A couple of important notes on Encore that folks are missing. Without that mark-down (or the uranium loan payment) they would have been cash flow positive for Q1. Projecting into Q2 - With the purchased uranium essentially gone from inventory and spot prices back to $70/lb, they will be selling their own mined product, produced at $36-$40/lb. And they will be selling at $65-70/lb. And they are producing at a rate now where they will not have to purchase more lbs.
They have 365K-lbs left to deliver in 2025 so one would think Alta Mesa should be able to cover this without any issues. As always, all we can do is monitor developments.
Exactly. According to their April PR, they had IEX1 at 100% and IEX2 at 75%. Nameplate is 2500 GPM/IEX, so 7500 GPM total with all 3 IEX @ 100% will produce 1.5M lb/yr. So, 2500GPM+1875GPM = 58% of capacity. 58% of 1.5M lb/yr = 700k lb/yr. Assuming, a conservative 90% uptime = 630k lb/yr rate of production in April. At this rate for Q2-Q4 (and conservatively not assuming further ramp, which we know they will) that equals ~475k lbs of production for the Q2-Q4. Plus the ~150k lbs in inventory at the end of Q1, is 625k lbs. More than enough to fulfill the 365k lbs left to contract + payback Boss the 100k lbs remaining.
Wow! Terrible math for an engineer! 58% of 1.5M is 875k lb/yr. At 90% uptime = 787k lb/yr. 3 Qs at that rate = 590k lbs. Plus 150k lbs in inventory = 740k lbs. This is more than enough of a cushion to satisfy their 465k in contracts + Boss pounds. Plus again, these are all lbs produced at $40-$45/lb. They were almost CFP last Q selling pounds that cost them $60/lb.
A couple of important notes on Encore that folks are missing. Without that mark-down (or the uranium loan payment) they would have been cash flow positive for Q1. Projecting into Q2 - With the purchased uranium essentially gone from inventory and spot prices back to $70/lb, they will be selling their own mined product, produced at $36-$40/lb. And they will be selling at $65-70/lb. And they are producing at a rate now where they will not have to purchase more lbs.
They have 365K-lbs left to deliver in 2025 so one would think Alta Mesa should be able to cover this without any issues. As always, all we can do is monitor developments.
Exactly. According to their April PR, they had IEX1 at 100% and IEX2 at 75%. Nameplate is 2500 GPM/IEX, so 7500 GPM total with all 3 IEX @ 100% will produce 1.5M lb/yr. So, 2500GPM+1875GPM = 58% of capacity. 58% of 1.5M lb/yr = 700k lb/yr. Assuming, a conservative 90% uptime = 630k lb/yr rate of production in April. At this rate for Q2-Q4 (and conservatively not assuming further ramp, which we know they will) that equals ~475k lbs of production for the Q2-Q4. Plus the ~150k lbs in inventory at the end of Q1, is 625k lbs. More than enough to fulfill the 365k lbs left to contract + payback Boss the 100k lbs remaining.
Wow! Terrible math for an engineer! 58% of 1.5M is 875k lb/yr. At 90% uptime = 787k lb/yr. 3 Qs at that rate = 590k lbs. Plus 150k lbs in inventory = 740k lbs. This is more than enough of a cushion to satisfy their 465k in contracts + Boss pounds. Plus again, these are all lbs produced at $40-$45/lb. They were almost CFP last Q selling pounds that cost them $60/lb.
Many thanks for your excellent & insightful commentary.
Thanks for reading Greg! We have only begun to scratch the surface. Lots more to come!