Executive Summary / Key Takeaways

• enCore Energy Corp. is strategically positioned as America's sole uranium producer with multiple In-Situ Recovery (ISR) Central Processing Plants in operation, leveraging its proven ISR technology to meet growing domestic and global demand for clean nuclear energy.
• The company is actively expanding its operational footprint, demonstrated by record uranium extraction rates at its Alta Mesa plant and significant wellfield development in South Texas, alongside critical federal permitting advancements for its Dewey Burdock project.
• Recent financial performance reflects increased operational activity and strategic asset management, with a notable reduction in per-pound costs of uranium sales and a significant realized gain from marketable securities, despite a decrease in sales volume for the first half of 2025.
• enCore has bolstered its liquidity with a recent $115 million convertible senior notes offering, providing capital for its aggressive growth strategy and reducing reliance on its equity line of credit.
• The investment thesis is underpinned by a supportive geopolitical and market environment for nuclear power, including U.S. government policies favoring domestic uranium production and global nuclear fleet expansion, though operational ramp-up and market price volatility remain key factors to monitor.

A New Dawn for Domestic Uranium: enCore's Strategic Ascent

The global energy landscape is undergoing a profound transformation, with a renewed focus on clean, reliable, and carbon-free power generation. At the heart of this shift lies nuclear energy, and with it, the critical demand for uranium. enCore Energy Corp. ($EU) stands at the forefront of this resurgence, positioning itself as "America's Clean Energy Company™" and the only United States uranium company with multiple Central Processing Plants (CPPs) in operation as of June 30, 2025. The company's overarching strategy is to build uranium extraction capacity by developing and operating a series of facilities in South Texas, complemented by a future pipeline of exploration projects in South Dakota and Wyoming, aiming to become a leading supplier of domestic uranium to fuel a growing demand for clean energy.

The industry backdrop is particularly favorable. As of May 2025, 439 operable nuclear reactors worldwide require an estimated 175 to 180 million pounds of U3O8 annually, a demand that continues to outstrip primary production. This supply-demand imbalance has been exacerbated by dwindling stockpiled inventories and secondary supplies. In the U.S., policy shifts are strongly supportive; the Inflation Reduction Act of 2022 and state-level clean energy credits have spurred operating life extensions and capacity expansions for existing nuclear plants. Furthermore, President Trump's Executive Orders in January 2025 designated uranium as a critical mineral and an energy resource, subject to emergency declarations to fast-track energy project permitting. The U.S. Department of Energy (DOE) has committed to providing high-assay low-enriched uranium (HALEU) to domestic developers, and the National Energy Dominance Council is actively promoting initiatives to expand energy infrastructure and launch small modular nuclear reactors. This robust policy environment, coupled with global nuclear expansion plans in countries like China and South Korea, creates a compelling market for enCore's domestic uranium production.

Technological Edge: The Power of In-Situ Recovery

enCore Energy's foundational strength lies in its exclusive utilization of In-Situ Recovery (ISR) technology for uranium extraction. ISR is a well-known and proven method, co-developed by leaders within enCore Energy, that offers significant advantages over conventional mining. This process involves injecting a lixiviant (a solution that dissolves the uranium) into the ore body, which then mobilizes the uranium, allowing it to be pumped to the surface for processing, all while minimizing surface disturbance.

The tangible benefits of ISR technology are substantial. It is generally more environmentally friendly, requiring a smaller physical footprint and generating less solid waste compared to traditional open-pit or underground mining. Operationally, ISR can lead to lower capital and operating costs, as it avoids the need for extensive earthmoving, crushing, and grinding. At enCore's Alta Mesa ISR Uranium CPP, operational efficiencies are evident. In June 2025, uranium capture peaked at 3,705 pounds on a single day, with an average of 2,410 pounds per day for the first 22 days of the month. The plant's South train achieved a peak head grade of 110mgL, averaging 26mgL, while the West train peaked at 120mgL with an average grade of 81.5mgL. The company utilizes Pathcad software to adjust wellfield flow patterns, optimizing mineral recovery. This technological application directly contributes to enCore's competitive moat by enabling more cost-effective and environmentally responsible production, which is increasingly valued by utilities and regulators. The company anticipates "further cost efficiencies as additional wellfield patterns come online and economies of scale improve," directly linking technological optimization to enhanced financial performance and market positioning.

Competitive Landscape and Strategic Positioning

enCore Energy operates in a competitive global uranium market, yet it carves out a distinct niche through its concentrated U.S. asset base and ISR expertise. While larger, more diversified players like Cameco Corporation (CCJ) boast global scale and established supply chains, enCore's focus on domestic production positions it uniquely to capitalize on U.S. energy independence initiatives and policy support. Uranium Energy Corp. (UEC) is a direct peer, also emphasizing ISR in the Americas. enCore's advantage over UEC lies in its multiple operational CPPs, making it the only U.S. producer with such a diversified operational footprint. NexGen Energy Ltd. (NXE), with its high-grade Canadian deposits, and Energy Fuels Inc. (UUUU), which diversifies into rare earth elements, represent different strategic approaches. enCore's pure-play uranium focus and regional expertise in the U.S. allow for potentially greater agility in navigating domestic regulations and securing localized supply contracts.

The company's strategic acquisitions and partnerships, such as the 70% interest in the Alta Mesa Project with Boss Energy Limited, underscore its commitment to expanding its domestic production capacity. This focused approach, while potentially leading to a smaller overall scale compared to global giants, provides a strong competitive advantage in securing U.S. utility contracts that prioritize domestic sourcing. However, enCore's smaller scale could lead to higher operating costs per pound compared to the efficiencies achieved by larger, more mature operations. The stringent regulatory environment and high capital requirements for new uranium projects act as significant barriers to entry, reinforcing enCore's established position and protecting its market share from new entrants.

