UEX has entered into an amended purchase agreement with OURD ("OURD Agreement") to acquire 100% ownership of JCU, a wholly owned subsidiary of OURD
Denison Mines Corp. (“Denison” or the “Company”) (TSX: DML) (NYSE American: DNN) is pleased to announce that it has entered into a binding agreement (the “Agreement”) to acquire 50% ownership of JCU (Canada) Exploration Company, Limited (“JCU”) from UEX Corporation (“UEX”), for cash consideration of $20.5 million, following UEX’s expected acquisition of JCU from Overseas Uranium Resources Development Co., Ltd. (“OURD”).
UEX has entered into an amended purchase agreement with OURD (“OURD Agreement”) to acquire 100% ownership of JCU, a wholly owned subsidiary of OURD, for cash consideration of $41 million (see UEX press release dated June 15, 2021).
JCU holds a portfolio of twelve uranium project joint venture interests in Canada, including a 10% interest in Denison’s 90% owned Wheeler River project, a 30.099% interest in the Millennium project (Cameco Corporation 69.901%), a 33.8123% interest in the Kiggavik project (Orano Canada Inc. 66.1877%), and a 34.4508% interest in the Christie Lake project (UEX 65.5492%).
David Cates, President and CEO, stated: “Denison welcomes this new partnership with UEX. We are pleased with the acquisition terms for this unique and valuable portfolio of strategic Canadian uranium interests, which have been meticulously accumulated by JCU over prior decades. Following this acquisition, Denison will not only increase its indirect ownership of the Company’s flagship Wheeler River project, but will also expand its asset base to include additional important Canadian uranium development projects such as Millennium and Kiggavik.”
The key terms of the Agreement are outlined below:
- Denison agrees to provide UEX with an interest-free three-month term loan of up to $41 million (the “Term Loan”) to facilitate UEX’s payment of the $41 million purchase price to OURD for the purchase of 100% of the shares of JCU pursuant to the OURD Agreement.
- $20.5 million of the amount drawn under the Term Loan will be deemed repaid to Denison by UEX on the transfer of 50% of the JCU shares to Denison immediately following the closing of the OURD Agreement and the acquisition of the JCU shares by UEX.
- UEX may extend the Term Loan by an additional three months, in which case interest will be charged at a rate of 4% from the date of the initial advance under the Term Loan until maturity.
- All of the shares of JCU owned by UEX will be held by Denison as security against the Term Loan pursuant to a pledge agreement until the Term Loan is repaid in full.
- The Term Loan is subject to certain customary terms and conditions and contains standard events of default that protect Denison.
- Denison and UEX agree to enter into a shareholders’ agreement governing the relationship of Denison and UEX with respect to the future management of JCU (“Shareholders’ Agreement”).
- The Shareholders’ Agreement shall include various provisions regarding future funding and dilution, as well as resolution of deadlock situations and protections of minority interests in relation to specific business matters that will require 66.67% or unanimous support from then JCU shareholders.
- The Agreement is subject to certain conditions precedent, including the completion of the acquisition of the JCU shares by UEX, pursuant to the OURD Agreement.
- Should the OURD Agreement be terminated, each of Denison and UEX have agreed to provide the other party with the opportunity to participate on a 50/50 basis in subsequent offers made in relation to an alternative acquisition of JCU.
- UEX and Denison have certain termination rights, including those in favour of Denison if the OURD Agreement is not completed by September 30, 2021.
The OURD Agreement, and the completion of the JCU acquisition by UEX pursuant thereto, remains subject to approval at a meeting of the shareholders of OURD, which is expected to occur in Tokyo on June 18, 2021. If the shareholders of OURD approve the OURD Agreement, the transaction is expected to close on or before August 3, 2021.
Denison’s previously announced offer to acquire 100% of JCU from OURD (see press release dated May 4, 2021) has been withdrawn.
Haywood Securities Inc. and RCI Capital Group are acting as financial advisors, and Blake, Cassels & Graydon LLP is acting as legal counsel to Denison.
Source: Company Press Release