Energy Fuels’ mineral sands project value up 80%

An updated feasibility study for Energy Fuels’ (TSX: EFR; NYSE: UUUU) Vara Mada heavy mineral sands (HMS) project in Madagascar almost doubles its value over the initial study while adding monazite as a saleable product.

The project’s post-tax net present value (at a 10% discount) rose 80% to $1.8 billion and the internal rate of return gained 1% to 24.9% compared to the original study released by Australia’s Base Resources in 2019, Energy Fuels reported Thursday. Energy Fuels acquired Base in 2024 when the Madagascar project was known as Toliara. 

“The FS confirms…Vara Mada is a generational, one-of-a-kind project that has the potential to positively alter the dynamics of global rare earth and critical mineral supply chains,” Energy Fuels CEO Mark Chalmers said in a release.

The update comes as Western countries are accelerating efforts to secure supplies of rare earths outside of the influence of China, which dominates the mining and processing of the elements, essential components in electronics and green energy transition technologies.

24,000 tonnes annually 

Vara Mada’s deposit of monazite, an important source of the rare earths cerium, lanthanum and neodymium is amenable to annual production of 24,000 tonnes, according to the update. It also estimates a mine could produce annually 959,000 tonnes of ilmenite, 66,000 tonnes of zircon and 8,000 tonnes of rutile, a naturally occurring titanium dioxide mineral.

The project has an initially modelled mine life of 38 years, with the potential to increase following refinements and further drilling.

Pre-Final Investment Decision (FID) capital costs for the project are estimated at $121 million, while the post-FID capital costs would total more than $900 million over two stages.

Processing in Utah

Vara Mada serves as a key part of the company’s diversified critical materials business centered around its White Mesa mill in Utah, Energy Fuels said. The facility is the only functioning uranium mill in the United States, but has the capability to process monazite into rare earth oxides.

Once in production, monazite material from Vara Mada would be transported to White Mesa for further processing into light and heavy rare earth oxides. 

“Monazite concentrates produced from Vara Mada, and other HMS projects globally, are a rich source of both light and heavy ‘magnet’ rare earth elements, used in a variety of clean energy and advanced technologies, including electric and hybrid vehicles, advanced robotics and manufacturing, consumer electronics, renewable energy, and key defense technologies,” Chalmers noted.

Under its current first stage capacity, the White Mesa mill can process up to 10,000 tonnes of monazite concentrate per year into up to 1,000 tonnes of neodymium-praseodymium oxide. Energy Fuels has plans to expand its processing capabilities into heavy rare earths, producing up to 48 tonnes of dysprosium and 14 tonnes of terbium oxides. The expanded facility, it says, could be operational as soon as this year’s fourth quarter.

Together with monazite produced at its other HMS projects, the total rare earth production could supply up to 30% of U.S. demand for light rare earth element (REE) oxides and 85% of U.S. demand for heavy REE oxides, Energy Fuels said, citing Benchmark Mineral Intelligence’s supply forecast.

Final investment decision

As noted by Energy Fuels, the FID on the Vara Mada project would require the formalization of certain fiscal terms, including the addition of monazite production to the existing mining permit.

The company and the government of Madagascar are still in negotiations based on the previously disclosed memorandum of understanding signed by the parties in December 2024, it said.

Shares of Energy Fuels fell 2% to $25.63 apiece on Thursday afternoon in Toronto, valuing the company at $6 billion.