ASX-listed Boss Energy buys stake in enCore uranium project for US$70M

EnCore Energy (TSXV: EU; NYSE-AM: EU) is selling 30% of its Alta Mesa project in South Texas to Australia’s Boss Energy (ASX: BOE) for US$70 million.

EnCore acquired Alta Mesa from Energy Fuels (TSX: EFR) in February. The in situ recovery (ISR) project has an annual production capacity of 1.5 million lb. of yellowcake (uranium oxide).

Boss Energy will pay US$60 million in cash and invest US$10 million into enCore shares at $3.90 per share. It will also loan the company up to 200,000 lb. of yellowcake for enCore’s commercial use over the next year.

EnCore will use the net proceeds from the deal, which is expected to be completed in February, to accelerate its uranium production pipeline in South Texas and develop other projects.

“The accelerated production plan is designed to take advantage of what is projected to be a very strong uranium market over the next decade,” enCore executive chair William Sheriff said in a release.

The asset will give Boss Energy two producing uranium assets in 2024, just as the price of uranium has surged to $81 per lb. from under $50 per lb. at the start of the year as a gap between supply and demand emerges. the company also expects to restart the Honeymoon ISR uranium project in South Australia in the first half of 2024.

“Given the location, grade, scale, growth potential and historic production, the Alta Mesa project is one of the best ISR projects globally with a near-term pathway to production. It is a project that we have always wanted to be involved in,” Boss Energy’s managing director, Duncan Craib said in a release. “The deal provides Boss Energy an initial low-risk foothold in the pivotal U.S. uranium industry.”

EnCore will establish a new unit to hold Alta Mesa under joint ownership of the two companies.

EnCore officially became the newest uranium producer in the United States with the restart of the South Texas Rosita ISR uranium central processing plant last week.

The Rosita plant is located about 60 miles from Corpus Christi, where enCore is headquartered. It has a capacity of 800,000 lb. of U₃O₈ per year and the ability to expand capacity within the existing licence.

The company is anticipating its first shipment of yellowcake to occur over the course of the next 45 to 60 days.

Shares of enCore rose 2.4% to $5.80 on Wednesday morning in Toronto before settling at $5.59 late in the day. The company has a market capitalization of $915 million.