enCore announced in mid-February, 2023 the closing of the acquisition of the Alta Mesa In-Situ Recovery uranium project from Energy Fuels Inc. (the "Alta Mesa Acquisition"). The transaction provides enCore with three licensed uranium in-situ recovery (ISR) processing plants and positions enCore as a leading US-focused ISR uranium company with the proven management expertise required to advance multiple production opportunities within its portfolio.
Transaction Highlights
Alta Mesa includes a fully-licensed and constructed ISR processing facility that has an operating capacity of 1.5 million pounds of uranium per year. Between Alta Mesa, Rosita and Kingsville Dome, all fully licensed for production, enCore’s ISR processing facilities have a combined potential processing capacity of 3.6 million pounds of uranium per year:
- Alta Mesa is host to a measured and indicated resource of 3.41 million lbs U3O8 (1.57 million tons at an average grade of 0.109% U3O8) and an inferred resource of 16.79 million lbs U3O8 (7.0 million tons at an average grade of 0.120% U3O8). Abundant exploration upside exists within the Alta Mesa land package around the existing defined resource areas, which enCore will prioritize;
- Alta Mesa will diversify enCore’s South Texas operations into a 3rd fully licensed production facility, along with Rosita and Kingsville Dome, all located in the business-friendly state of Texas. enCore’s mid- and long-term production potential is further fueled by a pipeline of projects with Dewey-Burdock in South Dakota, Gas Hills in Wyoming and additional projects in New Mexico. There are only 11 licensed production facilities in the United States;
- Alta Mesa is currently on standby and ready to resume production. The facility can reach commercial production levels with limited required capital within an estimated 10 months of a production decision;
- Control of a large private land package totaling 203,292 contiguous acres, including 4,575-acres currently under a lease and mining permit and 198,717 acres under a lease-option and exploration/testing permit;
- The acquisition will further cement enCore’s position as a dominant ISR uranium company and near term future producer in the US;
- Alta Mesa’s operations are located on private land, with 100% of minerals privately owned, and in a supportive jurisdiction with primary regulatory authority residing with the State of Texas;
- The Alta Mesa ISR processing facility is a fully permitted and constructed past-producing ISR operation, with a previous well-established track record of lower cost uranium production. The project is fully permitted for uranium extraction upon installation of the next wellfield;
- Alta Mesa has extensive exploration potential across an area that has previously identified uranium mineralization;
- Alta Mesa produced a total of 4.6 million pounds of uranium between October 2005 and November 2013, including 1 million pounds of uranium per year over a two-year period;
- With low holding costs, Alta Mesa provides fully permitted lower-cost production scalability that can be brought into production quickly to provide a domestic energy source for the United States.
Conference Call: The Company will host an online conference call on Wednesday, February 22nd, 2023 at 11:00 AM ET. To register for the presentation please log in at: https://us02web.zoom.us/webinar/register/WN_eeh5pSOFQwm6FZuu4l5Aog
To view the Alta Mesa project maps and enCore Energy’s South Texas projects please visit: https://bit.ly/3fV9fTg .
William M. Sheriff, Executive Chairman of enCore, stated:
"Alta Mesa is a key acquisition in enCore’s development into the dominant ISR uranium producer in the state of Texas. With its more immediate plan of restarting Rosita in later 2023 and greatly expanding its production profile with the start-up of Alta Mesa in early 2024 our goal of becoming a 3 million pound per year domestic producer from a consolidated base of operations within a 100 mile radius of Corpus Christi, Texas is well underway. This Texas platform positions the company well for its continued growth not only in Texas, but with planned operations in South Dakota, Wyoming and ultimately New Mexico. We are all looking forward to a dynamic and rewarding 2023. On behalf of the Board of Directors we extend congratulations to the enCore team for a major achievement."
Paul Goranson, CEO and Director of enCore, further added:
"With the completion of this transaction enCore is more than doubling our production capacity in South Texas. As we advance towards our Q3/23 production goal at our Rosita ISR Uranium Processing Plant we will commence work at the Alta Mesa Project with plans to restart production in 2024 with installation of a fully permitted wellfield. The strong technical team at enCore is excited to get started at Alta Mesa. Our collective South Texas operations puts us on the path to becoming a leading producer of uranium in the U.S."
Alta Mesa
The Alta Mesa project is a fully licensed and constructed ISR project and central processing facility currently on standby, located on over 203,000 acres of private land in the state of Texas. Total operating capacity is 1.5 million lbs U3O8 per year. Alta Mesa historically produced nearly 5 million lbs of U3O8 between 2005 and 2013, when full production was curtailed as a result of low uranium prices at the time. enCore will immediately pursue the resumption of operations.
1 Represents that portion of the in-place mineral resource that are estimated to be recoverable within existing wellfields. Wellfield recovery factors have not been applied to indicated and inferred mineral resources.
2 As reported in the NI-43-101 Technical Report Summary for the Alta Mesa Uranium Project, Brooks and Jim Hogg Counties, Texas, USA completed by Doug Beahm, PE, PG, of BRS Engineering. (Effective January 19, 2023).
The Transaction
The Consideration paid to Energy Fuels consisted of US$60 million in cash and a US$60 million secured vendor take-back convertible promissory note (the "Note"). The Note has a two (2) year term and bears interest at a rate of 8% per annum payable on June 30th and December 31st of each year during the term. The Note is convertible at the election of the holder, to acquire common shares of enCore at a price of US$2.9103 per share. Energy Fuels has agreed not to transact with the common shares of enCore received on conversion of the Note, including hedging and short sales, with exceptions for sale transactions of up to US$10 million in value in any 30-day period, block trades and underwritten distributions. In addition, Energy Fuels has agreed to standard standstill provisions restricting additional acquisitions of enCore securities.
Additional information regarding the Alta Mesa Project acquisition, is available in the Company’s news release dated November 14, 2022.
In connection with the closing of the Alta Mesa Acquisition, 23,277,000 subscription receipts issued December 6, 2022 at a price of C$3.00 per Subscription Receipt (the "Subscription Receipt Offering") were automatically converted into units comprised of one common share of enCore and one common share purchase warrant, with each warrant entitling the holder thereof to acquire one common share of enCore at a price of C$3.75 for a period of 3 years until February 14, 2026. The net proceeds from the Subscription Receipt Offering of approximately C$66 million, after deduction of fees and commissions, have been released from escrow to the Company, and were applied to fund the cash portion of the consideration payable by the Company pursuant to the Alta Mesa Acquisition.
For additional information regarding the Subscription Receipt Offering, please see the Company’s news release dated December 6, 2022.
Additionally, further to the Company’s news release dated February 8, 2023 announcing the closing of the offering of units for proceeds of C$34.5 million, the Company advises that it paid cash commissions to Canaccord Genuity Corp. (C$1,065,756.17), Cantor Fitzgerald Canada Corporation (C$659,753.82), and Haywood Securities Inc. (C$304,501.76). For additional information regarding the unit offering, please see the Company’s news release dated February 8, 2023.
John M. Seeley, Ph.D., P.G., CPC, enCore’s Manager of Geology and Exploration, and a Qualified Person under NI 43-101, has reviewed and approved the technical disclosure in this news release on behalf of enCore.
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