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Denison finalizes $110-million stock-swap to divest U.S. operations

Unprocessed ore containing uranium is seen in this file photo.

Denison Mines Corp. has reached a definitive agreement to spin off its U.S. assets in a mostly stock deal that will see its shareholders receive a controlling interest in fellow uranium miner Energy Fuels Inc.

Under terms of the stock-swap deal valued at more than $100-million, Energy Fuels will issue a promissory note and a nominal amount of cash to acquire Denison's U.S. mining assets and operations as well as all of the inter-company debt between Denison and the U.S. mining division.

Toronto-based Energy Fuels will later pay off the note by issuing some 425.4 million common shares to Denison's shareholders, who will then own about 66.5 per cent of the stock in Energy Fuels.

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Based on Wednesday's closing price of 26 cents per Energy Fuels share, the deal would have a value of about $110-million.

The arrangement, which is subject to shareholder and regulatory approval, also calls on the parties not to solicit competing offers and provides the right to match any superior proposal. A reciprocal break fee of $3-million is payable under certain circumstances.

In the past, analysts have said that Denison, by divesting its U.S. assets and operations, would make itself a more attractive takeover prospect.

Back in April, RBC Capital Markets analyst Adam Schatzker said the U.S. operations "acted as a poison pill for potential acquirers."

"The U.S. assets suffered from unpredictable grades, fluctuating production and high cash costs," Mr. Schatzker wrote in a note to clients.

"While they offered investors financial leverage through high operating costs, they were likely not attractive to more senior mining companies. On the other hand, the Canadian assets, located in the heart of one of the top uranium camps in the world, offer the potential for world-class discoveries."

Energy Fuels president and chief executive officer Steve Antony said at the time that the proposed deal would be transformational for his company and reshape the landscape of the uranium sector in the United States.

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"It combines the highly strategic asset of the only operating uranium mill in the U.S., White Mesa, with a significant resource base that substantially increases White Mesa's available feedstock."

"The result is an unmatched production growth profile and the opportunity for both Energy Fuels and Denison shareholders to benefit from the clear operational synergies that result from this transaction."

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