enCore Energy Corp 6-K, filed May 13, 2024
enCore Energy Corp. (EU)
About this 6-K
enCore Energy Corp filed this 6-K on May 13, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2024
Commission File Number 001-41489
enCore Energy Corp.
(Translation of registrant’s name into English)
101 N. Shoreline Blvd. Suite 450, Corpus Christi,
TX 78401
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F:
Form 20-F ☐ Form 40-F ☒
Incorporation by Reference
Exhibits 99.1 and 99.2 of this Form 6-K of enCore Energy Corp. (the “Company”) are incorporated by reference as additional exhibits to the Company’s Registration Statements on Form F-10 (File Nos. 333-272609 and 333-269428), as amended and supplemented, and the Company’s Registration Statement on Form S-8 (File No. 333-273173), as amended and supplemented.
The following documents are being submitted herewith:
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| enCore Energy Corp. | ||
| (Registrant) | ||
| Date: May 10, 2024 | By: | /s/ Robert Willette |
| Name: | Robert Willette | |
| Title: | Chief Legal Officer | |
2
Exhibit 99.1
Unaudited Condensed Interim Consolidated Financial Statements
For the three months ended
March 31, 2024
(In United States Dollars)
enCore Energy Corp.
Condensed Interim Consolidated Statements of Financial Position
Unaudited – Prepared by Management
As at March 31, 2024 and December 31, 2023
(In USD unless otherwise noted)
| Note | March 31, 2024 $ | December 31, 2023 $ | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | 90,090,593 | 7,493,424 | |||||||||
| Receivables and prepaid expenses | 3,430,001 | 931,170 | |||||||||
| Marketable securities | 4 | 17,594,169 | 16,886,052 | ||||||||
| Inventory | 3 | 12,794,412 | 9,077 | ||||||||
| 123,909,175 | 25,319,723 | ||||||||||
| Non-current assets | |||||||||||
| Intangible assets | 501,466 | 513,721 | |||||||||
| Property, plant, and equipment | 5 | 16,277,181 | 14,969,860 | ||||||||
| Marketable securities | 4 | 1,250,405 | 3,046,787 | ||||||||
| Mineral properties | 7 | 271,105,464 | 267,209,138 | ||||||||
| Mining properties | 8 | 3,720,346 | 5,301,820 | ||||||||
| Reclamation deposits | 7 | - | 88,500 | ||||||||
| Right-of-use asset | 387,466 | 443,645 | |||||||||
| Restricted cash | 7,679,961 | 7,679,859 | |||||||||
| Total assets | 424,831,464 | 324,573,053 | |||||||||
Liabilities and shareholders’ equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable and accrued liabilities | 3,487,113 | 3,576,194 | |||||||||
| Uranium loan liability | 6 | 20,282,012 | - | ||||||||
| Due to related parties | 11 | 138,880 | 2,520,594 | ||||||||
| Lease liability - current | 176,770 | 177,641 | |||||||||
| 24,084,775 | 6,274,429 | ||||||||||
| Non-current liabilities | |||||||||||
| Asset retirement obligations | 9 | 10,961,779 | 10,827,806 | ||||||||
| Convertible promissory note | 10 | - | 19,239,167 | ||||||||
| Lease liability - non-current | 240,026 | 295,147 | |||||||||
| Total liabilities | 35,286,580 | 36,636,549 | |||||||||
Shareholders’ equity | |||||||||||
| Share capital | 10 | 382,522,428 | 328,246,303 | ||||||||
| Equity portion of convertible promissory note | 10 | - | 3,813,266 | ||||||||
| Contributed surplus | 10 | 18,976,067 | 19,185,942 | ||||||||
| Accumulated other comprehensive income | 4,617,590 | 7,944,347 | |||||||||
| Equity reserves | 20,447,042 | - | |||||||||
| Non-controlling interests | 39,475,915 | - | |||||||||
| Accumulated deficit | (76,494,158 | ) | (71,253,354 | ) | |||||||
| Total shareholders’ equity | 389,544,884 | 287,936,504 | |||||||||
| Total liabilities and shareholders’ equity | 424,831,464 | 324,573,053 | |||||||||
Nature of operations and going concern | 1 | ||||||||||
| Events after the reporting period | 16 | ||||||||||
Approved on behalf of the Board of Directors on May 10, 2024:
| “William M. Sheriff” | Director | “William B. Harris” | Director |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
1
enCore Energy Corp.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
Unaudited – Prepared by Management
(In USD unless otherwise noted)
| Three months ended | |||||||||||
| Note | March 31, 2024 $ | March 31, 2023 $ | |||||||||
| Revenue | 30,394,700 | - | |||||||||
| Cost of goods sold | 28,052,288 | - | |||||||||
| Gross Profit | 2,342,412 | - | |||||||||
| Expenses | |||||||||||
| Accretion | 9,10 | 363,457 | 497,493 | ||||||||
| Amortization and depreciation | 5,6,7 | 518,102 | 207,180 | ||||||||
| Depletion | 8 | 1,581,474 | - | ||||||||
| General administrative costs | 11 | 1,910,497 | 1,154,925 | ||||||||
| Professional fees | 11 | 1,562,633 | 2,113,048 | ||||||||
| Promotion and shareholder communication | 458,568 | 71,933 | |||||||||
| Travel | 169,445 | 143,676 | |||||||||
| Transfer agent and filing fees | 163,937 | 237,764 | |||||||||
| Staff costs | 11 | 1,942,476 | 2,441,184 | ||||||||
| Stock option expense | 10,11 | 1,118,585 | 866,483 | ||||||||
| Loss from operations | (7,446,762 | ) | (7,733,686 | ) | |||||||
| Foreign exchange gain (loss) | 2,683,358 | (3,941 | ) | ||||||||
| Gain on divestment of mineral properties | 7 | 24,240 | 24,240 | ||||||||
| Gain on sale of uranium investment | - | 1,100,500 | |||||||||
| Gain on disposal of assets | (18,028 | ) | - | ||||||||
| Interest expense | (406,567 | ) | (600,000 | ) | |||||||
| Interest income | 415,873 | 320,275 | |||||||||
| Realized gain on marketable securities | 4 | 251,476 | - | ||||||||
| Unrealized loss on marketable securities | 4 | (821,437 | ) | (581,721 | ) | ||||||
| Net loss for the period | (5,317,847 | ) | (7,474,333 | ) | |||||||
| less: net loss for the period attributable to: Non controlling interest shareholders | (77,043 | ) | - | ||||||||
| Net loss for the period attributable to: Shareholders of enCore Energy Corp | (5,240,804 | ) | (7,474,333 | ) | |||||||
| Currency translation adjustment of subsidiaries | (3,326,757 | ) | 669,480 | ||||||||
| Comprehensive loss for the period attributable to: Shareholders of enCore Energy Corp | (8,567,561 | ) | (6,804,853 | ) | |||||||
| Loss per share | |||||||||||
| Weighted average number of common shares outstanding | |||||||||||
| - basic # | 173,486,569 | 127,199,482 | |||||||||
| - diluted # | 173,486,569 | 127,199,482 | |||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
2
enCore Energy Corp.
Condensed Interim Consolidated Statements of Cash Flows
Unaudited
(In USD unless otherwise noted)
| March 31, | March 31, | |||||||||||
| 2024 | 2023 | |||||||||||
| Note | $ | $ | ||||||||||
| Operating activities | ||||||||||||
| Net loss for the year | (5,317,847 | ) | (7,474,333 | ) | ||||||||
| Accretion | 7,11,12 | 363,457 | 497,493 | |||||||||
| Amortization and depreciation | 5,6,7 | 518,102 | 207,180 | |||||||||
| Depletion | 10 | 1,581,474 | - | |||||||||
| Foreign exchange (gain) loss | (2,683,358 | ) | 3,941 | |||||||||
| Stock option expense | 12,13 | 1,118,585 | 866,483 | |||||||||
| Interest income | - | (320,275 | ) | |||||||||
| Gain on divestment of mineral properties | 4,7 | (24,240 | ) | (24,240 | ) | |||||||
| Gain (loss) on marketable securities - realized | 4 | (251,476 | ) | 581,721 | ||||||||
| Gain (loss) on marketable securities - unrealized | 4 | 821,437 | - | |||||||||
| Gain on sale of uranium | 3 | - | (1,100,500 | ) | ||||||||
| Proceeds received from sale of uranium | - | 7,023,000 | ||||||||||
| Purchase of uranium | 3 | - | (14,672,500 | ) | ||||||||
| Changes in non-cash working capital items: | ||||||||||||
| Receivables | (1,191,461 | ) | (771,615 | ) | ||||||||
| Prepaids and deposits | (1,319,827 | ) | - | |||||||||
| Raw materials | (8,653 | ) | - | |||||||||
| Uranium inventory | (12,776,682 | ) | - | |||||||||
| Deposit - uranium investment | 3 | - | 2,000,000 | |||||||||
| Restricted cash | - | 47,676,777 | ||||||||||
| Uranium loan | 20,282,012 | - | ||||||||||
| Accounts payable and accrued liabilities | (558,558 | ) | 216,401 | |||||||||
| Due to related parties | 13 | (2,368,093 | ) | (345,817 | ) | |||||||
| (1,815,128 | ) | 34,363,716 | ||||||||||
| Investing activities | ||||||||||||
| Acquisition of property, plant, and equipment | 6 | (1,629,797 | ) | (462,910 | ) | |||||||
| Mineral property expenditures | 9 | (3,364,302 | ) | (1,484,328 | ) | |||||||
| Proceeds from divestment of mineral properties | 9 | - | 24,240 | |||||||||
| Proceeds from sale of minority interest in subsidiary | 10 | 60,000,000 | - | |||||||||
| Proceeds from sale of marketable securities | 4 | 44,557 | - | |||||||||
| Asset acquisition | - | (54,556,796 | ) | |||||||||
| Interest income received | 415,873 | 320,275 | ||||||||||
| Settlement of asset retirement obligation | 11 | (156,427 | ) | (7,085 | ) | |||||||
| 55,309,904 | (56,166,604 | ) | ||||||||||
| Financing activities | ||||||||||||
| Private placement proceeds | 12 | 10,024,264 | 25,508,956 | |||||||||
| Share issue costs | 12 | (50,554 | ) | (3,423,750 | ) | |||||||
| Proceeds from the At -the-Market (ATM) sales | 12 | 2,022,169 | - | |||||||||
| Proceeds from exercise of warrants | 12 | 16,933,343 | 158,918 | |||||||||
| Proceeds from exercise of stock options | 12 | 900,806 | 287,584 | |||||||||
| Lease payments | 7 | (52,738 | ) | (31,333 | ) | |||||||
| 29,777,290 | 22,500,375 | |||||||||||
| Effect of foreign exchange on cash | (674,897 | ) | 27,156 | |||||||||
| Change in cash | 82,597,169 | 724,643 | ||||||||||
| Cash, beginning of year | 7,493,424 | 2,512,012 | ||||||||||
| Cash, end of year | 90,090,593 | 3,236,655 | ||||||||||
| Supplemental cash flow information | 15 | |||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
3
enCore Energy Corp.
Condensed Interim Consolidated Statements of Shareholders’ Equity
Unaudited
(In USD unless otherwise noted)
| Convertible | Accumulated | |||||||||||||||||||||||||||||||||||
| Share | promissory | other | Non- | Total | ||||||||||||||||||||||||||||||||
| Number of | Share | subscriptions | note | Contributed | comprehensive | Accumulated | controlling | shareholders’ | ||||||||||||||||||||||||||||
| shares | capital | received | (equity portion) | surplus | income (loss) | Deficit | interest | equity | ||||||||||||||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| January 1, 2023 | 108,940,051 | 190,610,250 | 51,558,624 | - | 16,218,518 | 5,530,224 | (48,867,377 | ) | - | 215,050,239 | ||||||||||||||||||||||||||
| Private placement | 10,615,650 | 25,508,956 | - | - | - | - | - | - | 25,508,956 | |||||||||||||||||||||||||||
| Conversion of subscriptions to shares | 23,277,000 | 51,631,054 | (51,631,054 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Share issuance costs | - | (6,487,851 | ) | - | - | 1,412,138 | - | - | - | (5,075,713 | ) | |||||||||||||||||||||||||
| Shares issued for exercise of warrants | 101,041 | 158,918 | - | - | - | - | - | - | 158,918 | |||||||||||||||||||||||||||
| Shares issued for exercise of stock options | 213,279 | 881,576 | - | - | (593,992 | ) | - | - | - | 287,584 | ||||||||||||||||||||||||||
| Shares issued for ATM | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Stock option expense | - | - | - | - | 866,483 | - | - | - | 866,483 | |||||||||||||||||||||||||||
| Equity portion of convertible promissory note | - | - | - | 3,813,266 | - | - | - | - | 3,813,266 | |||||||||||||||||||||||||||
| Conversion of convertible promissory note to shares | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Fair value of replacement options for Alta Mesa acquisition (Note 9) | - | - | - | - | 81,414 | - | - | - | 81,414 | |||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | 72,430 | - | (2,570 | ) | 669,480 | - | - | 739,340 | ||||||||||||||||||||||||||
| Loss for the year | - | - | - | - | - | - | (7,474,333 | ) | - | (7,474,333 | ) | |||||||||||||||||||||||||
| March 31, 2023 | 143,147,021 | 262,302,903 | - | 3,813,266 | 17,981,991 | 6,199,704 | (56,341,710 | ) | - | 233,956,154 | ||||||||||||||||||||||||||
| January 1, 2024 | 165,133,798 | 328,246,303 | - | 3,813,266 | 19,185,942 | 7,944,347 | (71,253,354 | ) | - | 287,936,504 | ||||||||||||||||||||||||||
| Private placement | 2,564,102 | 10,024,264 | - | - | - | - | - | - | 10,024,264 | |||||||||||||||||||||||||||
| Conversion of subscriptions to shares | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Share issuance costs | - | (50,554 | ) | - | - | - | - | - | - | (50,554 | ) | |||||||||||||||||||||||||
| Shares issued for exercise of warrants | 5,579,385 | 17,153,863 | - | - | (220,520 | ) | - | - | - | 16,933,343 | ||||||||||||||||||||||||||
| Shares issued for exercise of stock options | 697,754 | 2,008,746 | - | - | (1,107,940 | ) | - | - | - | 900,806 | ||||||||||||||||||||||||||
| Shares issued for ATM | 495,765 | 2,022,169 | - | - | - | - | - | - | 2,022,169 | |||||||||||||||||||||||||||
| Stock option expense | - | - | - | - | 1,118,585 | - | - | - | 1,118,585 | |||||||||||||||||||||||||||
| Equity portion of convertible promissory note | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Conversion of convertible promissory note to shares | 6,872,143 | 23,117,637 | - | (3,813,266 | ) | - | - | - | - | 19,304,371 | ||||||||||||||||||||||||||
| Non controlling interest | - | - | - | - | 20,447,042 | - | - | 39,475,915 | 59,922,957 | |||||||||||||||||||||||||||
| Cumulative translation adjustment | - | - | - | - | - | (3,326,757 | ) | - | - | (3,326,757 | ) | |||||||||||||||||||||||||
| Loss for the period | - | - | - | - | - | - | (5,240,804 | ) | - | (5,240,804 | ) | |||||||||||||||||||||||||
| March 31, 2024 | 181,342,947 | 382,522,428 | - | - | 39,423,109 | 4,617,590 | (76,494,158 | ) | 39,475,915 | 389,544,884 | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
4
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 1. | Nature of operations and going concern |
enCore Energy Corp. was incorporated under the Laws of British Columbia, Canada. enCore Energy Corp., together with its subsidiaries (collectively referred to as the “Company” or “enCore”), is principally engaged in the acquisition, exploration, and development of uranium resource properties in the United States. In Q1 2024, the Company’s Rosita project transitioned to production. On February 19, 2024, the Company completed a sale of a 30% interest in the Company’s Alta Mesa project to Boss Energy Limited (“Boss Energy’). The Company’s common shares trade on the TSX Venture Exchange and directly on a U.S. Exchange under the symbol “EU.” The Company’s corporate headquarters is located at 101 N Shoreline, Suite 560, Corpus Christi, TX 78401.
