Energy Fuels Flags Strong Yields In Feasibility Study For Madagascar Rare Earths Project

Energy Fuels Inc said on Wednesday that an updated feasibility study for its wholly owned Vara Mada project in Madagascar confirmed strong long-term economics and the potential to become a major non-Chinese source of rare earth elements, alongside titanium and zircon.

The study, which complies with U.S. and Canadian mining disclosure standards, estimates a post-tax net present value of about $1.8 billion at a 10% discount rate and models an initial mine life of 38 years, which the company expects could be extended through further drilling and revisions to the mine plan.

Energy Fuels said Vara Mada, formerly known as the Toliara project, contains world-scale reserves of heavy mineral sands, including monazite, a key source of rare earths used in electric vehicles, renewable energy systems and defence technologies. The project is located in southwest Madagascar and is at an advanced stage of development.

Vara Mada, a Generational Asset

“This study confirms that Vara Mada is a generational asset with the potential to reshape global rare earth and critical mineral supply chains,” said Mark Chalmers, adding that the scale and economics of the project distinguish it from many western rare earth ventures.

Under the plan outlined in the study, monazite concentrates produced at Vara Mada would be shipped to the United States and processed at Energy Fuels’ White Mesa Mill in Utah. The company said this approach mirrors China’s long-established strategy of sourcing monazite as a low-cost by-product of mineral sands mining and refining it into high-value rare earth oxides.

At full capacity, Energy Fuels estimates that monazite from Vara Mada and its other mineral sands projects could supply up to 30% of U.S. demand for light rare earth oxides and as much as 85% of demand for heavy rare earth oxides such as dysprosium and terbium, based on industry forecasts for the early 2030s.

Rare Earths’ Quantification

The feasibility study projects average annual production of roughly 959,000 tonnes of ilmenite, 66,000 tonnes of zircon, 8,000 tonnes of rutile, and 24,000 tonnes of monazite, excluding ramp-up and wind-down years. About three-quarters of expected revenue would come from sales of mineral sands products to global customers, with the remainder linked to internal sales of monazite for downstream processing.

Energy Fuels said the project could generate more than $500 million in annual EBITDA at full run-rate, with average free cash flow of about $264 million per year over the modelled life of the mine. Initial capital spending before a final investment decision is estimated at $121 million, with a further $769 million required for the first stage of mine and processing development.

Despite the positive economics, the company cautioned that development remains subject to fiscal and regulatory agreements with the Malagasy government, including amendments to existing mining permits to allow for monazite production. Negotiations are ongoing under a memorandum of understanding signed in late 2024, and delays or unfavorable terms could affect the project timeline.

Chalmers said Energy Fuels intends to operate the project to high environmental and safety standards while contributing to local economic development. Analysts say the project, if approved, would strengthen western efforts to diversify rare earth supply chains at a time of heightened geopolitical scrutiny over China’s dominance in the sector.