Paladin Energy Buys Fission Uranium For $833M, Expands Canadian Footprint

Zinger Key Points
  • Paladin Energy acquires Fission Uranium for $833 million in an all-stock deal.
  • The merger boosts uranium resources and creates a diversified portfolio across Canada, Namibia, and Australia.

Australian uranium miner Paladin Energy PALAD is acquiring Canadian Fission Uranium Corp FCUUF for C$1.14 billion ($833 million) in an all-stock transaction. This transaction confirms the elevated mergers and acquisition trend amid a resurgence, with uranium prices doubling from an average of $50 per pound in 2023 to over $100 per pound earlier this year.

The acquisition integrates Fission Uranium’s assets, including the advanced-stage Triple R deposit at the PLS project, situated within Canada’s renowned Athabasca Basin, with Paladin’s existing portfolio. The PLS project has the potential for a 10-year mine life and produces 9.1 million pounds of uranium oxide annually.

"Fission is a natural fit for our portfolio," Paladin Energy CEO Ian Purdy said in an announcement. “The addition of PLS creates a leading Canadian development hub alongside Paladin's Michelin project, with exploration upside across all Canadian properties.”

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Under the terms of the agreement, each Fission shareholder will receive 0.1076 Paladin shares for each Fission share held, valuing Fission shares at C$1.30 each. This represents a 25.8% premium to Fission’s closing price of C$1.03 on June 21, 2024. The deal implies a total equity value of C$1.14 billion for Fission Uranium.

Fission's board has recommended that shareholders vote in favor of the transaction, which does not require Paladin's shareholders' approval. Once completed, existing Paladin and Fission shareholders will own approximately 76% and 24% of the combined entity, respectively.

The acquisition brings significant strategic benefits, including a combined mineral resource of 544 million pounds of uranium oxide and ore reserves of 157 million pounds.

Fission President and CEO Ross McElroy highlighted the merger’s strategic alignment and risk mitigation.

"The transaction significantly de-risks the mine-building financing at PLS, with cash flow generation from the producing Langer Heinrich mine in Namibia and a strong balance sheet creating an opportunity to fund the development of PLS through debt and internally generated cash flows," he noted.

The deal also benefits from the combined entity's diversified geographic presence, which spans Canada, Namibia, and Australia and has a proforma market capitalization of approximately $3.5 billion. This diversified portfolio positions the company to capitalize on the favorable long-term fundamentals of the uranium market.

Advisors for the transaction include Macquarie Capital as financial advisor and Fasken Martineau DuMoulin LLP as Canadian legal advisor for Paladin, while Fission engaged SCP Resource Finance as financial advisor and Blake, Cassels & Graydon LLP as legal advisor. Cantor Fitzgerald served as financial advisor to Fission's Special Committee.

Paladin has applied to list on the Toronto Stock Exchange concurrent with the transaction’s closing, which should happen by September 2024.

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