Exhibit 99.3
Consolidated Financial Statements
For the year ended
December 31, 2023
(Stated in United States Dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors of
enCore Energy Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of enCore Energy Corp. (the “Company”), as of December 31, 2023, and 2022, and the related consolidated statements of loss and comprehensive loss, changes in shareholders’ equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2022 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2016.
| /s/ DAVIDSON & COMPANY LLP | |
| Vancouver, Canada | Chartered Professional Accountants |
| (PCAOB ID:731) | |
| March 28, 2024 |
F-1
| enCore Energy Corp. |
| Consolidated Statements of Financial Position |
| As at December 31, 2023 and December 31, 2022 |
| (Stated in USD unless otherwise noted) |
| December 31, | December 31, | |||||||||
| 2023 | 2022 | |||||||||
| Note | $ | $ | ||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash | ||||||||||
| Receivables and prepaid expenses | ||||||||||
| Marketable securities - current | 4 | |||||||||
| Deposit - uranium inventory | 3 | |||||||||
| Raw materials | ||||||||||
| Assets held for sale | 9 | |||||||||
| Non-current assets | ||||||||||
| Intangible assets | 5 | |||||||||
| Property, plant, and equipment | 6 | |||||||||
| Marketable securities - non-current | 4 | |||||||||
| Mineral properties | 9 | |||||||||
| Mining properties | 10 | |||||||||
| Reclamation deposits | 9 | |||||||||
| Right-of-use asset | 7 | |||||||||
| Deferred acquisition costs | 8 | |||||||||
| Deferred financing costs | 8 | |||||||||
| Restricted cash | 2 | |||||||||
| Total assets | ||||||||||
| Liabilities and shareholders’ equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued liabilities | ||||||||||
| Due to related parties | 13 | |||||||||
| Lease liability - current | 7 | |||||||||
| Non-current liabilities | ||||||||||
| Asset retirement obligations | 11 | |||||||||
| Convertible promissory note | 12 | |||||||||
| Lease liability - non-current | 7 | |||||||||
| Total liabilities | ||||||||||
| Shareholders’ equity | ||||||||||
| Share capital | 12 | |||||||||
| Share subscriptions received | 12 | |||||||||
| Equity portion of convertible promissory note | 12 | - | ||||||||
| Contributed surplus | 12 | |||||||||
| Accumulated other comprehensive income | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Total shareholders’ equity | ||||||||||
| Total liabilities and shareholders’ equity | ||||||||||
| Nature of operations and going concern | 1 | |||||||||
| Events after the reporting period | 19 | |||||||||
Approved on behalf of the Board of Directors on March 25, 2024:
| “William M. Sheriff” | Director | “William B. Harris” | Director |
The accompanying notes are an integral part of these consolidated financial statements.
F-2
| enCore Energy Corp. |
| Consolidated Statements of Loss and Comprehensive Loss |
| For the years ended December 31, 2023, and December 31, 2022 |
| (Stated in USD unless otherwise noted) |
| Year ended | ||||||||||
| December 31, | December 31, | |||||||||
| 2023 | 2022 | |||||||||
| Note | $ | $ | ||||||||
| Expenses | ||||||||||
| Accretion | 7,11,12 | |||||||||
| Amortization and depreciation | 5,6,7 | |||||||||
| General administrative costs | 13 | |||||||||
| Impairment of mineral properties | 9 | |||||||||
| Professional fees | 13 | |||||||||
| Promotion and shareholder communication | ||||||||||
| Travel | ||||||||||
| Transfer agent and filing fees | ||||||||||
| Staff costs | 13 | |||||||||
| Stock option expense | 12,13 | |||||||||
| Loss from operations | ( | ) | ( | ) | ||||||
| Foreign exchange (loss) | ( | ) | ( | ) | ||||||
| Gain (loss) on change in asset retirement obligation estimate | 11 | ( | ) | |||||||
| Gain on divestment of mineral properties | 9 | |||||||||
| Gain on sale of uranium investment | 3 | |||||||||
| Interest expense | 12 | ( | ) | ( | ) | |||||
| Interest income | ||||||||||
| Loss on investment in associates | ( | ) | ||||||||
| Loss on write-off of sales tax recoverable | ( | ) | ||||||||
| Unrealized gain on marketable securities | 4 | |||||||||
| Net loss for the year | ( | ) | ( | ) | ||||||
| Currency translation adjustment of subsidiaries | ( | ) | ||||||||
| Comprehensive loss for the year | ( | ) | ( | ) | ||||||
| Loss per share | ||||||||||
| Weighted average number of common shares outstanding | ||||||||||
| - basic # | ||||||||||
| - diluted # | ||||||||||
| Basic and diluted loss per share $ | ( | ) | ( | ) | ||||||
| Diluted loss per share $ | ( | ) | ( | ) | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
| enCore Energy Corp. |
| Consolidated Statements of Cash Flows |
| For the years ended December 31, 2023, and December 31, 2022 |
| (Stated in USD unless otherwise noted) |
| Note | December 31, 2023 $ | December 31, 2022 $ | ||||||||
| Operating activities | ||||||||||
| Net loss for the year | ( | ) | ( | ) | ||||||
| Accretion | 7,11,12 | |||||||||
| Amortization and depreciation | 5,6,7 | |||||||||
| Impairment charge | 9 | |||||||||
| Foreign exchange (gain) loss | ||||||||||
| Stock option expense | 12,13 | |||||||||
| Interest income | ( | ) | ( | ) | ||||||
| Loss on write-off of sales tax recoverable | ||||||||||
| Gain on divestment of mineral properties | 4,9 | ( | ) | ( | ) | |||||
| Gain on change in asset retirement obligation estimate | ( | ) | ||||||||
| Gain on sale of uranium investment | 3 | ( | ) | ( | ) | |||||
| Settlement of asset retirement obligation | 11 | ( | ) | ( | ) | |||||
| Unrealized (gain) loss on marketable securities | 4 | ( | ) | ( | ) | |||||
| Loss on investment in associates | ||||||||||
| Changes in non-cash working capital items: | ||||||||||
| Receivables | ( | ) | ||||||||
| Prepaids and deposits | ( | ) | ||||||||
| Raw materials | ( | ) | ||||||||
| Deposit - uranium investment | 3 | - | ( | ) | ||||||
| Restricted cash | ( | ) | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||||
| Due to related parties | 13 | |||||||||
| ( | ) | |||||||||
| Investing activities | ||||||||||
| Acquisition of intangible assets | ( | ) | ||||||||
| Acquisition of property, plant, and equipment | 6 | ( | ) | ( | ) | |||||
| Acquisition of Alta Mesa | 8 | ( | ) | |||||||
| Mineral property expenditures | 9 | ( | ) | ( | ) | |||||
| Proceeds from divestment of mineral properties | 9 | |||||||||
| Deferred acquisition costs | ( | ) | ||||||||
| Interest income received | ||||||||||
| Investment in uranium | 3 | ( | ) | |||||||
| Proceeds received from sale of uranium investment | 3 | |||||||||
| ( | ) | ( | ) | |||||||
| Financing activities | ||||||||||
| Private placement proceeds | 12 | |||||||||
| Share issue costs | 12 | ( | ) | ( | ) | |||||
| Share subscriptions received | ||||||||||
| Proceeds from the At -the-Market (ATM) sales | 12 | |||||||||
| Proceeds from exercise of warrants | 12 | |||||||||
| Proceeds from exercise of stock options | 12 | |||||||||
| Repayments on convertible note | 12 | ( | ) | |||||||
| Deferred financing costs | ( | ) | ||||||||
| Lease payments | 7 | ( | ) | ( | ) | |||||
| Effect of foreign exchange on cash | ( | ) | ||||||||
| Change in cash | ( | ) | ||||||||
| Cash, beginning of year | ||||||||||
| Cash, end of year | ||||||||||
