enCore Energy Delivers Operational Turnaround with Production Surge and Cost Reductions in Q2

• enCore Energy dramatically increased daily uranium extraction from below 2,000 pounds to 3,700+ pounds per day through operational improvements and expanded drilling capacity from ~12-14 rigs to 24 rigs.
• The company reduced cash costs from approximately $40.80 per pound to $32 per pound in the latest quarter, targeting the low-$30s range with an ultimate goal of reaching $30 per pound.
• Texas legislation eliminated public comment requirements for routine wellfield expansions, reducing permitting delays and providing greater operational certainty for in-situ recovery operations.
• Upper Spring Creek satellite plant received a radioactive materials license with construction underway, expected to come online by end of 2025 or early 2026, significantly expanding production capacity.
• Strategic divestiture of Anfield Energy shares generated nearly $20 million, improving balance sheet during cash-tight periods and supporting continued operational ramp-up.

enCore Energy Corp (TSXV:EU), the leading in-situ recovery (ISR) uranium producer in the United States, has demonstrated significant operational improvements over the past four months following a strategic reorganization in March 2025. Executive Chairman William Sheriff outlined the company's transformation from production challenges to steady operational gains, positioning the company for sustained growth in an evolving uranium market.

Dramatic Production Improvements

The most striking development at enCore has been the substantial increase in daily uranium extraction rates. Sheriff revealed that the company has taken 

"Our daily extraction rate went from significantly below 2,000 pounds a day up to where we just peaked within the last week or so at 3,700 and some odd." 

This represents an 85% increase in production capacity achieved through operational efficiency rather than major capital expenditure.

The production gains stem primarily from accelerated well installation timelines. Sheriff emphasized that drilling efficiency "has dropped very significantly, certainly cut that in half at least," noting that well installation speed is "probably the single most important metric in terms of our production." This improvement directly correlates to extraction volumes since wells produce the uranium-bearing fluid processed at the company's facilities.

The operational transformation required expanding drilling capacity substantially. The company increased its rig count from approximately 12-14 rigs to 24 active rigs, with some now deployed at the Upper Spring Creek project that will feed the Rosita processing facility. This expansion demonstrates enCore's commitment to maintaining production momentum while developing additional capacity.

Cost Structure Optimization

Alongside production increases, enCore has achieved meaningful cost reductions. The company's cash costs decreased from approximately $40.80 per pound at year-end to $32 per pound in the most recent quarter. Sheriff indicated the company is targeting cash costs in the low-$30s range, with an ultimate objective of reaching $30 per pound.

However, Sheriff acknowledged the inherent challenges in uranium production economics, noting 

"You have a finite ability to go below a certain level and we kind of view that level as in the $30 range, low-30s." 

The cost improvements reflect operational efficiencies rather than fundamental changes to the ISR extraction process.

The company faces ongoing cash flow management challenges typical of uranium producers. Sheriff explained that "we do spend money every day and yet we receive money four to five times a year when our contracts are delivered." This timing mismatch requires careful financial planning, especially during production ramp-up phases when costs increase before revenue realization.

Strategic Asset Management

enCore strengthened its balance sheet through strategic asset disposition, most notably the sale of Anfield Energy shares for nearly $20 million. Sheriff explained the decision: 

"We have an active investment portfolio, but if we don't see a long-term relationship between us and the company we hold stock in, or some other compelling reason to hold the shares, quite frankly we'd made a very nice return on it."

This divestiture proved timely as it provided crucial liquidity during a cash-constrained period. Sheriff noted that

"We had a quarter of very little delivery and continuing expenses it was going to get tight and it was certainly getting tight, so that [Anfield share sale] made a big difference to us."

The company continues pursuing non-core asset dispositions, having generated over $40 million from such activities in recent years.

Interview with Executive Chairman, William Sheriff

Regulatory Environment Advantages

Texas has emerged as an increasingly favorable jurisdiction for uranium operations. Recent state legislation eliminated public comment periods for routine wellfield expansions, streamlining the permitting process for existing operations. Previously, each new production area authorization required "almost a significant amendment to your permit" with public comment opportunities that could extend timelines by months.

Sheriff praised the regulatory changes, stating they provide "certainty that you won't have any unusual unexpected delays" while maintaining appropriate oversight. The modifications apply to routine operational adjustments rather than new project approvals, reflecting the state's recognition of ISR uranium production as an established industry.

The regulatory improvements complement Texas's existing advantages as an agreement state, where permitting timelines are generally faster than federal oversight jurisdictions. This regulatory clarity provides operational predictability crucial for production planning and investment decisions.

