Fission, Denison merging

Fission Uranium (CVE:FCU) has just announced it is merging with Denison Mines to create a $900 million  exploration and development company to combine top uranium assets in Saskatchewan's Athabasca basin.

The new company will be called Denison Energy Corp. Fission Chairman and CEO Dev Randhawa will be taking over as chief executive of the new company. Fission's Ross McElroy will be appointed chief operating officer and president of the combined group.

The market capitalization of Denison and Fission on a combined basis is anticipated to be approximately CAD$900 million. The deal implies a price per Fission common share of $1.25, a roughly 18% premium to the ruling price.

Ron Hochstein, Executive Chairman of Denison, commented: "The continued exploration success at our Phoenix deposit and Gryphon discovery, in combination with the discovery and exploration success of the world class Triple R deposit puts the combined company in an incredibly strong strategic position, with the most significant development portfolio in the world. We are confident that our shareholders will benefit from the value creation opportunities that will be realized through an expanded and more diversified uranium company."

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."

Transaction highlights

  • Consolidation of Strategic Uranium Assets: An unrivaled portfolio of strategic uranium asset interests in the Athabasca Basin, headlined by Fission’s 100% owned PLS Project and Denison’s 60% owned Wheeler River Project and including Denison’s interests in the Midwest, McClean Lake, Waterbury Lake, Mann Lake, and Wolly projects, as well as Denison’s strategic 22.5% ownership interest in the McClean Lake Mill;
  • Continued Exploration Potential: Exploration foothold in both the historically prolific Eastern Athabasca Basin and the emergent Western Athabasca Basin, with a dominant combined land package of over 430,000 hectares and a sizeable base of mineral resources defined under NI 43- 101, providing the foundation for future resource growth.
  • Free Cash Flows: The toll-milling of ore from the Cigar Lake mine under a toll milling agreement between the McClean Lake Joint Venture and the Cigar Lake Joint Venture and management fees from Uranium
  • Participation Corporation are expected to provide the combined company with a source of cash in the future to fund its activities;
  • Complimentary Combined Management Team: Management from Fission and Denison will be combined, offering expertise and skill in the uranium industry and mergers and acquisitions, as well as the proven ability to finance ambitious exploration programs and successfully explore and develop uranium mining projects;
  • Increased Liquidity: Increased scale is expected to enhance trading liquidity and access to global capital markets; and
  • Valuation Upside: Various monetization options in respect of Denison’s African exploration and development portfolio, including the Falea project in Mali and the Mutanga project in Zambia, are being considered by the combined company and may be pursued when market conditions permit.