Under the terms, Cue Resources shareholders will receive 0.0195 of one share of Uranium Energy for every one share of Cue Resources held.
It is anticipated that about 2,336,260 shares of Uranium Energy will be issued.
Based on Uranium Energy's closing price of $3.85 Friday, it is paying approximately $8.9 million for Cue, which has a market capitalization of $7.4 million, according to TSX data.
Cue owns the Yuty project, a 230,650-hectare Uranium exploration property located in southeastern Paraguay. The company has spent over $16 million developing Yuty since 2006.
In August 2011, Cue reported that the current resource for the Yuty project was 8.914 million pounds of Uranium in the measured and indicated category and 2.226 million pounds of Uranium in the inferred category.
Uranium Energy's president and CEO, Amir Adnani, said: "The company's plan is to make the Yuty Project our second major Uranium asset in Paraguay. Cue's projects and resources will be synergistic with our current operations, and consistent with our development strategy in this stable and business-friendly country."
Cue's president and CEO, Robert Tyson, added: "Since the Fukushima disaster, funding Uranium projects has been a challenging task. The severe reduction in enterprise value and share price required Cue's board to pursue alternative financing opportunities in the best interests of Cue and our shareholders.
"Consummation of this relationship with UEC allows for our project to advance. UEC is a recognized ISR Uranium producer with a technical team that has an established record of developing and producing sandstone-hosted Uranium deposits."
The boards of both companies have approved the transcation.
Monday afternoon, Cue shares were up 30 percent to $0.06, while Uranium Energy stock was down two percent to $3.77.