Denison moves to lock down 100% of Wheeler River project

Denison (TSX: DML) announced on Tuesday that it has delivered an offer to Overseas Uranium Resources Development to acquire a 100% interest in its subsidiary JCU (Canada) Exploration Company for $40.5 million in cash, more than tripling the $12.5 million accepted offer in place with UEX Corp. (TSX: UEX) announced the week before last.

JCU’s assets include 10% ownership in Denison's flagship Wheeler River project (which DML owns the remaining 90%) in the southeast part of Saskatchewan’s Athabasca Basin.

The project has probable resources of 109.4 million lb. of uranium dioxide.

"At first glance, Denison's bid to acquire the remaining 10% of its Wheeler River project would be modestly accretive (+2%), although this does depend on the final scale of future liabilities," said BMO Capital Markets in a note.

"Further, if successful, the transaction simplifies the ownership of its flagship project as the company continues to make headway de-risking the use of ISL mining in the Athabasca."

"Denison continues to be rated a top-pick in the uranium space largely underpinned by our thesis that recent de-risking work at Wheeler River regarding the ISR mining approach to the ultra-high-grade Phoenix deposit is going under-appreciated by the market," Haywood Capital Markets said in a note.

"We expect ongoing and future work to further demonstrate the viability of this low-cost mining approach and believe that will translate into more positive movement in DML’s share price."

Midday Tuesday, Denison’s stock was down 4% on the TSX. The company has a $1.1 billion market capitalization.

JCU holds a portfolio of uranium project joint venture interests in Canada, including a 10% interest in Denison's 90% owned Wheeler River uranium project.

The Denison offer includes the following features:

• Consideration including cash payments of up to $40.5 million and the assumption of JCU's existing liabilities (see below). The cash payments include a $10 million refundable deposit on signing of a definitive agreement, an additional $28 million on closing, and a further amount of up to $2.5 million, which is expected to be paid within 45 days of the closing date and is subject to adjustment based upon JCU's actual working capital on the closing date.
• Binding subject only to the completion of definitive documentation, regulatory approvals (if applicable), and the termination of OURD's existing definitive purchase agreement with UEX Corp. in accordance with its terms.
• No conditions for (i) due diligence on the assets of JCU, or (ii) obtaining the necessary financing to fund the purchase price – as Denison already possesses sufficient cash to fully fund the acquisition.
• A commitment to OURD that JCU will be maintained as a corporate subsidiary in order for JCU to meet its joint venture commitments.
• Assumption of JCU's outstanding liabilities owed to the Japan Atomic Energy Agency.

This story originally appeared on MINING.COM.