Uranium Energy Corp. (UEC) Earnings Call Transcript & Summary

Thank you. Good day and welcome to Uranium Energy Corp.’s Fiscal 2026 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Amir Adnani, Uranium Energy Corp. Founder and CEO. Please go ahead.

Thank you, operator, and good morning, everyone. A presentation accompanying today's call is available on our website. Some of the commentary today will include forward-looking statements, and I would encourage everyone to review the cautionary language on slide 2 of the presentation. In addition, during today's call, we will be discussing certain non-GAAP financial measures. Please refer to our presentation for additional information. With that, let's begin with the highlights of a transformational year for UEC. 12 months ago, we produced uranium from only 1 mine in 1 state. Today, we produce from 2 mines in 2 states and are well underway in building a third at Ludeman. Fiscal 2026 established UEC as a multi-mine American uranium producer. Just as important, in a single year, that we can grow our operating team, which now stands at more than 250 people, double our drill rig count to 40, and continue to build and commission new mines, all while executing a differentiated strategy of vertical integration from mining through refining and conversion. I want to take a moment to recognize our people. Behind every number you will hear today are teams in Wyoming and Texas who hired and trained new operators, built and brought new header houses online, recommissioned the Hobson plant, and started up Burke Hollow, the largest new in-situ recovery uranium mine facility to come online in the United States in over a decade, and one that began as our own discovery. This is what rebuilding America's uranium industry looks like. Skilled, well-paying jobs in the rural communities where we operate. To our team and to those communities, thank you. On our last call, we said new header houses would lift production and that the rise in cost per pound seen in the third quarter was temporary. This proved true as we delivered. fourth quarter production rose 157%. Total cost per pound fell by 33%. And our unhedged strategy resulted in what we believe is the highest realized price among publicly traded uranium producers. The foundation of our competitive advantage includes the largest uranium resource base in the United States, arguably the largest ever assembled in this country, combined with $753 million in liquid assets and no debt. Fiscal 2026 was the year we built the platform. Fiscal 2027 is the year we start to scale it with an unparalleled combination of workforce, drill rigs, in-ground resources, and balance sheet strength. Turning to operations, combined, Christensen Ranch and Burke Hollow produced nearly 83,000 pounds of precipitated uranium and dried and drummed U-308 in the fourth quarter, up 157% from the third quarter at a cash cost of about $30 per pound and a total cost of about $36.50 per pound. At Christensen Ranch, production doubled to more than 65,000 pounds as the 3 new header houses in Wellfield 11 ran for a full quarter. Cash costs fell to about $28 per pound and total costs to about $36 per pound at 35% reduction in total cost per pound in a single quarter as higher volumes moved through the same plant. At Burke Hollow, our first full quarter delivered more than 17,000 pounds at a cash cost of about $36 per pound and a total cost of just under $40 per pound. This first phase was limited to a small section of the first production area to establish a playbook of key operating parameters ahead of expansion across the full wellfield. For the full fiscal year, our first full year of production, we produced more than 229,000 pounds at a cash cost of about 34 and a total cost of $39.94 per pound. Since commissioning, we have produced about 359,000 pounds. These production numbers are precipitated uranium and dried and drummed U-308. Beyond Christensen Ranch and Burke Hollow, our development pipeline advanced on every front, which I will cover shortly. On the financial side, our unhedged strategy has not changed. In a market facing a structural supply deficit, we seek to maintain exposure to pricing upside for our shareholders. Rather than locking into contracts signed at legacy prices. This year we sold 400,000 pounds at a weighted average realized price of $93.13 per pound, which we believe is the highest among publicly traded uranium producers, generating revenue of $37.3 million and gross profit of $16.9 million. That revenue reflects a deliberate choice. We ended the year holding 1.26 million pounds of uranium in inventory, worth about $109 million at current market prices, nearly 3 times this year's revenue, plus the roughly 359,000 pounds produced and held at our Ericarry and Hobson plants. We could have sold far more, and we chose not to. Our strategy is to hold inventory into a tightening market and sell into strength for the benefit of our shareholders. Our balance sheet is what gives us the relatively unique luxury of having that choice. We have $753 million in liquid assets, including $495 million in cash and no debt. We are never a for-seller. Turning to the tightening U.S. market, several forces are converging as we head into next year. At the end of 2027, the waivers under the U.S. ban on Russian uranium imports expire, and the ban takes full effect. The United States is now in a race to stand up domestic mining, conversion, and enrichment capacity, and new enrichment capacity only works with a reliable supply of U-308 and UF-6 behind it. At the same time, the U.S. government's own requirements are growing. The U.S. Department of Energy, through the National Nuclear Security Administration (NNSA), issued a request for information on domestic capability to supply unobligated U.S.-origin uranium and conversion services through the 2040s. 4 million pounds of U-308 and 1,500 metric tons of uranium as UF-6 each year, with deliveries starting as soon as 2030. And in August, the U.S. Army selected 5 developers to build nuclear micro-reactors at military installations, with more than 20 expected under its Janus program, all requiring unobligated U.S.