Merger to create US uranium giant

Tuesday, 4 June 2013

A planned acquisition of Strathmore Minerals by Energy Fuels would create the "premier pure-play US uranium company", according to an announcement by the two companies.

A letter of intent signed in May would see Energy Fuels acquire all of the issued and outstanding shares of Strathmore in a deal that offers numerous synergies from the two companies' existing operations.

One such synergy is the possibility of processing uranium from Strathmore's 60%-owned Roca Honda uranium project in New Mexico at Energy Fuels' White Mesa mill, which came into the company's possession after its 2012 acquisition of Denison's US mining division. A recently completed preliminary economic analysis for Roca Honda, which is currently undergoing permitting, assumed that a new mill would be built at the New Mexico site. However, Roca Honda is within transport distance of White Mesa, so the acquisition provides the opportunity to process its output at the existing mill without the need to build a new mill at Roca Honda. This, say the companies, could result in significant savings as well as reducing the permitting timeline.

Sumitomo Corporation of Japan owns 40% of Roca Honda, which has NI 43-101 compliant measured and indicated resources of some 16.783 million pounds U3O8 (6456 tU) and 11.894 million pounds U3O8 (4575 tU) of inferred resources.

The deal also offers savings opportunities between the two companies' Wyoming projects at Gas Hills (Strathmore) and Sheep Mountain (Energy Fuels) as well as bringing together Strathmore claims that are contiguous with Sheep Mountain. Gas Hills and Sheep Mountain are only 45 km apart, offering opportunities for combining the two projects. Strathmore recently updated its NI 43-101 compliant resource estimates for Gas Hills to a total indicated resource of 5.4 million pounds U3O8 (2077 tU) with inferred resources of 5.5 million pounds U3O8 (2115 tU), and is currently in the process of developing the project under a phased joint venture with agreement South Korea's KEPCO. Strathmore's Juniper Ridge is also located some 150 km from Sheep Mountain and could potentially be developed as a larger regional project in conjunction with Gas Hills/Sheep Mountain.

The transaction, which is subject to approval by shareholders and regulators as well as other conditions, is expected to be completed by the end of August. KEPCO, which is the largest shareholder of both Energy Fuels and Strathmore, has already expressed its support for the transaction, which would see it own 9.6% of the common shares of the expanded company. On completion of the transaction, a KEPCO-nominated director would be appointed to Energy Fuels' board.

Researched and written
by World Nuclear News