These condensed interim consolidated financial statements (the “financial statements”) have been prepared on the going concern basis which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due, under the historical cost convention except for certain financial instruments that are measured at fair value, as detailed in the Company’s accounting policies.
Geopolitical uncertainty
Geopolitical uncertainty driven by the Russian invasion of Ukraine has led many governments and utility providers to re-examine supply chains and procurement strategies reliant on nuclear fuel supplies coming out of, or through, Russia. Sanctions, restrictions, and an inability to obtain insurance on cargo have contributed to transportation and other supply chain disruptions between producers and suppliers. As a result of this and coupled with multiple years of declining uranium production globally, uranium market fundamentals are shifting from an inventory driven market to one more driven by production.
| 2. | Material accounting policy information |
Basis of preparation
These financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), using the same accounting policies as detailed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2023, except as stated below, and do not include all the information required for full annual financial statements in accordance with IFRS.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.
The preparation of consolidated financial statements in conformity with IFRS Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the accounting policies. Those areas involving a higher degree of judgment and complexity or areas where assumptions and estimates are significant to the consolidated financial statements are discussed below.
These financial statements were approved for issuance by the Board of Directors on May 10, 2024.
Revenue recognition
The Company supplies uranium concentrates to its customer. Revenue is measured based on the consideration specified in a contract with a customer.
The Company recognizes revenue when it transfers control, as described below, over a good or service to a customer. Customers do not have the right to return products, except in limited circumstances. The Company’s sales arrangements with its customers are pursuant to enforceable contracts that indicate the nature and timing of satisfaction of performance obligations, including significant payment terms, where payment is usually due in 10 days. Each delivery is considered a separate performance obligation under the contract.
5
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 2. | Material accounting policy information (continued) |
Revenue recognition (continued)
In a uranium supply arrangement, the Company is contractually obligated to provide uranium concentrates to its customers. Company-owned uranium may be physically delivered to either the customer or to conversion facilities (Converters). For deliveries to customers, terms in the sales contract specify the location of delivery. Revenue is recognized when the uranium has been delivered and accepted by the customer at that location. When uranium is delivered to Converters, the Converter will credit the Company’s account for the volume of accepted uranium. Based on delivery terms in the sales contract with its customer, the Company instructs the Converter to transfer title of a contractually specified quantity of uranium to the customer’s account at the Converter’s facility. At this point, control has been transferred and enCore recognizes revenue for the uranium supply.
Inventory
Inventories are uranium concentrates, and converted products including chemical and are measured at the lower of cost and net realizable value. The cost of inventories is based on the first in first out (FIFO) method. Cost includes direct materials, direct labor, operational overhead expenses and depreciation. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Consumable supplies and spares are valued at the lower of cost or replacement value.
Non-controlling interest
The Company applies the requirements of IFRS in accounting for non-controlling interests. A non-controlling interest represents the portion of equity in a subsidiary not attributable, directly or indirectly, to the parent company. The non-controlling interest represented in the financial statements includes the 30% interest Boss obtained in the Alta Mesa JV on February 26, 2024. The initial recognition of the interest was determined by calculating 30% of the total net assets, and the excess contribution was recorded under equity reserves. The subsequent recognition of the non-controlling interest is 30% of the net income of the Alta Mesa entity.
Basis of measurement
These financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value. All dollar amounts presented are in United States Dollars (“U.S. Dollars”) unless otherwise specified. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
Consolidation
These financial statements incorporate the financial statements of the Company and its controlled subsidiaries. Control is defined as the exposure, or rights, to variable returns from involvement with an investee and the ability to affect those returns through power over the investee. Power over an investee exists when an investor has existing rights that give it the ability to direct the activities that significantly affect the investee’s returns. This control is generally evidenced through owning more than 50% of the voting rights or currently exercisable potential voting rights of a Company’s share capital. All significant intercompany transactions and balances have been eliminated.
6
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 2. | Material accounting policy information (continued) |
Consolidation (continued)
The Company has a 70% interest in a Joint Venture (JV) with BOSS Energy Limited (Boss). Under the JV agreement the Company retained control both before and after Boss acquired their interest. As such, the Company will continue to consolidate the operations of the JV Co. with an offsetting non-controlling interest being recorded on sub-consolidation.
These consolidated financial statements include the financial statements of the Company and its significant subsidiaries listed in the following table:
| Name of Subsidary | Place of Incorporation | Ownership Interest | Principal Activity | |||
| Tigris Uranium US Corp. | Nevada, USA | 100% | Mineral Exploration | |||
| Metamin Enterprises US Inc. | Nevada, USA | 100% | Mineral Exploration | |||
| URI, Inc. | Delaware, USA | 100% | Uranium Producer | |||
| Neutron Energy, Inc. 3 | Nevada, USA | N/A | Mineral Exploration | |||
| Uranco, Inc. | Delaware, USA | 100% | Mineral Exploration | |||
| Uranium Resources, Inc. 2 | Delaware, USA | N/A | Mineral Exploration | |||
| HRI-Churchrock, Inc. | Delaware, USA | 100% | Mineral Exploration | |||
| Hydro Restoration Corp. 1 | Delaware, USA | N/A | Mineral Exploration | |||
| Belt Line Resources, Inc.1 | Texas, USA | N/A | Mineral Exploration | |||
| enCore Energy US Corp. | Nevada, USA | 100% | Holding Company | |||
| Azarga Uranium Corp. | British Columbia, CA | 100% | Mineral Exploration | |||
| Powertech (USA) Inc. | South Dakota, USA | 100% | Mineral Exploration | |||
| URZ Energy Corp. | British Columbia, CA | 100% | Mineral Exploration | |||
| Ucolo Exploration Corp. | Utah, USA | 100% | Mineral Exploration | |||
| JV Alta Mesa LLC | Delaware, USA | 70% | Uranium Producer | |||
| enCore Alta Mesa LLC | Texas, USA | 100% | Uranium Producer | |||
| Leoncito Plant, LLC | Texas, USA | 100% | Mineral Exploration | |||
| Leoncito Restoration, LLC | Texas, USA | 100% | Mineral Exploration | |||
| Leoncito Project, LLC | Texas, USA | 100% | Mineral Exploration | |||
| Azarga Resources Limited | British Virgin Islands | 100% | Mineral Exploration | |||
| Azarga Resources (Hong Kong) Ltd.4 | Hong Kong | 100% | Mineral Exploration | |||
| Azarga Resources USA Company | Colorado, USA | 100% | Mineral Exploration | |||
| Azarga Resources Canada Ltd. | British Columbia, CA | 100% | Mineral Exploration |
| 1 | Hydro Restoration Corp. and Belt Line Resources, Inc. were divested in April 2023 (Note 4,7). |
| 2 | Uranium Resources, Inc. was dissolved in 2023. |
| 3 | Neutron Energy, Inc. was divested in July 2023 (Note 4,7). |
| 4 | Azarga Resources (Hong Kong) Ltd was later dissolved on April 29, 2024. |
7
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 2. | Material accounting policy information (continued) |
Newly adopted accounting standards and interpretations
Effective for annual reporting periods beginning on or after January 1, 2024, the Company adopted the following amendments:
Presentation of financial statements pertaining to liabilities (IAS 1) – the amendment requires an entity to have the right to defer settlement of a liability for at least 12 months after the reporting period to be classified as non-current.
Disclosure of Accounting Policies (Amendment to IAS 7) – the amendment requires that an entity provides additional disclosures about its supplier finance arrangements relative to the Statement of Cash Flows within the liquidity risk disclosure.
Disclosure of information about international taxes (IAS 12) – the amendment introduces a temporary exception to the requirements to recognize and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes and related disclosures.
The adoption of these amendments did not have a material impact on the results of its operations and financial position.
| 3. | Inventory |
Purchases of uranium is categorized in Level 1 of the fair value hierarchy as of December 31, 2023 and categorized as inventory as at March 31, 2024.
As at March 31, 2024, the Company held 125,000 pounds of purchased uranium and 34,988 pounds of produced uranium inventory (including concentrate). Costs of inventory consisted of the following:
| $ | ||||
| Balance, December 31, 2023 | - | |||
| Chemicals used in production | 17,730 | |||
| Purchased uranium | 11,712,500 | |||
| Uranium from production | 1,064,182 | |||
| Balance, March 31, 2024 | 12,794,412 | |||
| 4. | Marketable securities |
As at March 31, 2024, the company held 11,308,250 shares of American Future Fuel Corp. All of the shares held are free trading (the “Trading Shares”) or will become free trading within the next 12 months. These shares have been classified as a current asset on the consolidated statements of financial position, due to the Company’s ability to liquidate those shareholdings within the next 12 months. These shares are carried at a fair value of $3,046,103 (December 31, 2023 - $2,265,794).
8
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 4. | Marketable securities (continued) |
In April 2023, the Company divested Belt Line Resources Inc and Hydro Restoration Corp to Nuclear Fuels Inc (“NFI”) pursuant to a Share Purchase Agreement whereby the Company received consideration in the form of 8,566,975 common shares (19.9% of the total shareholding in NFI) with a market value of $0.33 per share. The Company exercised significant judgement in the assessment of the interest in NFI specifically when considering the level of decision-making authority, the Company could exercise over NFI and concluded that NFI is an equity investment recorded and measured at fair value through profit and loss (FVTPL).
During the year ended December 31, 2023, NFI was acquired by Uravan Minerals Inc., who renamed themselves Nuclear Fuels Inc. As a result of this transaction the Company received 696,825 additional shares related to a contractual top up right for a total aggregate ownership of 9,327,800 shares (19.9% of the total shareholding in NFI). The cost base of the Company’s shareholdings of NFI is $2,802,030.
In January 2024, the Company purchased an additional 1,716,260 units of NFI at a price of C$0.60 per unit. Each unit is comprised of 1 common share and one half of a warrant. This investment maintained the Company’s ownership level at 19.9%.
As at March 31, 2024, 6,846,550 of the shares held in NFI are free trading or will become free trading within the next 12 months. These shares have been classified as a current asset on the consolidated statements of financial position, due to the Company’s ability to liquidate those shareholdings within the next 12 months. As at March 31, 2024, 4,197,510 of the shares have been classified as a non-current asset on the consolidated statements of financial position, due to the Company’s inability to liquidate those shareholdings within the next 12 months. The fair value of the 11,044,060 NFI shares at March 31, 2024 is $3,137,949 (December 31, 2023 - $5,077,980).
In July 2023, the Company divested of Neutron Energy Inc. to Anfield Energy Inc. (“Anfield”) pursuant to a Share Purchase Agreement whereby the Company received consideration of C$5,000,000 and 185,000,000 common shares (19.56% of the total shareholding in Anfield). During the three months ended March 31, 2024, the Company sold 15,000,000 of the shares for gross proceeds of C$1,097,950. The remaining shares were classified as a current asset on the consolidated statements of financial position, due to the Company’s ability to liquidate those shareholdings within the next 12 months. These shares are carried at a fair value of $12,546,000 (December 31, 2023 - $12,589,065).
In accordance with the Company’s accounting policy, each of these common shares is classified as FVTPL, with gains/losses being recognized to the consolidated statements of loss and comprehensive loss.
The following table summarizes the fair value of the Company’s marketable securities at March 31, 2024:
| Marketable securities | ||||||||||||||||||||
| current | non-current | Total | ||||||||||||||||||
| Volume | $ | $ | Warrants | $ | ||||||||||||||||
| Balance, December 31, 2022 | 11,388,250 | 3,162,361 | 784,831 | - | 3,947,192 | |||||||||||||||
| Additions | 194,247,800 | 7,022,600 | 2,792,500 | - | 9,815,100 | |||||||||||||||
| Reclass from non-current to current | - | 787,559 | (787,559 | ) | - | - | ||||||||||||||
| Change in fair value | - | 5,732,355 | 185,480 | - | 5,917,835 | |||||||||||||||
| Foreign exchange translation | - | 181,177 | 71,535 | - | 252,712 | |||||||||||||||
| Balance, December 31, 2023 | 205,636,050 | 16,886,052 | 3,046,787 | - | 19,932,839 | |||||||||||||||
| Additions | 1,716,260 | 763,564 | - | 763,564 | ||||||||||||||||
| Disposals | (15,000,000 | ) | (556,125 | ) | - | (556,125 | ) | |||||||||||||
| Reclass from non-current to current | - | 746,989 | (746,989 | ) | - | - | ||||||||||||||
| Change in fair value | - | 48,128 | (984,630 | ) | 115,065 | (821,437 | ) | |||||||||||||
| Foreign exchange translation | - | (408,961 | ) | (64,763 | ) | (543 | ) | (474,267 | ) | |||||||||||
| Balance, March 31, 2024 | 192,352,310 | 17,479,647 | 1,250,405 | 114,522 | 18,844,574 | |||||||||||||||
9
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 4. | Marketable securities (continued) |
The realized gain on marketable securities for the three months ended March 31, 2024 was $251,476 (three months ended March 31, 2023 – nil). The unrealized loss on marketable securities for the three months ended March 31, 2024 was $821,437 (three months ended March 31, 2023 – $581,721).
| 5. | Property, plant, and equipment |
In February 2023, through its asset acquisition of Alta Mesa, the Company acquired a variety of property, plant, and equipment assets (Note 8).
