May 18th: Golden Rock Weekly Roundup

Denison Takeaways, No CEO Hire at Encore, Belgium Scraps Phaseout & Orano Sale?

We are going to change up the Weekly Roundup by going through what we find particularly important or note-worthy in any company release or news article. We hope this provides the most value by sharing how we think about these events.

Denison Mines Q1 2025 Financial & Operational Update

There are three important takeaways from Denison’s Q1 2025 Financial and Operational Update.

• Canadian Nuclear Safety Commission (CNSC) scheduling of a public hearing for their Phoenix ISR project for Q4 2025

• Start of mining at their McClean Lake JV with Orano in 2025 using the SABRE method

• Maintain 2.2M-lbs of U3O8 inventory (no sales in Q1)

CNSC Hearing

The CNSC Registrar announced the schedule for the CNSC public hearing for their Wheeler River Uranium Project, specifically for the Phoenix deposit. The Hearing is scheduled to be held in two parts, October 8, 2025 and December 8-12, 2025 and is the final step in the Federal Approval process for the Project’s Environmental Assessment (EA) and the License to Prepare and Construct a Uranium Mine and Mill. Denison states that these dates are expected to support the commencement of construction in early 2026 and first production in the first-half of 2028.

Denison announced they have achieved 75% completion of total engineering work for the Phoenix deposit. The detailed work are important layers toward the company making a Final Investment Decision (FID) to support its production objective in the first half of 2028.

Like every other market participant, we have no edge on how Denison’s public hearing in Q4 2025 will go. We will closely monitor developments from the first hearing on October 8, 2025 and await disclosure from the CNSC.

We have been disappointed to see Denison publicly announce a production start-up date for Phoenix in 2028. At the end of the day, we feel this sets them up to over-promise and under-deliver. We have seen equity markets punish brownfields and a greenfield developer for not being able to hit start-up and production metrics. As a result, we are not sure what the upside is for the company or its investors with this target date.

Obviously, they are awaiting full Federal approval and then we assume they will make a Final Investment Decision (FID). Once these two major pieces of the puzzle are in place, we think it makes sense to advance contracting discussions with utilities without an official start-up date. By telling utilities that you are starting up, we feel strongly that companies lose leverage in contract negotiations.

It is crucial for investors to understand that utilities think that suppliers work for them. They don’t. They work for shareholders. While many investors continually complain about utilities and their conservative procurement plans, we feel strongly that many developers put a wet blanket on uranium sentiment and their own stocks by telling the market about their production plans with aggressive timelines. If a utility hears that a development company will have a mine running soon, with mining of upwards of 9M-lbs per year, why would utilities run out and bid up the term market today?

Source: Denison Mines, April 2025 Investor Update, pg. 10

Why not just wait for new production where the company will likely end up tripping over themselves to build a contract book just like Lotus Resources is doing today. As a refresher, Lotus continues to give away material at ~$80/lb in the term market which is why the term price from UxC and TT is pinned ~$80/lb today and won’t move higher.

It is time that investors hold developers much more responsible for the message they are sending to the market.

We are not trying to be overly critical of the company and their plans but 2028 is an aggressive timeline. As a result, we will be on the lookout for a lot more detail from the company regarding: FID, confidence that their 2021 field tests will translate to commercial production, contracting strategy, and inventory management.

SABRE Mining at McClean Lake JV

The McClean Lake JV (77.5% Orano / 22.5% Denison) plans to use the “Surface Access Borehole Resource Extraction” (SABRE) mining method to target 900K-lbs of production from the McClean Lake deposit in 2025.

The deposit has an indicated and inferred mineral resource of 17.8M-lbs and 7.6M-lbs respectively and discovered new mineralization at McClean South in 2021 and expanded the footprint in 2022.

We are keen to watch how mining developments unfold using SABRE. To be clear, the mining at McClean Lake is less interesting than to see how the mining method performs as Orano and Denison have another JV, Midwest, which is 74.83% Orano / 25.17% Denison. Between the two zones at the deposit (Midwest Main and Midwest A), it holds an Indicated and Inferred combined resource of 50.7M-lbs and 18.2M-lbs respectively for a total 68.9M-lbs today. If SABRE mining works like they plan, this opens up possibilities for other Athabasca deposits like Midwest.

