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Denison makes rival bid for minority partner JCU

Uranium hopeful Denison Mines has made a rival offer to Japan’s Overseas Uranium Resources Development for its subsidiary, JCU (Canada) Exploration.
Denison makes rival bid for minority partner JCU Denison makes rival bid for minority partner JCU Denison makes rival bid for minority partner JCU Denison makes rival bid for minority partner JCU Denison makes rival bid for minority partner JCU

Denison Mines is looking to take full ownership of Wheeler River in Saskatchewan

Ngaire McDiarmid

Reporter

JCU has interests in several uranium projects in Canada, including a 10% stake in Denison's flagship Wheeler River in Saskatchewan, and circa 34% in initial bidder UEX Corp's Christie Lake project.

Denison said its offer included up to C$40.5 million in cash payments and assuming JCU's existing liabilities.

UEX had last month said it signed a definitive purchase agreement with OURD to acquire JCU, by paying up to $12.5 million and assuming its liabilities.

"In our view, this is a great deal for Denison and is unlikely to be met by a competing bid from UEX, given a purchase price of more than 3x UEX's offer," Canaccord Genuity analyst Katie Lachapelle said.

"We currently value Denison's 90% stake in Wheeler River at $696 million, which implies a value of $77 million for JCU's 10% share.

"This alone justifies the transaction and purchase price, in our view.

"Furthermore, we see benefit to Denison consolidating 100% ownership of Wheeler River, with respect to negotiating a future financing agreement and/or partnership."

Denison said it had sufficient cash to fully fund the acquisition.

If its offer was accepted, Denison understood the transaction would be subject to approval by OURD shareholders.

UEX has not commented but its shares (TSX: UEX) fell 20% yesterday to 38c. They had reached a one-year high earlier this week of 49.5c. Yesterday's close put its value at $172 million (US$140 million).

Denison shares (TSX: DML) are near the middle of a one-year range and lost 4.96% to close at $1.34, capitalising it about $1 billion (US$0.8 billion).

Canaccord Genuity put Denison's price target at $2 and rated it a speculative buy.