Energy Fuels funds rare earth minerals move
Energy Fuels has raised an upsized US$600m from the sale of new six-year convertible bonds that the uranium miner is using to expand into rare earth minerals.
Goldman Sachs was sole bookrunner on pricing the CBs late on Tuesday at a 0.75% coupon and 32.5% conversion premium, the aggressive ends of 0.75%–1.25% and 27.5%–32.5% price talk. The bank was able to upsize from the US$550m base deal size marketed for one day.
The uranium miner’s shares fell 7.1% while the CB issue was being marketed on Tuesday to US$15.35, paring gains for the year to 200% (from US$5.35).
Energy Fuels cushioned any disappointment by purchasing a capped call to offset dilution from the CBs up to a share price of US$30.70, double the reference price.
This is a sporty, unknown stock with a lot of potential on the growth of US nuclear power. Highlighting both risks and opportunity, GS used a credit spread and vol of SOFR+550bp and 55 in marketing the CB.
Energy Fuels is using the bulk of the money to scale up production of rare earth minerals at its White Mesa processing facility in Utah. Already the largest US producer of uranium, the expansion seeks to process 13,000 tonnes of rare earth minerals. The company imports feedstock for rare earth minerals from other countries through a collaboration with Chemours.
In July, the US government took a 15% stake in rare earths miner MP Materials. MP Materials followed that agreement by raising an upsized US$650m from the sale of 11.8m shares at US$55.00 – that stock now trades at US$70.96.
Energy Fuels is still small. Despite producing record levels of uranium and increasing guidance on uranium sales for the year, the company generated a second-quarter operating loss of US$26.2m on revenues of US$3.9m.