Paladin launches $1.14 billion Fission Uranium bid

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Paladin Energy Ltd. [PDN-ASX, PALAF-OTCQX] has launched a bid to acquire Fission Uranium Corp. [FCU-TSX; FCUUF-OTCQX; 2FU-FSE], citing strong demand for nuclear energy driven by the global shift away from fossil fuels.

The all-share offer has an implied value of $1.30 per Fission share, or $1.14 billion, and represents a 25.8% premium to the closing price of Fission shares on June 21, 2024. Under the offer, Fission shareholders will receive 0.1076 fully paid share of Paladin for each of their Fission shares.

Fission Uranium shares jumped 11.6% or 12 cents to $1.15 in early trading Monday on volume of 1.47 million. The shares traded in a 52-week range of $1.33 and 55 cents.

Paladin is an Australian Stock Exchange-listed uranium producer with a 75% stake in the Langer Heinrich mine in Namibia. It also owns a portfolio of uranium exploration assets in Canada and Australia.

Fission has submitted an application for a license to construct a uranium mine and mill facility at its Patterson Lake South (PLS) property in Saskatchewan, which hosts the high-grade Triple R uranium deposit. The company recently published the results of a feasibility study outlining the potential for Triple R to become one of the lowest cost uranium mines in the world.

The combination of Paladin and Fission is expected to create a clean energy leader and will deliver multi-asset production expected by 2029 and a diversified presence across leading uranium jurisdictions, Canada, Namibia and Australia.

Fission’s board of directors, following the unanimous recommendation by its special committee of independent directors and in consultation with Fission’s financial and legal advisors, is recommending that its shareholders vote in favour of the transaction.

Paladin has applied to list its shares on the Toronto Stock Exchange, a move that would enable Fission shareholders to receive TSX-listed Paladin shares.

The 31,039-hectare PLS project is 100%-owned and operated by Fission. The project is accessible by road with primary access from all-weather Highway 955, which runs north of the former Cluff Lake mine and passes the NexGen Energy Ltd. [NXE-TSX, NYSE] Arrow deposit located 3.0 kilometres to the east.

Highlights of the feasibility study include a construction timeline of three years with an estimated initial capital cost of $1.15 billion. The study also envisages an increased time line of 10 years with a life of mine production of 90.9 million pounces of U3O8 at an average unit operating cost of $13.02 a pound (US$10 a pound).

The study is based on an indicated resource of 2.7 million tonnes of 1.94% U308 and 0.61 g/t gold or 114.9 million pounds of uranium and 52,700 ounces of gold in five zones.

News of the takeover bid follows a resurgence in the price of uranium as nuclear power is once again embraced by countries who are looking for ways to cut carbon emissions and ease concerns about supply.

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