Fission Uranium Corp T.FCU

Mineweb: A uranium mid-cap company

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https://www.mineweb.com/news/energy/a-uranium-mid-cap/

A uranium mid-cap

Denison, Fission argue a merger of equals means a unique position as uranium mid-cap.

Fission Uranium and Denison Mines announced a merger of equals Monday that, if consummated, combines a few, key high-grade assets in a premier uranium mining region of the world in terms of grade. In selling the marriage of two key uranium juniors focused on the Athabasca Basin, the sales pitch was largely focused on the benefit of being a bigger company in a sour mining market.

Fission has emerged in recent years with an important uranium discovery, called Triple R, and first resource that catapulted its prospects as a uranium developer. It has gone from a virtual unknown, chasing a U3O8-mineralized boulder train, to one of the relatively rare junior explorers with a market capitalization counted in the hundreds of millions (~C$400m).

That has helped it catch up to and near equal Denison, a Lundin Group company that has a more established position in the Athabasca Basin. Denison’s assets include another, deeper, but uber grade uranium deposit (60% Wheeler project) and a 22.5% stake in a sizeable uranium toll mill operated by Areva, which processes ore from Cameco’s Cigar Lake mine.

Fission and Denison held a conference call Tuesday and Dev Randhawa, Fission’s president and CEO, was especially keen to drive home the point that Fission was better off as part of a company with access to a mill, additional high-grade Athabasca assets (Wheeler), a larger market cap and a New York listing (Denison’s).

Randhawa argued that the bigger company would gain liquidity and also, with combined assets, be able to throw more weight around in the market from the perspective of buyers interested in uranium assets and the market, where its size might boost its inclusion on mining indices. Randhawa also described the impetus to consider putting the deal together as a matter of Fission no longer delivering share price results with drilling in recent months.

He noted that despite strong drilling results at its Triple R deposit, its share price had barely moved. In this he, as Denison and other Fission management suggested, saw greater potential in being part of a more diversified, mid-cap company that might attract more attention when, or if, the uranium sector turns around.

Still, the decision flummoxed some investors. A few self-described Fission shareholders were on the call, and one, in particular, questioned the need, or timing, to do the deal. “A lot of shareholders feel we can just buy Denison on our own,” one investor said.

In defending the deal to the more sceptical questioners on the call, Randhawa reiterated the value of a combined company in size and assets with a stake in an operating mill. He emphasized the importance of the mill noting conversations he said he had in Asia where potential investors told him Fission was simply too small on its own.

“The mill matters,” he said bluntly, at one point.

One investor pressed the issue that Fission might be better off – that is to say more valuable – going into it alone until it had completed a scoping study of the Patterson Lake South project, along with updated and possibly expanded resources.

But Randhawa countered that the question of whether it would be more valuable was speculative. “Hope is not a strategy…we know what we have here is a stronger more liquid company,” he said.

He pressed the point that the combined company would be second only to Cameco in market cap in the uranium space.