Denison forms three Athabasca uranium JVs with Cosa Resources

Denison Mines (TSX: DML) and Cosa Resources (TSX-V: COSA) have agreed to form three uranium exploration joint ventures in the eastern portion of the Athabasca Basin in northern Saskatchewan.

Cosa will acquire a 70% interest in Denison’s Murphy Lake North, Darby, and Packrat properties in exchange for about 14.2 million Cosa common shares, $2.2 million in deferred equity consideration, and a commitment to spend $6.5 million in exploration expenditures at Murphy Lake North and Darby.

Denison will receive an upfront payment of around 14.2 million Cosa common shares (representing around 19.95% ownership interest in Cosa post transaction), deferred equity consideration of $2.2 million of additional Cosa common shares, and a royalty on each of the properties. Cosa holds several properties in the basin’s east and southeast, the largest of which is the 600-sq.-km Ursa project, just west of Denison’s flagship Wheeler River project.   

“Denison is pleased to collaborate with Cosa in a way that is mutually beneficial and enhances our exposure to the potential discovery of a meaningful uranium deposit on the properties and through Cosa’s existing uranium exploration portfolio,” Denison CEO and president David Cates said in a release. “With Denison focused on executing on our core mining and development-stage projects, we believe Cosa is an excellent partner to advance exploration of the properties.”

The deal with Cosa adds to the joint venture Denison holds in a 90-10 split with JCU (Canada) Exploration at the Wheeler River in-situ recovery (ISR) project. Denison also owns 50% of JCU. Denison is a pioneer in testing ISR technology in the basin, and a little over one year ago it announced results showing the method could be successfully deployed on a commercial scale at Wheeler River. ISR involves pumping a solution underground, where it separates uranium from the ore and is later pumped back to the surface. It costs less than underground mining, doesn’t require digging pits and has a smaller environmental footprint.

30% stake in properties 

In the agreement with Cosa, Denison retains a minimum 30% direct interest in the properties and will become Cosa’s largest shareholder, while also securing strategic pre-emptive rights and a buydown right to increase Denison’s interest in the Darby property.

Denison will have the right to nominate one director to Cosa’s board of directors for so long as Denison holds at least 5% of the issued and outstanding common shares and an additional director to Cosa’s board of directors for so long as Denison holds at least 10% of the issued and outstanding common shares.

Cosa will be required to issue Denison a further $2.2 million in deferred consideration shares within a five-year period. It also must fund 100% of the next $1.5 million in exploration expenditures on Murphy Lake North by Dec. 31, 2027. It must also fund 100% of the next $5 million in exploration expenditures on Darby by June 30, 2029.

This year Denison is celebrating its 70th year in uranium mining, exploration, and development, which began in 1954 with Denison’s first acquisition of mining claims in the Elliot Lake region of northern Ontario.

Denison shares were down 0.3% to $3.20 apiece on Wednesday afternoon in Toronto, valuing the company at $2.9 billion. Its shares traded in a 52-week range of $1.91 to $3.40. Cosa shares were flat at 23¢ apiece, giving the company a market capitalization of $11.1 million. Its shares’ year-long range was 19¢ to 66¢.