In May 2023, the Company acquired proprietary Prompt Fission Neutron (“PFN”) technology and equipment in the amount of $3,100,000 included within “Other property and equipment”. The PFN is amortized over its expected useful economic life of 10 years.
| Uranium plants | Other property and equipment | Furniture | Buildings | Software | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance, December 31, 2023 | 10,405,924 | 4,119,189 | 84,297 | 353,055 | 7,395 | 14,969,860 | ||||||||||||||||||
| Additions | 1,241,804 | 163,303 | - | 295,050 | - | 1,700,157 | ||||||||||||||||||
| Disposals | ||||||||||||||||||||||||
| Depreciation | (178,412 | ) | (188,382 | ) | (8,597 | ) | (8,891 | ) | (7,252 | ) | (391,534 | ) | ||||||||||||
| Currency translation adjustment | - | (490 | ) | (669 | ) | - | (143 | ) | (1,302 | ) | ||||||||||||||
| Balance, March 31, 2024 | 11,469,316 | 4,093,620 | 75,031 | 639,214 | - | 16,277,181 | ||||||||||||||||||
| 6. | Asset acquisition and disposition |
Alta Mesa acquisition
On February 14, 2023, the Company acquired the Alta Mesa in-Situ Recovery uranium project (“Alta Mesa”).The aggregate amount of the total consideration was $120,574,541 which consisted of a cash payment of $60,000,000, the issuance of a $60,000,000 secured vendor takeback convertible promissory note and 44,681 enCore stock options (the “Replacement Options”) for options held by Energy Fuels option holders, valued at $81,414 using the Black-Scholes option pricing model, and total transaction costs of $493,127 associated with the Arrangement.
The transaction did not qualify as a business combination according to the definition in IFRS 3 Business Combinations. It has been accounted for as an asset acquisition with the purchase price allocated based on the estimated fair value of the assets and liabilities summarized as follows:
| Consideration | $ | |||
| Cash | 60,000,000 | |||
| Convertible promissory note | 60,000,000 | |||
| Fair value of replacement options | 81,414 | |||
| Transaction costs | 493,127 | |||
| Total consideration value | 120,574,541 | |||
| Net assets acquired | $ | |||
| Prepaids | 42,374 | |||
| Property, plant, and equipment | 6,111,000 | |||
| Mineral properties | 120,196,484 | |||
| Asset retirement obligations | (5,488,969 | ) | ||
| Accounts payable and accrued liabilities | (286,348 | ) | ||
| Total net assets acquired | 120,574,541 |
10
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 6. | Asset acquisition and disposition (continued) |
Alta Mesa acquisition (continued)
The value of the replacement options has been derived using the Black-Scholes option pricing model. The weighted average assumptions used in the Black-Scholes option pricing model are as follows:
| Weighted Average | ||||
| Exercise Price | $ | 3.10 | ||
| Share price | $ | 3.20 | ||
| Discount Rate | 3.39 | % | ||
| Expected life (years) | 5.00 | |||
| Volatility | 99.48 | % | ||
| Fair value of replacement options (CAD per option): | $ | 2.43 | ||
The fair value of the Replacement Options is based on the issuance of 44,681 options with a fair value of $81,414 (C$108,636).
Alta Mesa joint venture
On December 5, 2023, the Company entered into a Master Transaction Agreement (the “MT Agreement”) with Boss Energy Limited (“Boss Energy”), a public company domiciled in Australia. Pursuant to the MT Agreement, Boss Energy was assigned the right to acquire a 30% interest in the Alta Mesa assets.
On February 26, 2024, pursuant to the terms of a MT Agreement, Boss Energy acquired a 30% equity interest in a new limited liability company (the “JV Company”) that was formed to hold the Alta Mesa project, in exchange for a payment of $60 million. The company holds 70% equity in the JV Company.
Upon closing of the Transaction, the parties entered into a joint venture agreement (the “JV Agreement”) which will govern the JV Company. Pursuant to the JV Agreement, the company will act as manager of the JV Company and will be entitled to a management fee.
Concurrently with the establishment of the JV Company, the parties entered into a uranium loan agreement providing for up to 200,000 pounds of uranium to be lent by Boss Energy to the Company. The loan will bear interest of 9% and be repayable in 12 months in cash or uranium at the election of Boss Energy. After 6 months, the Company can elect to pay off the loan plus $200,000. At March 31, 2024, the Company recorded a deemed value of $20,108,000 for the borrowed uranium along with $174,012 of associated interest.
Boss Energy also acquired 2,564,102 common shares of the Company issued from treasury at a price of $3.90 per share for total proceeds to the Company of $10 million.
Finally, the parties also entered into a strategic collaboration agreement for the collaboration and research to develop the Company’s PFN technology, to be financed equally by each party.
The terms of the JV Agreement and the disposal of a 30% interest in the JV Co. support that control was retained both before and after Boss Energy acquired their interest, and that joint control is not present. As such, Company will continue to consolidate the operations of the JV Co. with an offsetting non-controlling interest being recorded.
The table below is a summary of the accounting for recognition of the initial Non-Controlling Interest on Boss Energy acquiring 30% interest in the JV Company.
| February 26, 2024 | ||||
| Boss Energy Initial NCI | $ | |||
| Cash | 60,000,000.00 | |||
| Equity Reserves | (20,447,042.00 | ) | ||
| Non-controlling interest | (39,552,958.00 | ) | ||
11
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 7. | Mineral Properties |
| Arizona | Colorado | New Mexico | South Dakota | Texas | Utah | Wyoming | Total | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Balance, December 31, 2022 | 775,754 | 578,243 | 4,905,348 | 86,220,848 | 9,144,069 | 1,840,362 | 41,754,462 | 145,219,086 | |||||||||||||||||
| Exploration costs: | |||||||||||||||||||||||||
| Drilling | - | - | - | - | 7,300 | - | - | 7,300 | |||||||||||||||||
| Acquisition, maintenance and lease fees | 99,415 | 4,544 | 49,370 | 312,927 | 121,414,182 | 49,910 | 296,298 | 122,226,646 | |||||||||||||||||
| Consulting | 141 | 4,566 | 138 | 4,742 | 96,937 | 552 | 38,511 | 145,587 | |||||||||||||||||
| Personnel | - | 8,069 | - | 174,850 | 426,773 | - | 75,317 | 685,009 | |||||||||||||||||
| Impairment | - | - | - | - | (1,537,168 | ) | (658 | ) | - | (1,537,826 | ) | ||||||||||||||
| Divestment: | |||||||||||||||||||||||||
| Divestment of mineral interest | (358,969 | ) | - | (2,433,353 | ) | - | - | - | (376,039 | ) | (3,168,361 | ) | |||||||||||||
| Assets held for sale | 358,969 | - | - | - | - | - | 369,913 | 728,882 | |||||||||||||||||
| Project development costs: | |||||||||||||||||||||||||
| Construction of wellfields | - | - | - | - | 1,060,260 | - | - | 1,060,260 | |||||||||||||||||
| Drilling | - | - | - | - | 5,898,856 | - | - | 5,898,856 | |||||||||||||||||
| Personnel | - | - | - | - | 1,245,519 | - | - | 1,245,519 | |||||||||||||||||
| Reclassification | |||||||||||||||||||||||||
| Reclassification to Mining properties | - | - | - | - | (5,301,820 | ) | - | - | (5,301,820 | ) | |||||||||||||||
| Balance, December 31, 2023 | 875,310 | 595,422 | 2,521,503 | 86,713,367 | 132,454,908 | 1,890,166 | 42,158,462 | 267,209,138 | |||||||||||||||||
| Exploration costs: | |||||||||||||||||||||||||
| Drilling | - | ||||||||||||||||||||||||
| Acquisition, maintenance and lease fees | 1,440 | 335,014 | 7,247 | 92,241 | 435,942 | ||||||||||||||||||||
| Consulting | 455 | 2,714 | 37,000 | 13,082 | 28 | 11,294 | 64,573 | ||||||||||||||||||
| Personnel | 6,796 | 50,540 | 18,597 | 33,730 | 109,663 | ||||||||||||||||||||
| Project development costs: | |||||||||||||||||||||||||
| Construction of wellfields | 2,816,207 | 2,816,207 | |||||||||||||||||||||||
| Personnel | 469,941 | 469,941 | |||||||||||||||||||||||
| Balance, March 31, 2024 | 875,765 | 604,932 | 2,521,503 | 86,802,347 | 136,107,749 | 1,897,441 | 42,295,727 | 271,105,464 | |||||||||||||||||
12
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 7. | Mineral properties (continued) |
Arizona
The Company owns or controls several Arizona State mineral leases and unpatented federal lode mining claims covering acreage in northern Arizona strip district.
At March 31, 2024, the Company held cash bonds for $nil (December 31, 2023 - $85,500) with the Bureau of Land Management. In February, 2024, the bond was released and funds have been returned to the Company.
New Mexico
On July 20, 2023, the Company divested its subsidiary Neutron Energy, Inc, including its holding of the Marquez-Juan Tafoya Uranium Project to Anfield Energy, Inc. Pursuant to a Share Purchase Agreement, the Company received cash consideration of $3,796,000 (C$5,000,000) and 500,000,000 shares of Anfield with a fair value of $7,022,600. (Note 4). The net book value of the subsidiary was $2,433,353 at the transaction date, transaction costs of $423,387 were incurred and $32,826 in currency exchange effect was recognized resulting in a gain on divestment of subsidiary of $7,994,688.
Nose Rock
The Nose Rock Project is located in McKinley County, New Mexico.
Treeline
The Treeline project is located in McKinley and Cibola Counties, Grants Uranium District, New Mexico.
McKinley, Crownpoint and Hosta Butte
The Company owns a 100% interest in the McKinley properties and a 60 - 100% interest in the adjacent Crownpoint and Hosta Butte properties, all of which are located in McKinley County, New Mexico. The Company holds a 60% interest in a portion of a certain section at Crownpoint. The Company owns a 100% interest in the rest of the Crownpoint and Hosta Butte project area, subject to a 3% gross profit royalty on uranium produced.
West Largo
The West Largo Project is near the Grants Mineral Belt in McKinley County, New Mexico.
Other New Mexico Properties
The Company holds mineral properties in an area located primarily in McKinley County in northwestern New Mexico.
Under the agreement, Ambrosia retained the right to acquire the uranium mineral rights associated with the property by quit claim deed to be furnished by the Company. In 2023, the Company received an additional payment of $24,240 to extend the option through January 14, 2024 which was recorded on the Company’s consolidated statements of loss and comprehensive loss. In January 2024, Ambrosia exercised its final option to complete the purchase of these rights and the Company received an additional payment of $24,240.
13
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 7. | Mineral properties (continued) |
Other New Mexico Properties (continued)
Related to a 2021 agreement, Wildcat Solar Power Plant, LLC exercised its option to acquire rights to certain mineral interests in September 2023. $16,000 was received in consideration. The asset having no net book value at the transaction date, resulted in a gain on disposal of the mineral interests of $16,000 recorded on the Company’s consolidated statement of comprehensive loss.
Texas
Rosita
The Rosita Project is located in Duval County, Texas on land owned by the Company.
At December 31, 2023, in accordance with its material accounting policy for mineral properties, the Company assessed its Rosita South Extension mineral property assets for impairment and found that the asset at a carrying value of $6,757,297 and a recoverable value of $5,301,822, resulting in an impairment charge of $1,455,475 on the Company’s consolidation statement of loss and comprehensive loss. Subsequent to recording impairment, the asset was reclassified as a Mining property asset (Note 8).
Alta Mesa Project
The Alta Mesa Project is located in Brooks County, Texas.
In February 2024, the Company completed several transactions under a master transaction agreement with an unrelated company Boss Energy Ltd. The completion of this transaction resulted in the Company holding a 70% interest in the project while also remaining as the project manager. Boss Energy Ltd. holds a 30% interest in the project (Note 8).
| 8. | Mining properties |
In December 2023, in accordance with its material accounting policy for mineral properties, the Company reclassified its Rosita Extension mineral property to a producing mining property.
Significant judgment was used to determine the recoverable value in use of the Rosita Extension asset. Recoverability is dependent upon assumptions and judgments in pricing for future uranium sales, costs of production, and mineral reserves. Other assumptions used in the calculation of recoverable amounts are discount rates, future cash flows and profit margins. A 10% change in these assumptions could impact the potential impairment of this asset.
The mining property’s balance at March 31, 2024 and December 31, 2023 consists of:
| Rosita | ||||||||
| Extension | Total | |||||||
| $ | $ | |||||||
| Balance, December 31, 2022 | - | - | ||||||
| Reclassification from mineral properties | 5,301,820 | 5,301,820 | ||||||
| Depletion | - | - | ||||||
| Balance, December 31, 2023 | 5,301,820 | 5,301,820 | ||||||
| Additions | - | - | ||||||
| Depletion | (1,581,474 | ) | (1,581,474 | ) | ||||
| Balance, March 31, 2024 | 3,720,346 | 3,720,346 | ||||||
14
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 9. | Asset retirement obligations |
The Company is obligated by various federal and state mining laws and regulations which require the Company to reclaim surface areas and restore underground water quality for certain assets in Texas, Wyoming, Utah and Colorado. These projects must be returned to the pre-existing or background average quality after completion of mining.
The Company updates these reclamation provisions based on cash flow estimates, and changes in regulatory requirements and settlements annually. The Company used an inflation factor of 2.5% per year and a discount rate of 11% in estimating the present value of its future cash flows.
