Vimy reviewing its options at Mulga Rock

Perth-based Vimy last month received approvals from the Western Australian Department of Mines, Industry Regulation and Safety enabling it to begin "ground disturbing" activities at the project, with a view to first uranium production by 2025. At that time, the company said the development of Mulga Rock, starting with the Ambassador and Princess deposits, remained its primary objective, but it had also been considering an alternative development option to further de-risk the project.

"Even though the uranium price is resurgent … there can be no assurance that any transaction will eventuate but with strong inbound interest, the Board must assess all value creation options for Vimy and will keep shareholders updated as to progress," the company said.

The strategic review process will assess opportunities to rapidly build organisational capacity and de-risk the execution of Mulga Rock, the company said, as well as considering the value that could be achieved through "potential corporate transactions with recognised industry participants" as an alternative to Vimy advancing the project on a 100% basis.

"We are focused on the next major milestone for Mulga Rock but in parallel believe there is strong merit in channelling this growing external interest into a coordinated process with the goal of de-risking the project development and thereby maximising value for all Vimy’s shareholders," interim CEO Steven Michael said. "This will also assist Vimy with decisions as to whether to expand our project development team or possibly leverage the team and skills of other recognised uranium players if we decide to go down that path."

Mulga Rock, located some 290km by road east-northeast of Kalgoorlie in the Great Victoria Desert of Western Australia, is described by Vimy as one of Australia’s largest undeveloped uranium resources. The company has appointed Macquarie Capital Australia Limited as financial adviser and MinterEllison as legal adviser to assist with the strategic review.

Merger proposal

Western Australia-based uranium exploration company Deep Yellow Limited subsequently said it had "attempted to engage with the Board of Vimy on several occasions since 17 September 2021, to merge the companies by way of a scheme of arrangement". Deep Yellow disclosed material details of a formal proposal made on 15 November, saying Vimy had allowed that proposal to lapse after "limited engagement" with the company. "Deep Yellow remains willing and motivated to explore alternatives and assess potential acquisition opportunities," it said.

In response, Vimy said it was disappointed that Deep Yellow had publicly announced its "unsolicited, unconventionally structured and non-market premium" proposal, saying Vimy had "offered to engage privately in good faith with Deep Yellow to explore a meaningful and value led transaction".

"The Vimy Board assessed the unconventionally structured proposal and found it deficient on many points," Vimy Chairperson Cheryl Edwardes said.

Vimy reiterated that the strategic review will continue.