Denison Mines Corp. is a uranium exploration and development company with interests in exploration and development projects in Saskatchewan, Zambia and Mongolia. As well, Denison has a 22.5% ownership interest in the McClean Lake uranium mill, located in northern Saskatchewan, which is one of the world’s largest uranium processing facilities. Denison’s exploration project portfolio includes the world class Phoenix deposit located on its 60% owned Wheeler River project also in the Athabasca Basin region of Saskatchewan.
Denison Mines shares jump after news of US asset sale to Energy Fuels
Denison Mines Corp.(TSE:DML) (AMEX:DNN) saw its shares jump 19.86 percent to $1.69 Tuesday afternoon, on the back of its plans to sell its US assets to uranium and vanadium company Energy Fuels (TSE:EFR).
The deal also led to a rise in Energy Fuels’ stock, as its shares rose 18 percent to 29 cents.
Denison said it will then complete a reorganization of its capital and will distribute the Energy Fuels shares to its shareholders on a pro rata basis as a return of capital in the course of that reorganization.
Upon completion of the deal, Denison shareholders will receive approximately 1.106 common shares of Energy Fuels for each common share of Denison owned, owning approximately 66.5 percent of Energy Fuels.
"This transaction is an important step forward for Denison," said Denison president and CEO Ron Hochstein.
"The company has evolved on two parallel but different tracks, being both an exploration and development entity with a global footprint and an established producer in the United States.
"We are pleased to have the opportunity to combine our U.S. operations with such a complimentary set of assets and people. I'm excited about the opportunities that lie ahead for both Denison and Energy Fuels shareholders and believe that this transaction only serves to strengthen the operations of both companies."
Both companies said the deal will cement the creation of the largest 100 percent-U.S. pure-play uranium producer, and one of the largest holders of National Instrument 43-101 (NI 43-101) compliant U.S.-based uranium resources.
Denison said it estimates the transaction will provide for total 2012 production that is greater than 25 percent of total U.S. estimated production. The combined assets will have total measured and indicated resources of 49.8 million pounds of uranium (U3O8,) plus inferred resources of 17.9 million pounds of U3O8.
The combination will also accelerate the rate of development of Energy Fuel’s mines, provide higher throughput of mill feed, and extend the number of years of production at Denison’s White Mesa mill in Utah, said the parties.
The White Mesa mill is a 2,000-ton per day uranium and vanadium processing plant near Blanding, Utah, producing up to eight million pounds of uranium per year.
Energy Fuel’s Sheep Mountain project in Wyoming is an advanced-stage development asset, which provides flexibility to bring an additional 1.5 million pounds per year of U.S.-produced uranium on-line.
Denison said the collaboration would also provide substantial vanadium by-product from its White Mesa mill and Colorado Plateau properties.
Denison also said its shareholders stand to benefit from the division of two distinctly different business profiles, with exclusive management focus on exploration and development, such as on the company's Wheeler River project in the Athabasca Basin region of northern Saskatchewan.
The deal's terms include a reciprocal break fee of C$3 million payable in certain circumstances, as well as non-solicitation provisions and a right to match any superior proposal.
"It combines the highly strategic asset of the only operating uranium mill in the U.S., White Mesa, with a significant resource base that substantially increases White Mesa's available feedstock."
Denison holds uranium mining and milling assets in Colorado Plateau, Utah and Arizona and New Mexico.
Energy Fuels owns about 61,000 acres of uranium and vanadium properties located in the states of Colorado, Utah, Arizona, Wyoming, and New Mexico, as well as exploration properties in Saskatchewan's Athabasca Basin totaling approximately 32,000 additional acres.