enCore Energy: Production to Ramp Further in South Texas as Growth Focus Shifts to Dewey Burdock

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Earlier today, enCore Energy (EU, EU-TSXV) reported its financial and operational results for the FY/2025 period. Highlighted by the extraction of nearly 700,000 lbs U3O8 largely from Alta Mesa, we expect further production increases from South Texas as construction activities related to the Upper Spring Creek Satellite facility (located within enCore's South Texas ISR hub) continues to advance. Some noted regulatory delays associated with permitting from the Texas Commission on Environmental Quality (TCEQ) were announced however. Looking ahead, the next leg of growth is finally worth highlighting as work at Dewey Burdock continues to advance with permitting activities on-going. Construction activities at Dewey Burdock are expected to commence within the next 18 months.

FY/2025 production from Alta Mesa increased by +242% relative to FY/2024 as 699,807 lbs U3O8 were extracted and a total of 655,000 lbs were sold into contracts at a price of $65.89 per lb (at a weighted average cost of $51.09 per lb). Though the annual 10-K has yet to be filed by the U.S. SEC deadline of March 31, given previous quarterly filings, we know that the 2025 contracts were filled by a combination of extracted uranium along with some purchased material. That said, the company ended the year with 132,013 lbs of uranium in inventory at a cost of $37.77 per lb.

Over the course of 2025, 270 new wells were turned on with additional wells expected to be brought online in Q1/2026. Initial work encompassing monitoring and permitting wells has already begun on wellfield 8. Production from South Texas is still expected to ramp higher as activities associated with the Upper Spring Creek Satellite Facility, located within enCore's South Texas ISR production hub, continues to advance. Certain components of the project timeline have been impacted by the timing of regulatory approvals associated with permitting from the Texas Commission on Environmental Quality (TCEQ). Though regulatory review timelines have extended beyond initial expectations, enCore management expects to complete construction activities and commence operations once the remaining approvals are received. Given the anticipated delays, enCore has announced that in late 2025, additional inventory was purchased "at favorable terms" to satisfy delivery requirements in 2026. EnCore's near term future remains underpinned by a solid contract book encompassing over just under 8.0M committed lbs for delivery from 2026 and extending until beyond 2030. Having fine-tuned our production estimates and timelines, our production estimates are below:

DEWEY BURDOCK: THE NEXT LEG OF ISR URANIUM PRODUCTION GROWTH

At the Dewey Burdock Project located in South Dakota, permitting activities and development planning continue to progress. enCore continues to work with federal and state regulators to complete the necessary approvals for the project. Based on the current status of the permitting process and development planning, enCore expects construction activities to commence within the next 18 months, following completion of the remaining regulatory requirements. Recall that this past September, the Project was approved for inclusion in the Fast-41 Program by the U.S. Federal Permitting Improvement Steering Council. Under the Executive Order, the Permitting Council identifies priority infrastructure and critical mineral projects to receive accelerated permitting review. Dewey Burdock's inclusion into the Fast-41 Program represents the first South Dakota ISR uranium Project named to receive accelerated permitting review. The Project previously received its Source and Byproduct Materials License SUA-1600 on April 8, 2014, from the NRC.

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%.

WILLIAM SHERIFF RETIRES AS EXECUTIVE CHAIR

As announced on March 2nd, William Sheriff, the founder of enCore Energy announced his retirement as Executive Chairman and Director. He will continue to serve as a Senior Advisor on the company’s Technical Advisory Committee providing continued guidance on matters related to investments, corporate development and finance.

VALUATION & CONCLUSION

The company has plenty in treasury with total liquidity of ~$96M at year-end. Last month, warrant exercise brought in an additional $18.1M. Anchored by a $100/lb LT uranium price, we maintain our 1.20x NAV8% derived price objective of $3.55 per share (rounded). This equates to upside of +85% from the most recent close (March 6). Shares of enCore Energy currently trade at a 0.65x P/NAV multiple.