enCore Energy: Drilling at Alta Mesa East is Off to a Good Start

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enCore Energy (EU) announced on June 1st that exploration drilling at the 5,900 acre Alta Mesa East (AME) Project is well underway with six rigs in operation and is yielding positive results from initial exploration. Positive initial drilling results have reconfirmed expectations for encouraging uranium grades across all mineralized sand units known to exist at Alta Mesa. The AME property is located immediately adjacent to the Alta Mesa wellfields and extraction operations.

Exploratory drilling tests have been designed to outline mineralization, which will guide the company’s efforts in permitting and expanding In-Situ Recovery operations into the AME from the existing Alta Mesa operations. These initial results have confirmed uranium mineralization extending more than 3,700 ft to the east from the nearest wellfield. The AME Project targets the continuation of productive roll fronts from Alta Mesa wellfields 1, 3, 3EXT, 4, 5B, and 7. Overall, exploration efforts are focused on mineralization within the designated B sands, Middle C sands, Lower C sands, and potentially the D sands in the northeast areas. 

Recall that historical drilling completed by Chevron Minerals during the late 1970’s discovered multiple uranium roll fronts located at various depths within sand units interpreted to be the lower C, middle C, B and A sands, all of which have been or are productive at Alta Mesa.

Initial exploration drilling is typically conducted on 400 and 500 ft centers with closer offsets in mineralized areas.  Seven widely spaced east-west fences of drilling are underway for overall regional characterization. Drilling is averaging a total depth of approximately 600 ft below the surface. Exploration drilling has discovered mineralization within the Middle C sands at a depth on average between 400 and 460 ft, and within Lower C sands between 480 and 520 feet below surface. The final results are reported for the initial 17 holes, which include six holes ranging from 0.351 to 2.297 Grade Thicknesses (GT). Generally, a GT of 0.3 is considered suitable for inclusion in a wellfield. Of the 17 holes reported, 10 were mineralized.  

Given the aggressive drilling campaign, additional drill results will be announced in the coming weeks. Though just at the start of the campaign, uranium extraction efforts from these sand units at the Alta Mesa wellfields have thus far generated solid results, including current operations at wellfield 7.

VALUATION & CONCLUSION

Provided that the current drill campaign remains successful, drilling to establish a resource estimate and to support permitting will continue through 2026 and into 2027. enCore Energy maintains plenty in treasury with total liquidity of ~$85M at quarter-end and uranium inventory amounting to nearly 154,000 lbs. Still anchored by a $100/lb LT uranium price, and a target NAV multiple of 1.15x NAV8%, our derived 12-month price objective is maintained at $3.30 per share (rounded). This equates to upside of +101% from the most recent close (June 1). Shares of enCore Energy currently trade at a 0.57x P/NAV multiple.