Denison Mines, Energy Fuels to merge into leading pure U.S. uranium producer
Comment of the Day

April 17 2012

Commentary by David Fuller

Denison Mines, Energy Fuels to merge into leading pure U.S. uranium producer

My thanks to a subscriber for this item from Mineweb. Here is the opening:
Energy Fuels and Denison Mineshave entered into Cdn$106 million all-stock transaction which allows Energy Fuels to acquire all of Denison's U.S. mining assets and operations, forming what is hoped to be a U.S. pure uranium miner.

As Denison shareholders receive 1.106 common shares of Energy Fuels for each common share of Denison, the Denison shareholders would end up with a 66.5% stake in the combined company.

The result, Energy Fuels and Denison management believes, would be "creation of the largest 100% U.S. pure-play uranium producer and one of the largest holders of National Instruments 43-101 (NI 43-101) compliant U.S.-based uranium resources. The combined company would hold 49.8 million pounds of measured and indicated U3O8 resources.

Denison brings to the deal the only conventional operating uranium mill in the United States, White Mesa, located near Blanding, Utah. The facility can process up to 8 million pounds annually of U3O8.

The company also owns four developed and partially developed uranium mines in the Arizona Strip: Arizona 1, Canyon, Pinenut and Kanab North. The development of a number of potential new mining projects in the Arizona Strip has been halted by a declaration of the U.S. Secretary of the Interior banning new mining exploration near the Grand Canyon National Park. However, the Denison mining properties are not included in the 20-year ban.

David Fuller's view My personal portfolio holds some shares in Denison Mines (weekly & daily) purchased for the 'Nuclear Renaissance' before it was derailed by the Fukushima tsunami damage. Although currently oversold, I have regarded uranium miners as being mostly in hibernation in terms of share performance, until more of the China-led new generation of reactors are stockpiling fuel. Meanwhile, friendly mergers of this sort make sense to the extent that they reduce costs and strengthen asset portfolios. It can spark some short-term interest in the sector and I assume that today's news has prompted short covering.

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