43.83 million in cash and cash equivalents,$60.44 million of marketable securities, approximately 847,000 pounds of uranium finished goods inventory and approximately 906,000 pounds of vanadium finished goods inventory. The Company believes it has sufficient cash and resources to carry out its business plan for at least the next twelve months.
The Company manages liquidity risk through the management of its working capital and its capital structure.
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Cash and Cash Flows
The following table summarizes our cash flows (in thousands):
Three Months Ended March 31, 2023 2022 Net cash used in operating activities$ (2,579) $ (10,548) Net cash used in investing activities (19,002) (398) Net cash provided by (used in) financing activities (846) 3,590
Effect of exchange rate fluctuations on cash held in foreign currencies
22 19
Plus: release of restricted cash related to sale of assets
3,475 -
Net change in cash, cash equivalents and restricted cash (18,930)
(7,337)
Cash, cash equivalents and restricted cash, beginning of period
80,269 132,822
Cash, cash equivalents and restricted cash, end of period
Three Months Ended
Net cash used in operating activities
Net cash used in operating activities decreased by$7.97 million to$2.58 million for the three months endedMarch 31, 2023 from$10.55 million for the three months endedMarch 31, 2022 primarily due to sales of uranium concentrates of$18.47 million less costs applicable to uranium concentrates of$7.72 million , partially offset by lower sales and costs of vanadium concentrates and increased selling, general and administrative expenses and exploration, development permitting and land holding expenses between periods.
Net cash used in investing activities
Net cash used in investing activities increased by$18.60 million to$19.00 million for the three months endedMarch 31, 2023 from$0.40 million for the three months endedMarch 31, 2022 primarily due to purchases of marketable securities of$47.92 million , the acquisition of theBahia Project for$21.60 million , partially offset by$53.76 million in proceeds from the sale of theAlta Mesa ISR Project . Additionally, additions to property, plant and equipment and mineral properties increased by$2.82 million between periods. See Note 5 - Property, Plant andEquipment and Mineral Properties for more information.
Net cash provided by (used in) financing activities
Net cash used in financing activities was$0.85 million for the three months endedMarch 31, 2023 compared to net cash provided by financing activities of$3.59 million for the three months endedMarch 31, 2023 . The change in net cash provided by (used in) activities is primarily due to proceeds of$4.16 million for the issuance of common shares for cash, net under our ATM Program during the three months endedMarch 31, 2023 . See Note 7 - Capital Stock for more information.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance withU.S. GAAP. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities. Certain accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions used in preparation of our financial statements. We provide expanded discussion of our more significant accounting policies, estimates and judgments in the Annual Report on Form 10-K for the year endedDecember 31, 2022 . We believe these accounting policies reflect our more significant estimates and assumptions used in preparation of our financial statements.
Off Balance Sheet Arrangements
See Note 12 - Commitments and Contingencies to the unaudited condensed consolidated financial statements for further information on off balance sheet arrangements.
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