Financial Performance and Operational Momentum

enCore Energy's financial results for the three and six months ended June 30, 2025, reflect a company in an active growth and operational ramp-up phase. For the three months ended June 30, 2025, revenue from uranium sales decreased by 31% to $3.664 million, primarily due to a lower contracted sales volume of 60,000 pounds of uranium compared to 90,000 pounds in the same period of 2024. However, the realized sales price per pound saw a modest increase of 3% to $61.07. For the six months ended June 30, 2025, revenue decreased by 39% to $21.904 million, with sales volumes of 350,000 pounds compared to 410,000 pounds in the prior year period. The realized sales price per pound for the six-month period was $62.58, a decrease from $87.11 in the comparable 2024 period, reflecting market dynamics for the commodity.

A critical highlight is the significant reduction in costs applicable to uranium sales. For the three months ended June 30, 2025, these costs decreased by 76% to $2.534 million, driven by lower sales volume and purchases of uranium at a lower market price. The weighted average cost per pound for sales was $42.23, a substantial improvement from $115.87 in Q2 2024. Similarly, for the six months, the cost per pound was $59.42, down from $100.71. Operating expenses, excluding stock option expenses, increased by 16% to $19.657 million for the three months and 23% to $34.382 million for the six months ended June 30, 2025. This increase "primarily reflects the growth and increased activity levels the Company is experiencing in 2025, which is driven primarily by the increased extraction of uranium at Alta Mesa and Rosita which commenced during the latter part of 2024." The net loss per share for Q2 2025 improved to $(0.03) from $(0.12) in Q2 2024.

Operationally, the company extracted 125,000 pounds of uranium in the first half of 2025 at a total cost of $42.92 per pound, with cash costs at an impressive $28.86 per pound. As of June 30, 2025, enCore held 244,204 pounds of U3O8 in inventory at a cost of $39.63 per pound. The company also realized a significant gain of $7.671 million from the sale of 170 million common shares of Anfield Energy Inc. during the period. These figures underscore enCore's progress in ramping up production and managing costs effectively, even as it navigates market price fluctuations.

Bolstering Liquidity and Future Outlook

enCore Energy's liquidity and capital resources are crucial for its ambitious growth trajectory. As of June 30, 2025, the company reported cash and cash equivalents of $26.897 million and working capital of $30.197 million. Historically, operations have been funded through share capital issuances and the sale of non-controlling interests, such as the $60 million received from Boss Energy Limited in February 2024 for a 30% stake in the Alta Mesa and Mesteña Grande projects.

Subsequent to the reporting period, enCore significantly strengthened its financial position by completing an upsized offering of $115 million aggregate principal amount of 5.50% Convertible Senior Notes due 2030 in August 2025. This move provides substantial capital for its strategic initiatives. The company also secured a $15 million equity line of credit commitment in August 2025, though it "do[es] not intend to draw on this line of credit as we have other sources of capital available," signaling confidence in its current funding. Management believes that its "available cash, expected operating cash flows, and existing credit facility or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements for the next twelve-month period following June 30, 2025."

Looking forward, enCore has substantial revenue commitments, expecting to recognize $64.740 million through December 31, 2027, and an additional $269.000 million thereafter from the non-cancelable portion of its sales contracts. Operationally, the company continues to advance its projects. The Dewey Burdock ISR Uranium Project in South Dakota received approval for the U.S. Government's Fast-41 Program in September 2025, streamlining its federal permitting process. The EPA's Environmental Appeals Board also denied a petition against the project's permits, further de-risking its development. The NRC is scheduled to finalize the renewal of the Dewey-Burdock Source Material License by April 2026. The acquisition of the 5,900-acre Tacubaya parcel adjacent to Alta Mesa is expected to provide additional feed and longevity for the Alta Mesa CPP, supporting long-term production.

Risks and Challenges

Despite the compelling investment thesis, enCore Energy faces several risks. The company has identified material weaknesses in its internal control over financial reporting, particularly concerning general information technology controls and process-level control activities. While remediation efforts are underway, these weaknesses could impact financial reporting accuracy. Litigation risks also persist, including a federal securities class action lawsuit and arbitration demands from former executives. Management believes these are "preliminary in nature and the Company believes that an adverse outcome is not probable or estimable at this time."

Furthermore, the company is "subject to market risk related to the market price of uranium." Given that future sales are contracted based on both spot and fixed pricing, fluctuations in uranium prices would directly impact revenues, results of operations, and cash flows. The company does not currently use derivative financial instruments to hedge this exposure. Capital access risk remains a factor, as the ability to secure future financing depends on overall equity and credit markets, the company's leverage, and market perceptions.

Conclusion

enCore Energy Corp. is strategically positioned to capitalize on the burgeoning demand for domestic uranium, driven by a global pivot towards nuclear energy and robust U.S. policy support. Its proven ISR technology, coupled with the operational ramp-up of its South Texas facilities and the advancement of key projects like Dewey Burdock, forms a strong foundation for future growth. While the company has demonstrated improved cost efficiencies and strengthened its liquidity, investors should closely monitor the continued operational execution, the resolution of internal control weaknesses, and the inherent volatility of uranium prices. The recent capital raise through convertible notes provides a significant runway, and the ongoing expansion of its production capacity, supported by a favorable market and regulatory environment, paints a compelling picture for enCore Energy as a critical player in America's clean energy future.