Nichols Ranch Mine (Uranerz June 2014 photo)

Nichols Ranch Mine (Uranerz June 2014 photo)

Energy Fuels (EFR.T) has reached an a deal to acquire Uranerz (URZ.T) in an all share based deal creating a leading US based uranium company. Shareholders of Uranerz will  receive 0.255 common share of Energy Fuels for each share of Uranerz common stock held.

Energy Fuels shares are currently trading down $0.51 cents (~7%) at $6.81 per share while Uranerz is up 16 cents (~12%) at $1.49 per share at press time.

Energy Fuels currently owns the White Mesa Mill which is the only operating and licensed conventional uranium mill in the United States. Uranerz operates the Nicholos Ranch in-situ recovery (ISR) Mine in Wyoming which commenced production in April 2014.

The combined company will be able to utilize management skill and expertise as they become the largest US based Uranium company via market capitalization.

Highlights of the deal include:

  • Creation of the only integrated conventional and in situ recovery uranium mining company focused solely on the United States
  • Diversified ISR and conventional uranium production from two operating production centres, including the White Mesa uranium mill in Utah and the Nichols Ranch ISR mine and plant in Wyoming
  • A deep development pipeline of projects highlighted by conventional assets such as the Canyon mine (Arizona), the Sheep Mountain project (Wyoming), the Henry Mountains project (Utah) and the Roca Honda project (New Mexico), paired with Wyoming ISR development assets including the Jane Dough, Hank, West North Butte and Reno Creek Projects
  • A combined National Instrument 43-101 resource base that will be the largest in the United States among producers and near producers
  • A strong portfolio of six uranium sales contracts extending to 2020, with approximately one million pounds of U3O8 under contract in 2015 alone

Stephen Antony, president and chief executive officer of Energy Fuels, commented: "It is with great enthusiasm that Energy Fuels is able to bring this transaction to our shareholders. The combination of Energy Fuels and Uranerz will create one of the few publicly traded, integrated conventional-ISR uranium companies in the world. Energy Fuels has already established itself as a leading producer of uranium in the U.S. and the premier consolidator of U.S.-based uranium assets. By adding Uranerz to our corporate umbrella, we are creating a multisource uranium production platform that is better positioned to respond to the dynamic and volatile nature of the uranium market. Wyoming has been an area of focus for Energy Fuels, and the Uranerz team has done an exceptional job of exploring, permitting, building and operating their Nichols Ranch project in Wyoming. I look forward to working with them to build a lasting and robust ISR mining business within Energy Fuels."

EFR 1 yr chart

Assuming the deal closes, Energy Fuels will be a stock to watch as the Uranium space recovers. My opinion is that we are still 18-24 months out before the space fully recovers as I believe the market currently has ample supply (as mentioned by Uranium major Cameco).

The fundamentals for the industry look bullish with 71 nuclear reactors currently under construction according to the World Nuclear Association.

Investors looking for a little more juice (risk/reward) can add our favourite uranium exploration company NexGen Energy (NXE.V) to their watch list. NexGen announced today they will be starting an 18,000 metre winter drill program at the promising Rook 1 project.

Symbol: EFR.T

Share price: $6.83
Shares outstanding: 19.68  M
Market cap:$ 134. 4M

Read: Energy Fuels and Uranerz to create the largest integrated uranium producer focused on the the United States

Related: Azarga primed to ride uranium revival

I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence. Please note NexGen and Azarga are CEO.ca conference sponsors.