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Denison Mines (TSX: DML) and Cosa Resources (TSXV: COSA) have agreed to form three uranium exploration joint ventures within the eastern portion of the Athabasca Basin of northern Saskatchewan.
Under the agreement, Cosa will acquire a 70% interest in Denison’s Murphy Lake North, Darby and Packrat properties in exchange for about 14.2 million common shares and C$2.2 million in deferred equity consideration. It will also commit C$6.5 million on exploration at Murphy Lake North and Darby.
Denison will receive the common share consideration (representing 19.95% ownership of Cosa post transaction) as upfront payment, plus a royalty on each of the three properties.
“Denison is pleased to collaborate with Cosa in a way that is mutually beneficial and enhances our exposure to the potential discovery of a meaningful uranium deposit on the properties and through Cosa’s existing uranium exploration portfolio,” Denison CEO David Cates said in a release.
“With Denison focused on executing on our core mining and development-stage projects, we believe Cosa is an excellent partner to advance exploration of the properties.”
Cosa currently holds several properties in the Athabasca Basin’s east and southeast, the largest of which is the 600-sq.-km Ursa project, just west of Denison’s flagship Wheeler River project.
The deal with Cosa adds to the joint venture Denison holds in a 90/10 split with JCU (Canada) Exploration at the Wheeler River in-situ recovery (ISR) project. Denison also owns 50% of JCU.
ISR involves pumping a solution underground, where it separates uranium from the ore and is later pumped back to the surface. It costs less than underground mining, doesn’t require digging pits and has a smaller environmental footprint.
Denison is a pioneer in testing ISR technology in the Athabasca Basin, and a little over one year ago it announced results showing the method could be successfully deployed on a commercial scale at Wheeler River.
This year, Denison is celebrating its 70th year in uranium mining, exploration and development, which began in 1954 with the first acquisition of mining claims in the Elliot Lake region of northern Ontario.
Under the agreement, Denison retains a minimum 30% direct interest in the three properties and will become Cosa’s largest shareholder, while also securing strategic pre-emptive rights and a buydown right to increase Denison’s interest in the Darby property.
Denison will have the right to nominate one director to Cosa’s board of directors for so long as its shareholding in Cosa is at least 5%, and another director to Cosa’s board when it holds at least 10% of the shares.
Cosa will be required to issue Denison the C$2.2 million in deferred consideration shares within a five-year period. It also must fund the entire C$1.5 million in exploration expenditures on Murphy Lake North by Dec. 31, 2027, and the C$5 million in exploration expenditures on Darby by June 30, 2029.
Denison’s shares were down 0.3% to C$3.20 apiece on Wednesday afternoon in Toronto, valuing the company at C$2.9 billion. Its shares traded in a 52-week range of C$1.91 to C$3.40.
Cosa Resources’ shares traded flat at C$0.23 apiece, giving the company a market capitalization of C$11.1 million. Its shares’ year-long range was C$0.19 to C$0.66.
