Denison buys Fission
17 January 2013
Denison Mines is set to expand its exploration scope in Canada's Athabasca Basin through a newly announced acquisition of uranium exploration company Fission Energy.
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| Drilling from the surface of Waterbury Lake (Image: Fission Energy) |
A binding letter of intent will see Denison acquire uranium projects including Fission Energy's 60% interest in the Waterbury Lake uranium development, as well as Fission's exploration interests in other properties in the Athabasca Basin, its interests in two joint ventures in Namibia and its assets in Quebec and Nunavut. The transaction, which will see Fission shareholders offered shares in Denison, values the assets at approximately C$70 million ($71 million). On completion, Fission's shareholders will hold approximately 11% of Denison.
As a condition of the acquisition, some of Fission's assets, including a 50% interest in the Patterson Lake South property in the western Athabasca basin, will be spun out into a new company, currently dubbed NewCo, to be held pro rata by current Fission shareholders. Under the leadership of Fission's current management team, NewCo will hold about C$18 million ($18.3 million) in cash and will be fully funded to continue future programs at Patterson Lake South and elsewhere.
Denison president and CEO Ron Hochstein said that the transaction satisfied his company's corporate objectives. "The acquisition of Waterbury will allow Denison to expand its exploration efforts in the area of our Midwest uranium deposits with a significantly enhanced land package," he said.
Waterbury Lake is immediately adjacent to Rio Tinto's Roughrider uranium deposit. Its J Zone deposit is currently estimated to contain N I43-101-compliant indicated resources of 10.3 million pounds (3960 tU) plus 2.7 million pounds U3O8 (1040 tU) of inferred resources. Activities at Waterbury have been carried out in conjunction with Fission's 40% joint venture partner, the Korean Electric Power Company-led Korea Waterbury Uranium Limited Partnership consortium.
Denison owns a 22.5% interest in the McClean Lake uranium mill in northern Saskatchewan, as well as exploration and development projects in Saskatchewan, Zambia and Mongolia. Its US mining division was acquired by Energy Fuels in June 2012, leaving the company free to focus on other areas including its 60%-owned Wheeler River project in the Athabasca Basin. Denison's recently announced exploration and development plans for 2013 focus an extensive drilling in the region, primarily centred on Wheeler River where a 25,000 metre winter and summer drilling program and geophysical surveys are planned.
For Fission Energy, chairman Dev Randhawa said that the agreement would enable Fission to focus on the "highly prospective" Patterson Lake South. The company is about to embark on a winter drilling program at the property, a 50:50 joint venture with Alpha Minerals. Much of the drilling will take place from lake ice and will look for extensions to high-grade uranium discovered in its 2012 drilling program.
The legal structure for the transaction remains to be finalised, but subject to the satisfaction of various conditions including approvals from shareholders and regulators the companies currently expect it to be completed in April 2013.
Researched and written
by World Nuclear News