The asset retirement obligations balance by project is as follows:
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Kingsville | 2,500,354 | 2,458,564 | ||||||
| Rosita | 1,444,412 | 1,485,560 | ||||||
| Vasquez | 42,021 | 40,896 | ||||||
| Alta Mesa | 6,707,186 | 6,574,980 | ||||||
| Centennial | 168,806 | 168,806 | ||||||
| Gas Hills | 63,000 | 63,000 | ||||||
| Ticaboo | 36,000 | 36,000 | ||||||
| Asset retirement obligations | 10,961,779 | 10,827,806 | ||||||
The asset retirement obligations continuity summary is as follows:
| Asset retirement obligation | $ | |||
| Balance, December 31, 2022 | 4,752,352 | |||
| Additions (Note 6) | 5,488,969 | |||
| Accretion | 1,099,119 | |||
| Settlement | (291,449 | ) | ||
| Change in estimates | (221,185 | ) | ||
| Balance, December 31, 2023 | 10,827,806 | |||
| Accretion | 290,401 | |||
| Settlement | (156,428 | ) | ||
| Balance, March 31, 2024 | 10,961,779 | |||
| 10. | Share capital |
The authorized share capital of the Company consists of an unlimited number of common and preferred shares without par value.
During the three months ended March 31, 2024, the Company issued:
| i) | 2,564,102 units to Boss Energy Limited. for a private placement at a price of $3.90 per unit for gross proceeds of $10,024,264 (C$13,518,900). |
| ii) | 6,872,143 common shares were issued to extinguish the convertible note with a carrying value of $23,117,637 |
15
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 10. | Share capital (continued) |
| iii) | 5,579,385 common shares were issued on the exercise of warrants, for gross proceeds of $17,153,863. |
| iv) | 697,754 common shares were issued on the exercise of stock options, for gross proceeds of $900,806. In connection with the stock options exercised, the Company reclassified $1,107,940 from contributed surplus to share capital. |
| v) | In June 2023 the Company filed a Canadian short form base shelf prospectus of $140 million and U.S. registration statement on Form F-10. The Company also filed a prospectus supplement, pursuant to which the Company may, at its discretion and from time-to-time, sell common shares of the Company for aggregate gross proceeds of up to $70.0 million. The sale of common shares is to be made through “at-the-market distributions” (“ATM”), as defined in the Canadian Securities Administrators’ National Instrument 44-102 Shelf Distributions, directly on a U.S. Exchange. At March 31, 2024, 495,765 common shares were sold in accordance with the Company’s ATM program for gross proceeds of $2,022,169. |
During the year ended December 31, 2023, the Company issued:
| i) | 10,615,650 units for a public offering at a price of C$3.25 per unit for gross proceeds of $25,561,689 (C$34,500,863). Each unit consisted of one common share and one-half share purchase warrant. Each whole warrant entitles the holder to purchase one additional share at a price of C$4.05 for a period of three years. The Company paid commissions of $1,504,047 (C$2,030,012) and other cash issuance costs of $391,939 (C$529,000). |
| ii) | 23,277,000 subscription receipts issued December 6, 2022 at a price of C$3.00 per Subscription Receipt were converted into units for gross proceeds of $51,737,788 (C$69,831,000). Each unit is comprised of one common share of enCore and one share purchase warrant. Each warrant entitles the holder to purchase one additional share at a price of C$3.75 for a period of three years. The Company paid commissions of $3,018,893 (C$4,074,600), other cash issuance costs of $171,365 (C$231,291) and issued 1,350,000 finders’ warrants with a fair value of $1,415,067 (C$1,909,916). 1,066,500 of the finder’s warrants are exercisable into one common share of the Company at a price of C$3.91 for 27 months from closing; 283,500 of the finder’s warrants are exercisable into one common share of the Company at a price of C$3.25 for 27 months from closing. The value of the finders’ warrants was derived using the Black-Scholes option pricing model as follows: |
| Weighted Average | ||||||||
| Quantity | 1,066,500 | 263,500 | ||||||
| Exercise Price | $ | 3.91 | $ | 3.25 | ||||
| Share price | $ | 3.20 | $ | 3.20 | ||||
| Discount Rate | 4.19 | % | 4.19 | % | ||||
| Expected life (years) | 2.25 | 2.25 | ||||||
| Volatility | 81.81 | % | 81.81 | % | ||||
| Fair value of finders’ warrants (CAD per option): | $ | 1.38 | $ | 1.54 | ||||
| iii) | 6,034,478 common shares were issued on the exercise of warrants, for gross proceeds of $16,995,629. |
| iv) | 575,676 common shares were issued on the exercise of stock options, for gross proceeds of $557,465. In connection with the stock options exercised, the Company reclassified $1,041,239 from contributed surplus to share capital. |
| v) | In June 2023 the Company filed a Canadian short form base shelf prospectus of $140 million and U.S. registration statement on Form F-10. The Company also filed a prospectus supplement, pursuant to which the Company may, at its discretion and from time-to-time, sell common shares of the Company for aggregate gross proceeds of up to $70.0 million. The sale of common shares is to be made through “at-the-market distributions” (“ATM”), as defined in the Canadian Securities Administrators’ National Instrument 44-102 Shelf Distributions, directly on a U.S. Exchange. At December 31, 2023, 15,690,943 common shares were sold in accordance with the Company’s ATM program for gross proceeds of $49,444,256. |
16
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 10. | Share capital (continued) |
Stock options
The Company adopted a Stock Option Plan (the “Plan”) under which it is authorized to grant options to Officers, Directors, employees and consultants enabling them to acquire common shares of the Company. The number of shares reserved for issuance under the Plan cannot exceed 10% of the outstanding common shares at the time of the grant. The options can be granted for a maximum of five years and vest as determined by the Board of Directors.
The Company’s stock options outstanding at March 31, 2024 and December 31, 2023, and associated changes, are as follows:
| Three months ended | Year ended | |||||||||||||||
| March 31, 2024 | December 31, 2023 | |||||||||||||||
| Weighted average | Weighted average | |||||||||||||||
| Options | exercise price | Options | exercise price | |||||||||||||
| # | CAD $ | # | CAD $ | |||||||||||||
| Options outstanding, beginning of period/year | 8,412,882 | 2.63 | 7,235,648 | 2.52 | ||||||||||||
| Granted | 425,000 | 6.11 | 2,670,181 | 2.85 | ||||||||||||
| Exercised | (697,754 | ) | 1.74 | (575,676 | ) | 1.31 | ||||||||||
| Forfeited/expired | (81,043 | ) | 3.33 | (917,271 | ) | 3.20 | ||||||||||
| Options outstanding | 8,059,085 | $ | 2.88 | 8,412,882 | $ | 2.63 | ||||||||||
| Options exercisable | 5,842,418 | $ | 2.69 | 5,921,267 | $ | 2.39 | ||||||||||
As at March 31, 2024, stock options outstanding were as follows:
| Options Outstanding | Options Exercisable | |||||||||||||||||||||
| March 31, 2024 | March 31, 2024 | |||||||||||||||||||||
| Weighted average | Weighted average | Weighted average | ||||||||||||||||||||
| Option price | Options | remaining life | exercise price | Options | exercise price | |||||||||||||||||
| per share | # | (years) | CAD $ | # | CAD $ | |||||||||||||||||
| $ | 0.18 - 1.92 | 2,307,164 | 0.25 | $ | 0.73 | 2,307,164 | $ | 0.73 | ||||||||||||||
| $ | 2.40 - 3.79 | 2,796,087 | 1.36 | $ | 2.91 | 985,253 | $ | 2.98 | ||||||||||||||
| $ | 4.20 - 6.45 | 2,955,834 | 1.11 | $ | 4.55 | 2,550,001 | $ | 4.35 | ||||||||||||||
| 8,059,085 | 2.71 | $ | 2.88 | 5,842,418 | $ | 2.69 | ||||||||||||||||
During the three months ended March 31, 2024, the Company granted an aggregate of 425,000 stock options to Directors, Officers, employees, and an accounting advisory consultant of the Company. A fair value of C$1,805,429 was calculated for these options as measured at the grant date using the Black-Scholes option pricing model.
During the year ended December 31, 2023, the Company granted an aggregate of 2,670,181 stock options to Directors, Officers, employees, and an accounting advisory consultant of the Company. A fair value of C$5,616,767 was calculated for these options as measured at the grant date using the Black-Scholes option pricing model.
The Company’s standard stock option vesting schedule calls for 25% every six months commencing six months after the grant date.
During the three months ended March 31, 2024, the Company recognized stock option expense of $1,118,585 (year ended December 31, 2023 - $4,538,747) for the vested portion of the stock options.
17
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 10. | Share capital (continued) |
Stock options (continued)
The fair value of all compensatory options granted is estimated on the grant date using the Black-Scholes option pricing model. The weighted average assumptions used in calculating the fair values are as follows:
| March 31, | December 31, | |||||
| 2024 | 2023 | |||||
| Risk-free interest rate | 3.56% | 3.34% | ||||
| Expected life of option | 5.0 years | 5.0 years | ||||
| Expected dividend yield | 0% | 0% | ||||
| Expected stock price volatility | 86.81% | 95.43% | ||||
| Fair value per option | C$4.25 | C$2.10 |
Share purchase warrants
A summary of the status of the Company’s warrants as of March 31, 2024, and December 31, 2023, and changes during the period/year then ended is as follows:
| Three months ended | Year ended | |||||||||||||||
| March 31, 2024 | December 31, 2023 | |||||||||||||||
| Weighted | Weighted | |||||||||||||||
| average | average | |||||||||||||||
| Warrants | exercise price | Warrants | exercise price | |||||||||||||
| # | CAD $ | # | CAD $ | |||||||||||||
| Warrants outstanding, beginning of year | 31,461,804 | 4.04 | 7,494,506 | 4.43 | ||||||||||||
| Granted | 500 | 3.90 | 30,013,783 | 3.80 | ||||||||||||
| Exercised | (5,579,385 | ) | 4.09 | (6,034,479 | ) | 3.35 | ||||||||||
| Expired | (2,746,235 | ) | 5.95 | (12,006 | ) | 2.02 | ||||||||||
| Warrants outstanding, end of period/year | 23,136,684 | 3.80 | 31,461,804 | 4.04 | ||||||||||||
As of March 31, 2024, share purchase warrants outstanding were as follows:
| Warrants Outstanding | ||||||||||||||
| March 31, 2024 | ||||||||||||||
| Warrant price per share | Warrants # | Weighted average remaining life (years) | Weighted average exercise price CAD $ | |||||||||||
| $ | 3.00 - 4.05 | 23,136,684 | 1.87 | $ | 3.80 | |||||||||
Convertible promissory note
On February 14, 2023, the Company issued a secured convertible promissory note (the “Note”) in connection with the Alta Mesa acquisition (Note 6) with a principal value of $60,000,000. The note had a two-year term bearing interest at 8% per annum.
During the year ended December 31, 2023, the Company paid $40,000,000 of the principal balance off, reducing the outstanding principal balance at that date to $20,000,000. In February 2024, the balance was converted by issuance of 6,872,143 common shares to the debt holder.
18
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 10. | Share capital (continued) |
Convertible promissory note (continued)
A reconciliation of the convertible debenture components is as follows:
| Liability | Equity | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Balance, December 31, 2023 | 19,239,167 | 3,813,266 | 23,052,433 | |||||||||
| Issuance of promissory note | - | - | - | |||||||||
| Accretion expense | 65,204 | - | 65,204 | |||||||||
| Conversion of promissory note to shares | (19,304,371 | ) | (3,813,266 | ) | (23,117,637 | ) | ||||||
| Accrued interest, not yet paid | - | - | - | |||||||||
| Balance, March 31, 2024 | - | - | - | |||||||||
| Liabilities: | ||||||||||||
| Current portion - convertible debenture (accrued interest) | - | - | - | |||||||||
| Long term portion - convertible debenture | - | - | - | |||||||||
| Balance, March 31, 2024 | - | - | - | |||||||||
| 11. | Related party transactions and balances |
Related parties include key management of the Company and any entities controlled by these individuals as well as other entities providing key management services to the Company. Key management personnel consist of Directors and senior management including the Executive Chairman, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Chief Legal Officer.
The amounts paid to key management or entities providing similar services are as follows:
| March 31, | March 31, | |||||||||
| 2024 | 2023 | |||||||||
| $ | $ | |||||||||
| Consulting | (1) | 309,280 | 37,774 | |||||||
| Directors’ fees | (2) | 69,000 | 27,000 | |||||||
| Staff costs | 409,161 | 1,504,754 | ||||||||
| Stock option expense | 651,160 | 660,962 | ||||||||
| Total key management compensation | 1,438,601 | 2,230,490 | ||||||||
| (1) | During the three months ended March 31, 2024, the Company incurred communications & community engagement consulting fees of $42,000 (December 31, 2023 - $147,529) according to a contract with 5 Spot Corporation in 2024 and Tintina Holdings, Ltd., in 2023. In July 2023, the Tintina Holdings, Ltd contract was reassigned to 5 Spot Corporation, a new Company owned by the spouse of the Company’s Executive Chairman. The Company also incurred finance and accounting consulting fees of $267,280 (December 31, 2023 – $7,000) according to a contract with Hovan Ventures LLC, a Company owned and operated by the former CFO for the Company. |
| (2) | Directors’ Fees are included in staff costs on the consolidated statements of loss and comprehensive loss. |
During the three months ended March 31, 2024, the Company granted 250,000 (March 31, 2023 – nil) options to key management, with a fair value of $496,565.
19
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 11. | Related party transactions and balances (continued) |
As of March 31, 2024 and December 31, 2023, the following amounts were owed to related parties:
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| 5-Spot Corporation | 14,000 | 12,000 | ||||||
| Hovan Ventures LLC | 30,100 | 7,000 | ||||||
| Officers and Board Members | 94,780 | 2,501,594 | ||||||
| Total key management compensation | 138,880 | 2,520,594 | ||||||
| 12. | Management of capital |
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to support the exploration, evaluation, and development of its mineral properties and to maintain a flexible capital structure that optimizes the cost of capital within a framework of acceptable risk. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue new shares, issue debt, and acquire or dispose of assets.
The Company is dependent on the capital markets as its primary source of operating capital and the Company’s capital resources are largely determined by the strength of the junior resource markets, the status of the Company’s projects in relation to these markets, and its ability to compete for investor support of its projects.
The Company considers the components of shareholders’ equity as capital.
