King: A Company That May Save the U.S. from Metals Oblivion

Besides extracting uranium from ore, this company’s plant processes vanadium. June 20, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Energy Fuels Knocks the Ball Outta the Park SEAN RING Dear Reader, Good morning. Every time I read a piece from Byron, I think, “This is the best thing he’s ever written.” Well, this is the best thing he’s ever written. It’s not in the Rude’s purview to recommend single stocks, but Byron just penned this outstanding article for our Lifetime Income Report subscribers. They’ve had a two-day headstart, which is plenty of time to consider a buy. It’s not an official recommendation; it’s an opportunity. If you haven’t participated in the rally in uranium or metals this year, this opportunity is your chance. If it’s not your cup of tea, that’s fine. Byron has stacked this article with great facts, figures, and know-how to make it worth your while to read. I’ll see you again tomorrow. All the best, Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( [Ex-CIA Insider Releases Trump Election Bombshell]( Former advisor to the CIA, the Pentagon and the White House Jim Rickards just dropped [this Trump election bombshell](. For the sake of our country… I hope he’s wrong. But Jim correctly predicted the Great Recession of 2008, Trump’s 2016 election, and the Covid Crisis. [Click here to see the details]( because if he’s right, you need to prepare now. [Click Here To Learn More]( BYRON KING It’s summertime, which means you might head to the baseball park and catch a game. Hey, it’s the great old American pastime, right? And c’mon, everybody gets a thrill when a player steps up to the plate, swings the bat, connects, and sends the ball out past the fence line. Well, that’s how I felt the other day when I saw an announcement from Denver-based Energy Fuels Inc. (UUUU), an energy and metals company that I’ve followed for several years. Energy Fuels, Inc. (UUUU), White Mesa Plant, nine miles south of Blanding, Utah. Energy Fuels just smacked the proverbial ball into the next county, so to speak. The company successfully tested a newly built system that produces metals critical to the U.S. economy, and certainly to national defense. And right now, there’s no other U.S. source for these materials, so the alternative is Chinese imports. It’s all great news and represents an impressive American success story. Details are below, so read on... Uranium, Vanadium, and Rare Earths Energy Fuels owns and operates the only up-and-running uranium processing mill in the U.S., in southeast Utah just south of a small town called Blanding. The 500-acre plant (photo above) dates from the 1970s and has been extensively upgraded over time. It’s fully licensed by the Department of Energy, through the Nuclear Regulatory Commission (NRC). The U.S. has two other potentially operable uranium plants, similar to this one, but both are currently out of commission and require an extensive, expensive restart process that includes updating a long list of state and federal permits. So, right away, you can see that Energy Fuels holds a distinct competitive advantage within the nuclear fuel cycle in this country. In addition to extracting uranium from ore, the plant processes vanadium, a metal used as an alloy to make super-strong steel. It helps that uranium and vanadium are often found in the same ore deposits, which gets us into the fascinating field of mineralogy (but not just now). The big, new development with Energy Fuels is that the company just completed and tested its newly built facility to extract large amounts of key rare earth elements (REEs) from mineral ores, namely the so-called “magnet metals” neodymium and praseodymium (Nd/Pr), with potential for numerous other exotic elements. This last item is downright strategic to the U.S. economy and defense production base. It marks the first time in many decades that the U.S. has had an up-and-running facility to produce REEs in commercial amounts. Or, returning to baseball analogies, it’s like Babe Ruth pointing toward the bleachers and hitting the ball into the upper seats. Welcome to the REE Revolution I’ve written about REEs in other articles, so I won’t overdo things here. I was first introduced to REEs as a geology and geochemistry student in the 1970s. My mentor and inspiration was the late Prof. Clifford Frondel of the Harvard Department of Geology, who was a principal investigator of REE-bearing rocks that astronauts brought back from the moon. Of course, we don’t have to go to the moon to find REEs; they’re available here on Earth, but very tricky to extract from ores and minerals. Meanwhile, if you don’t yet know much about REEs, here are some basics because your life is controlled by these substances. In fact, without REEs, you have no modern existence. Seriously, without REEs, your lifestyle would not be 