Energy Fuels Inc. (TSX: T.EFR, Stock Forum) and Strathmore Minerals Corp. (TSX: T.STM, Stock Forum) announced the signing of a letter of intent (LOI) whereby Energy Fuels would acquire, by way of a plan of arrangement, all of the issued and outstanding common shares of Strathmore.
Strathmore Minerals is a Canadian based resource company specializing in the strategic acquisition, exploration and development of mineral properties in the United States.
According to the Energy Fuels press release, under the terms of the LOI, Strathmore shareholders would receive 1.47 common shares of Energy Fuels for each common share of Strathmore held, resulting in the shareholders of Strathmore owning approximately 21% of the issued and outstanding shares of Energy Fuels upon completion of the transaction.
The consideration represents a premium of 31% based on the 20-day volume weighted average prices on the TSX as of May 22, 2013.
Energy Fuels and Strathmore believe the transaction will position the newly combined Energy Fuels as the premier pure-play U.S. uranium company, supported by significant current uranium production of 1.175 million lbs. for its current fiscal year, as well as a robust pipeline of development projects. The U.S. remains the largest consumer of uranium globally, yet it is heavily reliant on imported uranium for over 90% of its supply requirements. Energy Fuels is well positioned as a large, reliable source of uranium supply within the U.S., currently accounting for over 25% of estimated U.S. production.
The transaction will be completed in August 2013 or such later date as the parties may agree. A special meeting of the shareholders of Strathmore and, if required, Energy Fuels, to approve the transaction will each be held at a time yet to be determined.
Energy Fuels is America's largest conventional uranium producer, supplying approximately 25% of the uranium produced in the U.S., and is also a significant producer of vanadium.
On Friday, Energy Fuels was trading at $0.155 a share. The company had a market cap of $109.3 million, based on 705.3 million shares outstanding.