enCore Energy Corp. (TSX-V:EU, OTCQB:ENCUF) has announced the successful completion of its previously announced 'bought deal' brokered private placement of an aggregate of 23,000,000 subscription receipts at a price of C$3.00 each for aggregate gross proceeds of C$69 million, including the full exercise of the underwriters' option.
Concurrently, enCore said it completed a non-brokered private placement of 277,000 subscription receipts at the issue price for aggregate gross proceeds to enCore of C$831,000, collectively with the offering.
The net proceeds of the private placements will be used to fund the cash portion of the consideration payable by enCore pursuant to the definitive agreement to acquire the Alta Mesa In-Situ Recovery uranium project from Energy Fuels Inc for total consideration of US$120 million, and for working capital purposes.
Under the subscription receipt agreement, the gross proceeds from the private placements (less 50% of the underwriters' cash commission and the underwriters' expenses) will be held in escrow pending satisfaction of certain conditions, including, amongst others, (a) the satisfaction of each of the conditions precedent to the transaction in accordance with the agreement (other than the payment of the cash portion of the consideration); and (b) the receipt of all required approvals in connection with the transaction and the offering, including, without limitation, conditional approval of the exchange.
Upon satisfaction of the escrow release conditions, each of the subscription receipts will automatically convert into one unit of enCore. Each unit will be comprised of one common share of enCore and one common share purchase warrant, with each warrant entitling the holder thereof to acquire one common share at a price of C$3.75 for a period of 3 years following the satisfaction of the escrow release conditions.
If the escrow release conditions have not been satisfied on or prior to February 14, 2023, the escrow agent shall return the issue price plus any interest earned on the escrowed funds, to the holders of subscription receipts and the subscription receipts shall be cancelled.
The offering was completed under an underwriting agreement entered into among enCore, Canaccord Genuity Corp, Haywood Securities Inc, Cantor Fitzgerald Canada Corporation, PI Financial Corp, Clarus Securities Inc, and Red Cloud Securities Inc.
In consideration for their services, the underwriters were paid a cash commission equal to 6% of the gross proceeds of the offering (other than in respect of subscribers on the President's List for which a 2% commission was paid), subject to 50% of the cash commission payable in respect of the subscription receipts being held in escrow pending the satisfaction of the escrow release conditions and in accordance with the terms of the subscription receipt agreement entered into among enCore, Computershare Trust Company of Canada, as subscription receipt agent and the lead underwriter.
Additionally, in consideration for their services, the underwriters were issued an aggregate of 1,350,000 non-transferable broker warrants of enCore, with each broker warrant being exercisable into one common share of enCore at a price of C$3.25 each from the date hereof until 27 months following the satisfaction of the escrow release conditions. In connection with the concurrent offering, enCore paid an aggregate of $13,800 as finder's fee commissions.
All securities issued under the private placements will be subject to a hold period expiring four months and one day from the date hereof. The private placements remain subject to final acceptance of the TSX Venture Exchange.
The subscription receipts were offered in each of the provinces of Canada on a private placement basis, to investors in the United States under available exemptions from the registration requirements of the United States Securities Act of 1933, as amended, and in those jurisdictions outside of Canada and the United States which were agreed to by enCore and the underwriters.
The securities have not been, and will not be, registered under the US Securities Act or any US state securities laws, and may not be offered or sold in the United States without registration under the US Securities Act and all applicable state securities laws or compliance with the requirements of an applicable exemption therefrom.
enCore Energy is the most diversified In-Situ Recovery uranium development company in the United States and recently announced it entered into a definitive agreement to acquire the Alta Mesa In-Situ Recovery uranium project. The transaction will position enCore as a leading US-focused ISR uranium company with the proven management expertise required to advance multiple production opportunities within its portfolio.
enCore is focused on becoming the next uranium producer from its licensed and past-producing South Texas Rosita Processing Plant by 2023. The South Dakota-based Dewey-Burdock project and the Wyoming Gas Hills project offer mid-term production opportunities, with significant New Mexico uranium resource endowments providing long-term opportunities.
Contact the author at jon.hopkins@proactiveinvestors.com