2024; it would be more like 1824. The short version is that you are surrounded by REEs, used inside pretty much everything that makes modern life possible. For example: - Your smartphone and computer? Won’t work without REEs. - Television and all the cable, wireless, and internet hookups? REEs. - The light bulbs in your house and office? Probably REE-based (unless you have a stash of old tungsten filament bulbs). - Your refrigerator and microwave oven? REEs, absolutely. - Electricity? Without REEs, there’s no grid because REEs are inside most components, from power plants to switch boxes. Solar and wind power use even more REEs in electronics and related components. - Your car? It won’t work without REEs. And if it’s an electric car (EV), that goes almost without saying. EVs only work because of REEs - For gasoline and diesel, there is no fuel absent REEs because refineries use REEs to help crack petroleum fractions. - How about agricultural equipment? Or equipment that harvests food and processes it? And the logistical system that keeps food fresh and distributes it to stores? REEs, from one end to the other. - If you think that you’ll just drop out and go live in a log cabin, here’s some news: most fire-starter flints are made of… yes, REEs. (“Mischmetal” to be exact; a German word that means a mix of several REEs.) And don’t neglect how indispensable REEs are for military and defense systems like ships, airplanes, ground equipment, electronics, and even many kinds of ammunition, certainly anything with a guidance unit. REEs are everywhere, on a long list of just about every weapon the Pentagon buys. Perhaps there’s just a fraction of an ounce of REE in an electronic application, but those elements make the circuitry work, and absent REEs those devices won’t do squat. Or it might be a few pounds of REE in the guidance elements of a missile. Or about 1,000 pounds of REE in the overall construction of an F-35 fighter jet. Or many tons of REE in the drive motors and/or sonar transducers of a nuclear submarine. REEs are also in unexpected places, like futuristic tank armor. In fact, a few years ago, I visited the Army Research Lab in Aberdeen, Md., and learned how REEs alloy with iron to make phenomenally strong steel. Just a small amount of REE additive improves the strength of the armor plate by significant levels. So again, to reiterate, absent REEs, modern life regresses by about 200 years, and in terms of national defense, we’re almost back to tossing rocks and sharp sticks. But the sticky point is that in recent decades, China has been the world’s dominant producer of REEs, which creates all sorts of issues. Back to Blanding Now, let’s return to Energy Fuels in Utah and its facility, which I visited some months back. I received an insider’s tour and held extensive discussions with technical staff. We walked the entire facility and went over everything, meaning every step in the wet chemistry process. This ranged from watching ore unload from a truck to the end product of uranium “yellowcake,” which is actually more brown than yellow. Energy Fuels, Inc.; from ore to yellowcake (which is kind of brown, really). BWK photo. It was a thorough visit, such that when we were finished with the plant tour, I was required by NRC regulations to do a full body scan to detect any radioactive dust or gunk that might have been attached to my hands or clothing. (Yes, I passed.) So I saw it all, and it’s the real deal. The short version is that processing uranium and vanadium ores share many common steps along the way, with the two elements eventually getting extracted separately towards the end of the line. Indeed, it’s fair to say that Energy Fuels is primarily a uranium company, selling yellowcake into a currently strong, profitable market. And as a domestic uranium producer in a world where the security of supply is problematic, considering sanctions on Russia, Energy Fuels is in a solid position to serve the U.S. market. Also, the vanadium market is relatively weak right now, and prices are down. Yes, it’s a cyclical business, but Energy Fuels has the luxury of stockpiling its vanadium output on-site, awaiting a turnaround when it comes. Plus, it bears noting that Energy Fuels' profitable uranium side funded the move into rare earths. For the past couple of years, management has prudently invested some of the uranium cash flow into an area that is destined to grow, considering the long-term need for REEs. And now, the REE side is positioned to become highly complementary to the existing businesses. Specifically, Energy Fuels has focused its new processing circuit on a mineral called monazite, a form of phosphate that chemically combines with REEs, although I’ll skip over the mineralogical details. Here are a couple of monazite specimens from my personal collection; these are from a long-ago trip to Madagascar: Monazite mineral