ENERGY FUELS (UUUU) - HREE CHEMISTRY IS DE-RISKED

May 09, 2026

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SEQH CAPITAL RESEARCH - TEAR SHEET
ENERGY FUELS (UUUU) - HREE CHEMISTRY IS DE-RISKED, FEEDSTOCK AND EXECUTION ARE NOT

WHAT THIS NOTE SAYS

The March 2026 terbium milestone at White Mesa proves that Energy Fuels can produce 99.9 percent purity dysprosium and terbium oxide at pilot scale, but it does not guarantee full 2027 commercial-scale heavy rare earth production.
SEQH keeps a 2.1 billion dollar uranium core value and a 1.35 billion dollar rare earth optionality value, but raises the execution-risk haircut on the rare earth segment from 25 percent to 35 percent, moving the risk-adjusted sum-of-the-parts (SOTP) from 4.46 billion dollars to 3.79 billion dollars, or about 16.20 dollars per post-ASM share.

Pilot versus commercial scale

White Mesa is the only operating uranium mill in the United States and the only Western facility currently producing separated heavy rare earth oxides from primary mined monazite.
Pilot work in 2025 and early 2026 produced around 29 kilograms of 99.9 percent dysprosium oxide and the first kilogram of 99.9 percent terbium oxide; a dysprosium lot has already passed initial qualification at a South Korean automaker.
Phase 1 commercial HREE start has slipped from end 2026 to 2027, with guidance of 35 tonnes per year dysprosium, 12 tonnes per year terbium and 850 to 1,000 tonnes per year NdPr from 10,000 tonnes per year monazite, subject to permits, financing, build-out and feedstock.
A January 2026 feasibility study backs a 410 million dollar Phase 2 expansion targeting more than 6,000 tonnes per year NdPr, 240 tonnes per year dysprosium and 66 tonnes per year terbium, with Q1 2029 commissioning; SEQH models a 12 to 18 month slip toward mid 2030.

The process uses sulfuric-acid leaching followed by multi-stage solvent extraction. Academic work on Dy/Tb/Nd separation indicates that 15 to 30 mixer–settler stages are typically required to reach 99.9 percent purity and more than 95 percent recovery.
At 10,000 tonnes per year of monazite, sulfuric acid demand reaches roughly 30,000 to 40,000 tonnes per year, with 60 to 75 percent typically recovered; at Phase 2 throughput, acid and neutralization costs become dominant in the operating-cost stack.
SEQH estimates incremental cash costs of about 185 to 240 dollars per kilogram for dysprosium and 420 to 540 dollars per kilogram for terbium at Phase 1 commercial scale, versus current spot levels around 223 dollars per kilogram for dysprosium and about 790 to 1,140 dollars per kilogram for terbium depending on market.
The main technical risks are keeping the heavy-element circuit separate from the NdPr circuit, managing Ra‑226 and Th‑232 waste at higher monazite throughput, and sustaining high acid-recycling efficiency so unit cash costs do not drift toward uneconomic levels.

Phase 1 needs around 10,000 tonnes per year of monazite and Phase 2 requires 50,000 to 60,000 tonnes per year, but currently secure feed is largely limited to Chemours, at 2,500 tonnes per year or more from Georgia heavy mineral sands, plus a modest White Mesa stockpile.
The Donald joint venture in Australia is the key backfill. Energy Fuels held 10.5 percent as of March 31, 2026 after contributing about 44.6 million Australian dollars of cash and stock, with an earn-in path to 49 percent. Full Phase 2 Donald output of 13,000 to 14,000 tonnes per year is not achievable before 2029.
First deliveries from Donald are now expected in late 2027, implying that final investment decision, originally discussed for early 2026, is sliding into the second half of 2026.
Bahia in Brazil and Vara Mada in Madagascar remain pre-FID, with multi‑year timelines and country-risk overhangs, so they are treated as option value rather than secured feed.

Heavy rare earth prices have diverged from light rare earths since China tightened export controls; recent benchmarks put dysprosium oxide around 223 dollars per kilogram and terbium oxide about 790 dollars domestically with roughly 1,140 dollars per kilogram as an indicative FOB China level.
At Phase 1 volumes of 35 tonnes per year dysprosium and 12 tonnes per year terbium, SEQH’s scenarios imply gross HREE revenue of roughly 17 to 26 million dollars per year, depending on realized prices.
At combined Phase 1 plus Phase 2 nameplate, heavy rare earth revenue potential rises to approximately 106 to 159 million dollars per year on SEQH’s bear to bull price assumptions, before adding around 600 million dollars of NdPr revenue and roughly 14 million dollars of uranium co-product.
SEQH emphasizes that Phase 1’s main contribution is strategic rather than numerical: it makes Energy Fuels the only verified non‑Chinese commercial producer of high-purity dysprosium and terbium oxides from mined ore, which is a precondition for premium long-term contracts.

China imposed national-security export licensing on several heavy rare earths and related products in April 2025 and expanded the scope to more elements in October 2025, causing a sharp decline in Chinese exports of rare-earth magnets, dysprosium and terbium.
A partial suspension of certain dual-use controls in November 2025 did not undo the structural tightening, and a persistent premium has emerged for export-grade material versus domestic China prices.
Energy Fuels is, for now, the only Western producer of separated heavy rare earth oxides from primary ore, while peers such as MP Materials, Lynas, USA Rare Earth and REalloys are focused on light rare earths, undeveloped projects or downstream metallization.
The planned acquisition of Australian Strategic Materials, expected to close around July 2026, adds the Dubbo project and Korean alloying capability and advances Energy Fuels toward a vertically integrated rare-earth chain from mine to magnet feedstock.

The updated SOTP holds a 2.10 billion dollar uranium core, a 1.35 billion dollar rare earth optionality block, 100 million dollars of ASM synergy, 300 million dollars of Vara Mada option value, 910 million dollars of net cash and securities, and negative 300 million dollars for corporate overhead present value.
Applying a 35 percent haircut to rare earth optionality and a 60 percent haircut to Vara Mada results in a risk-adjusted SOTP of 3.79 billion dollars, equivalent to about 16.20 dollars per share on 234 million post‑ASM diluted shares.
Key risks include Phase 1 schedule slipping beyond 2027, Donald FID and feedstock contracts slipping beyond H2 2026, Phase 2 capex overruns above 20 percent on 410 million dollars, weaker acid recovery that lifts unit costs, any meaningful easing of Chinese export restrictions, faster-than-expected permanent-magnet substitution, and ASM deal execution.
The base case remains constructive: uranium operations, with first‑quarter 2026 revenue of 35.8 million dollars at about 70 dollars per pound and 2026 production guidance of 1.5 to 2.5 million pounds of U3O8, continue to underwrite the equity while rare-earth execution risk is worked through.

FULL 10-PAGE RESEARCH REPORT PDF LOCATED BELOW: