Energy Fuels Inc. ("Energy Fuels" or "EFR") (TSX:EFR) and Denison
Mines Corp. ("Denison" or "DML") (TSX:DML)(NYSE Amex:DNN) today
announced that they have entered into a Letter Agreement to
complete a transaction (the "Transaction") whereby EFR will acquire
all of Denison's mining assets and operations located in the United
States (the "US Mining Division") from Denison in exchange for
425,441,494 common shares of EFR (the "EFR Share Consideration").
Immediately following the closing of the Transaction, Denison will
complete a Plan of Arrangement (the "Denison Arrangement") whereby
Denison will complete a reorganization of its capital and will
distribute the EFR Share Consideration to DML shareholders on a pro
rata basis as a return of capital in the course of that
reorganization. Upon completion of the Denison Arrangement, Denison
shareholders will receive approximately 1.106 common shares of EFR
for each common share of DML owned and will in aggregate own
approximately 66.5% of the issued and outstanding common shares of
EFR.
Energy Fuels and Denison believe that the Transaction and the
Denison Arrangement will provide a number of substantial benefits
for shareholders of both companies, including the following:
-- Creation of the largest 100% U.S. pure-play uranium producer and one of
the largest holders of National Instrument 43-101("NI 43-101") compliant
U.S. based uranium resources.
-- 2012 production forecasts totaling greater than 25% of total U.S.
estimated production.
-- Measured and Indicated Resources of 49.8 million lbs of U3O8, plus
Inferred Resources of 17.9 million lbs of U3O8.
-- U.S. focus provides compelling fundamentals: domestic consumption of 55
million lbs of U3O8 per year vs. domestic production of only 4 million
lbs of U3O8 per year.
-- Clear operational synergies and capital efficiencies to increase
production.
-- Combination of mining and development assets which will accelerate the
rate of development of EFR mines, provide higher throughput of mill
feed, and extend the number of years of production at the White Mesa
Mill.
-- EFR's Sheep Mountain Project is an advanced-stage development asset
which provides flexibility to bring an additional 1.5 million lbs per
year of U.S.-produced U3O8 on-line.
-- Creation of a strategic platform for continued uranium consolidation
within the U.S.
-- Substantial vanadium by-product from the White Mesa Mill and Colorado
Plateau Properties, where historic uranium to vanadium ratios have
averaged approximately 5:1.
-- Combined management expertise, with decades of combined uranium mining
and processing experience.
-- DML shareholders to benefit from the division of two distinctly
different business profiles as well as exclusive management focus on
exploration and development, such as DML's high-profile Wheeler River
project in the Athabasca Basin region of northern Saskatchewan and its
Mutanga project in Zambia.
Steve Antony, President and CEO of Energy Fuels commented, "This
transaction is transformational for Energy Fuels and reshapes the
landscape of the uranium sector within the U.S. It combines the
highly strategic asset of the only operating uranium mill in the
U.S., White Mesa, with a significant resource base that
substantially increases White Mesa's available feedstock. The
result is an unmatched production growth profile and the
opportunity for both Energy Fuels and Denison shareholders to
benefit from the clear operational synergies that result from this
transaction. I look forward to working with Denison's U.S. team to
maximize the benefits of this important combination."
Ron Hochstein, President and CEO of Denison added, "This
transaction is an important step forward for Denison. The Company
has evolved on two parallel but different tracks, being both an
exploration and development entity with a global footprint and an
established producer in the United States. We are pleased to have
the opportunity to combine our U.S. operations with such a
complimentary set of assets and people. I'm excited about the
opportunities that lie ahead for both Denison and Energy Fuels
shareholders and believe that this transaction only serves to
strengthen the operations of both companies."
Transaction Details
Pursuant to the Letter Agreement, the parties have agreed to
enter into exclusive negotiations with a view to entering into a
definitive agreement in respect of the Transaction (the
"Arrangement Agreement"). The execution of the Arrangement
Agreement is subject to the following conditions:
(a) Korea Electric Power Corporation ("KEPCO") shall have waived its right
of first opportunity provided for in the strategic relationship
agreement dated as of June 15, 2009 among Denison, KEPCO and a
subsidiary of KEPCO, or the 30-day period for exercising such right
shall have expired without KEPCO exercising right;
(b) the entering into of support agreements with all directors and
officers of Denison, who own shares of Denison, and Zebra Holdings and
Investments S.a.r.l. and Lorito Holdings S.a.r.l.;
(c) the entering into of support agreements with all directors and
officers of Energy Fuels, who own shares of Energy Fuels, and with the
three largest shareholders of Energy Fuels;
(d) the prior approval by the boards of directors of each of Denison and
Energy Fuels;
(e) there shall not have been any event or change that has had or would be
reasonably likely to have a material adverse effect on the business,
operations, results of operations, prospects, assets, liabilities or
financial condition of the U.S. Mining Division and of the Energy
Fuels group taken as a whole.
The three largest shareholders of Energy Fuels, Dundee Resources
Ltd., Pinetree Capital Ltd. and Mega Uranium Ltd. who collectively
own approximately 22.7% of Energy Fuels' outstanding common shares,
have indicated their willingness to enter into support agreements
in respect of the Transaction. Zebra Holdings and Investments
S.a.r.l. and Lorito Holdings S.a.r.l., which combined are one of
the largest shareholders of Denison, owning approximately 9.9% of
Denison's outstanding commons shares, have also indicated their
willingness to enter into support agreements in respect of the
Transaction.
At its shareholder meeting to approve the Transaction, Energy
Fuels also expects to seek shareholder approval to implement a
10-for-1 consolidation of its common shares.
Following execution of the Arrangement Agreement, it is
anticipated that completion of the Transaction will be subject to
the following additional conditions:
a) approval of the Denison Arrangement by Denison shareholders;
b) approval of the issuance of the EFR Share Consideration as part of the
Transaction by Energy Fuels shareholders;
c) court approval of the Denison Arrangement;
d) receipt of third party approvals and consents; and
e) receipt of all required regulatory approvals, including acceptance by
the Toronto Stock Exchange.
The Letter Agreement contains customary deal protection
mechanisms, including a reciprocal break fee of Cdn$3.0 million
payable in certain circumstances, non-solicitation provisions and a
right to match any superior proposal.
Completion of the Transaction is subject to a number of
conditions and contingencies, many of which are beyond the control
of Denison and Energy Fuels. These conditions include the entering
into of definitive agreements, receipt of third party and
regulatory approvals, receipt of shareholder and court approval,
and the absence of any material adverse changes. Although it is the
intention of Denison and Energy Fuels to proceed as expeditiously
as possible toward completion of the Transaction and the Denison
Arrangement, there can be no guarantee that these transactions will
be completed.
Advisors and Counsel
Dundee Securities Ltd. is acting as financial advisor to Energy
Fuels and its board of directors, and has provided a verbal opinion
to the effect that, as of the date hereof, the consideration
offered to Denison by Energy Fuels is fair, from a financial point
of view, to Energy Fuels. Dundee Securities Ltd. and Dundee
Resources Ltd. are wholly-owned subsidiaries of Dundee Corporation.
Borden, Ladner and Gervais LLP is acting as legal advisor to Energy
Fuels.
Haywood Securities Inc. is acting as financial advisor to
Denison and its board of directors, and has provided an opinion to
the effect that, as of the date hereof and subject to the
assumptions, limitations and qualifications set out therein, the
consideration to be received by shareholders of Denison is fair,
from a financial point of view, to shareholders of Denison. Blake,
Cassels & Graydon LLP is acting as legal advisor to
Denison.
Conference Call
Energy Fuels and Denison will be hosting a conference call on
Tuesday, April 17, 2012 starting at 10:30 a.m. (Toronto time) to
discuss the Transaction. The call will be available live through a
webcast link on Energy Fuels website (www.energyfuels.com) and
Denison's website (www.denisonmines.com), and by dialing
1-888-789-9572 (toll free) or 416-695-7806. A recorded version of
the conference call will be available for playback approximately
two hours following the conclusion of the call by dialing
905-694-9451 or 800-408-3053 (password: 6637859). The presentation
will also be available at www.energyfuels.com and
www.denisonmines.com.
Overview of EFR and Denison's U.S. Mining Division
Energy Fuels Inc.
Energy Fuels Inc. is a uranium and vanadium mineral development
company. The Company recently acquired Titan Uranium Inc.,
including the Sheep Mountain Project in the Crooks Gap District of
Wyoming. The Company also received a Final Radioactive Materials
License from the State of Colorado for the proposed Pinon Ridge
Uranium and Vanadium Mill in March 2011. The mill will be the first
uranium mill constructed in the United States in over 30 years.
With about 61,000 acres of highly prospective uranium and
vanadium properties located in the states of Colorado, Utah,
Arizona, Wyoming, and New Mexico, as well as exploration properties
in Saskatchewan's Athabasca Basin totaling approximately 32,000
additional acres, the Company has a full pipeline of additional
development prospects. Energy Fuels, through its wholly-owned
subsidiaries, has assembled this property portfolio along with a
first class management team, including highly skilled technical
mining and milling professionals.
On March 1, 2012, Energy Fuels announced an updated Preliminary
Feasibility Study for Sheep Mountain. The study contemplates the
concurrent development of the underground and open pit deposits for
a 15 year mine life. This option generates a pre-tax Internal Rate
of Return (IRR) of 42% and a Net Present Value (NPV) of US$201
million, at a 7% discount rate and a $65/lb long term U3O8 price.
This option has an expected initial CAPEX requirement of US$109
million and OPEX of US$32.31 per lb. recovered. The Sheep Mountain
project is currently at an advanced stage of permitting. Production
is expected to commence in 2015, with a peak production rate of 1.5
million lbs U3O8 per year.
The Sheep Mountain Project contains an Indicated Resource of
12,895,000 tons at an average grade of 0.12% eU3O8 (30,285,000 lbs
eU3O8). This figure includes Probable Reserves of 7,453,000 tons at
an average grade of 0.123% eU3O8 (18,365,000 lbs eU3O8). Energy
Fuels' Colorado Plateau properties additionally contain Measured
& Indicated Resources of 1,951,486 tons at an average grade of
0.24% eU3O8 and 0.89% V2O5 (9,371,821 lbs eU3O8 and 34,862,116 lbs
V2O5).
The technical information in this news release regarding the
Sheep Mountain Project was prepared in accordance with the Canadian
regulatory requirements set out in NI 43-101 and is extracted from
Preliminary Feasibility Study for Sheep Mountain dated April 13,
2012 which is filed on EFR's SEDAR profile and is available for
viewing at www.sedar.com.
Stephen P. Antony, President and CEO of Energy Fuels, is Energy
Fuels' Qualified Person (as defined by National Instrument 43-101)
for uranium projects and is responsible for the technical
information related to EFR's assets contained in this release.
Denison's U.S. Mining Division
All of Denison's U.S. assets are held directly or indirectly
through its wholly-owned subsidiary Denison Mines Holdings Corp.
("DMH"). DMH holds its uranium mining and milling assets through
subsidiaries, as follows:
-- the White Mesa Mill, a 2,000-ton per day uranium and vanadium processing
plant near Blanding, Utah through Denison White Mesa LLC;
-- the Colorado Plateau mines, straddling the Colorado and Utah border,
through Denison Colorado Plateau LLC;
-- the Daneros uranium mine in the White Canyon district of southeastern
Utah, and other exploration properties through Utah Energy Corporation;
-- the Arizona Strip properties through Denison Arizona Strip LLC;
-- the Henry Mountains uranium complex in southern Utah and other
exploration properties through Denison Henry Mountains LLC; and
-- miscellaneous properties through Denison Properties LLC.
All of the U.S. properties are operated by Denison Mines (USA)
Corp., a wholly-owned subsidiary of DMH.
Denison's White Mesa Mill in Utah is the only conventional
uranium mill currently operating in the U.S. It is fully licensed
and permitted to process 2,000 tons per day, producing up to 8
million lbs of uranium per year. A vanadium co-product recovery
circuit allows for the processing of vanadium ore within the
Colorado Plateau mines and its central location allows for hauling
of uranium ore from Arizona, Utah, Colorado, and New Mexico.
The Arizona Strip has higher grade production from breccia
pipes. The Arizona 1 mine is currently producing with a
track-record of resource replacement. A second mine (Pinenut) is
expected to open in 2012. Shaft sinking is expected to begin at the
Canyon mine in the fourth quarter 2012, pending regulatory
approval, and the EZ1 & EZ2 properties are progressing through
permitting.
The Henry Mountains Complex in Utah consists of the Bullfrog and
Tony M deposits and represents Denison's largest resource in the
U.S. (12.8 million lbs Indicated Resources, 8.1 million lbs
Inferred Resources). Currently the complex is on care and
maintenance. It was fully permitted in September 2007 and has
excellent infrastructure, access, and is production ready. Haulage
to the mill is along County and State highways.
