My first thoughts were also for the implications of the Astron...

My first thoughts were also for the implications of the Astron and Energy Fuels JV, given the similarities in the projects (large scale, long life, mineral sands pre-development projects in overseas jurisdictions) and the relative significant investment required for a company of Energy Fuels size.

But over the last couple of days, I’ve done some more digging and I’m less concerned about it. Don’t get me wrong, I don’t like it and I’m less confident than I was 4 months ago when the JV was first announced, but I still think the deal is more likely than not to succeed.

The language Mark Chalmers uses is quite positive and the amount of consideration and coverage he gives Donald during press time is relatively high.

Some examples of positive language is:

"Based on these highly compelling economics and the expected consummation of the Base Resources and Astron transactions, Energy Fuels is also planning to update the Phase 2 REE separation infrastructure for the Mill to expand our production capacity to 4,000 to 6,000 tonnes of NdPr oxide per year, along with 150 - 225 tonnes of Dy oxide and 50 - 75 tonnes of Tb oxide per year, which would supply enough ‘magnet’ REE oxides to power 3 to 6 million EVs per year. This would put Energy Fuels in the REE oxide production capacity category of the other major ‘western’ REE suppliers."

- Energy Fuels Press Release re: BSE (22/04/24)

"We see we see it as fitting in right into our wheelhouse with the acquisition of Bahia and soon to be hopefully the Donald project in Victoria Australia to add Toliara and the Base team to our company is really exciting so I think that it's showing how we're building scale, and scale of world significance."

- Interview with Crux Investor (22/04/24)

There were also a few interesting comments during Energy Fuel’s conference call (22/04/24).

“Securing quality feed of this magnitude Toliara, along with the potential joint venture with Astron, will account for material amount of energy fuels long term feed of approximately 70% of 50,000 tonnes of feed. Now, this didn't just happen by accident. We enlisted that the Technical Support of Perth based Tcmi and we did a global review of the entire world, something like 60 or 70 projects and came up with a short list. And both Juliar and Donald were on that list. And so we went after them. So it was a very focused approach.”

In answer to a question regarding sequencing ore during phase 1 vs multi-project feed.

“Yeah. I mean, if you, if you look at the timelines you know assuming, and we're planning to close the Astron deal, that could come sooner, you know? Because you know, they're going to make their FID here in the next probably 12 months or something and they'll be pretty close. But I think that Donald could come on sooner.”

Question
“Looking at your other potential sources of feed, I guess, where are things with regards to Astron? And I know you guys are at an earlier stage, but maybe just could you give us an update on what you expect news flow wise there over the next year or two?”

Answer
“Yeah, yeah, we're still exclusive with them to the end of the month and we're trying to finalise our agreements with them, so we're well advanced there. So yeah, we, you know we're getting there with Astron and I expect to get there. So you know, we'll get that we believe finalised. We're still advancing the Bahia project. We've been hiring people. We're looking at a country manager for Brazil. We're, you know, we're advancing well. There are other companies that are still looking at us as an alternative for a home for monazite that we're also advancing as well too potentially but the bottom line is with toliara and Donald and Bahia, that's a lot of feed of monazite that's a lot of monazite.”

Also, I know you mentioned 30ktpa feed for the Mill phase 2 (which was the original Mill PFS figure) but if you read the fine print of Energy Fuels announcement with BSE, they say:

“The Mill PFS assumes a Phase 2 separation facility capacity of 30,000 tpa of Monazite. With the planned Monazite production from the Company’s Bahia Project in Brazil, the planned acquisition of Toliara, the potential acquisition of an interest in the Astron Donald Project, and other potential Monazite acquisitions, Energy Fuels plans to update the Mill PFS based on an increased Monazite throughput of 40,000 – 60,000 tpa, which would generate 4,000 - 6,000 tpa of NdPr, 150 - 225 tpa of Dy, and 50 - 75 tpa of Tb. The Phase 2 separation facility is subject to completion of engineering design and receipt of any required permits and licenses.”

In the conference call they also repeatedly refer to 50ktpa design capacity, so it would appear that is their revised target, assuming all transactions go through.

On the subject of finalising by the end of April, I’d be surprised as that is only one week away, and I wouldn’t be surprised if strategically Energy Fuels kept Astron in the dark about this. It could also help explain the delays in finalising the MOU. If the MOU gets further extended I hope it comes with much stronger language, a joint announcement and a lesser timeframe to give the market some confidence it is progressing.

Based on the conference call, it seems Energy Fuels are realistic that the permits for Toliara are unlikely to be approved until later this year or early next year. FID will follow sometime after permitting and then, from BSE’s own DFS, they have a 27 – 54 month construction and ramp up from FID.On that basis, best case for Energy Fuels is that Toliara phase 1 will be running full steam in early 2029.

This means they will need to source feedstock before then, Astron could help fill that gap. Astron would also be needed under their redesigned 50ktpa phase 2 mill.

It would appear Energy Fuels are now all in and committed to being a diversified Uranium, Rare earth and Mineral Sands producer. They have effectively committed $365m AUD to BSE, with a 591m USD Toliara capital expenditure and $348m USD on Phase 2 Mill expansion. Add in Astron and you’ve probably got another $450m USD spent to get Donald to phase 2 for a total of a little over $1.5B USD spent on the REE side of the business to 2030.

The conference call highlighted they see the revenue from the Uranium and Mineral Sands side of the business effectively funding the development of the REE side along with government grants and debt, but they seem determined to become a leading rare earth juggernaut. Honestly, the sheer scale of their ambition gives me some pause, but if they pull it off they will be set for the next several decades.