-origin uranium and conversion services. Those needs cannot be met from allied nations. Unobligated supply can only come from U.S. sources, U.S. mines, U.S. technology, and U.S. conversion. And conversion is arguably the biggest bottleneck in the entire nuclear fuel supply chain. And our response to the National Nuclear Security Administration, we made it clear that UEC is positioned to fully support its uranium requirements as our production in Texas and Wyoming ramps up, and through our refining and conversion subsidiary, to provide the conversion services it needs. No other company in the United States is building a solution from the mine through conversion. These demand signals confirm why we are building United States Uranium Refining and Conversion Corp., extending UEC beyond mining into the next stage of the fuel cycle. This year, working with our engineering partner, Fluor, URNC finalized this regulatory engagement strategy and began preparing its license application to the Nuclear Regulatory Commission. We are advancing toward a class 4 cost estimate, which we expect to be ready in mid-2027. Site selection continues to move forward. Behind this progress is a team that has grown to 63 individuals in less than a year, comprised of process engineers, chemists, nuclear fuel specialists, construction professionals, and other subject matter experts. There is currently only 1 operating conversion facility in the United States. It was built in the 1950s. Building the next one is a once-in-a-generation project, and you can feel the passion our team brings to it. URNC will be U.S. technology so that its output can qualify as unobligated U.S.-origin supply for the U.S. government. To protect that, URNC has put a technology control plan in place for export-controlled information, and our team has completed comprehensive training in this area. Disregard. Turning to our uranium assets, our current operating platform is built on 2 production hubs in Wyoming and South Texas, each with a central processing plant fed by satellite mines. This is supported by 2 major development projects we are advancing, the Sweetwater Hub in Wyoming and Rough Rider in Saskatchewan. At Christensen Ranch, the Wellfield 11 header houses performed as expected. As previously reported, 3 new header houses in Wellfield 11 began production late in the third fiscal quarter. 4 additional header houses were constructed and tested as of the end of the fourth fiscal quarter, bringing the total to 5 that were awaiting regulatory approval for startup at such time. Just yesterday afternoon, we received final approval for 4 of these. Our team expects to start production at these header houses in the coming weeks. At Ludeman, our next mine feeding Ericarry, wells for the first well field are being installed and tested for mechanical integrity. Engineering for the satellite ion exchange plant is advancing. We have ordered long lead time equipment, completed the plant pad engineering, and selected our construction contractor. The power line route is set with surveys expected to be completed in the first quarter of fiscal 2027. In South Texas, the first shipment of uranium-loaded resin from Burke Hollow arrived at our Hobson plant in mid-May. Every step at Hobson from elution through precipitation, drying, and packaging is now commissioned. And Hobson is once again an operating central processing plant. At the wellfield, 126 injection and recovery wells were brought online. We're utilizing the small section to establish our best operating parameters, from lixiviant chemistry and pump sizing to wellfield patterns. Those parameters will guide the next phase as we expand mining in the production area. Sweetwater will be our third production hub, with a mill that gives us the flexibility to process both conventional or in situ recovery production. Federal permitting continues to advance. The FAS 41 permitting dashboard targets completion of the environmental assessment in March 2027, and approval of the plan of operations in May 2027, and our environmental baseline studies are largely complete. Drilling at Sweetwater North has been very encouraging with results confirming mineralization trends that support continued delineation. Based on this success, we're planning additional drilling in the first quarter of fiscal 2027 to further extend the mineralization identified in the initial program and to advance well field design for our first 2 production areas. With our partner, Wood Group, we're continuing on installing the ion exchange and elution systems for in-situ recovery operations. In Saskatchewan's Athabasca Basin, home to the highest grade conventional uranium mines in the world, Rough Rider continues to advance. We completed a 36,000-meter drill program to upgrade our resources in support of our planned pre-feasibility study. In August, we signed the definition study agreement with Saskatchewan Power Corporation for a high-voltage transmission line to the mine, a key step in de-risking our project. UEC is committed to become America's national champion for the front end of the fuel cycle. Our competitive advantage is one that cannot be copied. The largest uranium resource base in the country with multiple mines and production platforms. The fuel cycle starts with uranium, and that is where we also begin in our development and growth strategy aimed at establishing America's only vertically integrated uranium company. With that foundation, our team of professionals, and a clear path from mining through conversion, UEC has never been better positioned. Before we turn to questions, I would like to note that I'm joined today by Josephine Mann, our Chief Financial Officer, Scott Melbye, our Executive Vice President, and Brent Berg, our Senior Vice President of U.S. Operations. Operator, please open the line for questions.We will now begin the question and answer session.

