Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Denison Mines (TSE: DML) announced on Tuesday that it has delivered an offer to Overseas Uranium Resources Development to acquire a 100% interest in its subsidiary JCU Exploration Company for C$40.5 million ($32.5m) in cash, more than tripling the C$12.5 million accepted offer in place with UEX Corporation announced two weeks ago.
JCU’s assets include 10% ownership in Denison’s flagship Wheeler River project (which DML owns the remaining 90%) in the southeast part of Saskatchewan’s Athabasca Basin.
The project has probable resources of 109.4 million lb. of uranium dioxide.
“At first glance, Denison’s bid to acquire the remaining 10% of its Wheeler River project would be modestly accretive (+2%), although this does depend on the final scale of future liabilities,” BMO Capital Markets said in a note.
“Further, if successful, the transaction simplifies the ownership of its flagship project as the company continues to make headway derisking the use of ISL mining in the Athabasca.”
“Denison continues to be rated a top-pick in the uranium space largely underpinned by our thesis that recent de-risking work at Wheeler River regarding the ISR mining approach to the ultra-high-grade Phoenix deposit is going under-appreciated by the market,” Haywood Capital Markets said in a note.
“We expect ongoing and future work to further demonstrate the viability of this low-cost mining approach and believe that will translate into more positive movement in DML’s share price.”
Midday Tuesday, Denison’s stock was down 4% on the TSE. The company has a C$1.078 billion market capitalization.