U3O8 Inventory

The company maintains an inventory stockpile of 2.2M-lbs with no sales in Q1. We give immense credit to CEO Dave Cates for the vision and conviction to purchase these pounds on the open market in April 2021, securing 2.5M-lbs at US$29.61/lb. At the time, the company was criticized by many market participants for raising capital to purchase uranium. As we mentioned earlier, we will closely monitor how they plan to utilize these pounds as if they will primarily use them to help finance the development of Phoenix, they will ultimately need to sell them in the spot or nearby market.

Golden Rock models Phoenix to produce 2.0M-lbs per year starting in 2030.

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Encore Energy Q1 2025 Financial Update

The biggest takeaway from Encore Energy’s Q1 Financial update is that a new full-time CEO has yet to be hired. On March 3^rd, during its FY ’24 Results, the company announced that its previous CEO, Paul Goranson, was no longer serving in the role.

We remain puzzled over this corporate action given Paul’s history with its flagship project, Alta Mesa. Once we heard the news, we assumed the company had a succession plan in place but it appears they do not. This comes at a time when the market is putting immense pressure on brownfield project performance. Shares of the stock remain down nearly 34% since the March 3^rd news.

Meanwhile, the ramp up of Alta Mesa continues with it producing ~130K-lbs for the quarter at a cost of $36.11/lb while making sales deliveries of 290K-lbs. Operating cash flow was negative $7.7M for the quarter after repaying a uranium loan, accounting for higher costs for wellfield development and a mark-to-market loss of $9.0M on marketable securities.

We await further news on their CEO succession plan.

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Belgian Parliament Scraps Nuclear Phaseout Plan

On Thursday, May 15th, Belgium’s Parliament voted to drop the country's planned nuclear phaseout. The motion was passed with 102 votes in favor, eight against and 31 abstentions.

“The Federal Parliament has just turned the page on two decades of blockages and hesitation to pave the way for a realistic and resilient energy model,” Energy Minister Mathieu Bihet of the center-right Reformist Movement party said. “This is not just an energy reform; it is a decisive step for the economic, environmental, and strategic future of our country.”

In 2003, Belgium passed a law for the gradual phase out of their nuclear plants. The law stipulated that nuclear power plants were to be closed by 2025 at the latest, while prohibiting the construction of new reactors. However, in 2022, Belgium delayed the phase out by ten years, with plans to run one reactor in each of its two plants as a backup due to energy uncertainty triggered by the Russian/Ukraine war.

The country currently has four nuclear reactors in operation, Doel 2+4 and Tihange 1+3 which will produce ~3.5GWe’s consuming ~1.5M-lbs of U3O8 in 2025. It is nice to see some common sense returning to parts of Europe who continue to understand and embrace their installed nuclear base.

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Orano Explores Sale of Niger Uranium Assets

French state-owned nuclear conglomerate Orano is exploring the sale of its uranium assets in Niger after the breakdown of its relationship with the West African country's military rulers, the Financial Times reported on Saturday. Orano currently has a stake in Somair, a uranium mine that has been in production since 1971. Additionally, they own a recently depleted uranium mine Cominak, along with a development asset, Imouraren whose mining permit was stripped in June 2024.

Orano said that it had filed a lawsuit with the Niger courts over the “arbitrary arrest, illegal detention and unjust confiscation of property” involving its staff and assets in the country.

Orano said it had been unable to contact its mining director in Niger, Ibrahim Courmo, who was taken to the headquarters of the country's external intelligence agency, the General Directorate of External Documentation and Surveillance, sources told Reuters earlier this month.

In a statement to Reuters, Orano said its priority remained the ongoing international arbitration process, adding that “several parties have expressed their interest in the mining assets of the group in Niger and are at liberty to submit offers if they wish to.”

Golden Rock believes that the Chinese or Russians could potentially express an interest in the Orano assets given that both state-owned nuclear companies are on the hunt for more U3O8. We currently model Somair to produce 2.5M-lbs this year although it is not clear if this is possible and if any material will be exported.

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We released two intraweek commentaries, ‘Concerns in Kazakhstan’ and ‘Sprott Uranium Trust Raises $25.55M at NAV’ as we thought they deserved their own separate and immediate commentaries. To read, please see below:

Thanks for reading!