Terra Clean Energy Corp: Winter Drilling Program Completed; More To Come This Summer

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Last week Terra Clean Energy Corp. (TCEC) announced that it had completed its winter 2025 drilling campaign at the South Falcon East Uranium Project, located at the periphery of the south-eastern edge of the Athabasca Basin. With nearly 2,000m drilled (and six of seven drill holes encountering uranium mineralization), the winter campaign was successful in demonstrating that the deposit remains open down dip to the northwest, north and northeast. Moreover, as the mineralized structure continues to be defined, the presence of clay alteration intersecting the mineralized conductive package points to further potential. Given the latest results, there are numerous follow-up holes which will be targeted as part of the upcoming 2,500m-3,000m summer program. With the actual assay results expected next month, we continue to believe that at the current microcap valuation, the risk remains on the upside, provided future drilling success.

Ahead of an even larger summer 2025 drilling campaign, we maintain our C$0.33 per share price objective. Our price objective equates to 57% upside from the most recent close. We add that given the robust near-term drilling plans, the risk remains on the upside for a material valuation re-rate.

STAGE SET FOR A FOLLOW-UP SUMMER 2025 DRILLING CAMPAIGN

Last week Terra Clean Energy Corp. announced that it had completed its winter 2025 drilling campaign at the South Falcon East Uranium Project, located at the periphery of the south-eastern edge of the Athabasca Basin. With six of seven drill holes encountering uranium mineralization, the large-scale winter drill campaign was successful on numerous fronts.

Split over seven drill holes, the helicopter supported 2025 winter program totaled a cumulative 1,927m, ranking it as one of the largest programs ever conducted on the property. When compared to the winter program conducted in 2024, this year’s program not only encountered wider intervals of mineralization but also encountered more consistent and higher grades spikes (with a notable peak of 0.16% eU3O8 – drill hole SF0065). This latest drill program was successful in demonstrating that the deposit remains open down dip to the northwest, north and northeast.

FRASER LAKES B DEPOSIT REMAINS OPEN IN NUMEROUS DIRECTIONS

Of the seven drill holes drilled this winter, all detected varying degrees of uranium mineralization except for Drill Hole SF0064, a step-out/exploration hole which targeted an area to the north of the deposit in the T-Bone Lake area. Drilled to a depth of 302m, Drill Hole SF0067 intersected a 70m interval containing multiple mineralized granitic pegmatites and zones within the altered and graphitic pelitic gneiss package. This interval was noted for the larger number of higher-grade spikes at or above the 0.1% eU3O8 intersected during the program. Down-hole gamma logging returned equivalent grades of 0.03% eU3O8 over 4.0m from 219.8m-223.8m, including 0.13% eU3O8over 0.2m and 0.01% eU3O8 over 5.5m from 233.7m-239.2m, including 0.06% eU3O8 over 0.2m in the two widest intervals. A zone of strong clay alteration and bleaching was intersected from 66.5m-73.5m. As a result, drilling has now extended the deposit to the north and northeast and is still open in that direction.

Drill Hole SF0065 was drilled to follow up the results of SF0063, reported earlier in March. It was targeted to intersect the same mineralized pegmatites 60 m to the northeast. The hole was completed to a depth of 282m and intersected a 75m wide zone of variably mineralized granitic pegmatites and zones within altered and graphitic pelitic gneiss. The main highlight was an equivalent grade of 0.02% eU3O8 over 17.5m from 204.9m-222.4m, including 0.16% eU3O8 over 0.3m.

Drill Hole SF0066 was drilled to a depth of 302m, to follow the clay alteration and mineralized pegmatites to the northwest and assist in characterizing orientation of the clay alteration and associated structure. Drilling intersected a 50m interval containing multiple mineralized granitic pegmatites and zones within altered and graphitic pelitic gneiss. The most notable zone returned an equivalent grade of 0.03% eU3O8 over 3.4m from 214.4m-217.8m, including 0.1% eU3O8 over 0.1m.

FOLLOW-UP DRILLING: THE SUMMER 2025 PLAN

Ultimately, the winter 2025 drilling program served to extend the deposit to the north and northeast. The deposit remains open in that direction. Additionally, it is believed that the clay altered structural zone identified in drill holes SF0063, SF0065, SF0066 and SF067 is dipping to the north and will intersect the mineralized and hematite altered graphitic pelitic gneiss and pegmatites approximately 120m-150m north of the current drilling. Given the results, A follow-up drill program is currently being planned to test this upgraded target area for a higher-grade unconformity related basement hosted uranium deposit and additional mineralized pegmatites where these structures and alteration all intersect. Beginning this summer, an expected ~10 drill hole program will commence. At between 2,500m-3,000m cumulative meters, the program will represent the largest drill campaign ever held on the South Falcon East Project.

RECAPPING THE SOUTH FALCON EAST PROJECT

Strategically situated at the periphery of the Athabasca Basin, the South Falcon East Project is located 50km east of Cameco's (CCJ, CCO) Key Lake uranium mill and just 7km north of the powerline servicing the Key Lake operations. As previously defined, the Fraser Lakes B deposit currently hosts a NI43-101 compliant uranium resource (Inferred) estimated to be 10.35Mt grading 0.03% U3O8 for 6.96M lbs, along with thorium (ThO2) mineralization. Mineralization remains open both down dip and along strike.

CONCLUSION & VALUATION

Our investment thesis remains intact: with Terra Clean Energy we see a microcap valuation leading to exposure to a pre-established, 6.9M lb Inferred shallow uranium resource situated near the needed infrastructure required for mining. The large scale summer drilling campaign will provide for additional near term catalysts. Assay results from the winter campaign will be expected in May. Following the summer drilling program, an updated resource estimate will be expected in Q4/2025.

Since exploration work and robust drilling campaigns are necessary standards for all exploration companies, we look at both all-in, earn-in cost and the earn-in ex work cost. Once backing out of the work budget, isolating the dedicated cash and share payments are more representative of the earn-in (asset) cost. These pro-rata valuations would equate to C$1.85/lb (at 51%) or C$2.20/lb (at 75%). These amounts are considerably lower to some of the more recently seen transaction valuations in the Athabasca Basin. See our August 22, 2024 initiation report for more details. Note as well that the numbers as seen in the exhibit above are for benchmarking purposes to the current 6.9M lb Inferred resource. We will wait until the updated resource estimate for any possible resource expansion.

Following the numerous management and corporate changes as executed late last year, we now see an unencumbered return to the primary objective of the company – drilling, de-risking and updating the Fraser Lakes B uranium deposit. We continue to believe that at the current microcap valuation, the risk remains on the upside, provided future drilling success. Turnaround should be relatively quick with winter 2025 assay results likely to be returned in Q2/2025, followed by a summer 2025 drilling program and finally an updated resource estimate expected by Q4/2025. Seeing that the deposit remains open in numerous directions, additional work spend may lead to an increase in both grade and resource size.

That said, we maintain our adjusted in-situ driven price objective of C$0.33 per share. Acknowledging the recent market volatility in an otherwise down YTD uranium market, our target equates to 57% upside from the most recent close. We add that given the robust near-term drilling plans, the risk remains on the upside for a material valuation re-rate.