Pursuant to the terms of the Transaction, and subject to certain rights of first refusal (“ROFR”) in favor of JCU (Canada) Exploration Company Limited (“JCU”), Denison has agreed to acquire 100% of Cameco’s interest (expected to be approximately 24% by the end of 2018) in the Wheeler River Joint Venture (“Wheeler River JV”), in exchange for the issuance of 24,615,000 common shares of Denison (the “Consideration Shares”) at a deemed price of $0.65 per share, for total consideration valued at approximately $16 million (the “Purchase Price”).

The acquisition of Cameco’s interest in the Wheeler River JV will increase Denison’s interest in the Project to 90% (or approximately 86.84% if JCU exercises its ROFR).

Denison president and CEO David Cates said: “We are pleased to have reached an agreement with Cameco to acquire their remaining minority interest in Wheeler River. Denison, Cameco and JCU have worked together, since 2004, to advance Wheeler River to the point of being the largest undeveloped uranium project in the eastern Athabasca Basin.

“We believe this transaction represents a unique opportunity to add to our existing controlling interest in the Project and offer significant value accretion to Denison shareholders.

“We are eager to continue advancing the Project towards a development decision – with the next step being the planned completion of a Pre-Feasibility Study before the end of the third quarter.”

Wheeler River is host to the Phoenix and Gryphon uranium deposits, which are estimated to contain combined Indicated Mineral Resources of 132.1 million pounds U3O8 at an average grade of 3.3% U3O8, plus combined Inferred Mineral Resources of 3.0 million pounds U3O8 at an average grade of 1.7% U3O8.

The Project is situated along the road and power line that runs between Cameco’s McArthur River mine and Key Lake mill complex in northern Saskatchewan, and is a joint venture between Denison (63.3%, increasing to approximately 66% by the end of 2018 under a previously announced earn-in agreement), Cameco (26.7%, decreasing to approximately 24% by the end of 2018), and JCU (10%).

Restriction on Denison Shares

The Consideration Shares will be subject to a six month escrow period, during which time Cameco has agreed to not, directly or indirectly, transfer any Consideration Shares without the prior written consent of Denison.

The transfer of the Consideration Shares is also restricted for a further six month period, where Denison retains the right, under certain circumstances, to designate a purchaser upon notice from Cameco of the intent to transfer or sell all or a portion of the Consideration Shares.

The issuance of the Consideration Shares is subject to the receipt of regulatory approvals from the TSX and NYSE American stock exchanges.

Rights of First Refusal

Under the terms of the Wheeler River JV, JCU’s ROFR allows for JCU to purchase its proportional interest of Cameco’s share of the Wheeler River JV alongside of Denison.

Based on Denison’s expected ownership interest of approximately 66%, and JCU’s ownership interest of 10%, JCU would have the right to purchase approximately 13.16% of Cameco’s expected 24% interest in the Wheeler River JV.

The Transaction is not conditional on JCU waiving its ROFR.  Accordingly, should JCU elect to exercise the ROFR, the Purchase Price to be paid to Cameco by Denison shall be reduced to approximately $13.9 million and Denison will own approximately 86.84% (rather than 90%) of the Wheeler River JV on completion of the Transaction.

Advisors & Counsel

Haywood Securities Inc. is acting as financial adviser to Denison in connection with the transaction, and Blake, Cassels & Graydon LLP is acting as legal counsel to Denison.

Source: Company Press Release