$725M Rare Earth Bet

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17 rare earth elements are grouped together on the periodic table:

Despite the “rare” label, most are fairly common in the Earth’s crust. The hard part is (1) extracting them, since they rarely occur in high concentrations, and (2) separating them, since rare earth metals share very similar chemical properties.

Separation is the harder of the two. It takes hundreds of stages of solvent extraction, and it's the part of the chain the West handed to China.

According to the IEA, China processes ~90% of the world's rare earths, makes about 94% of the permanent magnets, and refines close to all of the heavy rare earths like dysprosium and terbium.

China uses that dominance as leverage.

In April 2025 China required export licenses on seven medium and heavy rare earths, dysprosium and terbium among them, and Chinese magnet exports fell about 75% over the next two months.

The controls widened in October, and on June 21, 2026 China escalated again, adding U.S. rare earth producers MP Materials and USA Rare Earth to its export-control list.

Rare earth magnets also run hardware across the AI buildout. NdFeB magnets drive the high-efficiency motors in data center cooling, the actuator motors inside the hard disk drives that store AI training data, and the motors in the robots hyperscaler capex is starting to fund.

With demand climbing and China increasingly willing to restrict the refining it has cornered, the most promising company I’ve found for that bottleneck is a uranium producer that has processed ore in Utah for 45 years.

That company is Energy Fuels (NYSE: UUUU), the largest U.S. uranium producer. It retrofitted its White Mesa Mill, the only operating conventional uranium mill in the country, to separate rare earths, and it was the first U.S. company to report producing commercial-purity heavy rare earths from ore.

On June 18 the U.S. government, through the Department of War's Office of Strategic Capital, committed up to $725M to fund Energy Fuels' processing buildout. The stock today hovers $16/share after a 194% climb over the past year.

So the question is whether Energy Fuels is still an asymmetric bet on the rare earth refining the West lacks, or a uranium miner the market has gotten ahead of—and that’s what the rest of this write-up works through.

Energy Fuels runs three businesses that fit together because rare earth ores like monazite carry uranium and thorium. Its 45 years in uranium gave it the licenses and know-how to process that radioactive material.

The three businesses:

Energy Fuels is also testing medical isotopes (radium-226 and radium-228) for targeted alpha therapy cancer treatments. The CEO has floated $6M a gram, so the prize is large, but it's pilot-stage and won't move revenue for years.

Leadership changed this year. Ross Bhappu became President and CEO on April 15, 2026, and founder-era CEO Mark Chalmers retired into a two-year consulting role.

Of the three businesses, uranium is the one already making money.

Energy Fuels is the largest, lowest-cost U.S. uranium producer. Its Pinyon Plain mine ran at ~1.62% eU3O8 in 2025, which management calls one of the highest grades in U.S. history, at an all-in cost of $23-30 per pound.

FY2025 results beat guidance on every line. Energy Fuels mined ~1.72M pounds of contained U3O8, produced ~1.015M finished pounds, and sold 650,000 pounds at a $74.21 average realized price for $48.2M of uranium revenue.

2026 guidance steps up to 2.0-2.5M pounds mined, 1.5-2.5M processed, and 1.5-2.0M sold.

In June the company said it expected ~1.6M finished pounds by mid-year, already inside the full-year range, then plans to pause the mill to rebuild ore stockpiles and restart in Q4 while it upgrades the mill for heavy rare earths.

The selling balances cheap legacy contracts and opportunistic spot sales. In Q1 2026, Energy Fuels sold 100,000 pounds into the spot market at $95.88 and 410,000 pounds under older contracts at just under $64.

The ramp is showing up in the numbers. Q1 2026 revenue rose 112% y/y to $35.8M, almost all uranium, and operating cash flow turned positive at $8.3M, helped by collecting receivables.

With Pinyon Plain’s low costs and finished inventory carried at $36 a pound, well under what uranium now sells for, the segment keeps moving toward profitability.

Only ~$23M of minimum contracted revenue is left for 2026, so the cheapest legacy pricing is nearly delivered. The rest of the year sells at spot, near $96 a pound in Q1, or under newer, higher-priced contracts, and realized prices step up from here.

Those low contracts justified restarting the mines. The six long-term contracts now run to 2032, each setting a minimum price and a maximum while still leaving room when spot climbs.

The U.S. still imports most of its uranium, and Energy Fuels is a low-cost domestic producer with a deep permitted pipeline (Roca Honda, Bullfrog, Sheep Mountain, Nichols Ranch). Even if the rare earth plan never lands, the uranium side stands on its own.

The demand side is strengthening too. The IAEA has raised its nuclear forecasts five years running, and the 2026 wave of reactor restarts, life extensions, and new SMRs adds tens of gigawatts of new capacity.

Each gigawatt burns 0.4-0.5M pounds of uranium a year, so four new reactors alone use about what Energy Fuels produces in a year.

Kazakhstan mines ~40% of the world’s uranium with sulphuric-acid leaching, and sulphur costs have spiked in 2026, squeezing the largest low-cost supplier and supporting the price. Energy Fuels uses acid as well, but Pinyon Plain’s high grades mean it burns far less per pound.

White Mesa is licensed for over 8M pounds of U3O8 a year, well above the ~1.5-2.5M Energy Fuels plans to produce, so it can run other miners' ore through the mill for a fee when prices make that worthwhile.

