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Canadian nuclear fuel project developer IsoEnergy (TSXV: ISO) is taking over Consolidated Uranium (TSXV: CUR) in an all-stock deal elevating it into the sector’s top-10 publicly traded companies.
The agreement values the new IsoEnergy at C$903.5 million and gives it a pipeline of properties in Canada, the United States, Australia and Argentina, the companies said on a conference call on Wednesday.
The projects include IsoEnergy’s Hurricane, the world’s highest grade indicated uranium resource in Canada’s Athabasca Basin and Consolidated’s fully-permitted and past-producing Tony M and Daneros mines in Utah among others, they said.
This month, uranium prices broke the $60 a lb. mark for the first time in a dozen years as the industry recuperates from the 2011 Fukushima disaster in Japan and countries consider expanding nuclear power for its lower impact on climate change than fossil fuels. Western nations are also searching for local fuel suppliers as sanctions on Russia and a July coup in Niger impact the market.
“We really do believe that we are building a company that is built for this current uranium market,” IsoEnergy president and CEO Tim Gabruch said on the call. “It’s really exciting to be bringing them together with the assets in Consolidated which are fully permitted conventional uranium mines in the US that are ready for rapid restart.”
The deal is expected to close in December. IsoEnergy is helping fund it by raising as much as C$24.1 million from issuing subscription receipts, which may be turned into shares later, to NexGen Energy (TSX: NXE; NYSE: NXE; ASX: NXG), Mega Uranium (TSX: MGA) and Energy Fuels (TSX: EFR; NYSE: UUUU).
The new IsoEnergy will advance Consolidated’s Tony M, Daneros and Rim past-producing mines in Utah, but their start-ups will take about a year, Consolidated chairman and CEO Philip Williams said. Energy Fuels must complete refurbishing the local White Mesa mill and the uranium price needs to hit an acceptable level between $75-$80 per lb., he said.
“It’d be a function of the uranium price as much as anything but also the time it takes to turn that mill back on,” said Williams, who will be CEO of the new company. “I think we’re about 12 months out.”
Hurricane, IsoEnergy’s main asset, is among 20 projects it holds in the Athabasca Basin of northern Saskatchewan. It is assessing technical aspects before starting a preliminary economic assessment of the project in the “not-too-distant-future,” said Gabruch, who will be president of the new company. Crews conducted geophysical studies, drilled 6,000 metres of exploratory work across the district this year and are assessing further work, he said.
Hurricane holds 48.6 million indicated lb. of uranium oxide (U3O8) based on 63,800 tonnes grading 34.5% U3O8, including 43.9 million lb. of U3O8 at an average grade of 52.1% U3O8, IsoEnergy reported in 2022. Inferred resources were 2.7 million lb. of U3O8 based on 54,300 tonnes grading 2.2% U3O8, it said.
The Consolidated assets also face headwinds in Virginia, location of the Coles Hill project, which it calls the largest undeveloped uranium site in the US with 160 million lb. of uranium across the indicated and inferred categories. A state moratorium on uranium mining since the 1980s is being challenged by Republican Gov. Glenn Youngkin, but the state Supreme Court upheld the ban in 2021.
In Quebec, Consolidated’s Matoush property, which the company called the highest-grade project in the world outside of the Athabasca Basin with 12.3 million indicated lb. and 16.4 million inferred lb. at 0.95% U3O8, faces opposition from the local First Nations community. Also, the new company sees its Argentine assets as non-core.
“Australia is going to be a key part of our strategy,” Williams said. “Argentina we like as well, but it doesn’t stand up with Australia, Canada and the US as a key focus.”
In the deal, Consolidated shareholders get half a common share of IsoEnergy for each share of Consolidated Uranium they own. IsoEnergy and Consolidated shareholders will own about 70.5% and 29.5% of the new company, respectively.
Shares in IsoEnergy fell 12% to C$4.24 apiece in Toronto on Wednesday, within a 52-week window of C$2.32 and C$4.97, valuing the company at C$473.8 million.
Consolidated Uranium shares rose 8.4% to C$2.07 apiece, within a 52-week range of C$1.10 and C$2.20, giving the company a market capitalization of C$208.1 million.
Williams said the new company wouldn’t shy away from acquisitions.
“We’re also going to continue to be very busy on the M&A front,” Williams said. “This is very much a skill set and expertise of our company that we bring here and don’t be surprised if we add as we go here from this enhanced platform.”
Gabruch noted several staff positions are filled with 40-year industry veterans, while the market was turning positive for the industry, if a bit complicated.
“There’s certainly significant geopolitical shifts underway in the supply of uranium, most notably with Russia and the invasion of Ukraine,” he said. “It’s really resulting in a bifurcation of the uranium market with different influences on supply coming from Russia, Kazakhstan and how the material gets fed into key parts of the nuclear industry.”