| Supplemental cash flow information | 17 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
| enCore Energy Corp. |
| Consolidated Statements of Changes in Shareholders’ Equity |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| Number of shares # | Share capital $ | Share subscriptions received $ | Convertible Promissory note (equity portion) | Contributed surplus $ | Accumulated other comprehensive | Accumulated Deficit $ | Total shareholders’ equity $ | |||||||||||||||||||||||||
| January 1, 2022 | ( | ) | ||||||||||||||||||||||||||||||
| Private placement | ||||||||||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Shares issued for exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||
| Shares issued for exercise of stock options | ( | ) | ||||||||||||||||||||||||||||||
| Stock option expense | - | |||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||
| Share subscriptions received | - | |||||||||||||||||||||||||||||||
| Adjustment to investment in associate | - | |||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Loss for the year | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| December 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||
| January 1, 2023 | ( | ) | ||||||||||||||||||||||||||||||
| Public offering | ||||||||||||||||||||||||||||||||
| Conversion of subscriptions to shares | ( | ) | ||||||||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Shares issued for exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||
| Shares issued for exercise of stock options | ( | ) | ||||||||||||||||||||||||||||||
| Shares issued for ATM | ||||||||||||||||||||||||||||||||
| Stock option expense | - | |||||||||||||||||||||||||||||||
| Equity portion of convertible promissory note | - | |||||||||||||||||||||||||||||||
| Fair value of replacement options for Alta Mesa acquisition (Note 9) | - | |||||||||||||||||||||||||||||||
| Cumulative translation adjustment | - | |||||||||||||||||||||||||||||||
| Loss for the year | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 1. | Nature of operations and going concern |
enCore Energy Corp. was incorporated on October 30, 2009 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. In Q1 2024, the Company’s Rosita project transitioned to production. 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 corporate headquarters is located at 101 N Shoreline, Suite 560, Corpus Christi, TX 78401.
On September 14, 2022, the Company consolidated its issued and outstanding shares on a ratio of three old common shares for every one new post-consolidated common share (the “Share Consolidation”). All current and comparative references to the number of common shares, weighted average number of common shares, loss per share, stock options and warrants have been restated to give effect to this Share Consolidation.
These consolidated 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.
| 2. | Material accounting policy information |
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”).
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.
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 by the Board of Directors on March 25, 2024.
F-6
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Comparatives
Certain figures in the comparative period consolidated statements of financial position, consolidated statements of loss and comprehensive loss, consolidated statements of change in equity and consolidated statements of cash flows have been reclassified to meet the current presentation.
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.
Functional and presentation currency
These financial statements are presented in U.S. Dollars, unless otherwise specified. During the year ended December 31, 2022, the Company changed its presentation currency from Canadian Dollars to U.S. Dollars. The change in presentation currency is to improve investors’ ability to compare the Company’s financial results with other publicly traded businesses in the exploration industry.
The functional currency of enCore Energy Corp. is the Canadian Dollar. The functional currency of the Company’s subsidiaries is the U.S. Dollar based on the currency of the primary economic environment in which these subsidiaries operate.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive loss in the consolidated statement of loss and comprehensive loss to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive loss. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.
On consolidation, the parent Company’s financial statements are translated into the presentation currency, being the U.S. Dollar. Assets and liabilities are translated at the period-end exchange rate. Income and expenses are translated at the average exchange rate for the period in which they arise. Exchange differences are recognized in accumulated comprehensive loss as a separate component within equity.
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
F-7
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Name of Subsidary | Place of Incorporation | Ownership Interest | Principal Activity | Functional Currency | ||||
| Tigris Uranium US Corp. | ||||||||
| Metamin Enterprises US Inc. | ||||||||
| URI, Inc. | ||||||||
| Neutron Energy, Inc. 3 | ||||||||
| Uranco, Inc. | ||||||||
| Uranium Resources, Inc. 2 | ||||||||
| HRI-Churchrock, Inc. | ||||||||
| Hydro Restoration Corp. 1 | ||||||||
| Belt Line Resources, Inc.1 | ||||||||
| enCore Energy US Corp. | ||||||||
| Azarga Uranium Corp. | ||||||||
| Powertech (USA) Inc. | ||||||||
| URZ Energy Corp. | ||||||||
| Ucolo Exploration Corp. | ||||||||
| enCore Alta Mesa LLC | ||||||||
| Leoncito Plant, LLC | ||||||||
| Leoncito Restoration, LLC | ||||||||
| Leoncito Project, LLC | ||||||||
| Azarga Resources Limited | ||||||||
| Azarga Resources (Hong Kong) Ltd. | ||||||||
| Azarga Resources USA Company | ||||||||
| Azarga Resources Canada Ltd. |
| 1 |
| 2 |
| 3 |
Cash
Cash is comprised of cash held at banks and demand deposits.
Restricted cash
As of December 31, 2023, the Company
deposited $
F-8
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Asset retirement obligations
Various federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its in situ recovery (ISR) projects to the pre-existing or background average quality after the completion of mining. Asset retirement obligations, consisting primarily of estimated restoration and reclamation costs at the Company’s ISR projects, are recognized in the period incurred and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. In addition, the asset retirement cost is capitalized as part of the asset’s carrying value and amortized over the life of the related asset. Asset retirement obligations are periodically adjusted to reflect changes in the estimated present value resulting from revisions to the estimated timing or amount of restoration and reclamation costs. As the Company completes its restoration and reclamation work at its properties, the liability is reduced by the carrying value of the related asset retirement liability based on completion of each restoration and reclamation activity. Any gain or loss upon settlement is charged the consolidated statement of loss in the period. The Company reviews and evaluates its asset retirement obligations annually or more frequently if deemed necessary.
Assets held for sale
The Company classifies long-lived assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met: management commits to a plan to sell the asset or disposal group; the asset or disposal group is available for immediate sale; an active program to locate a buyer is initiated; the sale of the asset or disposal group is highly probable, within 12 months.
Mineral properties
The Company has certain mineral property assets that are in the exploration stage, and records exploration and evaluation assets, which consist of the costs of acquiring licenses for the right to explore and costs associated with exploration and evaluation activity, at cost. All direct and indirect costs related to the acquisition, exploration and development of exploration and evaluation assets are capitalized by property.
The exploration and evaluation assets are capitalized until the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable. Exploration and evaluation assets are then assessed for impairment and reclassified to mining property on the consolidated statement of financial position. If an exploration and evaluation property interest is abandoned, both the acquisition costs and the exploration and evaluation cost will be written off to net income or loss in the period of abandonment.
On an ongoing basis, exploration and evaluation assets are reviewed on a property-by-property basis to consider if there are any indicators of impairment, including the following:
| (i) | Whether the period during which the Company has the right to explore in the specific area has expired during the year or will expire in the near future; |
| (ii) | Whether substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned; |
| (iii) | Whether the Company has decided to discontinue activities in an area as the exploration and evaluation activities in the area have not led to the discovery of commercially viable quantities of mineral resources; and |
| (iv) | Whether sufficient data exists to indicate, although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. |
If any indication of impairment exists, an estimate of the exploration and evaluation asset’s recoverable amount is determined. The recoverable amount is determined as the higher of the fair value less costs of disposal for the exploration and evaluation property interest and its value in use. The fair value less costs of disposal and the value in use is determined for an individual exploration and evaluation property interest, unless the exploration and evaluation property interest does not generate cash inflows that are largely independent of other exploration and evaluation property interests. If this is the case, the exploration and evaluation property interests are grouped together into cash generating units (“CGUs”) for impairment purposes. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in net income or loss for the period. Where an impairment subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior periods. A reversal of an impairment loss is recognized in the period in which that determination was made in net income or loss.
F-9
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Investments in uranium
Investments in uranium are initially recorded at cost, on the date that control of the uranium passes to the Company. Cost is calculated as the purchase price and any directly attributable expenditure. Subsequent to initial recognition, investments in uranium are measured at fair value at each reporting period end. Fair value is determined based on the most recent month-end spot prices for uranium published by UxC LLC (“UxC”). Related fair value gains and losses subsequent to initial recognition are recorded in the consolidated statement of loss and comprehensive loss as a component of “Other Income (Expense)” in the period in which they arise.
In 2022, the Company entered into fixed price agreements for future purchases of uranium. These agreements required the Company to make a deposit at the time of contract execution toward its future purchase. These deposits are recorded on the Company’s statement of financial position in accordance with IFRS 9. The deposit was fully applied in 2023 and now has a balance of .
Investments in associates
Investments in associates are accounted for using the equity method. The equity method involves the recording of the initial investment at cost and the subsequent adjusting of the carrying value of the investment for the Company’s proportionate share of the earnings or loss. The cost of the investment includes transaction costs.
Adjustments are made to align the accounting policies of the associate with those of the Company before applying the equity method. When the Company’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Company resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized.
Property, plant and equipment
| Category | Range | |
| Uranium Plants | Straight-line over | |
| Other Property Plant and Equipment | Straight-line over | |
| Software | Straight-line over | |
| Furniture | Straight-line over | |
| Buildings | Straight-line over |
Uranium plants
Uranium plant expenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and recorded at cost. Depreciation of uranium plants is computed based upon the estimated useful lives of the assets. Repair and maintenance costs are expensed as incurred. Gain or loss on disposal of such assets is recorded as other income or expense as such assets are disposed.
F-10
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Other property, plant and equipment and furniture
Other property, plant and equipment consists of office equipment, and transportation equipment. Depreciation on other property, plant and equipment and furniture is computed based upon the estimated useful lives of the assets. Repairs and maintenance costs are expensed as incurred. Gain or loss on disposal of such assets is recorded as other income or expense as such assets are disposed.
Buildings
Depreciation on buildings is computed based upon the estimated useful lives of the asset. Repairs and maintenance costs are expensed as incurred. Gain or loss on disposal of such assets is recorded as other income or expense as such assets are disposed.
Software
Software acquired in the normal course of business through a perpetual license is capitalized and depreciated over the estimated useful life of the asset. Support and maintenance costs are expensed as incurred. Gain or loss on disposal of such assets is recorded as other income or expense as such assets are disposed.
Intangible assets
Intangible assets are recognized and measured at cost. Intangible assets with indefinite useful lives are assessed for impairment annually and whenever there is an indication that the intangible asset may be impaired. Intangible assets that have finite useful lives are amortized over their estimated remaining useful lives. Amortization methods and useful lives are reviewed at each reporting period and are adjusted if appropriate.
| Category | Range | |
| Data Access Agreement | ||
| Data Purchases |
Impairment of non-financial assets
At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs of disposal and the value in use. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects a current market assessment of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the asset belongs. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
F-11
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Leases
In accordance with IFRS 16, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.
Current and deferred income tax
Income tax expense comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity. Current tax expense is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.
Deferred tax is recorded using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Temporary differences are not provided for the initial recognition of assets or liabilities that do not affect either accounting or taxable loss or those differences relating to investments in subsidiaries to the extent that they are not probable to reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the date of the statement of financial position.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, it is not recorded.
Recovery of deferred tax assets
Judgment is required in determining whether deferred tax assets are recognized in the statement of financial position. Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood that the Company will generate taxable earnings in future periods in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the date of the statement of financial position could be impacted. Additionally, future changes in tax laws in the jurisdictions in which the Company operates could limit the ability of the Company to obtain tax deductions in future periods. The Company has not recorded any deferred tax assets.
Loss per share
The Company presents basic and diluted loss per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the loss of the Company by the weighted average number of common shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding, adjusted for own shares held and for the effects of all potential dilutive common shares related to outstanding stock options and warrants issued by the Company for the years presented, except if their inclusion proves to be anti-dilutive.
F-12
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Share-based payments
The fair value of all stock options granted to directors, officers, and employees is recorded as a charge to operations and a credit to contributed surplus. The fair value of these stock options is measured at the grant date using the Black-Scholes option pricing model. The fair value of stock options which vest immediately is recorded at the grant date. For stock options which vest in the future, the fair value of stock options, as adjusted for the expected level of vesting of the stock options and the number of stock options which ultimately vest, is recognized over the vesting period. Stock options granted to non-employees are measured at the fair value of goods or services rendered or at the fair value of the instruments issued if it is determined that the fair value of the goods or services received cannot be reliably measured. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.
Warrants issued to brokers are measured at their fair value on the vesting date and are recognized as a deduction from equity and credited to contributed surplus. The fair value of stock options and warrants issued to brokers are estimated using the Black-Scholes option pricing model. Any consideration received on the exercise of stock options and/or warrants, together with the related portion of contributed surplus, is credited to share capital.
Warrants issued in equity financing transactions
The Company engages in equity financing transactions to obtain the funds necessary to continue operations and explore its exploration and evaluation assets. These equity financing transactions may involve the issuance of common shares or units. Each unit comprises of a certain number of common shares and a certain number of share purchase warrants.
Depending on the terms and conditions of each equity financing agreement, the Warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the agreement. Warrants that are part of units are valued based on the residual value method. Warrants that are issued as payment for agency fees or other transactions costs are accounted for as share-based payments.
Financial instruments
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are recognized when the rights to receive or obligation to pay cash flows from the assets or liabilities have expired or been settled or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive loss (“FVTOCI”), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has opted to measure them at FVTPL. Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the consolidated statements of loss and comprehensive loss in the period in which they arise.
F-13
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
Impairment of financial assets at amortized cost
An ‘expected credit loss’ impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in the consolidated statement of loss for the period.
In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through the consolidated statement of loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
Derecognition of financial assets
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit or loss.
Derivative financial assets
Warrants are classified as derivative financial assets and are recorded at FVTPL. Warrants without an active market that are received as attachments to common share units are initially recorded at nominal amounts. At the time of purchase the total unit cost is allocated in full to each common share. Subsequent value is determined at measurement date using a valuation technique, such as the Black-Scholes option pricing model, or when the valuation technique input variables are not reliable, using the intrinsic value, which is equal to the higher of the market value of the underlying security, less the exercise price of the warrant, or zero.
Newly adopted accounting standards and interpretations
Effective for annual reporting periods beginning on or after January 1, 2023, the Company adopted the following amendments:
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) – the amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy.
Definition of Accounting Estimates (Amendments to IAS 8) – the amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.” Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error.
The adoption of these amendments did not have a material impact on the results of its operations and financial position.
F-14
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 2. | Material accounting policy information (continued) |
| Use of estimates |
The preparation of financial statements in conformity with IFRS Accounting Standards requires management to make estimates, assumptions, and judgment in applying its accounting policies and estimates and assumptions about the future. Estimates and other judgments are continuously evaluated and are based on management’s experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. Although management uses historical experience and its best knowledge of the expected amounts, events or actions to form the basis for estimates, actual results may differ from these estimates.
Critical accounting estimates:
The assessment of the recoverable amount of mineral properties as a result of impairment indicators – When indicators of impairment are identified, recoverable amount calculations are based either on discounted estimated future cash flows or on comparable recent transactions. The assumptions used are based on management’s best estimates of what an independent market participant would consider appropriate. Changes in these assumptions may alter the results of impairment testing, the amount of the impairment charges recorded in the statement of loss and comprehensive loss and the resulting carrying values of assets.
Asset retirement obligations - Significant estimates were utilized in determining future costs to complete groundwater restoration, plugging and abandonment of wellfields and surface reclamation at the Company’s uranium sites. Estimating future costs can be difficult and unpredictable as they are based principally on current legal and regulatory requirements and ISR site closure plans that may change materially. The laws and regulations governing ISR site closure and remediation in a particular jurisdiction are subject to review at any time and may be amended to impose additional requirements and conditions which may cause our provisions for environmental liabilities to be underestimated and could materially affect our financial position or results of operations. Estimates of future asset retirement obligation costs are also subject to operational risks such as acceptability of treatment techniques or other operational changes.
Critical accounting judgments:
The assessment of indicators of impairment for mineral properties - The Company follows the guidance of IFRS 6 to determine when a mineral property asset is impaired. This determination requires significant judgment. In making this judgment, the Company evaluates, among other factors, the results of exploration and evaluation activities to date and the Company’s future plans to explore and evaluate a mineral property.
Valuation of acquired mineral properties – The valuation of mineral properties acquired by the Company requires significant judgement. Acquired mineral properties are valued at their fair market value which can require significant estimates in future cash flows, production, and timing.
Business combinations and divestments - The determination of whether a set of assets acquired and liabilities assumed constitute a business may require the Company to make certain judgments, taking into account all facts and circumstances. A business is presumed to be an integrated set of activities and assets capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or economic benefits. The acquisition of Alta Mesa on February 14, 2023 (Note 8) was determined to constitute an acquisition of assets.
The Company completed two transactions in 2023 to divest of non-core assets that resulted in receipt of marketable securities (Note 4). Neither of these transactions led to the Company holding significant influence according to the definition of IAS 28 Investments in Associates, accordingly, they were accounted for as equity investments with the fair value of the securities on the transaction date being recorded on the Company’s Statement of Financial Position.
F-15
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 3. | Uranium contracts |
Investments in uranium are categorized in Level 1 of the fair value hierarchy (Note 15).
| Investment in uranium $ | Quantity in pounds (lbs) | |||||||
| Balance, December 31, 2021 | ||||||||
| Sale of uranium investment | ( | ) | ( | ) | ||||
| Gain on sale of uranium | ||||||||
| Balance, December 31, 2022 | ||||||||
| Investment in uranium | ||||||||
| Sale of uranium investment | ( | ) | ( | ) | ||||
| Gain on sale of uranium | ||||||||
| Balance, December 31, 2023 | ||||||||
During the year ended December 31, 2023,
the Company bought and sold
Deposits on uranium investment
In 2022, the Company entered into two uranium concentrates purchase
agreements with an unrelated third party to purchase
Sales contracts
In 2021, the Company entered into several contracts with traders and nuclear utilities. These contracts are designed to retain exposure to spot pricing while also incorporating minimum floor and maximum ceiling prices, which are adjusted annually for inflation. The minimum floor prices are set to ensure a reasonable margin over the Company’s expected operational costs, allowing for participation in potential increases in uranium prices.
| Year | Sales Commitments in Pounds | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
Loan agreements
In
December 2023 the Company entered into a Master Transaction Agreement which included a loan agreement with Boss Energy Ltd. The master
transaction agreement closed February 19, 2024 (Note 19). Pursuant to the loan agreement Boss Energy will loan the Company up to
F-16
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 4. | Marketable securities |
In May 2022, the Company divested Cibola
Resources, LLC to Elephant Capital (“Elephant”) pursuant to a Share Purchase Agreement whereby the Company received consideration
in the form of
As at December 31, 2023, all of the
shares held are free trading (the “Trading Shares”) or will become free trading within the next 12 months. These shares have
been classified as a current asset on the consolidated statements of financial position, due to the Company’s ability to liquidate
those shareholdings within the next 12 months. These shares are carried at a fair value of $
In October 2022, the Company received
In April 2023, the Company
divested of Belt Line Resources Inc and Hydro Restoration Corp to Nuclear Fuels Inc (“NFI”) pursuant to a Share Purchase
Agreement whereby the Company received consideration in the form of
During the year ended December 31, 2023,
NFI was acquired by Uravan Minerals Inc., who renamed themselves Nuclear Fuels Inc. As a result of this transaction the Company received
As at December 31, 2023,
In July 2023, the Company divested
of Neutron Energy Inc. to Anfield Energy Inc. (“Anfield”) pursuant to a Share Purchase Agreement whereby the Company
received consideration of C$
In accordance with the Company’s material accounting policy, each of these common shares is classified as FVTPL, with gains/losses being recognized to the consolidated statements of loss and comprehensive loss.
F-17
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 4. | Marketable securities (continued) |
| Marketable securities | ||||||||||||
| Volume | current $ | non-current $ | ||||||||||
| Balance, December 31, 2021 | ||||||||||||
| Additions | ||||||||||||
| Change in fair value | ||||||||||||
| Foreign exchange translation | ( | ) | ( | ) | ||||||||
| Balance, December 31, 2022 | ||||||||||||
| Additions | ||||||||||||
| Reclass from non-current to current | ( | ) | ||||||||||
| Change in fair value | ||||||||||||
| Foreign exchange translation | ||||||||||||
| Balance, December 31, 2023 | ||||||||||||
| 5. | Intangible assets |
In 2018, the Company acquired access
to certain uranium exploration data from VANE Minerals (US) LLC (“VANE”) in exchange for
In 2020, for $
In 2020, the Company permanently acquired
the Grants Mineral Belt database for $
In 2022, the Company acquired access
to the Getty Minerals Database from Platoro West Incorporated for $
There were no indicators of impairment
as at December 31, 2023.
VANE Agreement $ | Getty Database $ | Signal Equities Database $ | Grants Mineral Belt Database $ | Total $ | ||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Amortization | ( | ) | ( | ) | ||||||||||||||||
| Currency translation adjustment | ( | ) | ||||||||||||||||||
| Balance, December 31, 2022 | ||||||||||||||||||||
| Amortization | ( | ) | ( | ) | ||||||||||||||||
| Currency translation adjustment | ( | ) | ( | ) | ||||||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||||||
F-18
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 6. | Property, plant, and equipment |
In February 2023, through its asset acquisition of Alta Mesa, the Company acquired a variety of property, plant, and equipment assets (Note 9).
Uranium plants $ | Other property and equipment $ |
Furniture $ |
Buildings $ |
Software $ |
Total $ | |||||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Disposals | ||||||||||||||||||||||||
| Depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Balance, December 31, 2022 | ||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||
| Disposals | ||||||||||||||||||||||||
| Depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||||||||||
| 7. | Right-of-use assets and lease liability |
In 2021, the Company entered into a
contractual agreement to lease office space in Corpus Christi, Texas through June 30, 2025. The terms of the lease call for a monthly
lease payment of $
In 2021, the Company acquired a lease agreement for additional office space in Vancouver, B.C. through July 10, 2023. During the year ended December 31, 2023, this lease expired, and the related security deposit was returned to the Company.
In 2022, the Company entered into a contractual agreement to lease office space in Corpus Christi, Texas through August 31, 2024. During the year ended December 31, 2023, this lease was terminated.
In 2023, the Company entered into a
contractual agreement to lease office space in Corpus Christi, Texas through June 30, 2025. The terms of the lease call for a monthly
lease payment of $
In 2023, the Company entered into a contractual
agreement to lease additional office space in Corpus Christi, Texas through June 30, 2025. The terms of the lease call for a monthly lease
payment of $
In 2023, the Company entered a contractual
agreement to lease office space in Dallas, Texas through October 31, 2028. The terms of the lease call for a monthly lease payment of
$
F-19
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 7. | Right-of-use assets and lease liability (continued) |
| Leased asset $ | Leased offices $ | Total $ | ||||||||||
| Balance, December 31, 2021 | ||||||||||||
| Additions | ||||||||||||
| Accretion | ||||||||||||
| Lease payments made | ( | ) | ( | ) | ( | ) | ||||||
| Currency translation adjustment | ( | ) | ( | ) | ||||||||
| Balance, December 31, 2022 | ||||||||||||
| Less: current lease liability | ( | ) | ( | ) | ||||||||
| Balance (long-term), December 31, 2022 | ||||||||||||
| Additions | ||||||||||||
| Lease termination | ( | ) | ( | ) | ||||||||
| Accretion | ||||||||||||
| Lease payments made | ( | ) | ( | ) | ||||||||
| Currency translation adjustment | ||||||||||||
| Balance, December 31, 2023 | ||||||||||||
| Less: current lease liability | ( | ) | ( | ) | ||||||||
| Balance (long-term), December 31, 2023 | ||||||||||||
| Year | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total | ||||
| 8. | Asset acquisition |
In November 2022, the Company, and Energy Fuels, Inc (“Energy Fuels”) entered into a Definitive Agreement. Pursuant to the terms and subject to the conditions in the Definitive Agreement, 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 $
F-20
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 8. | Asset acquisition (continued) |
| Consideration | $ | |||
| Cash | ||||
| Convertible promissory note | ||||
| Fair value of replacement options | ||||
| Transaction costs | ||||
| Total consideration value | ||||
| Net assets acquired | $ | |||
| Prepaids | ||||
| Property, plant, and equipment | ||||
| Mineral properties | ||||
| Asset retirement obligations | ( | ) | ||
| Accounts payable and accrued liabilities | ( | ) | ||
| Total net assets acquired |
| Weighted Average | ||||
| Exercise Price | $ | |||
| Share price | $ | |||
| Discount Rate | % | |||
| Expected life (years) | ||||
| Volatility | % | |||
| Fair value of replacement options (CAD per option): | $ | |||
The fair value of the Replacement Options
is based on the issuance of
F-21
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 9. | Mineral properties |
| Arizona $ | Colorado $ | New Mexico $ | South Dakota $ | Texas $ | Utah $ | Wyoming $ | Total $ | |||||||||||||||||||||||||
| Balance, December 31, 2021 | ||||||||||||||||||||||||||||||||
| Exploration costs: | ||||||||||||||||||||||||||||||||
| Drilling | ||||||||||||||||||||||||||||||||
| Acquisition, maintenance and lease fees | ||||||||||||||||||||||||||||||||
| Permitting & Licensing | ( | ) | ||||||||||||||||||||||||||||||
| Personnel | ||||||||||||||||||||||||||||||||
| Recoveries | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Resource review | ||||||||||||||||||||||||||||||||
| Divestment: | ||||||||||||||||||||||||||||||||
| Divestment of mineral interest | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Assets held for sale | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Project development costs: | ||||||||||||||||||||||||||||||||
| Construction of wellfields | ||||||||||||||||||||||||||||||||
| Drilling | ||||||||||||||||||||||||||||||||
| Personnel | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | ||||||||||||||||||||||||||||||||
| Exploration costs: | ||||||||||||||||||||||||||||||||
| Drilling | ||||||||||||||||||||||||||||||||
| Acquisition, maintenance and lease fees | ||||||||||||||||||||||||||||||||
| Consulting | ||||||||||||||||||||||||||||||||
| Personnel | ||||||||||||||||||||||||||||||||
| Impairment | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Divestment: | ||||||||||||||||||||||||||||||||
| Divestment of mineral interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Assets held for sale | ||||||||||||||||||||||||||||||||
| Project development costs: | ||||||||||||||||||||||||||||||||
| Construction of wellfields | ||||||||||||||||||||||||||||||||
| Drilling | ||||||||||||||||||||||||||||||||
| Personnel | ||||||||||||||||||||||||||||||||
| Reclassification | ||||||||||||||||||||||||||||||||
| Reclassification to mining properties | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||||||||||||||||||
F-22
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 9. | Mineral properties (continued) |
Assets Held for Sale
On April 1, 2023, the Company divested
its subsidiaries Belt Line Resources, Inc. and Hydro Restoration Corp to NFI (Note 4). Beltline Resources, Inc owned the Moonshine Springs
project in Arizona. Hydro Restoration Corp owned the Kaycee and Bootheel projects in Wyoming. Pursuant to two Share Purchase Agreements
dated November 3, 2022, the Company received
Arizona
The Company owns or controls several Arizona State mineral leases and unpatented federal lode mining claims covering acreage in northern Arizona strip district.
At December 31, 2023, the Company held
cash bonds for $
Colorado
Centennial
The Centennial Uranium Project is located
in Colorado. In 2006, the Company entered into an option agreement to purchase uranium rights on certain areas of the Centennial Project
for consideration of $
New Mexico
On July 20, 2023, the Company divested
its subsidiary Neutron Energy, Inc, including its holding of the Marquez-Juan Tafoya Uranium Project to Anfield Energy, Inc. Pursuant
to a Share Purchase Agreement, the Company received cash consideration of $
Nose Rock
The Nose Rock Project is located in McKinley County, New Mexico.
Treeline
The Treeline project is located in McKinley and Cibola Counties, Grants Uranium District, New Mexico.
McKinley, Crownpoint and Hosta Butte
The Company owns a
West Largo
The West Largo Project is near the Grants Mineral Belt in McKinley County, New Mexico.
F-23
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 9. | Mineral properties (continued) |
New Mexico (continued)
Other New Mexico Properties
The Company holds mineral properties in an area located primarily in McKinley County in northwestern New Mexico.
In January 2022, the Company divested
certain mineral interest to Ambrosia Solar, LLC (“Ambrosia”). The assets, having no net book value at the transaction date,
resulted in a gain on disposal of the mineral interests of $
Under the agreement, Ambrosia retained
the right to acquire the uranium mineral rights associated with the property by quit claim deed to be furnished by the Company. In 2023,
the Company received an additional payment of $
Related to a 2021 agreement, Wildcat
Solar Power Plant, LLC exercised its option to acquire rights to certain mineral interests in September 2023. $
South Dakota
Dewey-Burdock
The Dewey-Burdock Project is an in-situ recovery uranium project located near Edgemont, South Dakota.
Texas
Kingsville Dome
The Kingsville Dome project is located in Kleberg County, Texas on land owned by the Company.
Rosita
The Rosita Project is located in Duval County, Texas on land owned by the Company.
At December 31, 2023, in accordance
with its material accounting policy for mineral properties, the Company assessed its Rosita South Extension mineral property assets for
impairment and found that the asset at a carrying value of $
Upper Spring Creek
The Upper Spring Creek Project is located in Live Oak and Bee counties in Texas.
Butler Ranch
The Butler Ranch Exploration project is located in Karnes County, Texas.
Alta Mesa Project
The Alta Mesa Project is located in Brooks County, Texas.
Subsequent to the period ended December
31, 2023, 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
F-24
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 9. | Mineral properties (continued) |
Utah
Ticaboo
The Company owns three portions of a claim block located in Shootarang Canyon, Utah. The Company has a federal Plan of Operation and State of Utah approval for processing of the assets.
Other Utah Properties
The Company owns various mining claims throughout Utah, as well as its Cedar Mountain project located northwest of the White Mesa Mill in Blanding County, Utah.
Wyoming
Gas Hills
The Gas Hills Project is located in Riverton, Wyoming.
Dewey Terrace
The Dewey Terrace Project is located in Weston and Niobrara Counties of Wyoming. The project is adjacent to the Company’s NRC licensed Dewey-Burdock Project along the Wyoming-South Dakota state line.
Juniper Ridge
The Juniper Ridge Project is located in the southwest portion of Wyoming.
| 10. | Mining properties |
At December 31, 2023, in accordance with its material accounting policy for mineral properties, the Company reclassified its Rosita Extension mineral property to a producing mining property.
Significant judgment was used to determine
the recoverable value in use of the Rosita Extension asset. 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
Rosita Extension $ |
Total $ | |||||||
| Balance, December 31, 2021 | ||||||||
| Additions | ||||||||
| Amortization | ||||||||
| Balance, December 31, 2022 | ||||||||
| Additions | ||||||||
| Amortization | ||||||||
| Balance, December 31, 2023 | ||||||||
F-25
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 11. | Asset retirement obligations |
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
December 31, 2023 $ | December 31,
2022 $ | |||||||
| Kingsville | ||||||||
| Rosita | ||||||||
| Vasquez | ||||||||
| Alta Mesa | ||||||||
| Centennial | ||||||||
| Gas Hills | ||||||||
| Ticaboo | ||||||||
| Asset retirement obligations | ||||||||
| Asset retirement obligation | $ | |||
| Balance, December 31, 2021 | ||||
| Accretion | ||||
| Settlement | ( | ) | ||
| Change in estimates | ||||
| Balance, December 31, 2022 | ||||
| Additions (Note 9) | ||||
| Accretion | ||||
| Settlement | ( | ) | ||
| Change in estimates | ( | ) | ||
| Balance, December 31, 2023 |
At the year end, the undiscounted cash
flows total $
| 12. | Share capital |
The authorized share capital of the Company consists of an unlimited number of common and preferred shares without par value.
During the year ended December 31, 2023, the Company issued:
| i) |
F-26
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 12. | Share capital (continued) |
| ii) |
| Weighted Average | ||||||||
| Quantity | ||||||||
| Exercise Price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Discount Rate | % | % | ||||||
| Expected life (years) | ||||||||
| Volatility | % | % | ||||||
| Fair value of finders’ warrants (CAD per option): | $ | $ | ||||||
| iii) |
| iv) |
| v) | In June 2023 the Company filed a Canadian short form base
shelf prospectus of $ |
During the year ended December 31, 2022, the Company issued:
| i) |
| ii) |
| iii) |
| iv) |
F-27
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 12. | Share capital (continued) |
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
| Year ended December 31, 2023 | Year ended December 31, 2022 | |||||||||||||||
| Options | Weighted average exercise price | Options | Weighted average exercise price | |||||||||||||
| # | CAD $ | # | CAD $ | |||||||||||||
| Options outstanding, beginning of period/year | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ( | ) | ||||||||||||
| Forfeited/expired | ( | ) | ( | ) | ||||||||||||
| Options outstanding | $ | $ | ||||||||||||||
| Options exercisable | $ | $ | ||||||||||||||
| Options Outstanding | Options Exercisable | ||||||||||||||||||||
| December 31, 2023 | December 31, 2023 | ||||||||||||||||||||
| Option price per share | Options # | Weighted remaining life (years) | Weighted exercise price CAD $ | Options # | Weighted exercise price CAD $ | ||||||||||||||||
| $ | 0.18 - 1.92 | $ | $ | ||||||||||||||||||
| $ | 2.40 - 3.79 | $ | $ | ||||||||||||||||||
| $ | 4.20 - 5.76 | $ | $ | ||||||||||||||||||
| $ | $ | ||||||||||||||||||||
During the year ended December 31, 2023,
the Company granted an aggregate of
During the year ended December 31, 2022,
the Company granted an aggregate of
The Company’s standard stock option
vesting schedule calls for
During the year ended December 31, 2023,
the Company recognized stock option expense of $
F-28
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 12. | Share capital (continued) |
Stock options (continued)
The fair value of all compensatory options
granted is estimated on the grant date using the Black-Scholes option pricing model.
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected life of option | ||||||||
| Expected dividend yield | % | % | ||||||
| Expected stock price volatility | % | % | ||||||
| Fair value per option | CAD $ | CAD $ | ||||||
Share purchase warrants
| Year ended December 31, 2023 | Year ended December 31, 2022 | |||||||||||||||
| Warrants | Weighted average exercise price | Warrants | Weighted average exercise price | |||||||||||||
| # | CAD $ | # | CAD $ | |||||||||||||
| Warrants outstanding, beginning of year | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ( | ) | ||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Warrants outstanding, end of period/year | ||||||||||||||||
| Warrants Outstanding | ||||||||||||
| December 31, 2023 | ||||||||||||
| Warrant price | Warrants | Weighted average remaining life | Weighted average exercise price | |||||||||
| per share | # | (years) | CAD $ | |||||||||
| $3.00 - 4.051 | $ | | ||||||||||
| $4.59 - 6.00 | $ | |||||||||||
| $ | ||||||||||||
| 1 |
Share subscriptions received
As of December 31, 2022, the Company
held in escrow $
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 9).
F-29
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 12. | Share capital (continued) |
Convertible promissory note (continued)
The principal value of the Note is $
The principal portion of the Note is
convertible at any time and at the option of the holder into common shares of the Company at a conversion price of $
The Note was valued initially by measuring
the fair value of the liability component using a
| Liability | Equity | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Balance, December 31, 2022 and December 31, 2023 | ||||||||||||
| Issuance of promissory note | ||||||||||||
| Accretion expense | ||||||||||||
| Principal payments | ( | ) | ( | ) | ||||||||
| Accrued interest, not yet paid | ||||||||||||
| Balance, December 31, 2023 | ||||||||||||
| Liabilities: | ||||||||||||
| Current portion - convertible debenture (accrued interest) | ||||||||||||
| Long term portion - convertible debenture | ||||||||||||
| Balance, December 31, 2023 | ||||||||||||
Subsequent to the period ended December 31, 2023, the outstanding balance on this note was converted by the holder and accrued interest was paid (Note 19).
| 13. | Related party transactions and balances |
Related parties include key management of the Company and any entities controlled by these individuals as well as other entities providing key management services to the Company. Key management personnel consist of Directors and senior management including the Executive Chairman, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Chief Administrative Officer.
| December 31, | December 31, | |||||||||||
| 2023 | 2022 | |||||||||||
| $ | $ | |||||||||||
| Consulting | (1) | |||||||||||
| Data acquisition | - | |||||||||||
| Directors’ fees | (2) | |||||||||||
| Staff costs | ||||||||||||
| Stock option expense | ||||||||||||
| Total key management compensation | ||||||||||||
| (1) |
F-30
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 13. | Related party transactions and balances (continued) |
During the period Tintina Holdings, Ltd’s contract was reassigned to a company named 5 Spot Corporation, a new Company owned by the spouse of the Company’s Executive Chairman.
| (2) |
During the year ended December 31, 2023,
the Company granted
| December 31, | December 31, | |||||||||
| 2023 | 2022 | |||||||||
| $ | $ | |||||||||
| 5 Spot Corp | Consulting services | |||||||||
| Hovan Ventures LLC | Consulting services | - | ||||||||
| Officers and Board members | Accrued compensation | |||||||||
| 14. | Management of capital |
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 year ended December 31, 2023, and the Company is not subject to any externally imposed capital requirements.
| 15. | Financial instruments |
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:
| 1. | Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities. |
F-31
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 15. | Financial instruments (continued) |
| 2. | Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1, that are observable either directly or indirectly. |
| ● | Level 3 fair value measurements are those derived from valuation techniques that include inputs that are not based on observable market data. |
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, 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, and lease liabilities approximates fair value as they bear a rate of interest commensurate with market rates.
Investments in uranium are measured at Level 1 of the fair value hierarchy. The Company classifies these investments as financial assets measured at fair value as determined based on the most recent month-end spot prices for uranium published by UxC and converted to Canadian dollars at the date of the consolidated statements of financial position.
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.
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| C$ | C$ | |||||||
| Cash | ||||||||
| Marketable Securities - Current | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
A
The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
F-32
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 15. | Financial instruments (continued) |
Credit risk
Credit risk arises from cash held by banks and financial institutions and receivables. The maximum exposure to credit risk is equal to the carrying value of these financial assets. Some of the Company’s cash is held by a Canadian bank.