[Operator Instructions] Our first question comes from Brian Lee with Goldman Sachs. Please go ahead.

Hey, Amir. Good morning. I guess first one, just be curious, you know, Fiscal 2026 was pretty eventful for you guys, but we're heading into kind of a new pricing environment, I suppose, if you look at the strength in U-308, and I think that's indicative of you having 2 quarters of sales this fiscal year. So maybe just on that front, fair to assume more sales in fiscal Q1 with U-308 prices hovering around $90 a pound? And then maybe just zooming out a little bit, just the extent to which you're seeing customer engagement at these levels of uranium pricing, and then the potential for UEC specifically to be engaged in more sustained and consistent sales in Fiscal 2027.

Hey, Brian, good morning, and thank you for the question and being here. I'll take this in kind of 2 ways. Let me just provide some comments on it myself, and then I'd like to get Scott Melbye to comment with his thoughts on it. But Brian, again, as you have seen with our announcements, and particularly kind of focusing on this growing U.S. government demand for unobligated U.S.-origin uranium, you've known kind of all along as to why we've stayed unhedged. There was partly because of the tightness we see in the market, the supply demand, and fundamentals that to us clearly shows a supply deficit, a structural one. But we always felt that we had a differentiated product. Uranium mined in the U.S. is simply different than what could be mined in Canada or elsewhere because of the unobligated needs of the U.S. government. Until recently, those needs were not explicitly expressed in numbers with delivery dates and the specifics that we now have from the National Nuclear Security Administration with the recent awards that the Army provided. And so now you're starting to see more clear demand signals from the U.S. government for that U.S.-origin unobligated uranium. And so this shapes our strategy for sales going into Fiscal 2027, where we want to certainly be there as a reliable supplier to the U.S. government. We've made sales to the Department of Energy in the past as a U.S. supplier. And so those lines are in place. But we've also noticed anecdotally increased utility interest and RFP activity, especially from U.S. utilities, going into the World Nuclear Symposium week. And generally speaking, you can see not only the price firm up and grind higher, north of 90 or just around $90 per pound, but the utility demand is there as well. We look to capitalize on that word appropriate as well, Brian. But let me hand it off to Scott to elaborate and add to those points. Go ahead, Scott.

