Alta Mesa sale complete

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

Texas-based enCore said it will "immediately" pursue the resumption of operations at the fully licensed and constructed ISL project and central processing facility, which is currently on standby. With a total operating capacity of 1.5 million pounds U3O8 (577tU) per year, Alta Mesa produced nearly 5 million pounds between 2005 and 2013, when full production was curtailed as a result of low uranium prices. The project has measured and indicated resources of 3.41 million pounds U3O8 and an inferred resource of 16.79 million pounds.

enCore's fully licensed ISL facilities - Alta Mesa, Rosita and Kingsville Dome, all of which are in Texas - have a combined potential processing capacity of 3.6 million pounds of uranium per year. The company also has a "pipeline" of projects including Dewey-Burdock in South Dakota, Gas Hills in Wyoming and additional projects in New Mexico.

"With the completion of this transaction enCore is more than doubling our production capacity in South Texas," enCore CEO and Director Paul Goranson said. "As we advance towards our Q3/23 production goal at our Rosita ISR Uranium Processing Plant we will commence work at the Alta Mesa Project with plans to restart production in 2024 with installation of a fully permitted wellfield."

Complementary projects

Energy Fuels said it will invest "a portion of the proceeds" into increasing its US uranium production. Its White Mesa Mill - which the company describes as "the only US uranium facility producing material quantities of uranium" - produced 162,000 pounds U3O8 in 2022, more than the company's previous guidance figures of 130,000-140,000 pounds, and the company said it is preparing four of its conventional uranium and uranium/vanadium mines to be ready to resume uranium ore production.

The timing of production restarts will depend on current and future uranium sales and inventory requirements, Energy Fuels said: it currently holds inventory of about 847,000 pounds U3O8 from production and inventory purchases, which it will use along with future production to fulfil its delivery obligations under its supply contracts with US nuclear utilities.

Energy Fuels CEO and President Mark Chalmers described the sale of Alta Mesa as highly strategic, with proceeds from the sale expected to fully fund the company's current uranium, vanadium and rare earth business plans "through approximately 2024" as well as providing Energy Fuels with the ability to invest in infrastructure and human capital needed to resume production at its lowest-cost and nearest-term uranium mines and facilities.

Three of the four conventional mines Energy Fuels is currently preparing for production produce both uranium and vanadium. The company also recently announced the achievement of several milestones related to its expanding rare earth element (REE) supply chain, including the acquisition of the Bahia Project in Brazil and procurements of natural monazite sand concentrate.

"Even though uranium is Energy Fuels' core business, we expect to invest some of the proceeds from the sale of Alta Mesa into our rapidly expanding rare earths business," Chalmers said. Modifications and enhancements to enable White Mesa to produce commercial quantities of REEs - which the company sees as highly complementary to our primary uranium business - are already under way. "We can utilise our existing facilities to recover uranium and REEs from monazite, which increases our uranium production and also allows us to generate margins from multiple commodities. No other US uranium producer has the ability to complement its primary uranium business in this manner," Chalmers said.