enCore clears Dewey Burdock legal hurdle

enCore Energy has had a legal win regarding its Dewey Burdock In-Situ Recovery uranium project in South Dakota, USA, which is regarded as one of the better ISR projects in the country.

Dewey Burdock

Dewey Burdock

The US Court of Appeals for the Circuit of the District of Columbia ruled lawful a prior decision by the US Nuclear Regulatory Commission to grant enCore subsidiary Powertech Uranium an extraction licence, which had been challenged by the Oglala Sioux Tribe.

The Tribe, which may appeal the court panel's opinion, had sought a review of the NRC's decision to grant the licence, arguing that the commission failed to comply with requirements set by the National Environmental Policy Act.

"The upholding of the federal licences paves the way for the state and EPA to finalise its permits which had already been approved in draft form, and for enCore to move the project forward to a production decision," Red Cloud Securities said.

Red Cloud said the project, with a 2020 preliminary economic assessment contemplating an after-tax NPV8% of US$147.5 million and IRR of 50% at US$55/pound, is "one of the better ISR projects in the USA".

"We suspect that this project could move forward via a toll milling arrangement with one of the several existing ISR processing plants already operational in Wyoming.

"That said, capex is already relatively low and enCore may wish to control its own destiny. This project is likely to enter the project pipeline behind the Rosita ISR plant in TX which is due to resume production in 2023," Red Cloud said.

The initial capital expenditures for the project are estimated at $31.7 million. It is forecast to produce 14.3 million lbs of U3O8 over its 16 years of production. Cash flows are expected to become positive in the second year or production.

On 11 August, enCore's share price was C$1.43 (US$1.12), having risen 3% day on day. The company has a market capitalisation of C$460.6 million.

Red Cloud has a target price for enCore of C$2.75.

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