Yes, thanks, Amir. And Brian, we indeed, as everyone, the utility contracting levels. And I would say, you know, the first half of this year, we've seen less than replacement rate of contracting by utilities. But as Amir has said, we've seen a real increase in off-market discussions with utilities and public RFQs, RFPs, soliciting long-term proposals. And I think what's encouraging is the supply deficit that I think all analysts agree is present and in fact even increasing to as much as maybe 2 billion pounds over the next 20 years. It's beginning to manifest itself in what sort of offers the utilities are seeing in the long-term market. They're not seeing the breadth and depth of offers that I think they'd like to see. Producers with production available are able to increase terms and conditions where that means higher base prices, maybe now approaching $100 per pound or above, or even the terms in market-related contracts, whether those are floors and ceilings increasing or what's relevant to us, we're beginning to see traction on proposals that have no price caps in terms of ceilings, certainly no discounts off market or flexibility. So I wouldn't rule out that we'll be successful in the coming months, signing some long-term contracts with utilities give us the certainty of the long-term contract without giving up our upside.

That's a super helpful call there. Maybe just a follow-up on that. At the onset, you mentioned the NNSA U.S.-origin unobligated RFP. It sounds like you guys have filed for that. What are next steps, milestones on that process, and how should we think about when you get clarity around potential volume and pricing terms if you're awarded something through that RFP?

Yeah, well, this is very, yeah, the RFI that was issued by the NNSA is very significant. I'll say, you know, in my experience through the Uranium Producers of America, we've advocated on behalf of replenishing the stockpile for our defense purposes, and we've done so with the last 5 presidential administrations. Administrations, Republican and Democrat, they all agreed that that's important and it should be a priority. But it wasn't until this administration that they've committed to do something about it. And so the RFI in government procurement terms is that first step prior to issuing formal requests for proposals. So the fact that, you know, they're moving forward with purchases as early as 2030 at the 4 million pounds a year rate in the form of concentrates and UF-6 conversion services, frankly, will be an incredible stimulus for the U.S. uranium industry, and certainly UEC will respond.

To that demand signal. And Brian, just to add to that, I mean, I think it would be fair to say that there really wasn't a number previously, and Scott, you can confirm this as well, but up until this RFI, there wasn't a number that someone can point to and say, the NNSA demand is X million pounds per year. And so now you've got a number, 4 million pounds per year, starting in 2030. It's quite specific. It's quite large, in some ways larger than maybe people would have been anticipating. And last month's award by the Army for the micro-reactors to power military bases is on top of that and to be further determined. So you look at that in the context of the growing production that UEC has and volumes going into 2030, this could be just an excellent fit for us and not to mention the conversion on top of that. And look, the reality is this, now I think hopefully drives home the point as to why we've remained unhedged as well, to have this added flexibility to be able to be a supplier, be aligned with those U.S. government needs that we've said for many quarters now were coming. And so there would have been 0 point to be sitting here talking about these new demand points. had we already contracted all of our production to utility demand. So the fact that again, this is emerging, the numbers are bigger than had been anticipated or expected. And the delivery dates are around the corner. This is in addition to the Russian ban kicking in December 2027. This creates one of the tightest environments we have ever seen in the U.S. for U.S.-origin and very specific unobligated needs that exist and that there's a market around.

That's great. My last one and I'll pass it on. Just on conversion, Amir, we'd love to hear your thoughts. You mentioned this is a once in a generation sort of build out that the country needs on conversion UF-6 capacity. Give us an update on sort of where you are in terms of off-take, financing discussions, and then also siting. And then just your big picture thoughts on competition. It's a once in a generation opportunity. There's an incumbent, as you mentioned. There seems to be a few startups. Our understanding is there's probably only room for 1 more factory, not 4 of them. So how does UEC position to be the one, and is there any way to kind of pull forward your plans, given kind of the competitive landscape might be heating up here? Thank you.

