enCore Energy: Production Growth Stalls; Reducing Targets as Next Leg of Growth Seen in 2027

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Late last week enCore Energy (EU) posted Q2/2026 results which were highlighted by revenues of $15.7M ($3.7M in Q2/2025) and an attributable net loss of $41.4M, or $0.21 per share (net loss of $6.3M, or $0.03 in Q2/2025). Contracted delivery for 485,000 lbs was achieved at an average sales price of $70.10 per lb U3O8, compared to the delivery of 350,000 lbs at an average sales price of $62.58 per lb in Q2/2025. Though the financial results are still largely immaterial due to the current transitional period of the company, uranium extraction during the quarter was materially lower at 131,274 lbs in Q2/2026 compared to 317,613 lbs extracted in Q2/2025. The drop in extracted lbs prompted the spot purchase of 360,000 lbs which pushed up costs materially during the quarter: $75.54 per lb compared to a weighted average cost of $59.42 per lb in the same period 2025.

Though the Alta Mesa Wellfield 3 Extension and the Upper Spring Creek wellfield supplying the Rosita CPP are ready for operation, the needed permits are still outstanding. Costs for the Wellfield Extension and for Upper Spring Creek have been fully expensed however permit receipt for each is only anticipated for Q4/2026. Note that Alta Mesa's Wellfield 7 is scheduled to end recovery operations later in Q3/2026 due to anticipated depletion as the end of its natural life approaches. Final permits for Wellfield 8 are anticipated by the end of Q1/2027. Though we expect production to meaningfully increase once permits are received, we expect the rest of the 2026 to focus on internal efficiencies (a workforce reduction was announced last month) until the the resumption of growth in 2027 once permits are received. Of note during the quarter is that 3-5 drill rigs were active at Alta Mesa East with results meeting or exceeding expectations.

PROGRESS CONTINUES AT DEWEY BURDOCK

On June 22, 2026, the company announced important permitting progress highlighted by the Dewey Burdock ISR Uranium Project receiving a 20-year renewal of the Source Materials License (SUA-1600) effective until June 2046, following the Bureau of Land Management approval to commence infrastructure construction. The announcement on June 22nd was preceded by a June 18 BLM decision which authorized the Dewey Burdock Project to commence construction of infrastructure on portions of the project’s BLM-managed public lands within the larger Dewey Burdock Project.  The Project has now received all needed federal permits. That said, the Project entered State of South Dakota permitting on June 15, 2026, which is under review by the Department of Agriculture & Natural Resources.

According to a recent S-K 1300 Technical Report (effective date October 8, 2024), given 17.1M lbs of Measured & Indicated resource (along with 712,624M lbs Inferred), Dewey Burdock not only represents one of the larger domestic US projects but it also represents one of the very few projects that is both ISR amenable and currently advancing rapidly with an eye to construction within ~18 months. Located approximately 75 miles from Cameco's (CCJ, CCO-TSX) Crowe Butte ISR facility, recall that the 2024 Dewey Burdock Technical Report estimated a 26 year operation capable of producing an average of 750,000 lbs U3O8 per year, over LOM. Production is seen as from a Central Processing Plant (CPP) with both ion exchange recovery trains and yellowcake processing facilities. Using an average sales price of $86.34 per lb and an estimated initial capex of $264.2M, an after-tax Project NPV8% was estimated at $133.6M with an after-tax IRR of 33%. Our company-wide production estimates are below:

VALUATION & CONCLUSION

The June regulatory approvals for Dewey Burdock represent the latest positive steps along the journey to get the Project fully approved and construction ready. Management previously stated that it expects construction activities to commence within the next ~18 months. Permitting wait time will be the theme for the rest of the year as the Alta Mesa Wellfield 3 Extension and the Upper Spring Creek wellfield are expected to receive approvals towards the end of 2026. For this reason, we only expect uranium extraction to meaningfully increase in 2027. Until then, material workforce reductions as announced in July are expected to generate significant savings as of Q3/2026 and beyond. enCore Energy maintains plenty in treasury with total liquidity of ~$90M at quarter-end and uranium inventory amounting to over 203,000 lbs. Still anchored by a $100/lb LT uranium price, after foactoring in corporate adjustments, we reduce our target NAV multiple from 1.15x to 1.10x NAV8%. As such, our lowered 12-month price objective is re-set to $2.75 per share (rounded). This equates to upside of +127% from the most recent close (August 14). Shares of enCore Energy currently trade at a 0.48x P/NAV multiple.