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The announcement comes just two days after Russia’s state-owned ARMZ made a $1.3-billion offer for Uranium One TSX:UUU, a bid that Chris and Michael Berry call “strategic as well as opportunistic.” Randhawa acknowledges that “these are very difficult times for juniors. A lot of people were optimistic that they could raise more money down the road, then found it never happened. Some people thought things would get better last summer, or in the fall. Now it’s January. Something like 40% of the companies on the TSX have less than $400,000 in the bank. It’s a good time to be buying.”
We’ve got lots of cash and a lean, hungry group that wants to go out and do it all again.—Fission Energy chairman/CEO Dev Randhawa
But he maintains the Fission acquisition would be “a good deal for both companies. We like Denison as a company, they have a very high-grade project at Phoenix [part of Wheeler River]. So our investors get a piece of a bigger chip which is more diversified and they also get a free chip in Patterson Lake South, which we think is very exciting, especially with mineralization kicking in at 50 metres.”
Cameco, Randhawa says, “has traditionally ‘owned’ the Athabasca. But that’s changing. I could see Rio taking a run at Denison. They do need access to that mill for their Roughrider zone.”
But couldn’t Rio or Cameco go after Fission first? “That may happen,” he responds. “I never really thought Rio would come in and compete with Cameco when they first took a run at Hathor. There’s talk out there. Whoever does control the J-zone—Rio’s probably the most natural because it’s very hard not to mine something that’s 20 yards away from yours. Common sense says they should all be developed as one. But that’s pure speculation.”
As for the LOI, “we signed a deal with Denison in good faith, we have a break-up fee with them, but obviously our shareholders may be open to any offer that comes in.”
For his part, Randhawa’s looking forward to the new spinoff. “That’s really what juniors are supposed to do, right? We go out and find land, make discoveries, develop them and sell them. We want to focus on Patterson Lake and the western part of the basin. So Fission’s management team will simply go to the new company and obviously the dominant project will be Patterson Lake. Waterbury Lake is the jewel for Denison.”
He adds, “Keep in mind that Kepco is a large shareholder of Denison and also holds 40% of Waterbury Lake, so it helps consolidate Kepco’s holdings too.”
And what about the Fission team and their proposed spinoff company? “We didn’t sign a non-compete and we actually have a lot of cash, $18.8 million to be exact. So we intend to be quite active ourselves in picking up projects. We’re basically trading paper with Denison. At the same time we’ve got lots of cash and a lean, hungry group that wants to go out and do it all again.”
Fission opened January 16 at $0.75, 11 cents above its previous close, then finished the day at $0.78. At press time the company had 124.54 million shares outstanding for a market cap of $97.14 million.
Denison opened January 16 at $1.43, three cents below its previous close. The stock then reached $1.50 before closing on $1.48. With 388.8 million shares outstanding, Denison had a press-time market cap of $575.43 million.
Read about uranium supply, demand and prices here.
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