ENCUF - enCore Energy Corp. (ENCUF)(EU:CA) - enCore announces PEA results for its New Mexico properties
enCore announced Preliminary Economic Assessment results for its recently-consolidated Juan Tafoya and Marquez projects in New Mexico. The assessment covers historical company assets and assets acquired in the Westwater Resources transaction of last year. As a reminder, these assets are long term in nature, and we do not expect the company to mine the projects in the near future. Instead, we expect management to focus on Texas operations including the reactivation of the Rosita production facility.The PEA reports a range of value of $20.9-$71.2 million. The range assumes uranium yellowcake prices of $60-$70/lb. Internal return rates range from 17-39% and assume capital costs of $72 million and a 7% discount rate. All-in costs are estimated at $48/lb. As a reminder, current uranium spot prices are closer to $30/lb. and contracted prices are near $40/lb., well below the PEA's assume prices. Management is quick to point out that returns are based on conventional underground mining and that they believe return would be higher under in-situ recovery processing.Why is the PEA significant? The shares of ENCUF have risen 650% in the last twelve months and 55% since closing the Westwater transaction at the end of last year. During both time periods, uranium prices have essentially been flat and the company has not announced new operating developments of note (unless one considers buying uranium for inventory as significant). The PEA represents one of the few data points from the company since the stock took off. The PEA announcement, while not all that significant, helps build a case for long-term value.We rate the shares OUTPERFORM with a US$1.50 price target (CDN$1.87). The shares of ENCUF have backed off of levels that were approaching our price target. We believe value exists at prices below $1.50 but will reiterate that we would like to see higher uranium prices or company operational developments before we consider raising our price target higher. Read More >>