URANIUM COULD BECOME THE DARLING METAL OF 2013
Those of you holding uranium stocks should be smiling as takeovers and mergers were announced this January that gave a lift in stock prices of those involved and other uranium explorers who could be possible candidates for such transactions. Out of the Saskatchewan Athabasca Basin saw Denison Mines Corp. (DML-TSX-V) sign a binding letter of intent, pursuant to which Denison will acquire a portfolio of uranium exploration projects from Fission Energy (FIS-TSX-V), as well as Fission's exploration interests in all other properties in the eastern part of the Athabasca Basin, its interests in two joint ventures in Namibia, plus its assets in Quebec and Nunavut.
Denison has agreed to offer shareholders of Fission 0.335 shares of Denison for each share of Fission held, conditional upon, among other things, certain assets of Fission being spun out to a new company (NewCo) to be held pro rata by current Fission shareholders. NewCo assets will include, among others, a 50% interest in the Patterson Lake (PLS) property located in the western Athabasca basin. The transaction values the assets at approximately $70 million based on the closing price of Denison on January 15, 2013. Denison is a uranium exploration and development company with interests in projects in Saskatchewan, Zambia and Mongolia. Denison has 22.5% ownership interest in the McClean Lake uranium mill, located in northern Saskatchewan, which is one of the world's largest uranium processing facilities. Partners comprise operator/manager AREVA Resources Canada Inc (70%) and OURD (Canada) Ltd. (7.5%).
The plant is licensed to produce 8.0 million pounds of uranium per year and designed to process the high grade Cigar Lake uranium ores without down blending. The McClean Lake mill is on standby and schedule for operational startup this fall. Denison's flagship exploration project is the world class Phoenix deposit located on its 60% owned Wheeler River project in the Athabasca Basin. Fission has been a successful uranium explorer with holdings in Saskatchewan, Quebec, Alberta, Peru and Namibia. Their Patterson Lake South Project in the Athabasca Basin with partner Alpha Minerals Inc. (AMW-TSX-V) has recently reported high grade uranium drill hole intersections which triggered the Denison takeover.
Denison stock rose a few pennies to $1.50 with the announcement, up from $1.25 at years' end. Fission traded up to 76-77 cents in mid-January up from the 60 cent range. Alpha performed the best trading up to $2.10 - 2.20 in mid-January, up from $1.75 at years' end.
A second Canadian company to enter the merger regime saw Uranium One Inc. (UUU-TSX-V) enter into a definitive agreement with Atomredmetzoloto and its affiliate, Effective Energy N.V. ( ARMZ) under which the company would be taken private pursuant to a plan of arrangement.
ARMZ and its affiliates currently hold own 51.4 % of the Uranium One common shares. ARMZ will acquire all outstanding shares for $2.86 per share, representing a 32% premium to the 20-day volume weighted average price of the shares on the TSE for the period ending January 11, 2013. Uranium One has a globally diversified portfolio of assets located in Kazakhstan, USA, and Australia. Uranium One stock bounced around the two dollar range in 2012 and closed at years' end at $2.34 and in mid-January rose to around $2.75-2.80.
The fall out effects of the above was felt with stocks like Kivalliq Energy Corp (KIV-TSX-V) and UEX Corp (UEX-TSX-V) that rose with the above merger announcements. KIV reported some increased resource uranium estimates from the their Nunavut projects with the stock up a nickel to 40 cents, and UEX upgraded their Shea Creek Project, western Athabasca Basin with an uplift of 7 cents to 80 cents.
Moving over to China I read with interest an article titled - Foreign uranium exploration steps up a notch. China's National Nuclear Corporation (CNNC) is fast tracking its uranium mining exploration in Australia, Africa and Central Asia in a bid to meet growing demand for the element.
In the wake of the European debt crisis, the state-owned energy company says it has good opportunities to expand its foreign mining operations. China is expected to start building inland nuclear power plants during the 13th Five-Year-Plan (2016-20) at earliest, and is conducting research and risk evaluation on the construction of the inland nuclear power plants. China imported 16,126 tonnes of uranium in 2011, down 6% from the previous year, with 95% of its uranium imports coming from Kazakhstan, Namibia, Australia and Uzbekistan.
So what does all this mean- uranium once the darling environmental savior but confronted with Fukushima disasters will soon be forgotten as energy demands continue to be increased. South Korea will be adding eleven new reactors to their present 23 in operation now providing a third of the energy needs. To the speculative investor uranium should not be neglected Good luck and successful investing.