There were no changes in the Company’s approach to capital management during the three months ended March 31, 2024, and the Company is not subject to any externally imposed capital requirements.
| 13. | Financial instruments |
Financial instruments include cash, receivables and marketable securities and any contract that gives rise to a financial asset to one party and a financial liability or equity instrument to another party. Financial assets and liabilities measured at fair value are classified in the fair value hierarchy according to the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement requires judgement and may affect placement within the fair value hierarchy levels. The hierarchy is as follows:
| 1. | Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities. |
| 2. | Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1, that are observable either directly or indirectly. |
| 3. | Level 3 fair value measurements are those derived from valuation techniques that include inputs that are not based on observable market data. |
Marketable securities are measured at Level 1 of the fair value hierarchy. The Company classifies these investments as financial assets whose value is derived from quoted prices in active markets and carries them at FVTPL.
The Company classifies its cash, restricted cash and receivables as financial assets measured at amortized cost. Accounts payable, lease liability, due to related parties, and convertible promissory note are classified as financial liabilities measured at amortized cost. The carrying amounts of receivables, accounts payable, and amounts due to related parties approximate their fair values due to the short-term nature of the financial instruments. The carrying value of the Company’s convertible promissory note, and lease liabilities approximates fair value as they bear a rate of interest commensurate with market rates.
20
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 13. | Financial instruments (continued) |
Currency risk
Foreign currency exchange risk is the risk that future cash flows, net income and comprehensive income will fluctuate as a result of changes in foreign exchange rates. As the Company’s operations are conducted internationally, operations and capital activity may be transacted in currencies other than the functional currency of the entity party to the transaction.
The Company’s objective in managing its foreign currency risk is to minimize its net exposures to foreign currency cash flows by obtaining most of its estimated annual U.S. cash requirements and holding the remaining currency in Canadian dollars. The Company monitors and forecasts the values of net foreign currency cash flow and consolidated statement of financial position exposures and from time to time could authorize the use of derivative financial instruments such as forward foreign exchange contracts to economically hedge a portion of foreign currency fluctuations.
The following table provides an indication of the Company’s foreign currency exposures during the period/year ended March 31, 2024, and December 31, 2023:
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| C$ | C$ | |||||||
| Cash | 2,333,327 | 5,120,718 | ||||||
| Marketable Securities - Current | 23,840,337 | 22,333,093 | ||||||
| Accounts payable and accrued liabilities | (331,929 | ) | (351,193 | ) | ||||
| 25,841,735 | 27,102,618 | |||||||
A 10% change in Canadian/US foreign exchange rate at period end would have changed the net loss of the Company, assuming that all other variables remained constant, by $1,907,120 for the period/year ended March 31, 2024 (December 31, 2023 - $2,049,192).
The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Credit risk
Credit risk arises from cash held by banks and financial institutions and receivables. The maximum exposure to credit risk is equal to the carrying value of these financial assets. Some of the Company’s cash is held by a Canadian bank.
Market risk
The Company is exposed to market risk because of the fluctuating value of its marketable securities (Note 4). The Company has no control over these fluctuations and does not hedge its investments. Based on the March 31, 2024 value of marketable securities every 10% change in the share price of these holdings would have impacted loss for the period/year, by approximately $1,760,000 (December 31, 2023 - $1,689,000) before income taxes.
Further, the Company still has a significant amount of projects still in the exploration stage. Fluctuations in commodity prices may influence financial markets and may indirectly affect the Company’s ability to raise capital to fund exploration.
21
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 13. | Financial instruments (continued) |
Interest rate risk
Interest rate risk mainly arises from the Company’s cash, which receives interest based on market interest rates. The interest rate risk on cash is not considered significant.
Liquidity risk
The Company is primarily engaged in the acquisition, exploration, and development of uranium resource properties in the United States which is subject to significant inherent risk. Declines in the market prices of uranium and delays in the production, changes in the regulatory environment and adverse changes in other inherent risks can significantly and negatively impact the Company’s operations and cash flows and its ability to maintain sufficient liquidity to meet its financial obligations. Adverse changes to the factors mentioned above have impacted the recoverability of the Company’s mineral properties property, mining properties, and plant and equipment, which may result in impairment losses being recorded.
The Company’s current operating budget and future estimated cash flows indicate that the Company will generate positive cash flow in excess of the Company’s cash commitments within the twelve-month period following the date these consolidated financial statements were authorized for issuance.
The Company may be required to raise additional funds from external sources to meet these requirements. There is no assurance that the Company will be able to raise such additional funds on acceptable terms, if at all.
If the Company raises additional funds by issuing securities, existing shareholders may be diluted. If the Company is unable to obtain financing from external sources or issuing securities the Company may have difficulty meeting its payment obligations.
| 14. | Segmented information |
The Company operates in a single segment: the acquisition, exploration, and development of mineral properties in the United States.
The table below provides a breakdown of the Company’s long-term assets by geographic segment:
| South Dakota | Texas | New Mexico | Wyoming | Other States | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Intangible assets | - | 122,399 | 216,340 | - | 174,982 | 513,721 | ||||||||||||||||||
| Property, plant and equipment | 208,619 | 14,761,241 | - | - | - | 14,969,860 | ||||||||||||||||||
| Mineral properties | 86,713,367 | 132,454,909 | 2,521,503 | 42,158,462 | 3,360,897 | 267,209,138 | ||||||||||||||||||
| Mining properties | - | 5,301,820 | - | - | - | 5,301,820 | ||||||||||||||||||
| Right-of-use assets | - | 443,645 | - | - | - | 443,645 | ||||||||||||||||||
| Balance, December 31, 2023 | 86,921,986 | 153,084,014 | 2,737,843 | 42,158,462 | 3,535,879 | 288,438,184 | ||||||||||||||||||
| Intangible assets | - | 119,468 | 215,949 | - | 166,049 | 501,466 | ||||||||||||||||||
| Property, plant and equipment | 207,092 | 16,070,089 | - | - | - | 16,277,181 | ||||||||||||||||||
| Mineral properties | 86,802,347 | 136,107,751 | 2,521,503 | 42,295,727 | 3,378,136 | 271,105,464 | ||||||||||||||||||
| Mining properties | - | 5,301,820 | - | - | - | 5,301,820 | ||||||||||||||||||
| Right-of-use assets | - | 387,466 | - | - | - | 387,466 | ||||||||||||||||||
| Balance, March 31, 2024 | 87,009,439 | 157,986,594 | 2,737,452 | 42,295,727 | 3,544,185 | 293,573,397 | ||||||||||||||||||
22
enCore Energy Corp.
Notes to the Condensed Interim Consolidated Financial Statements
For the three months ended March 31, 2024 and March 31, 2023
(In USD unless otherwise noted)
| 15. | Supplemental cash flows |
The Company incurred non-cash financing and investing activities as follows:
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Non-cash financing activities: | ||||||||
| Share issue costs on finders' warrants issued | - | 1,415,057 | ||||||
| Deferred financing costs remaining in accounts payable and accrued liabilities | - | - | ||||||
| - | 1,415,057 | |||||||
| Non-cash investing activities: | ||||||||
| Mineral property costs included in accounts payable and accrued liabilities | 532,024 | 327,607 | ||||||
| Property, plant, and equipment additions included in accounts payable and accrued liabilities | 107,961 | 187,834 | ||||||
| Reclamation Settlements remaining in Accounts Payable | - | 9,651 | ||||||
| Conversion of convertible note to shares | 23,117,637 | - | ||||||
| Convertible promissory note issued for asset acquisition (Note 10) | - | 60,000,000 | ||||||
| Marketable securities received on divestitures | - | 9,815,100 | ||||||
| 23,757,622 | 70,340,192 | |||||||
There were no amounts paid for income taxes during the period/year ended March 31, 2024, and December 31, 2023.
| 16. | Events after the reporting period |
Subsequent to March 31, 2024, the following reportable events were completed:
| a) | On April 4, 2024, the Company suspended its ATM Program with a remaining balance of approximately US$18.7 million of common shares available for sale. The Company does not anticipate further sales under the ATM program in light of its current cash on hand of approximately US$90 million. |
| b) | On April 29, 2024 the Company executed all liquidation documents and effectively completed the process to dissolve Azarga Resources (Hong Kong) Ltd. |
23
Exhibit 99.2
Management’s Discussion & Analysis
For the three months ended
March 31, 2024
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Introduction
Set out below is management’s assessment and analysis of the results of operations and financial condition of enCore Energy Corp. and its subsidiaries (“enCore”, or the “Company”) for the three months ended March 31, 2024. The following information is prepared as of May 10, 2024, and should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three months ended March 31, 2024 and 2023, and the accompanying notes thereto, as well as Management’s Discussion and Analysis for the year ended December 31, 2023, as contained in our Form 40-F Annual Report for 2023, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). All Dollar figures included in this management’s discussion and analysis (“MD&A”) are quoted in United States Dollars unless otherwise indicated. Additional information related to the Company is available on SEDAR+ at www.sedarplus.ca.
Our Business: America’s Clean Energy Company™
Business (Operations Update and Outlook)
The Company is focused on producing domestic uranium in the United States.The Company only utilizes the proven In-Situ Recovery technology (ISR) to provide necessary fuel for the generation of clean, reliable, and carbon-free nuclear energy.
enCore owns 3 of the 11 licensed and constructed Central In Situ Recovery ISR Uranium Processing Plants (CPPs) in the United States.1 All of its existing facilities are located in the business-friendly, energy-centric State of Texas. Our plants are designed and permitted to process uranium from a mix of satellite plants and primary sources within South Texas. In addition, the Company has several key mineral resource projects in other jurisdictions within the United States. Our NI43-101 compliant resources are listed below:
| Total measured and indicated Mineral Resources | 74.42 million lbs U3O8 |
| Total inferred Mineral Resources | 26.47 million lbs U3O8 |
Although the United States is the world’s largest consumer of uranium and largest producer of nuclear energy, it remains dependent on imported uranium. Due to the current geopolitical environment, the Company expects increasing demand for domestically-produced uranium as US utilities prefer domestic over Russian suppliers. enCore’s strategy is to leverage its uranium production to drive value for its shareholders and be a United States preferred supplier. With established and future sales contracts with nuclear utilities, enCore’s product will fuel clean, reliable and carbon-free electricity generation. Uranium, used for nuclear energy, is an important green energy fuel source. Unlike most fossil fuels, the cost of nuclear fuel (uranium) constitutes only a small portion of total power generating costs.
With a diverse portfolio of uranium projects, enCore is prioritizing projects that will utilize ISR technology to produce uranium. ISR, when compared to conventional open pit or underground mining, requires less capital and operating expenditures with a shorter lead time to extraction and a reduced impact on the environment, including minimizing groundwater use. The historic worker safety record in the ISR segment of the mning industry is significantly better that that of conventional underground and open pit uranium mining and milling.
enCore’s initial production strategy over the next 3 years is centered around two of its fully licensed Texas CPPs; Rosita and Alta Mesa. The CPPs, located at the Rosita and Kingsville Dome projects are designed for, and fully capable of, processing feed resin from relocatable satellite ion-exchange (IX) plants employed at various deposits within a 100-mile radius of each plant.
enCore has a significant economic opportunity in the changing and growing uranium market and nuclear energy industry. Its strong technical team forms the basis for its strength with extensive expertise in ISR operations, reclamation, permitting and exploration. The Company has a broad set of uranium assets that provide a growing production pipeline that includes production and near-term production in Texas followed by pipeline projects in South Dakota and Wyoming with longer term production planned from enCore’s extensive resources in New Mexico. The team enjoys access to a large collection of proprietary databases of United States assets. This gives the Company access to exclusive benefits from historic exploration, development and production data generated over almost 100 years by several major companies including Union Carbide, W.R. Grace, UV Industries, Getty Oil, Uranium Resources Inc. and others.
To support the Company’s development plans, enCore’s uranium sales strategy provides a base level of projected income from sales contracts while preserving significant ability to realize opportunities when strong short-term market fundamentals are present. This strategy assures that the Company will have committed sales to support the capital necessary for construction of new projects while maintaining flexibility to be opportunistic as market conditions continue to change. In February 2024, the Company signed its fifth and sixth supply agreements with two separate US nuclear utilities. enCore’s sales contracts typically retain exposure to spot pricing while including minimum floor and maximum ceiling prices, some of which are adjusted upwards annually for inflation. Minimum floor prices are set at levels that provide the Company a comfortable margin over its expected costs of operations in Texas while still allowing the Company to participate in anticipated escalations of the price of uranium. Combined, the Company has 4.1 million lbs U3O8 in committed uranium sales contracts from 2024 to 2033. Three of our current contracts provide optionality to add an additional 1.65 million lbs U3O8 to 2032. The Company will continue to assess opportunities to secure future sales agreements that will support its continued project and production growth strategies.
| 1 | Domestic Uranium Production Report First-Quarter 2023, Energy Information Administration, May 2023 |
2
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
The Rosita Central Processing Plant is the starting point for enCore’s Texas production strategy. In November 2023, the Company announced the commencement of uranium production at Rosita from the Rosita Extension wellfield, PAA-5. Rosita is located approximately 60 miles from Corpus Christi, Texas and has an 800,000-pound U3O8 per year production capacity. Newly modernized and refurbished in 2022, the Rosita Plant will act as the central processing site for the Rosita South, Upper Spring Creek, and Butler Ranch Uranium Projects.
In February 2023, the Company acquired 100% of the Alta Mesa Project from Energy Fuels, Inc. for $120 million. enCore’s fully licensed Alta Mesa ISR Uranium CPP is located approximately 100 miles southeast of Corpus Christi, TX, and has a production capacity of 1.5 million lbs U3O8 per year through its ion exchange system located at the plant. The facility has IX elution, precipitation, drying, and packaging capacity for 2.0 million lbs U3O8 per year. This capacity is designed to accept direct production feed to the IX columns in the plant and concurrently accept loaded resin from satellite locations. The Alta Mesa Project includes existing and near-term production areas, including the fully permitted and authorized production areas 6 & 7. The project also has 9 additional mineral resource areas described in the “Our Assets” section of Management’s Discussion and Analysis for the year ended December 31, 2023. In totality, the project encompasses mineral leases on 200,000 acres of private land. In February 2024, the Company sold a 30% interest in Alta Mesa project to Boss Energy Limited for $60 million. The injection of capital to the Company from its the sale of a 30% interest in the Alta Mesa Project will allow the Company to accelerate future production levels in South Texas, Wyoming and South Dakota.
