Under the terms of the Transaction, GoviEx has acquired Denison’s wholly owned subsidiary, Rockgate Capital Corp., which holds all of Denison’s Africa-based uranium interests (collectively "DML Africa"), in exchange for 56,050,450 shares of GoviEx (the "Consideration Shares") and 22,420,180 common share purchase warrants of GoviEx (the "Consideration Warrants").
GoviEx’s new, combined asset portfolio now includes two permitted uranium development projects – the Madaouela Project in Niger and the Mutanga Project in Zambia. It also includes the Falea Project, an advanced exploration-stage project in Mali, and the exploration-stage Dome Project in Namibia.
GoviEx now controls one of the largest uranium resource bases among publicly listed companies, with combined National Instrument 43-101 ("NI 43-101") Measured & Indicated resources of 124.29 Mlbs U3O8, plus Inferred resources of 73.11 Mlbs U3O8.
Govind Friedland, Founder and Executive Chairman of GoviEx, commented: "The closing of this transaction with Denison signifies a new beginning for GoviEx. The company has greatly expanded its uranium resources, diversified geographically, and introduced a project pipeline to add leverage to the development of our flagship Madaouela Project in Niger.
"The uranium market also may be reaching a turning point, as we are seeing the classic signs of a commodity being at, or near, the bottom of the commodity cycle. In March, China unveiled its new, five-year plan to increase its nuclear power generation capacity from 27 gigawatts to 150 gigawatts by 2030. With more than US$700 billion in nuclear power generation investments currently planned, the long-term fundamentals for the uranium market remain incredibly strong."
David Cates, President and Chief Executive Officer of Denison, commented: "Denison is very pleased to have closed this transaction and is looking forward to joining a group of shareholders at GoviEx, which includes other uranium and mining industry heavyweights.
"This transaction provides Denison shareholders with significant exposure to GoviEx’s Madaouela project, which is one of the world’s most advanced and arguably underappreciated uranium development assets.
"The closing of this transaction also marks the end of Denison’s transition from being a globally diversified company to one with a clear focus on advancing its Wheeler River project to become the next uranium producer in the Athabasca Basin region."
Pursuant to the terms of the Agreement, GoviEx acquired DML Africa from Denison in exchange for 56,050,450 Consideration Shares and 22,420,180 Consideration Warrants. The Consideration Shares have an approximate value of C$5,045,000 based on the closing price of GoviEx’s common shares on June 10, 2016. Denison received the Consideration Shares and Consideration Warrants in reliance on the exemption in section 2.12 of National Instrument 45-106.
Each such Consideration Warrant is convertible into one common share of GoviEx at a price of US$0.15 per share for a period of three (3) years. The Consideration Warrants include an acceleration clause, which provide that in the event the closing price of GoviEx’s common shares is equal to or greater than C$0.24 per share, for a period of 15 consecutive trading days, GoviEx may provide holders of the Consideration Warrants with written notice that holders have 30 days within which to exercise the Consideration Warrants on the original terms.
Failing exercise on the original terms within 30 days of notice, the exercise price of the Consideration Warrants will be increased to US$0.18 per share and the term of the Consideration Warrants will be reduced by six months.
At the time of closing the Transaction, DML Africa was capitalized with a minimum working capital of US$700,000, which is equivalent to the forecasted annual budget for the operations of DML Africa.
For so long as Denison holds at least 5% of the issued and outstanding common shares of GoviEx, Denison will have the right to nominate one director to the GoviEx board of directors and will have the right to participate in future GoviEx equity financings in order to maintain its pro-rata ownership.