crystals; pen for scale. BWK photo. Be assured: most monazite used in industry does not resemble those gorgeous, museum-quality specimens above. Instead, most of the world’s monazite that goes into REE production comes from mineral sands, which means what it sounds like: erosional, sandy detritus that gets concentrated in river valleys and along beaches. And voila, the initial feedstock that Energy Fuels used for its recent success in separating Nd/Pr looks like this: Monazite mineral sand (left), and first stage “crack slurry.” BWK photo. Yes, that jar of brown sand looks much like brown dirt, except that it’s almost all tiny grains of monazite minerals, highly separated and concentrated at an industrial scale. Energy Fuels just processed this particular batch of monazite sand into Nd/Pr metal material. It came from a company called Chemours, which runs a separation facility in Georgia (the U.S. state, not the overseas country). Monazite-bearing sand deposits are found in other parts of the world too, from Australia to India, South America to Africa, and more. And usually, anymore at least, wherever you find monazite sands, you also find a Chinese mining company, because some people think many decades ahead. Along these lines, Energy Fuels recently agreed to combine with an Australian mineral company called Base Resources, which controls a significant monazite deposit in Madagascar. This offers Energy Fuels a long-term source of mineral feedstock, but one obvious issue is distance and transport. And it’s fair to say that the company is looking for other sources of supply. Meanwhile, don’t think that it’s somehow easy to process brown sand. A key issue in turning monazite into REEs is that the mineral tends to contain uranium and thorium, two radioactive elements. This gets back to the fundamentals of chemistry and mineralogy, which I’ll again skip. But with this issue of radiation in mind, it’s fair to say that if you want to process monazite, it helps to be in the uranium biz at the same processing facility. That is, you extract the radioactive materials from the monazite and shunt them over into the uranium-processing side of the building. This alone solves an issue that is near-insurmountable for many other REE wannabe companies. Energy Fuels Takeaways As Rude readers know, we don’t make formal recommendations here; I occasionally pound the table and tell you about companies I really like. But Energy Fuels is definitely worth your time to understand. It’s at the forefront of the U.S. uranium industry, selling much of its product into a hot spot market, with the balance of product going out the front gate under contract to power utilities. Plus, there’s that secondary business in vanadium, and now the recent ramp-up into REEs. All of these elements are critical to the U.S. economy, as well as the defense complex. Energy Fuels has a market cap of about $1 billion, which should grow strongly over the years ahead. Shares trade in the range of $6.00, down from higher levels in the past year. Earnings are a few cents per share negative just now, reflecting internal accounting and capital investment, not anything wrong with the business case. Along these lines, I anticipate strong earnings in the years ahead, based on uranium sales that are even now ringing the cash register. The company has about $220 million in the bank, plus another $30 million of inventory on-site, namely stockpiled yellowcake and vanadium. And the debt level is an enviable zero. Meanwhile, despite all the media hype about government support for certain aspects of so-called “green” energy and defense-related companies, Energy Fuels has chosen not to apply for government grants. The idea is to retain freedom of action and avoid red tape and bureaucracy. Besides, with a strong share price and money in the bank, the company can invest in itself or buy whatever it needs. There’s more to say, but at this point, I think you get the idea. Babe Ruth smacks a home run. As with all investment discussions, the recommendation is to buy in carefully if you so choose. Watch the chart and look for down days. Don’t chase momentum. Be patient, and watch this one do well in the years ahead. Thank you for subscribing and reading. All the best, Byron W. King Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. In Case You Missed It… Rickards on the Petrodollar Agreement SEAN RING I hope you’re enjoying your day off. Since you’re relaxing, I thought it’d be wise to leave you be. But, Jim Rickards put together a knockout commentary of the alleged expiration of the Petrodollar agreement. This excellent, short read is well worth 5 minutes of your time. Enjoy your coffee and have a restful day! [“I traveled over 1,000 miles to show you this strange device…”]( He traveled 1,000 miles away from home… To show you this strange device on a farm in rural Virginia. You won’t know by