The Kingsville Dome Central ISR Uranium Processing Plant (Kingsville Dome CPP) is currently maintained and available to increase production capacity as additional satellite plants and production wellfields are brought into production. This facility, similar in size and design to the Rosita facility, has a capacity of 800,000 lbs U3O8 per year.
Notably, the advanced stage Dewey-Burdock Uranium Project (Dewey-Burdock) in South Dakota has demonstrated ISR resources, including a 2019 PEA citing robust economics. The Company is in the process of reviewing and updating the PEA to reflect current economics and planning. The project has its source material license from the US Nuclear Regulatory Commission (NRC) and its underground injection permits and aquifer exemption from the US Environmental Protection Agency (EPA). In 2023, the Company announced that the NRC approval was considered final when appeals of the license approval were exhausted following a successful outcome from the Circuit Court of Appeals for the District of Columbia. The underground injection permits were appealed to the EPA’s Environmental Appeals Board and the aquifer exemption was appealed to the 8th Circuit Court of Appeals. Based on the successful outcome for the company of the appeal of the NRC license, we believe we will also be successful in the appeals of the EPA’s underground injection permits and the aquifer exemption.
The Company has commenced the initial permitting work to advance the Gas Hills Uranium Project (Gas Hills) as an ISR uranium recovery operation located in central Wyoming, approximately 60 miles west of Casper, WY. Gas Hills has a current resource and robust economics as described in a 2021 PEA. It is ideally located in the historic Gas Hills Uranium Mining District, a brownfield area of extensive previous mining. The Company has Dewey-Burdock and Gas Hills as its mid-term production assets within the planned production pipeline.
The Company’s New Mexico assets represent a major, long-term asset in our planned production pipeline. enCore holds a dominant position in the historic Grants Uranium District in New Mexico through its control of mineral rights over approximately 500 square miles containing significant uranium resources in several different deposits. The Company is committed to the significant work necessary to overcome legacy issues related to historic uranium mining and milling in New Mexico and its effect on indigenous and local communities. The Company is executing an engagement strategy with local communities to educate one another and work together to realize economic and social benefits of collectively exploiting these significant resources in an environmentally superior way, unlocking the value of the assets to all parties’ benefit. In addition to these more advanced projects, the Company has significant mineral holdings in Wyoming, Arizona, Utah, and Colorado.
enCore has a clear pathway to production across the western United States and is focusing its expansion efforts within jurisdictions with well-established regulatory environments for the development of ISR uranium projects. Both Texas and Wyoming are NRC Agreement states, whereby the Nuclear Regulatory Commission has ceded its regulatory authority to the individual state regulators. This streamlined and mature regulatory process is a demonstrable benefit to the uranium industry within these jurisdictions. The Company is leveraging the near-term production assets in South Texas to support the South Dakota-based Dewey-Burdock and Wyoming-based Gas Hills projects for mid-term production opportunities with advanced projects and established resources. enCore’s significant New Mexico uranium resource endowment provides long-term opportunities and the ability to establish mutually beneficial relationships with indigenous and local communities. The Company also supports communities with local hiring and capital spending in the localities where it works.
ESG Principles
The long-term success of enCore requires the integration of sustainability into all aspects of its business. Leading environmental, social and governance performance is strongly correlated to strong financial performance and the creation of long-term value for enCore’s shareholders and other stakeholders. This includes, striving to meet the highest standards, contributing toward sustainable development, and serving as responsible natural resource stewards for the purpose of making positive and lasting impacts on the communities we operate in. enCore is responsible to its shareholders, governments, and community stakeholders as the Company advances projects forward and considers appropriate best practices and innovative methods to meet and exceed these responsibilities within its financial means.
Please refer to Management’s Discussion and Analysis for the year ended December 31, 2023, as contained in our Form 40-F Annual Report for 2023 on www.sedarplus.ca or on the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system at www.sec.gov/edgar.
3
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Corporate Highlights for 2024
In January 2024, the Company:
| ● | Commenced trading on the Nasdaq Capital Market (“Nasdaq”). The Company shares continue to trade under the ticker symbol “EU” on Nasdaq and continue to trade on the TSX Venture Stock Exchange (“TSXV”) under the ticker symbol “EU”. |
| ● | Sold a total of 15,000,000 common shares of Anfield for approximate proceeds of C$1,097,900. The shares were sold through the facilities of the TSX Venture Exchange at prices ranging from C$0.07 to C$0.08 per share. |
| ● | The Company purchased 1,716,260 units of NFI at a price of C$0.60 per unit. Each unit is comprised of 1 common share and one half of a warrant. This investment maintained the Company’s ownership level at 19.9%. |
In February 2024, the Company:
| ● | Converted the full outstanding principal amount of a $20 million convertible promissory note (the “Note”) into common shares of the Company. With the repayment of the Note, the company fully eliminated its remaining debt that resulted from the 2023 $120 million acquisition of the Alta Mesa Project. Pursuant to the conversion of the Note, the Company issued 6,872,143 common shares to the holder. |
| ● | Completed the transactions under the Master Transaction Agreement with Boss Energy Limited (“Boss Energy”), and completed the sale of a 30% ownership interest in enCore’s Alta Mesa project to Boss Energy for $60 million, with an added investment of $10 million into 2,564,102 common shares by Boss Energy. |
| ● | Executed the fifth commercial uranium sales contract, with a fourth U.S. utility with deliveries from 2026 through 2032. |
| ● | Hosted the Grand Opening of the Rosita Plant in February 2024, just 20 months after work commenced to restart production. |
In March 2024, the Company:
| ● | Completed its initial shipment of uranium from the Rosita Project. |
| ● | Executed its sixth commercial uranium sales contract with a fifth U.S. utility with deliveries in 2026 and 2027. |
| ● | Released the highest grade drill results to date since drilling activities restarted from the Alta Mesa Project in South Texas. |
| ● | Released the Nasdaq Opening Bell and hosted the first Annual Investor Day following the Opening Bell Ceremony. |
The company issued a total of 495,765 common shares, between the period January 1, 2024 to March 31, 2024, under the At-The-Market (ATM) controlled equity offering program (“ATM Program”). The shares were issued through the facilities of the TSXV and NASDAQ at an average share price of $4.05 per share for gross proceeds of $2,008,256 with a commission of $50,206 paid to the Agent.
Highlights Subsequent to March 31, 2024
| ● | On April 4, 2024, the Company suspended its ATM Program with a remaining balance of approximately US$18.7 million of common shares available for sale. The Company does not anticipate further sales under the ATM program in light of its current cash on hand of approximately US$80 million, zero debt, revenue from ongoing operations at the Rosita In-Situ Recovery Uranium Central Processing Plant (“CPP”) and expected near term production revenue from the Alta Mesa CPP. |
| ● | On April 29, 2024 the Company executed all liquidation documents and effectively completed the process to dissolve Azarga Resources (Hong Kong) Ltd. |
Industry Update and Outlook
In April 2024, the World Nuclear Association reported, globally, there are currently 440 operable reactors and 60 reactors under construction.Many nations that have deployed nuclear power are appreciating its clean energy and energy security benefits, reaffirming their commitment, and developing plans to support existing reactor units while reviewing and developing policies to encourage more nuclear capacity. Several non-nuclear countries continue to emerge as candidates for new nuclear capacity. In the European Union (EU), specific nuclear energy projects have been identified for inclusion under its sustainable financing taxonomy and are therefore eligible for access to low-cost financing. In some countries where phase-out policies were previously in place, there have been policy reversals and potential reactor life extensions with public opinion polls showing growing support. In the U.S., several utilities have announced life extensions and power uprates of existing, operating reactors because of government policy changes that are directly supporting nuclear power. With several reactor construction projects recently approved and many more planned around the world, demand for uranium fuel continues to increase.
4
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Ongoing geopolitical events continuing in 2024, the global focus on the climate crisis, and energy security concerns all continued to provide tailwinds to the nuclear energy industry while further highlighting supply and demand challenges. Driven by a tightened uranium market and growing security of supply concerns, uranium prices reached levels not seen since 2008. Significantly, the continuing Russian invasion of Ukraine is impacting global nuclear supply chains including the ability to reliably deliver enriched uranium from Russia to the United States, and to deliver uranium produced in Kazakhstan to western uranium markets.
The Company believes that these recent events are resulting in a geopolitical realignment for uranium markets. Nuclear energy is seen as a key source of clean, secure, and affordable energy. Currently, according to the World Nuclear Association, Russia supplies approximately 5% of uranium concentrates globally, 38% of conversion capacity, and 46% of enrichment capacity. The realignment that is occurring has highlighted security of supply risk with a growing primary supply gap and shrinking secondary supplies. At the same time we have seen a significant increase in the focus on the origin of supply. To address these risks, utilities continue to evaluate their nuclear fuel supply chains. Nuclear utility contracting to secure their long-term requirements for conversion and enrichment services we saw in 2023 has continued into 2024. Higher prices across the fuel cycle and annual contracting activity that is getting closer to the rate required to replace what is consumed annually indicate that utilities are returning their focus to secure the uranium necessary to feed those services. The Company expects continued competition among utilities to secure long-term contracts for uranium products and services with proven producers who demonstrate strong environmental, social and governance (ESG) performance and from assets in geopolitically attractive jurisdictions on terms that will ensure the availability of reliable supply to satisfy demand.
Over the last decade, the uranium industry has seen underinvestment in new production capacity, and because of persistent low uranium prices, many producers, including the lowest cost producers, made decisions to leave uranium in the ground or idled capacity to preserve long-term value of their resources. Unplanned supply disruptions related to the COVID-19 pandemic also disrupted uranium mining and processing activities. Despite the increase in prices across most segments of the fuel cycle there has been no material increase in global production due to increased costs, inflationary pressures and uncertainty regarding the continuing and changing geopolitical conditions. The World Nuclear Association’s 2023 Nuclear Fuel Report highlights that nuclear powers contributes of 10 percent of the global electricity demand, accounts for 25 percent of low carbon electricity production, and is expected to play a growing role in future energy supply in a low-carbon economy. Notably, geopolitical instability has led to increased interest in nuclear power for energy security. Three scenarios for nuclear generating capacity are presented in the report, and referred to as Lower, Reference, and Higher Scenarios. In the Reference Scenario (informed by government & utility targets), total nuclear capacity is expected to increase to 444 GWe by 2030 and 686 GWe by 2040, including 35 GWe of generic small modular reactor (SMR) capacity. In the Lower Scenario, nuclear capacity is projected to reach 409 GWe by 2030 and 487 GWe by 2040. In the Upper Scenario, the figures show a higher increase with 490 GWe nuclear capacity by 2030 and 931 GWe by 2040. The report notes that primary production from uranium mines, conversion, and enrichment plants continue to supply the majority of the demand from nuclear reactors. Secondary supply is projected to have a gradually diminishing role in the market, decreasing from the current level of 11-14 percent of global reactor uranium requirements to 4-11 percent by 2040, depending on the scenario.
United States Government Policy
| ● | US President Joe Biden asked Congress to allocate US$6 billion to enhance energy security, including increasing uranium enrichment capacity. In particular, the specified amount includes $2.2 billion, which is planned to be allocated through the US Department of Energy for “long-term improvement of internal capacities for the enrichment of low-enriched uranium and high-grade low-enriched uranium.” |
| ● | The National Defense Authorization Act of 2024 was signed into law by President Biden in April 2024, and it includes language backed by Senate Energy and Natural Resources Chair Senator Joe Manchin (D-WV) and ranking member Senator John Barrasso (R-WY) to promote the domestic availability of High-Assay Low-Enriched Uranium (HALEU) to fuel advanced reactors and direct DOE to create a “Nuclear Fuel Security Program.” Additionally, the law funds this program up to $2.7 billion, contingent on the passage of import restrictions on all forms of Russian uranium. |
| ● | The Prohibiting Russian Uranium Imports Act (H.R. 1042), sponsored by Rep. Cathy McMorris Rodgers (R-WA) that passed the House in December 2023 unaminously, also passed the Senate unaminously on April 30, 2024. Once this bill is signed into law by President Biden, it will end all Russian uranium imports within 90 day, subject to waivers to prevent reactor shutdowns due to the lack of alternative sources other than Russia. Additionally, when made law, the $2.7 billion conditional funding in the 2024 NDAA will be released. |
Global Market Developments
| ● | Construction of Unit 1 at the Lianjiang Nuclear Power Plant in China’s southern Guangdong province has started with the pouring of the first safety-related concrete for the nuclear island. Unit 1 is the first of two CAP1000 reactors planned as the initial phase of the plant, which will eventually house six reactors. The construction of the first two 1,250 MWe CAP1000 reactors—the Chinese version of the Westinghouse AP1000. |
| ● | The International Atomic Energy Agency (IAEA) has released its annual outlook for nuclear power in the coming decades, revising up its global growth projections for a third straight year. In both its high and low case scenarios, the IAEA now envisions 25 percent more nuclear energy capacity installed by 2050 than it did as recently as 2020, which underscores how a growing number of countries are looking to nuclear to address the challenges of energy security, climate change, and economic development. |
| ● | The European Science Agency (ESA) forecasts a 2 percent increase in gross annual average natural uranium requirements over the next 10 years to approximately 32.3 million pounds U3O8 (12,417 tU). This considers possible changes in national policies or regulatory requirements that result in the construction of new units (projects already granted a construction license); lifetime extensions; early retirement of reactors; and phasing-out or decommissioning. |
5
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
| ● | The UAE’s Federal Authority for Nuclear Regulation (FANR) issued an operating license for Unit 4 at the Barakah Nuclear Energy Plant to Nawah Energy Co., which operates the plant located in the Al Dhafra region of Abu Dhabi. |
| ● | Japan’s Nuclear Regulation Authority issued its approval on November 1 to Kyushu Electric Power Co. to operate Units 1 and 2 (846 MWe PWRs) at its Sendai Nuclear Power Plant, located in Kagoshima Prefecture on the island of Kyushu, for 60 years from the respective starts of the two reactors’ commercial operation. |
US Market Events
| ● | The Energy Information Administration (EIA) expects global primary energy consumption to increase through 2050. Non-fossil fuel-based resources, including nuclear and renewables, produce more energy through 2050, but in most of the IEO2023 cases examined, that growth is not sufficient to reduce global energy-related CO2 emissions under current laws and regulations. |
| ● | Constellation, operator of the USA’s largest fleet of nuclear power plants, has completed its acquisition of NRG Energy Inc.’s 44 percent ownership stake in the South Texas Project Electric Generating Station, a 2,645 MW, dual-unit nuclear plant located about 100 miles northeast of Corpus Christi, TX. |
| ● | The US Nuclear Regulatory Commission (NRC) has determined that Pacific Gas and Electric Co.’s (PG&E) License Renewal Application (LRA) for extended operations of the Diablo Canyon Power Plant in the state of California is sufficient for its review. PG&E is seeking to extend the plant’s operating licenses by an additional 20 years. Diablo Canyon is currently licensed to operate through November 2, 2024, for Unit 1 and through August 26, 2025, for Unit 2. |
Our Assets
The Company has properties across the Western United States. Approximate locations are shown in Figure 1.