The technical information in this news release regarding the
Henry Mountains Complex was prepared in accordance with the
Canadian regulatory requirements set out in NI 43-101 and is
extracted from the technical reports prepared for DML titled
"Technical Report on the Tony M-Southwest Deposit, Henry Mountains
Complex, Utah, USA" dated March 19, 2009, and "Technical Report on
the Henry Mountains Complex Uranium Project, Utah, U.S.A." dated
October 17, 2006, which are filed on Denison's SEDAR profile and
are available for viewing at www.sedar.com.
Ron Hochstein, President and CEO for Denison, is Denison's
Qualified Person (as defined by National Instrument 43-101) for
uranium projects and is responsible for the technical information
related to Denison's U.S. Mining Division contained in this
release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this news release, including
any information relating to the proposed Transaction between Energy
Fuels and Denison, the benefits and synergies of the Transaction,
future opportunities for the combined company and any other
statements regarding Energy Fuels' and Denison's future
expectations, beliefs, goals or prospects constitute
forward-looking information within the meaning of applicable
securities legislation (collectively, "forward-looking
statements"). All statements in this news release that are not
statements of historical fact (including statements containing the
words "expects", "does not expect", "plans", "anticipates", "does
not anticipate", "believes", "intends", "estimates", "estimates",
"projects", "potential", "scheduled", "forecast", "budget" and
similar expressions) should be considered forward-looking
statements. All such forward-looking statements are subject to
important risk factors and uncertainties, many of which are beyond
Energy Fuels' and Denison's ability to control or predict. A number
of important factors could cause actual results or events to differ
materially from those indicated or implied by such forward-looking
statements, including without limitation: the parties' ability to
consummate the Transaction; the conditions to the completion of the
Transaction, including the receipt of shareholder approval, court
approval or the regulatory approvals required for the Transaction
may not be obtained on the terms expected or on the anticipated
schedule; the ability of the parties to agree to terms on the
definitive agreements relating to the Transaction; the parties'
ability to meet expectations regarding the timing, completion and
accounting and tax treatments of the Transaction; the volatility of
the international marketplace; and other risk factors as described
in Energy Fuels' and Denison's most recent annual information forms
and annual and quarterly financial reports.
Energy Fuels and Denison assume no obligation to update the
information in this communication, except as otherwise required by
law. Additional information identifying risks and uncertainties is
contained in Energy Fuels' and Denison's respective filings with
the various provincial securities commissions which are available
online at www.sedar.com. Forward-looking statements are provided
for the purpose of providing information about the current
expectations, beliefs and plans of the management of each of Energy
Fuels and Denison relating to the future. Readers are cautioned
that such statements may not be appropriate for other purposes.
Readers are also cautioned not to place undue reliance on these
forward-looking statements, that speak only as of the date
hereof.
CAUTIONARY NOTE REGARDING TECHNICAL DISCLOSURE
This news release and the information contained herein does not
constitute an offer of securities for sale in the United Sates and
securities may not be offered or sold in the United States absent
registration or exemption from registration. The terms "Inferred
Resources", "Indicated Resources", "Measured Resources", "Mineral
Resources" and "Probable Reserves" used in this news release are
Canadian mining terms as defined in accordance with National
Instrument 43-101 - Standards of Disclosure for Mineral Projects
under the guidelines set out in the Canadian Institute of Mining,
Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources
and Mineral Reserves (the "CIM Standards"). The CIM Standards
differ significantly from standards in the United States. While the
terms "Mineral Resources", Measured Resources", "Indicated
Resources", "Inferred Resources" and "Probable Reserves" are
recognized and required by Canadian regulations, they are not
defined terms under standards in the United States. "Inferred
Resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
Inferred Resource will ever be upgraded to a higher category. Under
Canadian securities laws, estimates of Inferred Resources may not
form the basis of feasibility or other economic studies. Readers
are cautioned not to assume that all or any part of Measured or
Indicated Resources or Probable Reserves will ever be converted
into reserves. Readers are also cautioned not to assume that all or
any part of an Inferred Resource exists, or is economically or
legally mineable. Accordingly, information regarding resources and
reserves contained or referenced in this news release containing
descriptions of our mineral deposits may not be comparable to
similar information made public by United States companies.
This news release and the information contained herein does not
constitute an offer of securities for sale in the United Sates. The
securities have not been and will not be registered under the
United States Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration or an
applicable exemption from such registration requirements.
Contacts: Denison Mines Corp. Ron Hochstein President & CEO
(416) 979-1991 x232rhochstein@denisonmines.com www.denisonmines.com
Contacts: Energy Fuels Inc. Stephen P. Antony President & CEO
(303) 974-2140s.antony@energyfuels.com www.energyfuels.com
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