enCore Energy Corp. said it has entered into a definitive agreement to acquire the Alta Mesa in-situ recovery (ISR) uranium project from Energy Fuels Inc. (TSX:EFR, NYSE-A:UUUU) for US$120 million, positioning it as a leading US uranium and rare earth company.
Alta Mesa includes a fully licensed and constructed ISR processing facility in Texas that has an operating capacity of 1.5 million pounds of uranium per year. Between Alta Mesa, Rosita and Kingsville Dome, Corpus Christi, Texas-based enCore said its existing processing capacity would reach 3.6 million pounds of uranium per year.
enCore executive chair William M Sheriff said this transaction exceeds enCore's requirement for any major acquisition to be accretive to shareholders in not only production capacity but also cost and timelines to production.
READ: enCore Energy Corp to sell non-core exploration assets in Arizona and Wyoming to Nuclear Fuels Inc
"This acquisition further cements enCore's commitment to near-term, US-based uranium production with our initial focus on South Texas. Alta Mesa will immediately become a flagship asset amongst our large project portfolio, including our licensed and past-producing Rosita ISR production plant in South Texas, our development-stage Dewey-Burdock and Gas Hills projects in South Dakota and Wyoming, respectively, along with a large resource portfolio in New Mexico. enCore is committed to developing a reliable domestic source of energy," Sheriff said in a statement, adding there are only 11 licensed production facilities in the US.
Alta Mesa is host to measured and indicated resources of 3.41 million pounds of U3O8 uranium oxide. Abundant exploration upside exists within the Alta Mesa land package around the existing defined resource areas, which enCore said it would make a priority.
enCore CEO Paul Goranson said Mesteña Uranium, which owned and operated the Alta Mesa project, generated substantial cash flow during the last cycle of elevated uranium prices, and established the project as a leading US ISR uranium producer.
“Combined with our South Texas operations that are anchored around our Rosita project, this acquisition puts us in an exceptionally strong position to advance towards being a long-term sustainable source of uranium production to fuel clean nuclear energy that will benefit our local communities, the state of Texas, and the United States," Goranson said in a statement.
Alta Mesa is currently on standby and ready to resume production, as market conditions warrant. It can reach commercial production levels with limited required capital within 10 months of a production decision, according to enCore.
Alta Mesa's operations are located on private land, with 100% of minerals privately owned, and in a jurisdiction with primary regulatory authority residing with the State of Texas, the company said.
The Alta Mesa ISR processing facility has a well-established track record of lower cost uranium production. It produced a total of 4.6 million pounds of uranium between October 2005 and November 2013, including one million pounds of uranium per year over a two-year period, according to enCore.
Equity financing
In connection with the transaction, enCore said it has entered into an agreement with Canaccord Genuity (TSX:CF, LSE:CF), which on behalf of a syndicate of underwriters will purchase on a "bought deal" private placement basis 20,000,000 subscription receipts of enCore at a price of C$3.00 each for aggregate gross proceeds to enCore of C$60 million.
enCore said it has granted the underwriters an over-allotment option to purchase up to an additional 3,000,000 subscription receipts at the issue price until 48 hours prior to the closing of the offering, which is expected to occur around December 6, 2022.
Contact the author at susie@proactiveinvestors.com