enCore Energy (EU) 6-KUnaudited Condensed Interim Consolidated Financial Statements

Exhibit 99.1

Unaudited Condensed Interim Consolidated Financial Statements

For the three and nine months ended

September 30, 2024

(In United States Dollars)

Approved on behalf of the Board of Directors on November 14, 2024:

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

enCore Energy Corp. was incorporated under the Laws of British Columbia, Canada. enCore Energy Corp., together with its subsidiaries (collectively referred to as the “Company” or “enCore”), is principally engaged in the acquisition, exploration, and development of uranium resource properties in the United States. The Company’s corporate headquarters is located at 101 N Shoreline, Suite 560, Corpus Christi, TX 78401. On February 26, 2024, the Company completed a sale of a 30% interest in the Company’s Alta Mesa project to Boss Energy Limited (“Boss Energy’). The Company’s common shares trade on the TSX Venture Exchange and directly on a U.S. Exchange under the symbol “EU”. The Company’s Rosita and Alta Mesa projects transitioned to production in Q1 2024 and Q2 2024, respectively.

These condensed interim consolidated financial statements (the “financial statements”) have been prepared on the going concern basis which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due, under the historical cost convention except for certain financial instruments that are measured at fair value, as detailed in the Company’s accounting policies.

Geopolitical uncertainty

Geopolitical uncertainty driven by the Russian invasion of Ukraine has led many governments and utility providers to re-examine supply chains and procurement strategies reliant on nuclear fuel supplies coming out of, or through, Russia. Sanctions, restrictions, and an inability to obtain insurance on cargo have contributed to transportation and other supply chain disruptions between producers and suppliers. As a result of this and coupled with multiple years of declining uranium production globally, uranium market fundamentals are shifting from an inventory driven market to one more driven by production. The Prohibiting Russian Uranium Imports Act (H.R. 1042) which was signed into law on August 11, 2024 allows for temporary waivers under certain circumstances. However, any waiver must terminate by January 1, 2028, and the ban remains in effect until December 31, 2040. 

Basis of preparation

These financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), using the same accounting policies as detailed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2023, except as stated below, and do not include all the information required for full annual financial statements in accordance with IFRS. 

The principal accounting policies applied in the preparation of these financial statements are set out below.

The preparation of consolidated financial statements in conformity with IFRS Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise judgment in the process of applying the accounting policies. Those areas involving a higher degree of judgment and complexity or areas where assumptions and estimates are significant to the consolidated financial statements are discussed below. 

These financial statements were approved for issuance on November 14, 2024. 

Revenue recognition 

The Company supplies uranium concentrates to its customers. Revenue is measured based on the consideration specified in a contract with a customer less fees related to the sale. 

The Company recognizes revenue when it transfers control, as described below, over a good or service to a customer. Customers do not have the right to return products, except in limited circumstances. The Company’s sales arrangements with its customers are pursuant to enforceable contracts that indicate the nature and timing of satisfaction of performance obligations, including significant payment terms, where payment is usually due within 30 days. Each delivery is considered a separate performance obligation under the contract.

In a uranium supply arrangement, the Company is contractually obligated to provide uranium concentrates to its customers. Company-owned uranium is delivered to conversion facilities (Converters). When uranium is delivered to Converters, the Converter will credit the Company’s account for the volume of accepted uranium. Based on delivery terms in the sales contract with its customer, the Company instructs the Converter to transfer title of a contractually specified quantity of uranium to the customer’s account at the Converter’s facility. At this point, control has been transferred and enCore recognizes revenue for the uranium supply. 

Inventory 

Inventories are uranium concentrates and converted products including chemicals and are measured at the lower of cost and net realizable value. The cost of inventories is based on the first in first out (FIFO) method. Cost includes direct materials, direct labor, operational overhead expenses and depreciation. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Consumable supplies and spares are valued at the lower of cost or replacement value. 

Non-controlling interest 

The Company applies the requirements of IFRS in accounting for non-controlling interests. A non-controlling interest represents the portion of equity in a subsidiary not attributable, directly or indirectly, to the parent company. The non-controlling interest represented in the financial statements includes the 30% interest Boss obtained in the Alta Mesa JV on February 26, 2024. The initial recognition of the interest was determined by calculating 30% of the total net assets, and the excess contribution was recorded under equity reserves. The subsequent recognition of the non-controlling interest is 30% of the net income of the Alta Mesa entity. 

Depletion

The Company recognizes depletion expense based on the unit-of-production method. This method applies the depletion rate to the actual amount of uranium extracted during the period relative to the estimated recoverable reserves within inventory.

