Uranium Energy Corp. 2026 Q4 Earnings Call

Good day and welcome to the Uranium Energy Corps fiscal 2026 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Amir Adnani, Uranium Energy Corps founder and CEO. Please go ahead. Thank you.

Operator, and good morning, everyone. At 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. Twelve months ago, we produced uranium from only one mine in one state. Today, we produce from two mines in two states and are well underway in building a third at Ludomint. Fiscal 2026 established UEC as a multi-mine American uranium producer. Just as important, in a single year, we demonstrated 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: our 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 Berkalo, the largest new in-situ recovery uranium mine to come online in the United States and 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, and the rural communities where we operate. To our team and to those communities, thank you. On our last call, we set new header houses with 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 Berkalo produced nearly 83,000 pounds of precipitated uranium and dried and drummed U308 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 three 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 Berkalo, 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 U308. Beyond Christensen Ranch and Berkalo, our development pipeline advanced on every front, which I will cover shortly. On the financial side, our unhedged strategy has not changed, and a market-facing a structural supply deficit we seek to maintain exposure to pricing upside for our shareholders.

Rather than lock it 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 three times this year's revenue plus the roughly $359,000 pounds produced and held at our Erigarian 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 forced 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 U308 and UF6 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, 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 U308 and 1,500 metric tons of uranium as UF6 each year, with delivery starting as soon as 2030. And in August, the U.S. Army selected five developers to build nuclear microreactors at military installations, with more than 20 expected under its Janice 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. In 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 one 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 regard. Turning to our uranium assets, our current operating platform is built on two production hubs in Wyoming and South Texas, each with a central processing plant fed by satellite mines.

This is supported by two major development projects. We are advancing the Sweetwater hub in Wyoming and Rough Rider in Saskatchewan. At Christensen Ranch, the well-feeled 11 header houses performed as expected. As previously reported, three new header houses in well-feeled 11 began production late in the third fiscal quarter. For additional header houses were constructed and tested as of the end of the fourth fiscal quarter, bringing the total to five that were awaiting regulatory approval for startup at such time. Just yesterday afternoon, we received final approval for four of these. Our team expects to start production at these header houses in the coming weeks. At Luderman, our next mine feeding Erigari, 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 service expected to be completed in the first quarter of fiscal 2027. In South Texas, the first shipment of uranium-loaded resin from Burkalo arrived at our Hobson plant in mid-May, every step at Hobson from Aleutian through precipitation drying and packaging is now commissioned.

And Hobson is once again an operating central processing plant. At the well field, 126 injection and recovery wells were brought online, were utilizing the small section to establish our best operating parameters, from Lexivian chemistry and pump sizing to well field patterns. Those parameters will guide the next phase as we expand mining in the first production area. Sweetwater will be our third production hub, with Emil that gives us the flexibility to process both conventional ore and in-situ recovery production. Federal permitting continues to advance. The fast 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 two production areas. With our partner, Wood Group, work continues on installing the ion exchange and allusion 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 Man, our Chief Financial Officer, Scott Melby, 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. To ask a question, you may press star then 1 on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Brian Lee with Goldman Sachs. Please go ahead. Hey, Amir.

Good morning. Thanks for taking the questions. I guess first one, just be curious. 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 U308. And I think that's indicative of you having two quarters of sales this fiscal year. So maybe just on that front, fair to assume more sales in fiscal Q1 with U308 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. I'm being here I'll take this and kind of two ways. Let me just provide some comments on it myself, and then I'd like to get Scott Melbye to come into 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 on hedge. There was partly because of the tightness we see in the market, the supply-demand fundamentals that to us clearly shows the 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. And we look to we look to capitalize on that. We're appropriate as well, Brian. But let me hand it off to Scott to elaborate. And add to those points. Go ahead, Scott. Yeah. Thanks, Amir.