Cauldron Energy (ASX: CXU) will exit a trading halt this morning after announcing an off-market scrip takeover bid for Energia Minerals (ASX: EMX).
Cauldron is offering one share for every 8 Energia shares, which is a 29% premium to the 5 day VWAP.
The new entity will be Western Australia uranium-focused company that holds a dominant land position in an emerging and potentially significant uranium province.
Just last month at Cauldron's wholly owned Yanrey Project, the Exploration Target was increased from 25 to 30 Mlbs to 30 to 115 Mlbs of U3O8 at 250 to 900ppm U3O8.
The new target followed the recent 300% increase in the inferred uranium resource at Bennet Well from 4.8 Mlbs to 15.7 Mlbs.
Worth noting Yanrey is adjacent to Paladin Energy's (ASX: PDN) Manyingee Deposit (24 Mlbs U3O8), and Energia’s Nyang Deposit (16.7 Mlbs U3O8).
Analysis
The importance of the takeover by Cauldron of Energia is that the new entity will have synergies and economies of scale, and will control over 190 kilometres of contiguous mineralisation in the Carnarvon Basin of Western Australia.
The area is a current 'hot spot', highlighted by recent exploration success by Cauldron, Paladin and Energia defining a metal endowerment of potential global significance.
Energia's Nyang is situated along strike from Yanrey and Cauldron said that it appears to reinforce the company's model of uranium mineralisation as they share very similar geological settings.
Cauldron had over $3 million in cash at the end of 2012.
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