Basis of measurement 

These financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value. All dollar amounts presented are in United States Dollars (“U.S. Dollars”) unless otherwise specified. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. 

Consolidation 

These financial statements incorporate the financial statements of the Company and its controlled subsidiaries. Control is defined as the exposure, or rights, to variable returns from involvement with an investee and the ability to affect those returns through power over the investee. Power over an investee exists when an investor has existing rights that give it the ability to direct the activities that significantly affect the investee’s returns. This control is generally evidenced through owning more than 50% of the voting rights or currently exercisable potential voting rights of a Company’s share capital. All significant intercompany transactions and balances have been eliminated.

The Company has a 70% interest in a Joint Venture (JV) with Boss Energy Limited (Boss). Under the JV agreement, the Company retained control both before and after Boss acquired their interest. As such, the Company will continue to consolidate the operations of the JV with an offsetting non-controlling interest being recorded on sub-consolidation. 

These consolidated financial statements include the financial statements of the Company and its significant subsidiaries listed in the following table: 

New standards and interpretations not yet adopted

In April 2024 the International Accounting Standards Board (IASB) issued IFRS 18, Presentation and Disclosure of Financial Statements (IFRS 18). IFRS 18 is effective for periods beginning on or after January 1, 2027, with early adoption permitted. IFRS 18 is expected to improve the quality of financial reporting by requiring defined subtotals in the statement of profit or loss, requiring disclosure about management-defined performance measures, and adding new principles for aggregation and disaggregation of information. The Company has not yet determined the impact of this standard on its disclosures.

Newly adopted standards and interpretations 

Effective for annual reporting periods beginning on or after January 1, 2024, the Company adopted the following amendments: 

Presentation of financial statements pertaining to liabilities (IAS 1) – the amendment requires an entity to have the right to defer settlement of a liability for at least 12 months after the reporting period to be classified as non-current. 

Disclosure of accounting policies (Amendment to IAS 7) – the amendment requires that an entity provide additional disclosures about its supplier finance arrangements relative to the Statement of Cash Flows within the liquidity risk disclosure. 

Disclosure of information about international taxes (IAS 12) – the amendment introduces a temporary exception to the requirements to recognize and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes and related disclosures. 

The adoption of these amendments did not have a material impact on the results of its operations and financial position. 

Purchased uranium is categorized in Level 1 of the fair value hierarchy as of December 31, 2023 and categorized as inventory as at September 30, 2024. 

As at September 30, 2024, the Company held 335,000 pounds of purchased uranium and 60,701 pounds of produced uranium inventory. Costs of inventory consisted of the following: 

The following table summarizes the fair value of the Company’s marketable securities at September 30, 2024: 

During the nine months ended September 30, 2024, the company purchased an additional 4,085,146 shares and disposed of 26,308,250 shares related to investments held as at December 31, 2023. As at September 30, 2024, the remaining shares are carried at a fair value of $16,401,066.

During the nine months ended September 30, 2024, the company purchased a total of 4,086,680 shares in companies that are publicly traded. As at September 30, 2024, these shares are carried at a fair value of $4,919,029.

The realized gain on marketable securities for the nine months ended September 30, 2024, was $249,373 (nine months ended September 30, 2023 – nil). The unrealized loss on marketable securities for the nine months ended September 30, 2024, was $3,684,267 (nine months ended September 30, 2023 – $5,307,976). These net realized and unrealized gains and losses are recorded in the condensed consolidated income statement.

In February 2023, through its asset acquisition of Alta Mesa, the Company acquired a variety of property, plant, and equipment assets (Note 8). In May 2023, the Company acquired proprietary Prompt Fission Neutron (“PFN”) technology and equipment in the amount of $3,100,000 included within “Other property and equipment”. The PFN is amortized over its expected useful economic life of 10 years. 

The following is a summary of property, plant and equipment, net:

Alta Mesa acquisition

On February 14, 2023, the Company acquired the Alta Mesa in-Situ Recovery uranium project (“Alta Mesa”).The aggregate amount of the total consideration was $120,574,541.

The transaction did not qualify as a business combination according to the definition in IFRS 3 Business Combinations. It has been accounted for as an asset acquisition with the purchase price allocated based on the estimated fair value of the assets and liabilities summarized as follows:

The value of the replacement options has been derived using the Black-Scholes option pricing model. The weighted average assumptions used in the Black-Scholes option pricing model are as follows:

The fair value of the Replacement Options is based on the issuance of 44,681 options with a fair value of $81,414 (C$108,636). 

Alta Mesa joint venture 

On December 5, 2023, the Company entered into a Master Transaction Agreement (the “MT Agreement”) with Boss Energy Limited (“Boss Energy”), a public company domiciled in Australia. Pursuant to the MT Agreement, Boss Energy was assigned the right to acquire a 30% interest in the Alta Mesa assets. 

On February 26, 2024, pursuant to the terms of a MT Agreement, Boss Energy acquired a 30% equity interest in a new limited liability company (the “JV Company”) that was formed to hold the Alta Mesa project, in exchange for a payment of $60 million. enCore holds 70% equity in the JV Company. 

Upon closing of the Transaction, the parties entered into a joint venture agreement (the “JV Agreement”) which governs the JV Company. Pursuant to the JV Agreement, enCore acts as manager of the JV Company and is entitled to a management fee. 

Concurrently with the establishment of the JV Company, the parties entered into a uranium loan agreement providing for up to 200,000 pounds of uranium to be lent by Boss Energy to the Company at a fair market value of $20,108,000. The loan bears interest of 9% and is repayable in 12 months in cash or uranium at the election of Boss Energy. After 6 months, the Company can elect to pay off the loan plus $200,000. At September 30, 2024, the Company recorded a uranium loan liability of $21,186,872 for the borrowed uranium including $1,078,872 of associated interest. 

Boss Energy also acquired 2,564,102 common shares of the Company issued from treasury at a price of $3.90 per share for total proceeds to the Company of $10 million. 

Finally, the parties also entered into a strategic collaboration agreement for the collaboration and research to develop the Company’s PFN technology, to be financed equally by each party. 

The terms of the JV Agreement and the disposal of a 30% interest in the JV Co. support that control was retained both before and after Boss Energy acquired their interest, and that joint control is not present. As such, Company will continue to consolidate the operations of the JV Co. with an offsetting non-controlling interest being recorded. 

The table below is a summary of the accounting for recognition of the initial Non-Controlling Interest on Boss Energy acquiring 30% interest in the JV Company.

The table below summarizes the balance of Non-controlling interest at September 30, 2024

Alta Mesa Project 

The Alta Mesa Project is located in Brooks County, Texas.

In February 2024, the Company completed several transactions under a master transaction agreement with an unrelated company Boss Energy Ltd. The completion of this transaction resulted in the Company holding a 70% interest in the project while also remaining as the project manager. Boss Energy Ltd. holds a 30% interest in the project (Note 8). 

At June 30, 2024, in accordance with its material accounting policy for mineral properties, the Company assessed its Alta Mesa mineral property assets for impairment and found that the asset had carrying value of $133,271,835 and a recoverable value of $140,749,713 and concluded that the asset was not impaired. The asset was reclassified as a Mining property asset (Note 8) at September 30, 2024.

As noted in Note 7, in December 2023 and September 2024, the Company reclassified its Rosita Extension mineral property and part of its Alta Mesa mineral property to producing mining property. 

Significant judgment was used to determine the recoverable value in use of the Rosita Extension and Alta Mesa assets. Recoverability is dependent upon assumptions and judgments in pricing for future uranium sales, costs of production, and mineral reserves. Other assumptions used in the calculation of recoverable amounts are discount rates, future cash flows and profit margins. A 10% change in these assumptions could impact the potential impairment of this asset. 

The mining property’s balance at September 30, 2024 and December 31, 2023 consists of: 

The Company is obligated by various federal and state mining laws and regulations which require the Company to reclaim surface areas and restore underground water quality for certain assets in Texas, Wyoming, Utah and Colorado. These projects must be returned to the pre-existing or background average quality after completion of mining. 

The Company updates these reclamation provisions based on cash flow estimates, and changes in regulatory requirements and settlements annually. The Company used an inflation factor of 2.5% per year and a discount rate of 11% in estimating the present value of its future cash flows. 

The asset retirement obligations balance by project is as follows: 

The asset retirement obligations continuity summary is as follows: 

The authorized share capital of the Company consists of an unlimited number of common and preferred shares without par value.

During the nine months ended September 30, 2024, the Company issued:

During the year ended December 31, 2023, the Company issued: 

Stock options 

The Company adopted a Stock Option Plan (the “Plan”) under which it is authorized to grant options to Officers, Directors, employees and consultants enabling them to acquire common shares of the Company. The number of shares reserved for issuance under the Plan cannot exceed 10% of the outstanding common shares at the time of the grant. The options can be granted for a maximum of five years and vest as determined by the Board of Directors. 

The Company’s stock options outstanding at September 30, 2024 and December 31, 2023, and associated changes, are as follows: 

As at September 30, 2024, stock options outstanding were as follows: 

During the nine months ended September 30, 2024, the Company granted an aggregate of 2,804,000 stock options to Directors, Officers, employees, and an accounting advisory consultant of the Company. A fair value of C$11,054,708 was calculated for these options as measured at the grant date using the Black-Scholes option pricing model.

During the year ended December 31, 2023, the Company granted an aggregate of 2,670,181 stock options to Directors, Officers, employees, and an accounting advisory consultant of the Company. A fair value of

C$5,616,767 was calculated as measured at the grant date using the Black-Scholes option model.

The Company’s standard stock option vesting schedule calls for 25% every six months commencing six months after the grant date.

During the nine months ended September 30, 2024, the Company recognized stock option expense of $4,600,697 (nine months ended September 30, 2023 - $3,535,299) for the vested portion of the stock options.

The fair value of all compensatory options granted is estimated on the grant date using the Black-Scholes option pricing model. The weighted average assumptions used in calculating the fair values are as follows: 

Share purchase warrants

A summary of the status of the Company’s warrants as of September 30, 2024, and December 31, 2023, and changes during the period/year then ended is as follows:

As of September 30, 2024, share purchase warrants outstanding were as follows:

Convertible promissory note

On February 14, 2023, the Company issued a secured convertible promissory note (the “Note”) in connection with the Alta Mesa acquisition (Note 6) with a principal value of $60,000,000. The note had a two-year term bearing interest at 8% per annum.

During the year ended December 31, 2023, the Company paid $40,000,000 of the principal balance off, reducing the outstanding principal balance at that date to $20,000,000. In February 2024, the balance was converted by issuance of 6,872,143 common shares to the debt holder.  

A reconciliation of the convertible debenture components is as follows:

Related parties include key management of the Company and any entities controlled by these individuals or their direct family members. Key management personnel consist of Directors and senior management including the Executive Chairman, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Chief Legal Officer. 

The amounts paid to key management or entities providing similar services are as follows: 

During the nine months ended September 30, 2024, the Company granted 2,010,000 (September 30, 2023 – 2,075,000) options to key management, with a fair value of $5,511,010 (September 30, 2023 - $3,184,425).

As of September 30, 2024 and December 31, 2023, the following amounts were owed to related parties:

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to support the exploration, evaluation, and development of its mineral properties and to maintain a flexible capital structure that optimizes the cost of capital within a framework of acceptable risk. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue new shares, issue debt, and acquire or dispose of assets. 

The Company is dependent on the capital markets as its primary source of operating capital and the Company’s capital resources are largely determined by the strength of the junior resource markets, the status of the Company’s projects in relation to these markets, and its ability to compete for investor support of its projects. 

The Company considers the components of shareholders’ equity as capital. 

There were no changes in the Company’s approach to capital management during the nine months ended September 30, 2024, and the Company is not subject to any externally imposed capital requirements. 

Financial instruments include cash, receivables and marketable securities and any contract that gives rise to a financial asset to one party and a financial liability or equity instrument to another party. Financial assets and liabilities measured at fair value are classified in the fair value hierarchy according to the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement requires judgement and may affect placement within the fair value hierarchy levels. The hierarchy is as follows:

Marketable securities are measured at Level 1 of the fair value hierarchy. The Company classifies these investments as financial assets whose value is derived from quoted prices in active markets and carries them at FVTPL. 

The Company classifies its cash, restricted cash and receivables as financial assets measured at amortized cost. Accounts payable, lease liability, uranium loan liability, due to related parties, and convertible promissory note are classified as financial liabilities measured at amortized cost. The carrying amounts of receivables, accounts payable, and amounts due to related parties approximate their fair values due to the short-term nature of the financial instruments. The carrying value of the Company’s convertible promissory note, the uranium loan liability and lease liabilities approximates fair value as they bear a rate of interest commensurate with market rates. 

Currency risk 

Foreign currency exchange risk is the risk that future cash flows, net income and comprehensive income will fluctuate as a result of changes in foreign exchange rates. As the Company’s operations are conducted internationally, operations and capital activity may be transacted in currencies other than the functional currency of the entity party to the transaction. 

The Company’s objective in managing its foreign currency risk is to minimize its net exposures to foreign currency cash flows by obtaining most of its estimated annual U.S. cash requirements and holding the remaining currency in Canadian dollars. The Company monitors and forecasts the values of net foreign currency cash flow and consolidated statement of financial position exposures and from time to time could authorize the use of derivative financial instruments such as forward foreign exchange contracts to economically hedge a portion of foreign currency fluctuations. 

The following table provides an indication of the Company’s foreign currency exposures during the period/year ended September 30, 2024, and December 31, 2023: