Uranium companies join forces

Tuesday, 17 April 2012

Denison's American mining division will be combined with the uranium development company Energy Fuels to create the largest "pure-play" uranium producer in the USA.

Operations at the White Mesa mill (Image: Denison)

Toronto-based Energy Fuels and Denison Mines have agreed that Energy Fuels will acquire all of Denison's US-based mining assets and operations in exchange for over 425 million Energy Fuels shares which Denison will then distribute among its own shareholders in a capital reorganisation. Denison shareholders will ultimately own about 65.6% of Energy Fuels on completion of the transaction and reorganisation.

Energy Fuels brings to the deal the Sheep Mountain in Wyoming, acquired through its recent purchase of Titan Uranium, as well as extensive uranium and vanadium properties in Colorado, Utah, Arizona, Wyoming, and New Mexico and exploration properties in Saskatchewan, Canada. Sheep Mountain has indicated resources of some 11,700 tU. A preliminary feasibility study for the project, which is at an advanced stage of permitting, has recently been updated, and production is expected to begin in 2015. Energy Fuels is also in the process of developing the first conventional uranium and vanadium mill to be built in the USA in three decades at Piñon Ridge, Colorado.

Denison' US assets, held directly or indirectly through subsidiary Denison Mine Holdings, include the operating White Mesa uranium and vanadium mill in Utah as well as mines and exploration properties in Colorado, Utah and Arizona. Its Arizona 1 mine is currently in production, and a second Arizona mine, Pinenut, is expected to open later this year.

According to the two companies, the transaction will create "the largest 100% US pure-play uranium producer." With measured and indicated uranium resources of 49.8 million pounds U3O8 (19,155 tU) and inferred resources of 17.9 million pounds U3O8 (6885 tU) it will also be one of the largest holders of NI 43-101 compliant US-based uranium resources.

As well as offering operational synergies and capital efficiencies, the two companies anticipate that combining their mining and development assets will enable Energy Fuels' mines to be developed at a faster rate and the operating life of the White Mesa mill to be extended. Meanwhile, Denison will be able to focus on exploration and development in other areas, such as its Wheeler River project in Canada's Athabasca Basin and the Mutanga project in Zambia.

The CEOs of both companies hailed the transaction as strengthening both companies. Energy Fuels president and CEO Steve Antony said the transaction would reshape the landscape of the US uranium sector, bringing together the asset of the only currently operating US uranium mill with a significant resource base to increase its available feedstock.

Denison president and CEO Ron Hochstein noted that his company had evolved on two parallel but different tracks, being an international exploration and development company and also an established producer in the USA. "We are pleased to have the opportunity to combine our US operations with such a complimentary set of assets and people," he said.

Before a definitive agreement can be reached numerous conditions pertaining to the two companies' existing shareholders and strategic agreements will have to be negotiated. However, Energy Fuels' three largest shareholders, who together own some 22.7% of the company's outstanding common shares, have already indicated their willingness to enter into the necessary support agreements, as have two of Denison's major shareholders who account for about 9.9% of the company. Completion of the transaction will also be subject to a number of further conditions and contingencies including the receipt of necessary third party, regulatory, shareholder and court approvals. The two companies currently anticipate a closing date of June 2012.

Researched and written
by World Nuclear News