Expansion Plans & Timeline

The Upper Spring Creek satellite facility represents enCore's primary near-term growth catalyst. The project recently received its radioactive materials license, enabling construction to begin. Sheriff indicated the facility should begin production "towards the end of the year or certainly by the beginning of next year," pending final permit approval.

The timing of Upper Spring Creek's commissioning will significantly impact enCore's production profile and financial guidance. Sheriff explained that if final permits arrive by September or October, "we should get at least a month of ramp-up production started in this calendar year." Earlier approval would provide 2025 production contributions, while later approval would shift benefits to 2026.

Construction activities are already underway, demonstrating enCore's confidence in permit approval. The facility will process uranium-bearing solutions from multiple wellfields, significantly expanding the company's production capacity beyond current Rosita and Alta Mesa plant capabilities.

Market Positioning & Industry Outlook

Sheriff provided perspective on the broader uranium industry, emphasizing the advantages of restart projects over greenfield developments. He noted that restart operations "don't have huge capex to lay out" and benefit from "a track record that shows uranium is producible and expected recovery rates" compared to new projects relying on laboratory-scale testing.

The company maintains conservative guidance, committing not to purchase additional uranium for contract fulfillment in 2025. This represents a significant improvement from 2024 when enCore "had to purchase 200,000 [pounds] at a $20 premium to what we were receiving." Achieving self-sufficiency eliminates this margin pressure while demonstrating operational capability.

Sheriff acknowledged that meaningful guidance updates require additional operational data, stating 

"We need six months under our new plan to be able to really give any forecast at a minimum, maybe even nine." 

This conservative approach reflects management's focus on operational delivery over promotional guidance.

Financial Outlook & Capital Allocation

Despite production improvements, enCore faces ongoing working capital management challenges inherent to uranium production. The company's contract-based revenue model creates timing mismatches with daily operational expenses. However, the strengthened balance sheet from asset sales provides greater financial flexibility during the operational ramp-up phase.

The company's inventory position has improved with uranium price appreciation. Sheriff noted that inventory costs now trade "at a rather healthy premium" to current market prices, providing unrealized gains on the balance sheet. This inventory appreciation partially offsets the working capital intensity of increased production.

Future capital allocation will focus on operational optimization rather than major facility upgrades. While acknowledging that processing plants could benefit from modern monitoring technology, Sheriff indicated such investments remain premature during the current ramp-up phase, noting 

"it's working, we've made a number of tweaks to the system that have been material in terms of productivity."

The Investment Thesis for enCore Energy

• Operational Momentum: Demonstrated ability to nearly double production rates through efficiency improvements, validating management's operational expertise and providing a clear pathway for continued growth.
• Cost Competitiveness: Achieved 20% cost reduction while increasing production, positioning the company among lower-cost uranium producers with further optimization potential.
• Regulatory Advantages: Benefits from Texas's increasingly favorable regulatory environment, providing operational certainty and reduced permitting risks compared to other jurisdictions.
• Expansion Catalyst: Upper Spring Creek facility represents significant near-term production increase with minimal additional capital requirements, leveraging existing infrastructure investments.
• Contract Security: Established contract portfolio eliminates need for spot market uranium purchases, providing revenue visibility and margin protection in volatile pricing environments.
• Asset Monetization: Active non-core asset disposition program provides financial flexibility while focusing resources on core uranium production operations.
• Market Positioning: As one of few active U.S. uranium producers, benefits from domestic supply chain priorities and potential government support for strategic mineral production.
• Restart Advantages: Lower capital requirements and proven reserves compared to greenfield projects, reducing execution risk while providing faster production scalability.

Macro Thematic Analysis

The uranium sector stands at an inflection point driven by nuclear energy's renaissance amid global decarbonization efforts and energy security concerns. Small modular reactors (SMRs) and traditional nuclear capacity additions create substantial long-term demand while uranium supply remains constrained by years of underinvestment. Sheriff highlighted the temporal challenge facing the industry: 

"The biggest risk is it's not going to come for two or three or four years. That's the period we're actually in." 

This timeline mismatch between demand realization and supply development creates opportunity for established producers. Recent regulatory improvements, including the NRC's new 18-month approval timelines, signal accelerating downstream development that will eventually drive uranium demand. Sheriff captured the opportunity succinctly: 

"The best thing that can possibly happen to our end of the industry is for all of these plants to get built, and timeline relief on building these plants is nothing more than guaranteeing the demand is going to be there."