The Dewey-Burdock Project is an advanced-stage uranium exploration project located in South Dakota and owned 100% by enCore Energy Corp. The Project is in southwest South Dakota and situated on the southwestern flank of the Black Hills Uplift, forming a part of the northwestern extension of the Edgemont Uranium Mining District. The nearest population center is Edgemont, South Dakota (population 900) located about 16 miles from the Project.
The project is divided into two mineral resource areas; Dewey and Burdock, consisting of approximately 73 surface acres and 93 surface acres respectively of wellfields where mineral extraction will occur. A central processing facility will be located at Burdock and a satellite facility will be installed at Dewey. Uranium mineralization is comprised of “roll-front” type uranium mineralization hosted in several sandstone stratigraphic horizons within the Inyan Kara Formation that are isolated from adjacent aquifers and therefore amenable to In-Situ Recovery technology.
The Project includes federal claims, private mineral rights and private surface rights covering a 10,580-acre project license boundary as well as surrounding areas. In total, enCore Energy controls approximately 16,962 acres of mineral rights and 12,613 acres of surface rights.
The Project was granted a Source and Byproduct Materials License by the U.S. Nuclear Regulatory Agency in April 2014, and Underground Injection Control Class III and V permits were issued by the U.S. Environmental Protection Agency, Region 8 in October 2020. Additional approvals necessary for construction and operation of the Project have been applied for including those from the State of South Dakota and Bureau of Land Management.
The project is within an area of low population density characterized by an agriculture-based economy with little other types of commercial and industrial activity. The project is expected to bring a significant economic benefit to the local area in terms of tax revenue, new jobs, and commercial activity supporting the project. Previously, a uranium mill was located at the town of Edgemont. Uranium was first produced in the vicinity of the Dewey-Burdock Project in 1954.
Estimated initial capital costs for the first two years of the Project life are approximately $31.7 million with sustaining capital costs of approximately $157.7 million spread over the next 17 years of operation. Project life is estimated at 21 years including reclamation and groundwater restoration with approximately $149.2 million in direct operating expenditures. Overall potential yellowcake production is estimated to be 14.3 million pounds.
 NI 43-101 Technical Report, Preliminary Economic Assessment. Dewey-Burdock Uranium ISR Project, South Dakota, USA, completed by Woodard & Curran and Rough Stock Mining Services (effective 3 December 2019)
Preliminary Economic Assessment and NI 43-101 Mineral Resources
In December 2020, the enCore’s wholly subsidiary Azarga Uranium Corp. filed an amended and restated NI 43-101 compliant independent Technical Report and Preliminary Economic Assessment (“PEA”) for the Dewey-Burdock Project prepared by Woodard & Curran and Rough Stock Mining Services (the “Dewey-Burdock PEA”) with an effective date of December 3, 2019.
The Dewey-Burdock PEA states the Project contains estimated ISR amenable Measured and Indicated uranium resources of 17.12 million pounds U3O8 (7.38 million tons at an average grade of 0.116% eU3O8) and estimated Inferred uranium resources of 0.71 million pounds U3O8 (0.65 million tons at an average grade of 0.055% eU3O8) at a 0.20 GT cut-off. The mineral resource estimate was made using information from a database of over 4,000 drill holes.
The Dewey-Burdock PEA resulted in a pre-income tax NPV of $171.3 million at a discount rate of 8% and an IRR of 55% compared to a post-income tax NPV of $147.5 million at a discount rate of 8% and an IRR of 50%. The Dewey-Burdock PEA post-income tax calculations do not include a corporate level assessment of income tax liabilities; taxes have only been calculated at the Dewey-Burdock Project level. The estimate of income tax at the corporate level is subject to a number of additional considerations that have not been factored in when calculating income taxes at the project level, including, but not limited to, the capital structure to finance the Dewey-Burdock Project, which has not yet been determined and any loss carry forwards available at the corporate level.
The Dewey-Burdock PEA estimated uranium market prices of $55/lb U3O8, direct cash operating costs of $10.46 per pound of production and royalties and local taxes (excluding property tax) of $5.15 per pound of production. The total pre-income tax cost of uranium production is estimated to be $28.88 per pound of production. Income taxes are estimated to be $3.39 per pound of production.
Initial capital expenditures are estimated at $31.7 million. The Dewey- Burdock Project is forecast to produce 14.3 million pounds of U3O8 over its 16 year production life and the projected cash flows of the Dewey-Burdock Project are expected to be positive in the second year of production, two years after the commencement of construction.
This Preliminary Economic Assessment is preliminary in nature, that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the Preliminary Economic Assessment will be realized.
Summary of Amenability for ISR Mining
Investigations have been conducted to determine the ISR amenability of the Dewey Burdock deposit, including both ground water conditions and leachability of the mineralization. Analysis of the Fall River and Lakota hydro-stratigraphic unit, host for the mineralization indicates that a range of ISR well pumping rates is suitable within the hydro-stratigraphic unit’s potential, and the unit’s transmissivity provide favorable conditions for ISR mining techniques.