Uranium producer Energy Fuels acquires Uranerz Energy

Energy Fuels Inc, one of the leading producers of uranium in the US, is buying Uranerz Energy Corp in an all-stock deal valued at approximately $150 million, aiming to create the largest integrated uranium producer focused on the US.

Under the terms, shareholders of Uranerz will get 0.255 common shares of Energy Fuels for each of their shares. The transaction represents a 37-per cent premium to the closing price of the Uranerz stock on 2 January.

Energy Fuels president and CEO Stephen Antony said, "The combination of Energy Fuels and Uranerz will create one of the few publicly-traded, integrated conventional and in-situ recovery (ISR) uranium companies in the world.''

ISR is a mining process that uses leaching solution to extract uranium from underground uranium deposits.

Casper, Wyoming-based Uranerz is the newest uranium producer in the US, located in one of the most prolific areas of uranium production in the US.  Uranerz recently commenced production at its Nichols Ranch ISR Uranium Project and holds one of the largest areas for ISR-amenable deposits in Powder River Basin in Wyoming.

Toronto, Canada-based Energy Fuels is the second-largest producer of the nuclear fuel in the US.  It currently accounts for about 20-per cent of US uranium production from its wholly-owned White Mesa uranium mill in Utah, the only licensed and operating conventional uranium mill in the US.

The White Mesa mill is capable of processing 2,000 tons per day of uranium and has a licensed capacity of over 8 million pounds of U3O8, the most common form of the metal.

With the addition of Uranerz to its portfolio, Energy Fuels will create a multi-source uranium production platform that is better positioned to respond to the dynamic and volatile nature of the uranium market, Antony said.

The combination of the two uranium miners will also have a deep development pipeline of conventional assets in New Mexico, Colorado, Utah, Arizona and ISR development in Wyoming.

Dennis Higgs, Uranerz' executive chairman commented, ''This transaction creates a unique uranium producer with a leading portfolio of development projects that I believe will be attractive to both the investment community and utility customers.''

The US is the world's largest consumer of uranium with 100 nuclear reactors in operation and five under construction. The country, once the leading producer of the nuclear fuel in the US, is now heavily reliant on imported uranium to fuel its reactors.

Energy Fuels and Uranerz believe that the company will be well positioned in terms of size, operational scale, and diversification as a preferred US uranium supplier.

Energy Fuels has a strong portfolio of six uranium sales contracts extending to 2020, with approximately one million pounds of U3O8 under contract in 2015 alone, at a premium price of $58 a pound 63 per cent above the current spot price of $35.50 per pound.

The acquisition is expected to result in significant cost savings and synergies with additional potential of other operating efficiencies.

Further to the closing of the transaction, Energy Fuels shareholders will own approximately 45 per cent of the shares of the combined entity while Uranerz shareholders will own 55 per cent.

The agreement includes a reciprocal break fee of 5 million payable if the transaction is not completed under certain circumstances.

The deal is expected to close in the second quarter of 2015 subject to the required approvals and customary closing conditions.