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COMMENT: Denison, Fission combination to create diversified uranium enterprise

Denison Mines Corp. of Toronto and Fission Uranium Corp. of Kelowna, BC, have announced plans to combine their businesses, creating a diversified uranium enterprise. The new company will have Denison's 22.5% of the McLean Lake mill, 60% of the...



Denison Mines Corp. of Toronto and Fission Uranium Corp. of Kelowna, BC, have announced plans to combine their businesses, creating a diversified uranium enterprise. The new company will have Denison’s 22.5% of the McLean Lake mill, 60% of the Wheeler River project on the eastern rim of the Athabasca Basin, and all of the hottest new uranium exploration play on the southwest rim, the Patterson Lake South project.

The agreement between the two companies specifies that Fission shareholders will receive 1.26 common shares of Denison plus $0.0001 per share in cash for each Fission common share held. The new company, to be called Denison Energy Corp., will be equally owned by former Denison and former Fission shareholders. The market capitalization of the new company will be approximately $900 million.

Denison Energy will combine the extensive expertise of individuals from both companies. Lucas Lundin is to be the non-executive chair, Dev Randhawa will become CEO, Ross McElroy will be president and COO, and David Cates will become CFO. The board will be comprised of 10 directors: five from Denison and five from Fission.

This amalgamation can be seen as the melding of the old guard with the new.

Denison made its reputation in the Elliot Lake, ON, uranium camp in the middle of the 20th Century. Those mines are long closed, but the company has amassed a strong portfolio of advanced and earlier stage exploration properties in Canada, Africa and Asia.

Fission made its PLS uranium discovery in November 2012, and it has poured all its efforts into that property. In January this year, the maiden Triple R resource totaled 2.29 million indicated tonnes grading 1.58% U3O8 and 0.51 g/t Au for 79.61 million lb U3O8 and 38,000 oz of gold. The inferred resource is 901,000 tonnes at 1.3% U3O8 and 0.56 g/t Au, for 25,884,000 lb U3O8 and 16,000 oz of gold.

Since announcing the discovery hole at PLS, Fission has ignored takeover speculation, choosing instead to concentrate on what it does best – outline a world-class uranium deposit. Hardly a week went by without a news release announcing the latest success. Fission set itself apart by concentrating on successful exploration.

But exploration juniors seldom have the capital to develop a large project such as Patterson Lake South will undoubtedly become. Industry watchers knew it was only a matter of time before a larger company wanted control of Canada’s hottest uranium play. Cameco was mentioned as a suitor, but it is plucky Denison that is making the first move.

The Denison-Fission deal is far from done. The boards of both companies are recommending their shareholders approve the transaction. The amalgamation is also subject to customary regulatory approvals and conditions.

Now that other companies see that Fission is ready to do a deal, the allure of the PLS project will have other companies sniffing around. Competing bids could come from Cameco, the Chinese or any number of other uranium mining companies.

Visit either DenisonMines.com or FissionUranium.com where additional information will be posted.