Uranium Consolidation: Denison, SXR, IUC, RobTVThe Globe and Mail reported today what was already known in the small uranium investor circle: we are entering into an era of increased M&A activity. In recent months, mid-sized uranium juniors like sxr Uranium One (SXR.TO) have been active in trying to make themselves bigger through acquistion.
Buzz on the markets now is the potential acquisition of Dension Mines (DEN.TO), a half-a-billion dollar company that is remarkably, a uranium producer: it owns 22.5% of the McLean uranium mine in Sasketchewan. Denison's share of the production will be about 675,000 lbs of uranium in 2006, although the uranium will be sold at a price lower than the current U3O8 price under existing legacy contracts.
Besides being a uranium producer, Denison has several job titles. It helps in the administration of the Uranium Participation Corporation (U.TO), owns a share of the Midwest uranium project, and has various joint exploration projects in Canada and in Mongolia.
Better yet, the company at the end of June had $86 million in cash.
The CEO of Denison had these comments:
"There are economies of scale and synergies to be had if the deal is right."
"An interest in one area is riskier than an interest in three or four," he said.
"We've got a good base and expanding upon it if you can get value is a good thing to do."
Suitors for Denison include sxr Uranium One and International Uranium Corporation (with Teck Cominco having an outside interest), fellow uranium mid-size juniors and companies I write about on a consistent basis.
Jim Mustard of Haywood Securities commented on RoBTV today that IUC would benefit from acquiring Denison because of Denison's strong North American presence and existing utiility contracts that could add value of IUC. He predicts that with the strong price movement of Denison today that acquisition talks could accelerate and a deal made fairly soon.
In addition, Jim predicts an "avalanche" of uranium mergers, with likely buyers being Paladin (PDN.TO), UEX (UEX.TO), and companies with American interests, the implication presumably being Ur-Energy (URE.TO), Strathmore (STM.V), Energy Metals Corp (EMC.TO). Baywater Uranium (BAY.V) was mentioned as a merger heralding the current uranium M&A wave.
Statistics of Denison:
Share Price $16.80
Shares Outstanding 30.5 million
Market Capitalization 511.8 million
Spelunca/Stocknutfan, blog writer @ Stockhouse + https://www.uraniumstockinvesting.blogspot.com