Market risk
The Company is exposed to market risk
because of the fluctuating value of its marketable securities (Note 4). The Company has no control over these fluctuations and does not
hedge its investments. Based on the December 31, 2023 value of marketable securities every
Further, the Company is still primarily in the exploration stage; commodity prices are not reflected in operating financial results. However, fluctuations in commodity prices may influence financial markets and may indirectly affect the Company’s ability to raise capital to fund exploration.
Interest rate risk
Interest rate risk mainly arises from the Company’s cash, which receives interest based on market interest rates. The interest rate risk on cash is not considered significant.
Liquidity risk
The Company is primarily engaged in the acquisition, exploration, and development of uranium resource properties in the United States which is subject to significant inherent risk. Declines in the market prices of uranium and delays in the production, changes in the regulatory environment and adverse changes in other inherent risks can significantly and negatively impact the Company’s operations and cash flows and its ability to maintain sufficient liquidity to meet its financial obligations. Adverse changes to the factors mentioned above have impacted the recoverability of the Company’s mineral properties property, mining properties, and plant and equipment, which may result in impairment losses being recorded.
The Company’s current operating budget and future estimated cash flows indicate that the Company will generate positive cash flow in excess of the Company’s cash commitments within the twelve-month period following the date these consolidated financial statements were authorized for issuance.
The Company may be required to raise additional funds from external sources to meet these requirements. There is no assurance that the Company will be able to raise such additional funds on acceptable terms, if at all.
If the Company raises additional funds by issuing securities, existing shareholders may be diluted. If the Company is unable to obtain financing from external sources or issuing securities the Company may have difficulty meeting its payment obligations.
F-33
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 16. | Segmented information |
The Company operates in a single segment: the acquisition, exploration, and development of mineral properties in the United States.
| South Dakota $ | Texas $ | New Mexico $ | Wyoming $ | Other States $ | Canada $ | Total $ | ||||||||||||||||||||||
| Intangible assets | ||||||||||||||||||||||||||||
| Property, plant and equipment | ||||||||||||||||||||||||||||
| Mineral properties | ||||||||||||||||||||||||||||
| Mining properties | ||||||||||||||||||||||||||||
| Right-of-use assets | ||||||||||||||||||||||||||||
| Balance, December 31, 2022 | ||||||||||||||||||||||||||||
| Intangible assets | ||||||||||||||||||||||||||||
| Property, plant and equipment | ||||||||||||||||||||||||||||
| Mineral properties | ||||||||||||||||||||||||||||
| Mining properties | ||||||||||||||||||||||||||||
| Right-of-use assets | ||||||||||||||||||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||||||||||||||
| 17. | Supplemental cash flows |
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| $ | $ | |||||||
| Non-cash financing activities: | ||||||||
| Share issue costs on finders’ warrants issued | ||||||||
| Deferred financing costs remaining in accounts payable and accrued liabilities | ||||||||
| Non-cash investing activities: | ||||||||
| Mineral property costs included in accounts payable and accrued liabilities | ||||||||
| Property, plant, and equipment additions included in accounts payable and accrued liabilities | ||||||||
| Reclamation Settlements remaining in Accounts Payable | ||||||||
| Convertible promissory note issued for asset acquisition (Note 10) | ||||||||
| Marketable securities received on divestitures | ||||||||
There were no amounts paid for income taxes during the years ended December 31, 2023, and December 31, 2022.
F-34
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 18. | Current and deferred income tax |
Income tax expense (recovery)
| December 31, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
| Current tax expense (recovery) | ||||||||
| Current period | ||||||||
| Deferred tax expense (recovery) | ||||||||
| Orgination and reversal of temporary differences | ( | ) | ( | ) | ||||
| Change in tax rate | ( | ) | ||||||
| Change in unrecognized temporary differences | ||||||||
| Income tax expense (recovery) | ||||||||
F-35
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 18. | Current and deferred income tax (continued) |
The actual income tax provision differs from the expected amount calculated by applying the Canadian combined federal and provincial corporate tax rates to income before tax. These differences result from the following:
| December 31, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Statutory income tax rate | % | % | ||||||
| Expected income tax expense (recovery) | ( | ) | ( | ) | ||||
| Increase (decrease) resulting from: | ||||||||
| Change in unrecognized temporary differences | ||||||||
| Permanent differences | ||||||||
| Change in tax rate | ( | ) | - | |||||
| Effect of tax rates in foreign jurisdictions | ||||||||
| Share issue costs | - | |||||||
| Other | ||||||||
| Income tax expense (recovery) | - | |||||||
Recognized deferred tax assets and liabilities
Deferred tax assets are attributable to the following:
| December 31, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
| Loss carryforwards | ||||||||
| Lease liability and other | ||||||||
| Deferred tax assets | ||||||||
| Set-off of tax | ( | ) | ( | ) | ||||
| Net deferred tax assets | ||||||||
December 31, 2023 $ | December 31, 2022 $ | |||||||
| Intangible assets | ( | ) | ( | ) | ||||
| Right-of-use assets | ( | ) | ( | ) | ||||
| Fixed assets | ( | ) | ( | ) | ||||
| Convertible note | ( | ) | ||||||
| Marketable securities | ( | ) | ( | ) | ||||
| Deferred tax liabilities | ( | ) | ( | ) | ||||
| Set-off of tax | ||||||||
| Net deferred tax liability | ||||||||
Unrecognized deferred tax assets
| December 31, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
| Deductible temporary differences | ||||||||
| Tax losses | ||||||||
Deferred tax assets have not been recognized in respect of the above items, because it is not probable that future taxable profit will be available against which the Company can use the benefits therefrom.
F-36
| enCore Energy Corp. |
| Notes to the Consolidated Financial Statements |
| For the years ended December 31, 2023 and December 31, 2022 |
| (Expressed in USD unless otherwise noted) |
| 18. | Current and deferred income tax (continued) |
The Company has Canadian non-capital
loss carryforwards of $
| 19. | Events after the reporting period |
Subsequent to December 31, 2023, the following reportable events were completed:
| (a) | The
Company issued |
| (b) | The Company issued |
| (c) | The Company sold |
| (d) | The Company sold |
| (e) | The Company issued |
| (f) | The Company issued |
| (g) | The Company granted |
| (h) | The Company received $ |
| (i) | The
Company sold |
| (j) | The Company purchased |
| (k) | The Company received $ |
| (l) | The Company received $ |
| (m) | The Company entered into a loan agreement providing for up to |
| (n) | The Company entered a strategic collaboration agreement with Boss Energy to research and develop the Company’s PFN technology, to be financed equally by each party. |
| (o) | In the normal course of business, the Company completed the following uranium transactions related to existing uranium contracts (Note 3).: |
| 1) | Purchased | |
| 2) | Sold | |
| 3) | Received a loan of |
F-37