Energy Fuels to buy Denison’s U.S. uranium assets

Energy Fuels (EFR-T), which is striving to become a leading pure-play uranium producer, has recently entered a $106-million all-stock deal for Denison Mines’ (DML-T, DNN-X) uranium assets and operations in the United States.

Following the transaction, Denison will complete a plan of arrangement, where its shareholders will receive 1.106 Energy Fuels shares (pre-consolidation) for each Denison share held. In total Denison shareholders will own two-thirds of Energy Fuels.

The transaction could create the largest 100% U.S. pure-play uranium producer, with one of the largest National Instrument 43-101 compliant U.S.-based uranium resources, the two companies said in a joint statement released after market close on April 16.

Once the assets are combined, Energy Fuels will hold 49.8 million lbs. U3O8 in measured and indicated, and 17.9 million lbs. U3O8 in inferred.

Through the deal, Energy Fuels will be able to get its hands on Denison’s White Mesa mill, the only conventional operating uranium mill in the U.S. Located near Blanding, Utah, White Mesa could produce up to 8 million lbs. uranium a year.

Denison’s other U.S. assets include the Colorado Plateau mines, the Henry Mountains uranium complex in Utah and the Arizona Strip properties.

The company has four mines in operation: Beaver, Pandora, Daneros and Arizona 1.

It is working to develop its other uranium projects at Arizona Strip. For instance, the Pinenut mine is slated to come online by year-end, and shaft sinking is expected to start at the Canyon mine later this year, pending regulatory approval.

The Henry Mountains complex, which is currently on care and maintenance, makes up Denison’s largest uranium resource in the U.S., with 12.8 million lbs. in indicated, and 8.1 million lbs. in inferred. 

Some of Energy Fuels’ main uranium properties include the Sheep Mountain project in the Crooks Gap district of Wyoming. In March, the Colorado-based company updated a prefeasibility study for the project, which looked at developing underground and open pit deposits for a 15-year mine life. Production is expected to kick off in 2015, and should peak at a rate 1.5 million lbs. U3O8 a year.

Energy Fuels has also proposed to build the Pinon Ridge uranium and vanadium mill in Paradox Valley in western Montrose County, Colorado.

If its plans are approved, Pinon Ridge will be the first uranium mill constructed in the U.S. in over 30 years.

Energy Fuel’s top three shareholders – Dundee Resources, Pinetree Capital and Mega Uranium – representing 22.7% of the company have indicated that they would support the recent agreement.

The same was said for Zebra Holdings and Investments and Lorito Holdings, which combined own 9.9% of Denison.

The letter agreement has a reciprocal break fee of $3 million.

Energy Fuels also expects to seek shareholder approval for a 10-for-1 consolidation of its shares.

On the news of the transaction, Denison shares in Toronto jumped 17% to close April 17 at $1.65 on 6.5 million shares traded, while Energy Fuels closed up 20% at 30¢ as 1.8 million shares changed hands.