Energy Fuels Inc (NYSEAMERICAN:UUUU) (TSE:EFR) said that International Consolidated Uranium Inc (CVE:CUR) (OTCQB: CURUF) has struck a definitive asset purchase agreement with its subsidiaries to acquire a portfolio of conventional uranium projects in Utah and Colorado.
In connection with the transaction, the companies have agreed to enter into toll-milling and operating agreements, which positions CUR as a potential near-term US uranium producer.
“With the toll-milling agreement for production from the projects to be executed on closing of the transaction, CUR will become the only current US uranium developer (other than Energy Fuels) with guaranteed access to Energy Fuels' White Mesa Mill, which is the only permitted and operating conventional uranium mill in the US,” said the companies in a joint statement.
READ: Energy Fuels helping to restore US rare earth production
Following the purchase agreement, CUR will acquire 100% of Energy Fuels’ Tony M, Daneros and Rim mines in Utah, as well as the Sage Plain property and eight DOE Leases in Colorado, for the following consideration:
- Energy Fuels will receive a payment of US$2.0 million in cash, payable on closing of the transaction;
- The issuance of that number of CUR shares that results in Energy Fuels holding 19.9% of the outstanding CUR shares immediately after closing of the transaction;
- A payment of CA$3 million in cash on or before the 18-month anniversary of closing of the transaction;
- Payment of an additional CA$3.0 million in cash on or before the 36-month anniversary of closing of the transaction;
- The payment of up to CA$5.0 million in contingent cash payments tied to achieving commercial production at the Tony M Mine, the Daneros Mine and the Rim Mine.
The operating agreements will allow the projects to continue to be managed by the experienced team at Energy Fuels, ensuring a smooth transition, said the company.
"This transaction has all the hallmarks of a true win-win for both parties. Energy Fuels currently holds the largest and highest quality portfolio of uranium production, development, and exploration projects in the US. The assets we are selling to CUR are proven US uranium mines, and in fact production from these mines since 2006 has accounted for over 1,050,000 lbs of US uranium production, which would rank those mines as fifth among all current uranium producers in the US over those years,” Energy Fuels CEO Mark Chalmers said in a statement.
“However, because Energy Fuels is focusing its attention on its core projects – the Nichols Ranch and Alta Mesa ISR properties and the Pinyon Plain, La Sal and other conventional properties, we do not believe markets have properly valued the projects within our expansive portfolio of exceptional assets. We believe that, in order to realize the full value of our expansive portfolio, certain assets, such as the projects, can be repositioned to the benefit of Energy Fuels and its shareholders, provided we find the right vehicle to unlock the value of these assets. In this transaction, we believe we have found that vehicle in CUR.”
The Energy Fuels boss will join the CUR board once the transacton is done. Chalmers said that he has known the team behind CUR for almost 15 years.
“I have watched keenly as they have gained market support for their consolidation strategy. This is why we have structured the transaction to provide Energy Fuels with significant exposure to the future share price performance of CUR through a 19.9% equity interest and speaks to our belief in and our commitment to these assets,” said Chalmers.
“My joining the CUR board, as well as Energy Fuels' entering into the toll-milling and operating agreements for the projects, should also be strong signals as to how important we view our alliance with CUR for these assets."
Meanwhile, International Consolidated Uranium CEO Philip Williams said his company’s strategy has been to acquire uranium projects around the world, “create critical mass,” and target the acquisition of “larger, more advanced projects.”
“While the recently announced acquisition of the high-grade Matoush Project in Quebec was a big step forward for CUR, today's acquisition and alliance with Energy Fuels represents a giant leap,” added Williams.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive