Acquisition Rationale and Highlights:
Uranium Energy Corp. (NYSE American: UEC) and UEX Corporation (TSX: UEX), are pleased to announce they have entered into a definitive arrangement agreement, pursuant to which UEC will acquire all of the issued and outstanding common shares of UEX by way of statutory plan of arrangement under the Canada Business Corporations Act.
Under the terms of the Agreement, each holder of the common shares of UEX will receive 0.0831 of one UEC share in exchange for each UEX Share. This share exchange ratio implies consideration of approximately C$0.43 (3) per UEX Share and a premium of approximately 50% based on the closing price of UEX’s shares on the Toronto Stock Exchange on June 10, 2022.
At closing, existing UEC and UEX shareholders will own approximately 86.3% and 13.7%, respectively, of UEC based on current outstanding common shares.
Amir Adnani, President and CEO of UEC, stated: “UEC’s acquisition of Uranium One Americas, Inc. in December 2021 marked the largest M&A transaction in the uranium sector in about a decade. The transaction was highly accretive for the Company, and we have seen a very positive response from our shareholders and the marketplace. The strategic acquisition of UEX has the same characteristics and will grow our diversified portfolio in the politically stable and mining friendly jurisdiction of Canada. It also marks the largest North American M&A transaction in the uranium sector following the U1A acquisition. This transaction underscores UEC’s sector leading strategy as the fastest growing, pure play, 100% un-hedged uranium company with assets only in the Western hemisphere. As with the U1A acquisition, the purchase price is equal to only 13.7% of the pro forma market capitalization, yet the acquisition is expected to more than double the size of our attributable measured and indicated uranium resources. This opportunity provides entry into two of Canada’s most prospective uranium districts in Saskatchewan and Nunavut, and cements UEC’s position as not only a leading American uranium mining company but a North American one as well. We commend Roger Lemaitre and the UEX team for having assembled and advanced this highly prospective portfolio and look forward to working with their experienced and professional Canadian team. They will be of great benefit to UEC moving forward. Furthermore, the key projects in the UEX portfolio are already in joint venture partnerships with uranium producers, including Cameco and Orano, and we look forward to working with them as the projects continue development towards production.”
Roger Lemaitre, President and CEO of UEX, commented: “This transaction with UEC reflects the efforts of the UEX team to create value through building an attractive strategic portfolio of assets and ultimately delivers a great outcome for UEX shareholders and complements our recent acquisition of JCU (Canada) Exploration Company Limited. The combination of UEC and UEX brings together two very strong and complementary portfolios and, in addition to a significant premium, provides our shareholders with the opportunity to participate in the continued growth of UEC. UEX shareholders will gain substantial exposure to production-ready low-cost U.S. ISR (in situ recovery) mining assets, a substantial physical uranium portfolio, a strong balance sheet and access to capital. I look forward to seeing UEC’s management team continue to execute on their growth strategy and build upon the success we have already seen with UEX’s portfolio of assets.”
Additional Benefits of the Acquisition to UEX shareholders
UEX Asset Portfolio Overview
For mineral resource estimates referenced above as “historical estimates”, UEX and UEC are not treating this information as current mineral resources, have not verified this information and are not relying on it. A qualified person has not done sufficient work to classify these historical estimates as current mineral resources. UEX and UEC currently do not plan to conduct work to verify the historical estimates other than using them to guide exploratory and possible development work.
UEC Asset Portfolio Overview
Readers are cautioned that resources reported by UEX have been prepared and reported pursuant to the disclosure standards required by NI 43-101, and the resources reported by UEC have been prepared pursuant to the disclosure standards required under Regulation S-K subpart 1300 adopted by the United States Securities and Exchange Commission for filings under the U.S. Securities Act of 1933, as amended, and under the U.S. Securities Exchange Act of 1934, as amended. Resources that are reported pursuant to S-K 1300 may not qualify as resources under NI 43-101 or may differ from resources prepared under NI 43-101, and vice versa.
Transaction Conditions & Timing
UEX intends to call a meeting of shareholders to be held in August 2022 to seek shareholder approval for the Arrangement. Completion of the Arrangement will require:
Completion of the Arrangement is also subject to the receipt of court and stock exchange approvals, and other customary closing conditions for transactions of this nature, such as Investment Canada approval.
The Agreement provides for, among other things, non-solicitation covenants, with “fiduciary out” provisions that allow UEX to consider and accept a superior proposal, subject to a “right to match period” in favour of UEC. The Agreement also provides for a termination fee of US$8.25 million to be paid by UEX to UEC if the Agreement is terminated in certain specified circumstances. In addition, under the Agreement UEC has agreed to provide UEX with C$5 million funding by way of a private placement of UEX Shares at a price of C$0.43 per UEX Share. Closing of the Private Placement is subject to the approval of the TSX.
The Arrangement has been unanimously approved by the Board of Directors of UEX. The directors and senior officers of UEX, holding in aggregate approximately 0.5% of the issued and outstanding UEX Shares, have entered into voting support agreements with UEC, pursuant to which they have agreed to vote their shares in favour of the Arrangement at the UEX Meeting. TD Securities and Sprott Capital Partners have provided opinions to the UEX Board of Directors to the effect that, as of the date thereof, and based upon and subject to the assumptions, limitations and qualifications stated in such opinions, the consideration to be received by UEX shareholders pursuant to the Arrangement is fair, from a financial point of view, to such shareholders.
The transaction is expected to close in the third quarter of 2022.
Advisors and Counsel
BMO Capital Markets and Rothschild & Co are acting as financial advisor to UEC in connection with the transaction. McMillan LLP is acting as legal advisor to UEC.
TD Securities and Sprott Capital Partners are acting as financial advisors to UEX in connection with the transaction. Koffman Kalef LLP is acting as legal advisor to UEX.
Notes on Technical Disclosure
The technical information in this news release relating to UEC has been reviewed by Clyde L. Yancey, P.G., Vice President-Exploration for UEC, being a Qualified Person under Item 1302 of Regulation S-K-1300 and NI 43-101
The technical information relating to UEX in this news release has been reviewed and approved by Roger Lemaitre, P.Eng., P.Geo., UEX’s President and CEO.
About Uranium Energy Corp
Uranium Energy Corp is America’s leading, fastest growing, uranium mining company listed on the NYSE American. UEC is a pure play uranium company and is advancing the next generation of low-cost, environmentally friendly ISR mining uranium projects. The Company has two production ready ISR hub and spoke platforms in South Texas and Wyoming, anchored by fully licensed and operational processing capacity at the Hobson and Irigaray Processing Plants. UEC also has seven U.S. ISR uranium projects with all of their major permits in place. Additionally, the Company has other diversified holdings of uranium assets, including: 1) one of the largest physical uranium portfolios of U.S. warehoused U3O8; 2) a major equity stake in the only royalty company in the sector, Uranium Royalty Corp; and 3) a pipeline of resource-stage uranium projects in Arizona, New Mexico and Paraguay. The Company’s operations are managed by professionals with a recognized profile for excellence in their industry, a profile based on many decades of hands-on experience in the key facets of uranium exploration, development and mining.
About UEX Corporation
UEX is a Canadian uranium and cobalt exploration and development company involved in an exceptional portfolio of uranium projects. UEX’s directly-owned portfolio of projects is located in the eastern, western and northern perimeters of the Athabasca Basin, the world’s richest uranium region which in 2020 accounted for approximately 8.1% of the global primary uranium production. In addition to advancing its uranium development projects through its ownership interest in JCU, UEX is currently advancing several other uranium deposits in the Athabasca Basin which include the Paul Bay, Ken Pen and Ōrora deposits at the Christie Lake Project , the Kianna, Anne, Colette and 58B deposits at its currently 49.1%-owned Shea Creek Project, the Horseshoe and Raven deposits located on its 100%-owned Horseshoe-Raven Project and the West Bear Uranium Deposit located at its 100%-owned West Bear Project.
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