Cashed-Up enCore Energy Steps on Gas to Consolidate as Leading US Uranium Producer

• enCore Energy sold a 30% stake in the Alta Mesa project to Boss Energy for $70 million cash injection to accelerate development plans
• Deal provides funding to advance EnCore's portfolio of uranium projects in US more quickly
• Expect to see industry consolidation to 8-9 major global uranium producers long-term with enCore well-positioned
• enCore targeting annual uranium production rate of 3 million pounds within 3 years, focused completely in Texas and Wyoming initially
• Company utilizing blended contracting approach with some upside exposure to potentially higher uranium prices

Uranium Developer Cashes Up to Fast-Track US Projects

Uranium development company enCore Energy recently completed a transformational deal, selling a 30% stake in its flagship Alta Mesa project for $60 million for part-project acquisition and $10 million for equity to Australian uranium miner Boss Energy. The influx of capital provides enCore with the funding needed to aggressively advance its portfolio of prospective in-situ uranium recovery (ISR) projects in the United States.

Executive Chairman William Sheriff explained in an interview that the company had been living "hand to mouth", slowly moving its projects forward one at a time due to capital constraints. But with the Boss Energy deal providing an immediate cash injection, enCore can now progress its projects in parallel, greatly accelerating its timeline to production and cash flow.

In particular, the deal funding enables enCore to fast-track satellite uranium production sources to provide feed for its Rosita processing plant in Texas. It also allows the company to aggressively explore and develop its large landholding between its Dewey Burdock and Dewey Terrace projects in South Dakota. According to Mr Sheriff:

"By having extra money we get extra drill rigs, we can afford extra equipment and bring in more well fields sooner and max out that production capacity sooner by virtue of having that cash."

Initially focused completely on uranium projects located in Texas, enCore is targeting an annual production rate of 3 million pounds of uranium within the next three years. Given Texas' favorable regulatory environment for energy project development and uranium mining specifically, enCore anticipates achieving this production target based on its assets in the state alone.

However, with additional funding now available, the company can also begin advancing complementary satellite projects in other amenable uranium mining jurisdictions like Wyoming simultaneously. This will provide greater flexibility and confidence in achieving its rapid production growth goals.

Interview with Executive Chairman, William Sheriff

Strategic Consolidation on the Horizon

The uranium market is early in what is expected to be a prolonged bull run driven by a structural supply deficit emerging in the coming years. However, enCore management believes the number of new global uranium producers able to successfully advance projects into production will end up being relatively limited over the next decade.

He expects consolidation in the industry as smaller developers struggle with the technical and economic challenges of achieving commercial production. This will leave opportunities for larger, better-resourced companies like EnCore to acquire quality assets from struggling juniors.

enCore is aiming to position itself as one of no more than three major US-focused uranium producers likely to emerge. With a strengthened balance sheet and accelerated production timeline, the company believes it now has a prime opportunity to continue growing rapidly. This could feasibly occur through additional acquisitions or organic development of an expanded portfolio of US uranium assets.

Exposure to Higher Prices

In structuring its sales contracts for future uranium production, enCore has adopted a balanced market price exposure strategy. Its contracts incorporate aspects providing both downside price protection through minimum "floor" pricing, yet allowing some upside exposure to potentially much higher uranium prices likely to materialize in the coming years.

This blended contracting approach is intended to deliver greater earnings stability and predictability relative to producers selling entirely at prevailing volatile spot market prices. However, it still allows enCore to participate in meaningful upside if uranium prices continue rising.

Mr Sheriff emphasized avoiding over dependence on the fickle spot market in favor of steady cash flows. But he notes their balanced contract structure with adjustable price collars will still benefit greatly when prices move higher:

"We want to benefit obviously by a buoyant high price and an increasing price but at the same time we've got to be in business and if we get a six-month correction and there's no buyers in the market...we don't want to be dependent upon that."

Rapid Production Growth Imminent

With Boss Energy's $70 million cash injection soon to be in enCore bank account, the company appears well-funded to aggressively advance its portfolio of uranium projects in America's amenable mining jurisdictions. The deal seemed reasonable given the implied valuation increase for just 30% of enCore's flagship Alta Mesa asset.

enCore exhibited its technical capability by bringing its Rosita plant back online in industry-leading permitting timeframes. It is now focused completely on rapidly expanding uranium production in Texas and complementary satellite sources over the next three years.

As the anticipated uranium supply deficit approaches, enCore looks to be positioning itself as an emerging leader amongst consolidating US-focused uranium producers. With planned production growth aligned with a strengthening uranium price outlook, enCore could represent an intriguing investment opportunity in the uranium sector.

The Investment Thesis for enCore Energy

• Near-term U.S. focused uranium developer with a clear pathway to reach a 3 million lb/year production rate within 3 years
• Strategic consolidation likely to position enCore as one of few major U.S. uranium producers
• $70 million cash infusion from partial Alta Mesa sale funds accelerated the development timeline
• Balanced contract book provides downside price protection but maintains upside exposure
• Flagship Texas assets in industry-leading permitting jurisdiction with a proven team

In summary, enCore Energy has greatly enhanced its growth trajectory and positioning amongst uranium developers in the United States. With multiple projects now funded to advance concurrently across strategically targeted mining-friendly states, the company exhibits the potential to emerge as a premier domestic uranium supplier over the coming years. The accelerated expansion aligns favorably with anticipated uranium market tightness over that timeframe. enCore offers investors a unique leveraged exposure profile relative to uranium price upside through its blended production contracting strategy focused primarily on US assets.

The influx of $70 million in growth capital enables enCore Energy to fast-track its portfolio of US uranium production assets simultaneously. This positions the company to achieve its 3 million pound per year production target within three years. enCore maintains favorable exposure to expected strengthening uranium prices but aims for predictable earnings through balanced market pricing contracts. Consolidation amongst uranium developers appears probable over the next decade, likely leaving enCore as one of the few remaining major US-focused uranium producers. With expanding production capacity aligned with market dynamics, enCore offers investors potentially appealing leverage to the accelerating uranium bull market.

Uranium Market Consolidation

Executive Chairman William Sheriff anticipates significant consolidation amongst uranium mining companies over the coming decade. In his assessment:

“You’re going to see a continual evolution of buying out the companies that are small new entrant companies to where you'll end up with eight or nine [major producers] when you look down the road here probably in a decade or something.”

Mr Sheriff believes the challenges inherent in achieving commercial-scale uranium production will prove too onerous for many juniors. Smaller developers struggle with permitting delays, technical issues, and funding stresses trying to advance complex mining projects. These hurdles often overwhelm the capabilities and resources of more modestly-sized companies.

Thus opportunities should arise for larger, better-capitalized uranium entities to acquire quality assets from struggling juniors unable to progress projects independently. Mr Sheriff emphasized that only eight or nine major global uranium producers are likely to emerge through this consolidation process as many projects stall.

In the United States specifically, he anticipates no more than two or three US-focused uranium miners will be left standing as viable long-life production entities. enCore Energy aims to position itself as one of these likely survivors and beneficiaries of industry consolidation trends through its recent deal with Boss Energy.