Flash Note- Kairos Power, Encore & Goviex

There were three pieces of news that were released this morning that we wanted to comment on as all three relate to important themes we having been discussing lately.

First, Google and Kairos Power will deploy an advanced reactor to help power the tech company’s data centers on the Tennessee Valley Authority (TVA) grid and hopes to be connected by 2030. TVA has agreed to purchase up to 20 megawatts (MWs) from Kairos’ Hermes 2 reactor and are the first U.S. utility to sign a power purchase agreement with an advanced reactor company. Kairos and Google will bear the financial risk with building the project while TVA provides the revenue stream the plant will need to operate through the power purchase agreement.

Kairos received a construction permit for the reactor from the Nuclear Regulatory Commission (NRC) in November 2024 and will still need to apply for an operating license with them before it can start operations.

This is important news to mention as the market begins to understand which SMR company is actually moving ahead and which ones are not. We are not nuclear engineers and are not an SMR expert, but because Global X Uranium ETF (URA) now holds two SMR companies in its top five holdings, we feel that we need to keep a close eye on any developments as capital inflows and outflows to these specific stocks can have an affect on other industry stocks.

Currently, URA holds OKLO as its second biggest holding at 10.72% of AUM and NuScale (SMR) in fifth with 5.49% of AUM. Based on what we see developing in the SMR market, both OKLO and SMR are falling further behind competitors like Kairos. Just yesterday, we wrote that both OKLO and SMR appear overvalued so if any air comes out of these stocks, they could drag on URA performance and as a result, impact more uranium mining/development focused names.

Second, Encore Energy announced that the company completed the acquisition of a 5,900 acre parcel of private land (“Tacubaya”) located immediately adjacent, and east of, Encore’s Alta Mesa historic and producing wellfields. The company says that Tacubaya is expected to provide additional feed and longevity for the Alta Mesa central processing plant as:

• Historical drilling completed by Chevron Minerals during the late 1970’s discovered multiple uranium roll fronts located at various depths within multiple sand units interpreted to be the lower C, middle C, B and A sands, all of which have been, or are currently productive, at the Alta Mesa Uranium Project

• Additional exploration will be required to fully explore and delineate uranium mineralization on Tacubaya

• Projected continuation of productive roll fronts from Alta Mesa Wellfields 1, 3, 4, 5B and the currently operating Wellfield 7; and

• Initial exploration to include a 200-hole drilling program beginning in two key areas utilizing several rigs. Two rigs will begin in October 2025, with an additional two drill rigs being added as the program progresses

Source: Encore Energy PR, August 18, 2025

On August 13rd, in Flash Note- Brace for Impact, we wrote about Encore stating: “Cash levels have dropped from from $39.7M to $26.9M in the first-half of the year and this is after the company took a gain of $7.6M in its Anfield Energy shares (AEC). They did not utilize their ATM this quarter but we wonder how long they will be able to hold off given the capital expenditures that remain?”

We recognize that this is mineral company that wants and will need to replace its resources (the company does not have reserves), but the story from the junior re-starts has always been, once we get into production and start cash flowing, our need to enter the market for capital will drop substantially or cease all together.

But, we think this is the first time in the cycle that equity investors are finally getting a sense that cash flows are nowhere to be found and the companies are finding ways to spend capital a lot faster than they can bring it in. What was the cost of this land? It isn’t disclosed. How much will drilling cost? We do not know. The point of all this is while the company announces an expansion of the uranium project, at the end of the day, this is going to cost more capital without a clear pathway to sustainable cash flow generation in the near future.

Now, if all these re-starts managed investor expectations by stating they did not expect cash flows once operations began, that would be one thing. But, this is not what any of them communicated to investors over the past couple of years.

In the big picture, we think this means uranium equities will continue to see large dispersions in returns as some companies make good on what they said they would do while others effectively just poke holes in the Earth and subsidize utilities as they have signed contracts much too early in the cycle.

Lastly, this morning, Goviex Uranium announced a transformational reverse takeover of Tombador Iron Limited, unlocking an ASX-listing and A$10.4M in cash reserves. Goviex shareholders will retain 75% of the combined company, which will be re-named Atomic Eagle Ltd., with an improved capital structure with the total number of ordinary shares issued and outstanding being reduced to 345.31M.

For those who remember, Goviex lost its flagship deposit in Niger, Madaouela, after the Niger junta revoked the mining license in July 2024 over developmental timelines. There is no doubt that it appears the company did not have tremendous control over its destiny after the coup d'état that took place in summer 2023.

The Goviex news is a simple reminder that the junior mining/development industry is not for the faint of heart as things can and do change. For investors, it is another reminder to consider how they are expressing their view and what they are actually betting on. Said differently, are you really betting on higher uranium prices or something else completely? Obviously, it is important to understand this distinction.

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All three of these news pieces touch on some of the big picture items that are relevant for uranium investors today.

Investors need to remain conscious of the narrative and views around the growth of US electricity prices. Within the last few weeks, more stories are emerging that regional grids are hitting or will be hitting the maximum capacity limits. While this is obviously why Big Tech continues to seek out more electricity generation to power data centers, we all know that generation does not come on overnight.

In June, Texas signed a new law that gives grid operators the ability to curtail data centers during load shed events. More states and lawmakers are quickly realizing just how fast electricity demand is jumping across the country. While US midterm elections are 15 months away, there is growing commentary that electricity prices could become the #1 issue in this election. This all boomerangs around to, will the US and its consumers let its energy bills rise all so people can plow ahead using AI interfaces? Markets are notoriously bi-polar these days and it does not take much for sentiment to change. Please recall that many AI investors have hunted for derivative trades like nuclear power. If, for any reason, we see a drawdown in AI stocks as it relates to any of these issues, we feel that uranium equities could be hit as well given so many AI investors have come to nuclear/uranium in 2025.

Tangentially, Ladenburg Thalmann double downgraded Nano Nuclear (NNE) from buy to sell this morning. Share are down ~9% as of this writing. The analyst wrote: Nano’s management would streamline its strategy and prioritize core initiatives, particularly the Kronos reactor, during its Q3 business update. Instead, the company “continues promoting a broad, diversified model encompassing ancillary ventures in fuel, transportation, and consulting,” which are “distractions” for a company of Nano’s size and capitalization, and whose credibility has been eroded by missed timelines and broad strategic ambitions.

As we alluded to at the beginning, we do not pretend to be an SMR expert by any means but it also does not take a rocket scientist to figure out which companies are actually advancing hardware. Given that some of the public names are amalgamated with uranium equities in URA, please be conscious of how these companies can be interlinked via price action. Please note that NNE is 1.34% of AUM in the URA ETF.

Lastly, we wonder how much longer equity investors will support junior re-starts in light of how difficult it has been across the board. We note that Lotus Resources (LOT) has effectively commenced uranium production from its Kayelekera deposit in Malawi and the market appears to have cared less. Is this a function of other re-start disappointments? It certainly feels this way.

Investors should keep a close eye on the cash and working capital of all these re-starts as they progress as it is clear some will be back to tap markets for capital via private placements, ATMs or selling uranium inventory from their balance sheets.

Disclosure: Golden Rock Research (GRR) and its owner does not own shares in any company mentioned in this article. Similarly, GRR and its owner is not short any shares mentioned in this article. This is not investment advice nor is it a solicitation to buy or sell any securities or futures contracts. It is important that readers conduct their own due diligence and consult a financial professional if they are seeking any financial advice.