Toronto big board miner Denison Mines (
TSX:DML,
Forum) and Athabasca front runner Fission Uranium (
TSXV:FCU,
Forum) have announced they will combine their respective businesses in a bid to
create the leading Canadian uranium player in the Athabasca region.
As part of the deal, Fission shareholders will receive 1.26 common shares of Denison for every Fission share they own, plus a negligible cash amount of 1c per 1000 shares.
The new company, which will bring a market cap of approximately $900m, will be named Denison Energy Corp and will be evenly split in ownership between shareholders of the two companies.
At a value of around $1.26 per share, the deal gives Fission shareholders an assumed 18% premium on the 30-day volume weighted average price of $1.06.
Dev Randhawa, Chairman & CEO of Fission, stated: "This merger will create the uranium industry's leading exploration and development company at a time when the sector is poised for growth. Denison has a strong, diversified portfolio and, with the Triple R deposit, Fission is bringing the Athabasca Basin's largest undeveloped high-grade resource as well as a successful and award-winning technical and management team."
The companies suggest the deal will bring significant valuation upside, with increased liquidity, free cash flows from the toll-mining of ore from the Cigar Lake Mine, a dominant land package in both the eastern and western Athabasca areas, and a consolidation of strategic assets.
The new combo company will feature a murderer’s row of heavy hitters on the executive side, with billionaire resource magnate Lukas Lundin taking the Chairman role, Fission CEO Dev Randhawa continuing in that role in the larger company, Ross McElroy serving as President and COO, and David Cates taking the CFO responsibilities.
Shareholders on both sides will need to ratify the agreement with a 2/3 vote of approval. Both Boards have recommended shareholders vote in favour of the transaction.
Denison has uranium exploration interests in both exploration and development in Canada, Zambia, Mali, Namibia and Mongolia. Fission has a sizable stake in the Patterson Lake South uranium region and has registered a consistent flow of off-scale results in the area.
Speculation that Fission would be bought out, or buy out competitors, has been rife for over a year now, with Randhawa occasionally hinting at deals on the horizon. The company acquired Alpha Minerals in late 2013, and subsequently spun off Fission 3.0 (
TSXV:FUU,
Forum),
re-acquiring 12% of the company in February of this year.
Speculation on the
Stockhouse Fission Bullboards is rife that a hostile counter-bid will show up before the shareholder vote takes place, with Cameco seen as a likely suitor. Confirmation on whether that's wishful thinking of not will come later, but there also seems to be much discussion among shareholders that the premium offered by Denison was
not what they'd hoped.
--Chris Parry
https://www.twitter.com/chrisparry
FULL DISCLOSURE: Fission Uranium is a Stockhouse Publishing marketing client