looking at it, but a secret company behind this strange device could hold the potential to make you rich over the coming years. [Click Here To Learn More]( JIM RICKARDS News services of dubious accuracy reported that Saudi Arabia had ended the Petrodollar Deal on June 9, 2024, after fifty years of adherence. This report was quickly followed by claims that oil would now be priced in everything from Chinese yuan to Indian rupees, Russian rubles, and other currencies without strong claims to being reserve currencies. The implication of these stories was that the U.S. dollar’s long reign as the leading global reserve currency (dating to 1914 by some measures or 1944 at the latest) was over. New reserve currencies would come to the fore, most prominently the BRICS planned currency. The crypto crowd were not far behind, shouting that the demise of the dollar proved that cryptocurrencies were the way of the future and their day had come in the global payments networks. The internet was on fire with these and other histrionic claims. Whoa. In fact, almost everything you just read is nonsense. There have been some very important developments in international finance and monetary policy in recent days, but they are far more nuanced and ultimately more important than stories grabbing the headlines. As the saying goes, it’s complicated. Let’s deconstruct what’s actually going on. A little background on the Petrodollar Deal is a good start. This deal was concluded in June 1974 under the Nixon administration by Treasury Secretary William Simon and his Deputy Gerry Parsky. It was a tense time following the Yom Kippur War and the Saudi oil embargo on exports to the U.S. I played a role in the run-up to the deal when I met at the White House with Deputy National Security Advisor Helmut Sonnenfeldt to plan an invasion of Saudi Arabia in case the Saudis did not agree to what Simon and Parsky had put on the table. The deal had four main parts: Saudi Arabia would price oil in U.S. dollars. Saudi Arabia would take the dollars earned and invest them in U.S. Treasury securities or large bank CDs. The Treasury and the banks would lend those dollars to developing economies, which would purchase equipment and agricultural products from the U.S. Finally, the U.S. offered Saudi Arabia military protections against the Soviets and regional rivals. The security agreements and the financial agreements were put in writing but have never been revealed. The Petrodollar Deal was a win-win for the participants and the world. The U.S. found a reliable prop for the dollar’s reserve currency status (since other countries would need dollars to buy their own oil), and Saudi Arabia enhanced its national security. Recycling the Saudi dollars to developing country buyers boosted world trade and commodity prices and helped pull the world out of the severe 1974 recession. At the Saudi’s request, the U.S. kept a veil of secrecy over the exact amount of Treasuries owned by Saudi Arabia; their holdings were lumped in with other OPEC members from the region and were not reported separately. Did the Saudis just end the Petrodollar Deal as reported? Not exactly. The deal was never a treaty ratified by the Senate, which would rise to the level of law. It was a non-binding executive agreement; not much more than a written handshake. It contained annual renewal provisions and could be terminated at any time by either party. The Saudis held up their end by pricing oil in dollars and buying U.S. Treasuries. The U.S. held up its end by sending troops and repelling Iraq’s invasion of Kuwait in Operations Desert Shield and Desert Storm in 1990-91. The agreement suited both sides and so it continued. The agreement never had an explicit “expiration date,” so reports that it has expired are overstated. The Saudis have notified the U.S. that they are not extending the deal, but that decision has to be considered in the context of other U.S.-Saudi discussions. The U.S. and Saudi Arabia are currently in negotiations on a new financial and security arrangement that will supersede the old Petrodollar Deal. The new agreement will provide that Saudi Arabia will recognize Israel as part of the broader Abraham Accords initiated during the Trump administration. The U.S. will continue to offer security protections to The Kingdom, but those will be expanded to include uranium enrichment technology. Ostensibly, this technology would be used to fuel nuclear reactors (about 20% Uranium 235) but might later be used to build nuclear weapons (about 90% Uranium 235). Saudi Arabia wants this technology because it feels threatened by Iran’s own uranium enrichment capability. On the financial side, Saudi Arabia would continue to price oil in dollars but could agree to be paid in other currencies, primarily euros, as is the case today. The Kingdom would continue to purchase Treasury securities alongside its