enCore Energy (TSXV: EU) is continuing to consolidate assets within the uranium sector. The firm this morning revealed it has entered a definitive arrangement with Energy Fuels (TSX: EFR) to acquire the Alta Mesa In-Situ Recovery uranium project, which is found in the state of Texas.
“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,” said CEO William M Sheriff.
The facility itself is fully-licensed, and has an annual operating capacity of 1.5 million pounds of uranium, however the operation is currently on standby, waiting to resume operations based upon market conditions. Full scale-up is estimated to take 10 months, once the production decision is made.
The purchase brings enCore’s total capacity to 3.6 million pounds across three processing facilities, all of which are found in Texas.
Situated on private land, the facility comes with a land package of 195,501 contiguous acres, of which 4,575 acres are under a lease and mining permit. The remaining 190,926 acres are held under a lease-option and an exploration and testing permit. The property also features measured and indicated resource of 3.41 million pounds of U3O8, at a grade of 0.109%, and inferred resources of 16.79 million pounds U3O8 at 0.12%.
The purchase comes at a total figure of US$120 million, of which US$60 million is to be paid in cash. The remaining US$60 million meanwhile will be structured as a secured vendor take-back convertible promissory note. The note has a two year term with interest set at 8% per annum. The conversion feature will enable Energy Fuels to convert the debt to equity at a 20% premium to the 10-day volume weighted average price of enCore at the time of conversion.
Funding for the purchase by enCore is set to occur via an equity financing announced this morning, which will see the company raise C$60 million via the sale of subscription receipts at C$3.00 per each. Each receipt will convert to one unit, with each unit containing one common share and one purchase warrant. Each warrant is valid for a period of three years and contains an exercise price of C$3.75.
Closing of the financing is set to occur December 6. The purchase of the Alta Mesa facility is expected to occur thereafter, subject to regulatory approvals.
enCore Energy last traded at $3.25 on the TSX Venture.
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