Hey, Brian, I think our competitive advantage and differentiation on this couldn't be more clear, and it can't be copied, as I mentioned. And it really starts with the resource base that we've assembled, the largest resource base in the U.S. for uranium. And so what we are offering is the ability to be vertically integrated and to be able to offer uranium, U-308, and UF-6. That does not exist today. That has never existed in the U.S. before. This can't be an alternative that French, Canadian, Chinese, Russian technology provides. As I mentioned, it has to be mined in the U.S., U.S. technology, U.S. infrastructure, and all of it has to be here. And the existing conversion facility that we mentioned that's been in operation since the 50s is conversion only. It's not vertically integrated into mining operations, nor are any of the other, let's say, potential early-stage startups that you may have heard about there. So we've got, again, the ability to talk about the vertical integration as being essential, because we have this problem in enrichment. The biggest risk to enrichment, Brian, isn't the shortage of capital. It's the availability of UF-6. And similarly, that's the biggest risk to conversion is the availability of U-308. The feedstock that allows the fuel cycle to exist is uranium. And so without that, we don't have a healthy and robust fuel cycle in the country. So I think we're going about it the right way. I think for years, the focus, frankly, has been backwards start at enrichment and then hope everything else shows up at the doorsteps. You can't enrich air. And so to start with uranium, add conversion, and to be the only company that offers that supply chain solution, we think really stands out. And I hope that answers your question, Brian.

Our next question comes from Heiko Ihle with H.C. Wainwright & Co. Please go ahead.

Hey there, Amir and team. Thanks very much for taking my questions here. There's been some stories in the news recently about the supply crisis as the Department of Defense has requested another 4 million pounds of domestically sourced uranium. Obviously, this is much, much in excess of what we domestically produce. So something needs to give and I want to see maybe a little bit what are you seeing with the demand from the Navy and then building on all of that I assume the Army is going to have some requirements as well. What are you seeing in the market and what are your conversations like with counterparties?

Thanks, Heiko, for that question. And Scott, why don't you go ahead and take that?

Hey Heiko, I'll go ahead and take that.

I think that maybe there's a glitch. It is on mute. Oh, yes, maybe he's on mute. Maybe he's disconnected. Hey, Heiko, yes, this is, he may have been disconnected for a connection issue. He's overseas right now. But just to get into that question, you, I think you're absolutely right that this is something that we've been waiting for and the industry has been waiting for for a long time frankly some of this demand, again, was difficult to pinpoint and put exact figures around. And so when you kind of consider just to maintain the existing fleet of reactors in the nuclear Navy to kind of pinpoint that number around 4 million pounds per year starting in 2030 before any further development or expansion of the fleet takes place. And again, the additional micro-reactors being deployed with the expansion and the JANUS program that the Army has. This is again never seen before numbers. I think it creates a real race in the U.S. to stand up the domestic industry, because even though these demand signals are effective for 2030 and beyond, the Russian uranium ban takes full effect December 2027. So we're about a year away from the market here really starting to feel tight. And the squeeze on the availability of these domestic supply sources become quite real. You've seen announcements and more focus on enrichment, but like we said, you need the entire supply chain. We just think this is a really important positive development and it's something that, again, we've been waiting for for years. You heard Scott talk about how so many different presidents and administrations were, there was advocacy towards this issue to pay greater attention to it. I think now that's happening finally and there's this very strong bipartisan support for these initiatives to stand up and build a domestic industry. And frankly, with that type of durable policy support, you can really then do the scaling and the development initiatives that we have underway, multiple mines, multiple projects across the various projects that you've heard us provide updates on.

That's a fair answer. And then just maybe a little more 30,000 foot view wise. I mean the world is a very changed place from a year ago, 5 years ago, but frankly even since the last time we had a conference call here. What are you seeing in relation to the willingness to face geopolitical risk factors from your utilities? I mean, is there buying at any price? Is there more concern about, you know, long-term viability of supply? What are you seeing in your conversations? If you maybe want to give a bit of color there.

Scott, go for it. I can take that if you want.