holdings of gold. In short, not much would change from the current Petrodollar Deal except for the enhanced security guarantees. Saudi Arabia allowed the existing deal to lapse to gain leverage in the new negotiations because the old deal would be replaced by the new deal in all cases. The new deal will not be completed for six months, perhaps longer. It will be handed off from the Biden administration to the new Trump administration in January 2025. The reason for the delay is that Saudi Arabia cannot recognize Israel until the Gaza War is over. That will take a few more months at least. There’s an irony there because the Trump administration created the Abraham Accords and may be the one to complete the process by including Saudi Arabia under that umbrella. That’s a summary of what’s going on. Here’s what’s not going on: Oil will not be priced in rupees, rubles, yuan or other emerging market currencies except in very small quantities and as an accommodation. About 20% of oil purchases today are in euros and that can be expected to continue. The new arrangement between Saudi Arabia and the U.S. does not mark the end of the dollar as the world’s leading reserve currency and does not imply the collapse of the global market in U.S. Treasury securities. The oil and dollar markets will be business as usual. Ties between The Kingdom and the U.S. will be even closer because of the nuclear enrichment aspect of the new deal. This is not to say that there have not been important developments in international financial and monetary markets away from the Saudi Arabian situation. There have. In particular, major policy initiatives were announced at the St. Petersburg International Economic Forum (SPIEF), hosted by Vladimir Putin from June 5 – 8, 2024. Russia announced that it was working with other BRICS+ members to develop a global payments system that is completely independent of existing Western systems, including SWIFT, FedWire, and other clearinghouses. That’s critical because payments through Western systems are subject to seizure and interdiction, whereas payments through an independent system should be safe from Western interference. Putin also met with Dilma Rousseff, former president of Brazil, and today, president of the New Development Bank, which is a de facto central bank and development lender to the BRICS+ and other associated members. That meeting was to discuss the roll-out of the new BRICS currency. It will be called The Unit, and its value will be based on a weight of gold (40%) and a basket of BRICS+ currencies (60%). As with the NDB and the Contingent Reserve Arrangement previously established by the BRICS, the Unit will imitate the original Bretton Woods arrangements. Membership in the IMF was originally conditioned on a contribution of gold, hard currency, and local currency by the aspiring member. Later, the gold contribution requirement was dropped. BRICS+ is returning to the original IMF formula with a call for gold and local currency in exchange for access to Units. The key to the implementation of the BRICS currency plan is an expansion of the membership. A bilateral currency arrangement between two weak emerging markets will never be successful because there’s not much for the seller of goods to buy once it receives the currency. However, a currency union with 20 members or more using the Unit can be successful because the seller of goods can “go shopping” in many other markets and is likely to find goods or services that meet its needs. The success of the Euro, with 20 members and worldwide acceptance, is the model for this. The Unit will not be launched for another year or longer although some formal announcements may come at the BRICS leaders’ summit in Kazan, Russia this October. It will still take a few years to add members, build out the infrastructure and firm up some valuation issues. Still, this currency is coming. It’s important to realize that the BRICS Unit will initially be a payment currency, not a reserve currency. Payment currency arrangements are fairly straightforward. Reserve currency status is far more difficult because it requires a large, liquid bond market, good rule of law, and an infrastructure of dealers, hedging tools, repurchase agreements, auctions, and settlement procedures. That can take ten years or longer to put in place with the rule of law perhaps being the most difficult element. Even as a payment currency, the BRICS Unit could be used in a material percentage of global trade, giving the dollar a run for its money. The BRICS Unit does not mark the end of the dollar as a widely accepted currency. Still, in conjunction with Joe Biden and Janet Yellen's badly misguided weaponization of the dollar, it could mark the beginning of the end. All the best, Jim Rickards ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. 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