Figure 1: Locations of enCore Energy Corp. Projects.
6
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Arizona
The Company owns or controls several Arizona State mineral leases and unpatented federal lode mining claims covering acreage in northern Arizona Strip district.
Colorado
The Centennial Uranium Project is located in Colorado.
New Mexico
The Company has several uranium mineral holdings and project areas in New Mexico. They are shown in figure 2.
Figure 2: enCore Energy Corp. project and property locations in New Mexico
7
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
The Nose Rock Project is located in McKinley County, New Mexico.
The Treeline project is located in McKinley and Cibola Counties, Grants Uranium District, New Mexico.
The Crownpoint-Hosta Butte Uranium Project: the Company owns a 100% interest in the McKinley County properties and a 60 - 100% interest in the adjacent Crownpoint and Hosta Butte properties, all of which are located in McKinley County, New Mexico. The Company holds a 60% interest in a portion of a certain section at Crownpoint. The Company owns a 100% interest in the rest of the Crownpoint and Hosta Butte project area, subject to a 3% gross profit royalty on uranium produced. The 2022 N.I. 43-101 compliant technical report can be found on the Company’s website at https://encoreuranium.com/wp-content/uploads/2022/03/05.-CPHB-Technical-Report.pdf.
The West Largo Project is near the Grants Mineral Belt in McKinley County, New Mexico.
The Company holds several sections of mineral properties in an area located primarily in McKinley County and Cibola County in northwestern New Mexico. These mineral properties are part of the former railroad checkerboard holdings that the company has acquired over the last several years.
South Dakota
The Dewey-Burdock Project is an in-situ recovery uranium project located near Edgemont, South Dakota. The December 2020 NI 43-101 Technical Report and Preliminary Economic Assessment of the Dewey-Burdock Uranium ISR Project South Dakota, USA, can be found on the Company’s website at https://encoreuranium.com/wp-content/uploads/2022/02/Azarga-Amended-Technical-Report-Compiled.pdf.
Texas
The Company has three licensed and constructed uranium production facilities along with several mineral properties that are owned in fee or leased from private owners. The Figure 3 below describes the location of the uranium production facilities and the production project areas.
Figure 3: enCore Energy Corp. properties in South Texas.
8
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
The Kingsville Dome project is located in Kleberg County, Texas. It is a licensed and constructed past operating production facility that is currently maintained in a standby state. The project area consists of mineral properties that are leased by the Company or owned in fee by the Company. The Central Processing Plant is located on land owned by the Company.
The Rosita Project is located in Duval County, Texas. It is a licensed and constructed past operating production facility that is currently operating and producing uranium from the nearby Rosita Extension wellfield. The project area consists of mineral properties that are leased by the Company or owned in fee by the Company. The Central Processing Plant is located on land owned by the Company. The Rosita project also includes the Rosita South Development Area within the project boundary.
The Upper Spring Creek Project consists of two project areas, Brown and Brevard, located in Live Oak and Bee counties in Texas, respectively. The project will be developed and operated as a satellite wellfield operation to be processed at the Rosita Central Processing Plant.
The Butler Ranch Exploration project is located in Karnes County, Texas. The Butler Ranch project will be developed as a satellite wellfield to the Rosita Central Processing Plant.
The Alta Mesa Project is consists of 200,000 acres of leased private mineral properties located in Brooks and Jim Hogg Counties, Texas. This is a past producing uranium project, and the Company is anticipating production restart in the 2nd quarter of 2024. In February 2024, the Company entered into a joint venture with Boss Energy, Ltd. to develop and advance the project. The Company retains ownership of 70% of the project and Boss Energy holds 30%. The Mesteña Grande Exploration project is a portion of the Alta Mesa Project, and it will be developed as multiple satellite wellfields to feed the Alta Mesa Central Processing Plant. The January 2023 N.I. 43-101 Technical Report Summary for the Alta Mesa Uranium Project, Brooks and Jim Hogg Counties, Texas, USA can be found on the Company’s website at https://encoreuranium.com/wp-content/uploads/2023/02/TechReport.pdf.
Utah
The Ticaboo project consists of three portions of a claim block located in Garfield County, Utah, and it consists of low grade uranium ore stockpiles. The Company has a federal Plan of Operation and State of Utah approval for processing of the assets.
The Company owns various mining claims throughout southern Utah, including Emery, Garfield, and San Juan Counties. All of these are in relative proximity to the White Mesa Mill in Blanding County, Utah.
Wyoming
The Gas Hills Project is located in Fremont and Natrona Counties, Wyoming. The August 2021 NI 43-101 Technical Report and Preliminary Economic Assessment Gas Hills Uranium Project in Fremont and Natrona Counties, Wyoming, USA can be found on the Company’s website at https://encoreuranium.com/wp-content/uploads/2022/08/Gas-Hills.pdf.
The Dewey Terrace Exploration project is located in Weston and Niobrara Counties, Wyoming. The project is adjacent to the Company’s NRC licensed Dewey-Burdock Project along the Wyoming-South Dakota state line.
The Aladdin Exploration project is located in Weston County, Wyoming.
The Juniper Ridge Project is located in southern Sweetwater County, Wyoming, near the state line with Colorado.
9
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Quarterly Information
The following selected financial data is prepared in accordance with IFRS for the last eight quarters ending with the most recently completed quarter:
| March 31, | December 31, | September 30, | June 30, | |||||||||||||
| 2024 $ | 2023 $ | 2023 $ | 2023 $ | |||||||||||||
| Revenue | 30,394,700 | - | - | - | ||||||||||||
| Cost of goods sold | (28,052,288 | ) | - | - | ||||||||||||
| Operating expenses, excluding stock option expense | (8,670,589 | ) | (13,077,861 | ) | (5,489,193 | ) | (5,869,884 | ) | ||||||||
| Stock option expense | (1,118,585 | ) | (1,003,448 | ) | (1,525,160 | ) | (1,143,656 | ) | ||||||||
| Interest income | 415,873 | 45,363 | 19,725 | 7,984 | ||||||||||||
| Interest expense | (406,567 | ) | (525,018 | ) | (1,207,011 | ) | (1,200,000 | ) | ||||||||
| Foreign exchange gain (loss) | 2,683,357 | (2,945,741 | ) | 1,621,940 | (882,750 | ) | ||||||||||
| Gain on divestment of mineral interests | 24,240 | - | 8,010,687 | 2,056,638 | ||||||||||||
| Gain on change in reclamation estimate | - | 221,185 | - | - | ||||||||||||
| Gain (loss) on marketable securities | (569,961 | ) | 609,859 | 7,234,293 | (1,344,596 | ) | ||||||||||
| Gain (loss) on sale of asset | (18,028 | ) | (22,000 | ) | 638,500 | 858,500 | ||||||||||
| Net Income (loss) | (5,317,847 | ) | (16,697,661 | ) | 9,303,781 | (7,517,764 | ) | |||||||||
| Basic and diluted earnings (loss) per share1 | (0.03 | ) | (0.10 | ) | 0.06 | (0.06 | ) | |||||||||
| March 31, | December 31, | September 30, | June 30, | |||||||||||||
| 2023 $ | 2022 $ | 2022 $ | 2022 $ | |||||||||||||
| Operating expenses, excluding stock option expense | (6,867,203 | ) | (4,734,898 | ) | (3,078,477 | ) | (2,402,241 | ) | ||||||||
| Stock option expense | (866,483 | ) | (1,050,522 | ) | (1,601,058 | ) | (1,864,891 | ) | ||||||||
| Interest income | 320,275 | 232,961 | 103,921 | 63,566 | ||||||||||||
| Interest expense | (600,000 | ) | 2,677 | (3,662 | ) | (719 | ) | |||||||||
| Loss on write-off of sales tax recoverable | - | (91,289 | ) | - | - | |||||||||||
| Foreign exchange gain (loss) | (3,941 | ) | (76,139 | ) | 30,147 | 317 | ||||||||||
| Gain (loss) on divestment of mineral interests | 24,240 | 22,481 | 176 | 1,552,912 | ||||||||||||
| Gain (loss) on change in reclamation estimate | - | (157,227 | ) | - | - | |||||||||||
| Gain (loss) on marketable securities | (581,721 | ) | 167,172 | (88,153 | ) | 978,386 | ||||||||||
| Gain on sale of uranium Investment | 1,100,500 | (308 | ) | 308 | - | |||||||||||
| Gain (loss) from investment in associate | - | 9,677 | (449,942 | ) | (65,863 | ) | ||||||||||
| Miscellaneous Income | - | (1,802 | ) | 1,802 | - | |||||||||||
| Net Income (loss) | (7,474,333 | ) | (5,677,217 | ) | (5,084,938 | ) | (1,738,533 | ) | ||||||||
| Basic and diluted loss per share1 | (0.06 | ) | (0.05 | ) | (0.05 | ) | (0.02 | ) | ||||||||
| 1 | Basic and diluted loss per share has been adjusted to reflect the share consolidation that occurred on September 14, 2022. |
10
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Significant items causing variations in Quarterly Results:
| ● | Revenue and cost of goods sold for the three months ended March 31, 2024 was $30,394,700 and $28,052,288, respectively, which was generated from the sale of our uranium inventory. The company did not have any sales for the three months ended March 31, 2023. |
| ● | Operating expense for the three months ended March 31, 2024, were $8,670,589 as compared to $6,867,203 for the three months ended March 31, 2023. This increase primarily reflects the growth and increased activity levels the Company experienced in 2024. |
| ● | Losses recognized on the fair value of marketable securities remained fairly constant at $569,961 for the three months ended March 31, 2024 compared to a loss of $581,721 for the three months ended March 31, 2023. This is due to losses in Nuclear Fuels largely offset by gains in other investments. |
| ● | Interest expense for the three months ended March 31, 2024 and 2023, was $406,567 and $600,000, respectively. This reduction is attributable to the Company’s debt pay down of $40,000,000 in 2023 and conversion of the $60,000,000 convertible promissory note in February 2024. |
| ● | Foreign exchange gain for the three months ended March 31, 2024, was $2,683,358 compared to a loss of $3,491 for the three months ended March 31, 2023. This change reflects the increase in assets and liabilities as well as the impact of foreign exchange fluctuations on the Company’s Canadian Dollar denominated financial assets and liabilities. |
The following table sets forth selected operating data and financial metrics for uranium sales for the three months ended March 31, 2024 and 2023.
| Three Months Ended March 31, | Increase | Percent | ||||||||||||||
| 2024 | 2023 | (Decrease) | Change | |||||||||||||
| Volumes Sold (lbs) | 320,000 | - | 320,000 | nm | ||||||||||||
| Realized Sales Price ($/lb) | 95.28 | - | 95.28 | nm | ||||||||||||
| Costs applicable to revenues ($/lb) | 87.66 | - | 87.66 | nm | ||||||||||||
Revenues
Revenues from uranium were $30,394,700 for the three months ended March 31, 2024 due to the completed sale of 320,000 pounds of our inventories to major U.S. nuclear utilities at a realized sales price of $95.28 per pound of uranium. There were no revenues from uranium for the three months ended March 31, 2023.
Costs Applicable to Revenues
Costs applicable to uranium were $28,052,288 for the three months ended March 31, 2024 due to the completed sale of 320,000 pounds of our inventories at a weighted average cost of $87.66 per pound to a major U.S. nuclear utility. There were no costs applicable to uranium concentrates for the three months ended March 31, 2023.
11
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Liquidity and Capital Resources
As at March 31,2024, the Company had cash and cash equivalents of $90,090,593 (December 31, 2023 - $7,493,424) and working capital of $99,824,400 (December 31, 2023 - $19,045,294).
On February 26, 2024, pursuant to the terms of a Master Transaction Agreement dated December 5,2023, Boss Energy acquired a 30% equity interest in a new limited liability company (the“JV Company”) that was formed to hold the Alta Mesa project, in exchange for a payment to enCore of $60 million. enCore holds 70% equity in the JV Company. Upon closing of the Transaction, the parties entered into a joint ventureagreement (the “JV Agreement”) which will govern the JV Company. Pursuant to the JV Agreement, enCore will act as manager of the JV Company and will be entitled to a management fee. The JV Company will distribute uranium from production at Alta Mesa on a pro rata basis according to enCore and Boss Energy’s ownership interest. In the event a party’s interest falls below 10%, the other party shall have a right to either acquire that interest, or elect to have theinterest converted into a 1% production royalty at Alta Mesa.
Concurrently with the establishment of the JV Company, the parties entered into a uranium loan agreement providing for up to 200,000 pounds of uranium to be lent by Boss Energy to enCore. The loan will bear interest of 9% and be repayable in12 months. Under the agreement enCore may prepay the loan in full or part after six months and would be subject to a prepayment fee of $200,000. Both the prepayment and the prepayment fee can be paid in cash or uranium at the election of Boss Energy.
Boss Energy also acquired 2,564,102 common shares of enCore at a price of $3.90 per share for total proceeds to enCore of $10 million. The share price was fixed under the Master Transaction Agreement dated December 5, 2023 with the common shares subject to a four-month statutory hold period,expiring June 27, 2024.
Finally, the parties also entered into a strategic collaboration agreement for thejoint collaboration and research to develop the Company’s PFN technology, to befinanced equally by each party.
