Energy Fuels to buy Australian Strategic Materials in a $300M deal

Uranium and critical minerals miner Energy Fuels (TSX: EFR; NYSE: UUUU) will acquire rare earth producer Australian Strategic Materials (ASX: ASM) in a deal valuing the Australian firm’s equity at A$447 million ($300.88 million), the two parties said in separate statements on Wednesday.

Under the deal, shareholders of Australian Strategic Materials would receive 0.053 Energy Fuel shares for each ASM share held, along with a special dividend of up to A$0.13 per ASM share, representing a total implied value of A$1.60 per ASM share. That is a 121% premium on ASM’s close from January 20.

The transaction, should it go through, would create a global mid-tier rare earth elements producer outside China with a presence in the United States, South Korea and Australia.

Rare earth elements are crucial for wind turbines and are used in electric vehicles, smartphones and missiles, among other applications.

Prices of rare earths have been rising as Western countries scramble to reduce dependence on China. In response, Australia has been mulling a price floor and new international partnerships to support rare earth projects and build alternative supplies.

Currently, Australia’s Lynas Rare Earths (ASX: LYC) is the world’s largest rare earths producer outside China.

($1 = 1.4857 Australian dollars)

(Reporting by Himanshi Akhand in Bengaluru. Additional reporting by Melanie Burton in Melbourne; Editing by Alan Barona and Chris Reese)