Alta Mesa sale boosts uranium production plans

Colorado-based Energy Fuels Inc has agreed to sell three wholly owned subsidiaries that together make up the Alta Mesa project to Texas-based enCore for a total USD120 million - USD60 million cash at closing and USD60 million in a secured convertible note, payable in two years. enCore will also assume all reclamation liabilities associated with Alta Mesa. EnergyFuels acquired the project from Mesteña Uranium in 2016 for about USD13.6 million.

The fully licensed and constructed ISL project and central processing facility has an operating capacity of 1.5 million pounds U3O8 (577 tU) per year. It produced nearly 5 million pounds U3O8 between 2005 and 2013, when full production was curtailed because of low uranium prices, and remains on standby. Measured and indicated resources currently stand at 3.41 million pounds U3O8 with inferred resources of 16.79 million pounds.

enCore's portfolio includes the licensed and past-producing Rosita and Kingsville Dome ISL operations in South Texas, the development-stage Dewey-Burdock (South Dakota) and Gas Hills (Wyoming) projects, and resources in New Mexico. With the addition of Alta Mesa - which the company said can reach commercial production levels with limited required capital within 10 months of a production decision - enCore's total uranium processing capacity will be 3.6 million pounds U3O8 per year.

Executive Chairman William Sheriff said the acquisition "further cements enCore's commitment to near-term US-based uranium production with our initial focus on South Texas." Alta Mesa will "immediately become a flagship asset amongst our large project portfolio", he added.

"Combined with our South Texas operations that are anchored around our Rosita project, this acquisition puts us in an exceptionally strong position to advance towards being a long-term sustainable source of uranium production to fuel clean nuclear energy that will benefit our local communities, the state of Texas, and the United States," enCore CEO Paul Goranson said.

As well as uranium, Energy Fuels produces vanadium and is also developing commercial production of rare-earth carbonate as well as looking to develop the separation of radioisotopes from its mineral processing streams. Its assets include the White Mesa Mill in Utah - the only currently operating conventional uranium mill in the USA - and the Nichols Ranch ISL project in Wyoming, which is currently on standby.

Energy Fuels CEO Mark Chalmers said the money from the transaction will allow the company to "focus and accelerate" its higher priority uranium and vanadium projects, adding that the company is carrying out work towards restarting production at one or more of its projects with production expected to start as soon as 2023. The cash from the Alta Mesa transaction will help further fund this ramp-up, he said, while the company will also retain some exposure to short-term market upside and optionality at Alta Mesa and enCore through the convertible note.

Energy Fuels also plans to establish an ore purchasing programme from future uranium mining from others to maximise currently underutilised capacity at White Mesa, Chalmers said. The transaction with enCore "helps to both finance and focus our plans in this regard without dilution associated with equity financings", he added.

The transaction is expected to close by the end of 2022 or early 2023. enCore said it will "immediately pursue the resumption of operations" at Alta Mesa following completion.