Management estimates that it has adequate working capital to fund planned activities for the next year. The Company’s long-term continued operations are dependent on its ability to monetize assets, raise funding from loans or equity financings, deliver uranium into sales at a price above cost, or through other financing arrangements. There is no assurance that future financing activities will be successful
From January 1 through March 31, 2024, the Company issued:
| ● | 6,872,143 common shares pursuant to the conversion of the outstanding balance on its convertible note by its holder. |
| ● | 5,451,669 shares for warrants exercised for gross proceeds of $16,507,663. |
| ● | 697,754 shares for stock options exercised for gross proceeds of $900,077. |
| ● | 495,765 shares for its At-The-Market (ATM) program for gross proceeds of $2,008,256. |
| ● | 127,716 shares pursuant to the exercise of brokers warrants for gross proceeds of $411,979. |
Contractual Obligations
| Payments Due by Period | ||||||||||||||||||||
| Less than | After | |||||||||||||||||||
| Type of Obligation | Total | 1 year | 1-3 years | 4-5 years | 5 years | |||||||||||||||
| Finance Lease Obligations | $ | 81,252 | $ | 48,751 | $ | 32,501 | $ | - | $ | - | ||||||||||
| Purchase Obligations1 | 45,473 | 45,473 | - | - | - | |||||||||||||||
| Other Obligations2 | - | - | - | - | - | |||||||||||||||
| Total Contractual Obligations | $ | 126,725 | $ | 94,224 | $ | 32,501 | $ | - | $ | - | ||||||||||
| 1 | “Purchase Obligation” means an agreement to purchase goods or services that is enforceable and legally binding |
| 2 | “Other Obligations” means other financial liabilities reflected on your company’s statement of financial position. |
12
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Transactions with Related Parties
Key management personnel and compensation
Related parties include key management of the Company and any entities controlled by these individuals as well as other entities providing key management services to the Company. Key management personnel consist of directors and senior management including the Executive Chairman, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Chief Legal Officer.
The amounts paid to key management or entities providing similar services are as follows:
| March 31, 2024 $ | March 31, 2023 $ | |||||||||||
| Consulting | (1) | 309,280 | 37,774 | |||||||||
| Directors’ fees | (2) | 69,000 | 27,000 | |||||||||
| Staff costs | 409,161 | 1,504,754 | ||||||||||
| Stock option expense | 651,160 | 660,962 | ||||||||||
| Total key management compensation | 1,438,601 | 2,230,490 | ||||||||||
| (1) | During the three months ended March 31, 2024, the Company incurred communications & community engagement consulting fees of $42,000 (March 31, 2023 - $37,774) according to a contract with 5 Spot Corporation in 2024 and Tintina Holdings, Ltd., in 2023. In July 2023, the Tintina Holdings, Ltd contract was reassigned to 5 Spot Corporation, a new Company owned by the spouse of the Company’s Executive Chairman. The Company also incurred finance and accounting consulting fees of $267,280 (March 31, 2023 – nil) according to a contract with Hovan Ventures LLC, a Company owned and operated by the former CFO for the Company. |
| (2) | Directors’ Fees are included in staff costs on the consolidated statements of loss and comprehensive loss. |
During the three months ended March 31, 2024, the Company granted 250,000 (March 31, 2023 – nil) options to key management, with a fair value of $496,565.
As of March 31, 2024, and December 31, 2023, the following amounts were owing to related parties:
| March
31, 2024 $ | December 31, 2023 $ | |||||||||
| 5 Spot Corp | Consulting services | 14,000 | 12,000 | |||||||
| Hovan Ventures LLC | Consulting services | 30,100 | 7,000 | |||||||
| Officers and Board members | Accrued compensation | 94,780 | 2,501,594 | |||||||
| 138,880 | 2,520,594 | |||||||||
13
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Financial Instruments and financial risk management
Please refer to the December 31, 2023, consolidated financial statements on www.sedarplus.ca or on the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system at www.sec.gov/edgar.
In January 2024, the Company subscribed to a unit offering with Nuclear Fuels Inc. whereby the Company acquired 1,716,260 units at a price of C$0.60 per unit for gross consideration of C$1,029,756. Each unit is comprised of one common share and one-half of one share purchase warrant, with each whole warrant being exercisable into an additional common share at a price of C$0.80 for a period of 3 years, expiring January 24, 2027.
Off Balance Sheet Arrangements
At March 31, 2024, the Company had no material off-balance sheet arrangements such as guarantee contracts, contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that trigger financing, liquidity, market or credit risk to the Company.
Accounting Policies and Critical Accounting Estimates and Judgements:
For a complete summary of all of our material accounting policies refer to Note 2: Material Accounting Policy Information of the Notes to the consolidated financial statements, Consolidated Financial Statements and Management’s Discussion and Analysis for the year ended December 31, 2023, in our Annual Report on Form 40-F for 2023 on www.sedarplus.ca or on the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system at www.sec.gov/edgar.
Other MD&A Requirements
Additional disclosure of the Company’s technical reports, material change reports, news releases and other information can be obtained on SEDAR+ at www.sedarplus.ca or on the SEC’s EDGAR system at www.sec.gov/edgar.
Contingencies
There are no contingent liabilities that have not been disclosed herein.
Proposed Transactions
There are no proposed transactions that have not been disclosed herein.
Risk Factors and Uncertainties
There have been no material changes from the risk factors disclosed in Management’s Discussion and Analysis of our Annual Report on Form 40-F for the year ended December 31, 2023.
14
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Cautionary Notes Regarding Forward-Looking Statements
This MD&A contains statements that, to the extent that they are not historical fact, may constitute “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation, respectively. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “project”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes” or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements may include, but are not limited to, statements with respect to:
| ● | the Company’s future financial and operational performance; |
| ● | the sufficiency of the Company’s current working capital, anticipated cash flow or its ability to raise necessary funds; |
| ● | the anticipated amount and timing of work programs; |
| ● | our expectations with respect to future exchange rates; |
| ● | the estimated cost of and availability of funding necessary for sustaining capital; |
| ● | forecast capital and non-operating spending; |
| ● | the Company’s plans and expectations for its property, exploration, development, and production; |
| ● | the use of available funds; |
| ● | expectations regarding the process for and receipt of regulatory approvals, permits and licenses under governmental and other applicable regulatory regimes, including U.S. government policies towards domestic uranium supply; |
| ● | expectations about future uranium market prices, production costs and global uranium supply and demand; |
| ● | expectations regarding holding physical uranium for long-term investment; |
| ● | the establishment of mineral resources on any of the Company’s current or future mineral properties (other than the Company’s properties that currently have established mineral resource estimates); |
| ● | future royalty and tax payments and rates; |
| ● | expectations regarding possible impacts of litigation and regulatory actions; and |
| ● | the completion of reclamation activities at former mine or extraction sites. |
15
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
Such forward-looking statements reflect the Company’s current views with respect to future events, based on information currently available to the Company and are subject to and involve certain known and unknown risks, uncertainties, assumptions and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed in or implied by such forward-looking statements. The forward-looking statements in this MD&A are based on material assumptions, including the following:
| ● | the Company budget, including expected levels of exploration, evaluation, development, production and operational activities and costs, as well as assumptions regarding market conditions and other factors upon which we have based the Company’s income and expenditure expectations; |
| ● | assumptions regarding the timing and use of the Company’s cash resources; |
| ● | the Company’s ability to, and the means by which the Company can, raise additional capital to advance other exploration objectives; |
| ● | the Company’s operations and key suppliers, employees, contractors and subcontractors will be available to continue operations; |
| ● | the Company’s ability to obtain all necessary regulatory approvals, permits, and licenses for the Company’s planned activities under governmental and other applicable regulatory regimes; |
| ● | the Company’s expectations for the demand and supply of uranium, the outlook for long-term contracting, changes in regulations, public perception of nuclear power, and the construction of new and ongoing operation of existing nuclear power plants; |
| ● | the Company’s expectations regarding spot and long-term prices and realized prices for uranium; |
| ● | the Company’s expectations that the Company’s holdings of physical uranium will be helpful in securing project financing and/or in securing long- term uranium supply agreements in the future; |
| ● | the Company’s expectations regarding tax rates, currency exchange rates, and interest rates; |
| ● | the Company’s decommissioning and reclamation obligations and the status and ongoing maintenance of agreements with third parties with respect thereto; |
| ● | the Company’s mineral resource estimates, and the assumptions upon which they are based; |
| ● | the Company’s employees’ and contractors’, ability to comply with current and future environmental, safety and other regulatory requirements and to obtain and maintain required regulatory approvals; and |
| ● | the Company’s operations are not significantly disrupted by political instability, nationalization, terrorism, sabotage, pandemics, social or political activism, breakdown, natural disasters, governmental actions, litigation or arbitration proceedings, equipment or infrastructure failure, labor shortages, transportation disruptions, or other development or exploration risks. |
The risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from any future results expressed in or implied by the forward-looking statements in this MD&A include, but are not limited to, the following factors:
| ● | exploration and development risks; |
| ● | changes in commodity prices; |
| ● | access to skilled mining personnel; |
| ● | results of exploration and development activities; |
16
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
| ● | uninsured risks; |
| ● | regulatory risks; |
| ● | defects in title; |
| ● | availability of supplies, timeliness of government approvals and unanticipated environmental impacts on operations; |
| ● | risks posed by the economic and political environments in which the Company operates and intends to operate; |
| ● | the potential for losses arising from the expansion of operations into new markets; |
| ● | increased competition; |
| ● | assumptions regarding market trends and expected demand and desires for the Company’s products and proposed products; |
| ● | reliance on industry manufacturers, suppliers and others; |
| ● | the failure to adequately protect intellectual property; |
| ● | the failure to adequately manage future growth; |
| ● | adverse market conditions; and |
| ● | the failure to satisfy ongoing regulatory requirements. |
In addition, the risks, assumptions, and other factors set out herein (including under Risk Factors and Uncertainties) and in the Company’s public filings, including its most recent Annual Information Form, could cause actual results to differ materially from any future results expressed in or implied by the forward-looking statements in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. These risks, uncertainties, assumptions and other factors should be considered carefully, and prospective investors and readers should not place undue reliance on the forward-looking statements.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or information or statements to reflect information, events, results, circumstances or otherwise after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable laws. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such fact on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements or information.
All of the forward-looking statements contained in this MD&A are qualified by the foregoing cautionary statements.
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED MINERAL RESOURCES: The Company reports mineral resources on its projects according to Canadian standards, which differ from the requirements of U.S. securities laws. As a result, the Company reports the mineral resources of the projects it has an interest in according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, (the “CIM Standards”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. The requirements of NI 43-101 and the CIM Standards differ from the requirements of the SEC that are applicable to domestic United States reporting companies under subpart 1300 of Regulation S-K (“S-K 1300”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As an issuer that prepares and files its reports with the SEC pursuant to the multi-jurisdictional disclosure system of the Exchange Act, the Company is not subject to the requirements of S-K 1300. Any mineral resources reported by the Company in accordance with NI 43-101 and CIM Standards may not qualify as such under or differ from those prepared in accordance with S-K 1300. Accordingly, information included in this MD&A concerning descriptions of mineralization and estimates of mineral resources under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of S-K 1300.
17
enCore Energy Corp.
Management’s Discussion and Analysis
For the three months ended March 31, 2024 and 2023
OUTSTANDING SHARE DATA AS AT THE DATE OF THIS MD&A
Issued share capital: 181,732,963 common shares
| a) | Outstanding stock options: |
| Average | ||||||||
| Outstanding | Exercise Price | |||||||
| Expiry Date | Options | C$ | ||||||
| June 2024 | 436,666 | 0.45 | ||||||
| October 2024 | 66,666 | 5.76 | ||||||
| May 2025 | 840,499 | 0.64 | ||||||
| September 2025 | 525,000 | 1.32 | ||||||
| October 2025 | 5,000 | 1.20 | ||||||
| January 2026 | 53,333 | 2.82 | ||||||
| February 2026 | 11,667 | 3.24 | ||||||
| May 2026 | 233,073 | 3.57 | ||||||
| December 2026 | 65,000 | 5.30 | ||||||
| January 2027 | 16,667 | 5.01 | ||||||
| February 2027 | 2,120,833 | 4.20 | ||||||
| May 2027 | 83,333 | 4.32 | ||||||
| June 2027 | 166,667 | 3.75 | ||||||
| November 2027 | 133,334 | 3.65 | ||||||
| December 2027 | 50,000 | 3.30 | ||||||
| January 2028 | 25,000 | 3.38 | ||||||
| February 2028 | 44,681 | 3.10 | ||||||
| April 2028 | 67,000 | 2.61 | ||||||
| May 2028 | 2,070,500 | 2.79 | ||||||
| June 2028 | 60,000 | 3.10 | ||||||
| August 2028 | 22,500 | 3.14 | ||||||
| October 2028 | 35,000 | 4.24 | ||||||
| January 2029 | 125,000 | 6.25 | ||||||
| February 2029 | 260,000 | 6.16 | ||||||
| March 2029 | 40,000 | 5.37 | ||||||
| April 2029 | 37,000 | 6.20 | ||||||
| 7,594,419 | ||||||||
| b) | Outstanding share purchase warrants: |
| Exercise | ||||||||
| Outstanding | Price | |||||||
| Expiry Date | Warrants | C$ | ||||||
| May 2025 | 56,444 | 3.251 | ||||||
| February 2026 | 21,191,890 | 3.806 | ||||||
| 21,248,334 | ||||||||
| c) | Convertible Promissory note: |
A portion of the consideration paid to Energy Fuels, Inc in the Company’s acquisition of the Alta Mesa Project was a $60,000,000 secured vendor take-back convertible promissory note. The Promissory Note has a two-year term and bears interest at 8% per annum.
During the year ended December 31, 2023, the Company paid $40,000,000 of the principal balance off, reducing the outstanding principal balance at that date to $20,000,000. In February 2024, the balance was converted by issuance of 6,872,143 common shares to the debt holder eliminating the debt.
18
Exhibit 99.3
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, W. Paul Goranson, Chief Executive Officer of enCore Energy Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of enCore Energy Corp. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013) published by The Committee of Sponsoring Organizations of the Treadway Commission. |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: May 10, 2024
| /s/ W. Paul Goranson | |
| W. Paul Goranson | |
| Chief Executive Officer |
Exhibit 99.4
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Shona Wilson, Chief Financial Officer of enCore Energy Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of enCore Energy Corp. (the “issuer”) for the interim period ended March 31, 2024. |
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013) published by The Committee of Sponsoring Organizations of the Treadway Commission. |
| 5.2 | ICFR – material weakness relating to design: N/A |
| 5.3 | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
Date: May 10, 2024
| /s/ Shona Wilson | |
| Shona Wilson | |
| Chief Financial Officer |