Yes, Heiko, it's interesting because the utilities, you know, are coming back to the long-term market and, you know, not seeing that breadth of offers coming back to them. is causing them to do a bit of soul searching and maybe go down into the second and third tier type suppliers and some and that might even mean taking on some geopolitical risk. So I think it's always as it always has been, you know, we'll come back to suppliers that have geopolitical stability, stable operations. Operations, you know, are going to, you know, really see a premium in this market. And, you know, I think already the utilities, I think we're going into a market where the utilities are going to be less concerned about fighting over $0.50 or $1 in terms, actually getting a claim on a bona fide producer's production capacity. And that can come through long-term contracting. I don't think we're far off from utilities and other fuel cycle companies taking equity stakes in uranium companies to get that certainty of supply because we're really we're going into that kind of again. We've seen it in the past. Feels like early stages of that happening again.

Fair enough. I agree with you that at the end of the day, it's an irrelevant sum of money to your counterparty. I'll get back to you. Thank you guys very much.

Thank you. Our next question comes from Katie Lachapelle with Canaccord Genuity. Please go ahead.

Hi, Amir and team. Thanks for taking my question. I'm just wondering about production expectation into Fiscal Year 2027. I know that you mentioned that Burke Hollow produced from only a small section of the first production area. So what are you expecting to open up additional areas for production? And then as it pertains to Christensen Ranch, there are additional header houses coming online. So how are you expecting that to impact the next year?

Hey, Katie, thanks for that and good to have you on. You heard already, we were quite delighted and excited that yesterday afternoon, just as we were putting on the final preparations to get everything queued up and filed for today, we got approvals for 4 header houses at Christensen Ranch just yesterday afternoon, which allows our team to now start to move those projects in the coming weeks into operation. So despite the fact that we are continuing to deal with these industry growing pains with the regulatory delays that have occurred over the course of this year, there's definitely progress being made, and I think you see that. At this point, as you know, we don't have formal guidance, and I'll be direct about that as we've been before. We still have a variable in our ramp up, which is the timing of these regulatory approvals. Despite yesterday's good news, we still have much of that work in progress in front of us and that's outside of our control, Katie. It's not unique to UEC. The regulators are handling far more uranium permitting than in prior years. This is after a long period, the industry was largely idle. The growing pains of an industry coming back, frankly, is a good problem. We're making progress. We're working side by side with the regulators in Wyoming and Texas. Approval timelines are improving. And every approval makes the next one more predictable. So the capital capacity is ready. As you heard me talk about, the workforce has doubled. The drill rigs have doubled in size. Our capacity for header houses increased just as recent as yesterday afternoon. We've got the progress and the development that's taking place at Ludeman and Sweetwater. So the approval cadence is, as it becomes more predictable and as we get a larger critical mass of operations rolling, I think we'll be able to provide the guidance and be more specific about it. Until then, I think the best measure of what we deliver each quarter is really the way to go by. And this quarter you saw production was up 157%. And so with the growing with that capacity and with additional header houses coming, we're quite confident about a strong Fiscal '27 ahead.

Understood. And then maybe just a follow-up question to Brian's question on conversion earlier. How close are you to selecting a technology or are you still assessing multiple flow sheets? And then to that end, are you planning to disclose the class 4 estimate that's currently underway?

The current plan, Katie, is to disclose or to provide that information in mid-2027 when it's available. And that's. And that's something that we disclosed and are working towards at this point. As you also mentioned, as you also see us mentioned, the team and the progress we're making has really advanced quite significantly, growing to roughly 63 individuals on the team. On the team. Maybe I can let Brent speak a bit to the progress on the conversion project with URNC. Brent, over to you. Thank you.

Yeah, thanks, Amir. Katie, I would just add that, you know, we're moving very quickly with Uranium Refining and Conversion as we advance the next phase of engineering, siting, and licensing. Of course, secure domestic fuel cycle infrastructure is a top priority for the Department of Energy, and we have a collaborative relationship with them to keep our conversion initiative aligned with government objectives. Our next milestone as Amir alluded to is really that class 4 cost estimate with Fluor. And we expect to complete that by mid-2027. And that estimate will really set out the cost, the timeline for the project and we would not expect the final investment decision until that's complete. But things are progressing very well. And that estimate is the milestone for the current stage. And it'll lead to more detailed estimates to support a final investment decision.

Thanks, Brent. That's good on my end, guys.