Because the mill runs uranium or rare earths, Energy Fuels keeps enough uranium inventory to cover contracts so it can switch the mill to rare earths when that pays better. A planned circuit upgrade is meant to end that either/or by 2027.

Uranium funds the company. The rare earths are the upside, and of all of them, dysprosium and terbium are the ones China controls almost entirely.

Light rare earths like neodymium and praseodymium (NdPr) go into the bulk of magnets. Dysprosium (Dy) and terbium (Tb) get added in small amounts so those magnets hold their strength at high temperatures, which is what lets them run inside motors, defense hardware, and anything that runs hot.

A magnet maker outside China can buy the light rare earths from several suppliers, but not dysprosium and terbium.

Almost no one outside China separates those two at commercial scale, which is the gap a U.S. refiner would have to fill.

The asset that lets Energy Fuels chase that gap is the mill.

White Mesa, near Blanding, Utah, is the only fully licensed and operating conventional uranium mill in the United States, and the only U.S. facility that can commercially process monazite to recover both uranium and rare earths.

The mill is 45 years old, but a new one would mean years of permitting for a radioactive-materials plant few communities want, so management treats it as close to irreplaceable on any near-term timeline.

The mill already ran solvent extraction to recover uranium, and rare earths are separated the same way, so Energy Fuels reworked those circuits in 2024 to pull out rare earths instead of building a new plant from scratch.

That retrofit, the "Phase 1 Circuit," modified the mill's lines to produce up to 850-1,000 tonnes per year of separated NdPr from monazite.

The one constraint today is that the mill runs uranium or rare earths, not both at once. Fixing that is the focus of 2026-2027.

The mill proved the concept on one circuit. Scaling it comes in stages, layered onto the existing Phase 1 line:

A January 2026 bankable feasibility study laid out the economics of the Phase 2 expansion. It puts capex at $410M, an after-tax NPV (8%) of $1.9B ($7.96/share), a 33% IRR, and ~$311M of average annual EBITDA over the first 15 years from Phase 2 alone.

Energy Fuels hasn't made a final investment decision on Phase 2, and it only hopes to have permits by the end of 2027, with commissioning as early as Q4 2028. So the $1.9B NPV is a target on paper, not money in the bank.

The capability is already proven:

A kilogram a week is tiny. But producing 99.9% Dy and any Tb at all, from ore rather than recycling, is something almost no one does outside China. Running it at thousands of tonnes is the gap, and that waits on Phase 1-B and Phase 2.

Quality isn’t the question. In September 2025, ~1.2 tonnes of the mill’s NdPr oxide became ~3.0 tonnes of magnets at South Korea’s largest EV drive-motor core maker, enough for ~1,500 vehicles, and they passed every qualification benchmark.

MP Materials runs the other major U.S. rare earth operation at Mountain Pass, but it processes bastnasite for light rare earths and is only now commissioning heavy separation. Monazite and the heavy rare earths are where Energy Fuels is ahead.

China's June 21, 2026 export-control list blocks both MP and USA Rare Earth from receiving Chinese dual-use items, and Energy Fuels was not named, which helps it against its two closest U.S. rivals. But that doesn't mean China won't add Energy Fuels to a later list.

A buildout this size needs funding, and the government just stepped in.

On June 18, 2026, Energy Fuels received a conditional commitment for up to $725M of senior-secured debt from the U.S. Office of Strategic Capital, housed under the Department of War.

The terms that matter:

The loan targets the bottleneck, processing and metal-making, not mining.

Government backing marks Energy Fuels as strategic, which lowers its financing risk and signals more support could follow.

Separating the oxides is only the first choke point. They still have to become metals and then alloys before they are magnets, and that metal-making is a second bottleneck almost only China operates.

In January, Energy Fuels agreed to acquire Australian Strategic Materials (ASX: ASM) for ~$299M, almost entirely in stock (0.053 Energy Fuels shares per ASM share plus a small cash dividend).

ASM brings three things:

That vertical control is what magnet buyers and the government want, since every other Western option still has a Chinese step in the middle.

The deal cleared its Australian foreign-investment review and is targeted to close in early July 2026, subject to ASM shareholder approval.

Because it’s paid in stock, the share count rises by ~15M shares when it closes, leaving ASM holders with about 5.8% of Energy Fuels.

Every step of that chain still needs raw material, and for Energy Fuels that means monazite, a byproduct of heavy mineral sands mining. It carries 50-60% total rare earth content, is rich in both NdPr and the heavy rare earths, and contains uranium the mill recovers and sells as a byproduct.

Because it comes out alongside titanium and zirconium, its cost is shared across several products.

To keep the mill fed, Energy Fuels has built a global feedstock pipeline:

Vara Mada is both the largest prize and the largest dependency. It requires a fiscal stability agreement with Madagascar, where a new government took power in October 2025 after political unrest and slowed the talks.

Until that agreement is signed, Energy Fuels can't break ground.

Filling Phase 2 needs more monazite than Energy Fuels controls today, so it's buying on the open market and from Chemours, a U.S. titanium producer whose mining yields monazite as a byproduct. Much of that supply still goes to China, and Western sellers would rather it didn't.

Energy Fuels is losing money by choice, spending ahead of revenue to build the rare earth side, so how it funds that buildout is the real question.