Canada approves Paladin Energy’s $1.1B takeover of Fission Uranium

The Canadian government has approved Paladin Energy’s (ASX: PDN; US-OTC: PALAF) $1.1 billion all-share takeover of Fission Uranium (TSX: FCU; US-OTC: FCUUF) under Ottawa’s Investment Canada Act (ICA).

The clearance announced Wednesday comes with certain conditions, however, including that Paladin cannot sell uranium from Fission’s PLS project to end-users in China.

The deal, announced in June, has been under a national security review since October due to Chinese state-owned companies holding stakes in both companies.

CGN Mining, a subsidiary of China General Nuclear Power, has a 11.26% stake in Fission and China National Nuclear Corporation holds a 25% interest in Paladin’s main Langer Heinrich mine in Namibia. CGN tried to block the acquisition in September, but wasn’t successful.

The acquisition, which will give Paladin Fission’s PLS project in Saskatchewan’s Athabasca Basin, comes amid rising demand for uranium as global interest in nuclear energy options grows.

“The combination of Paladin and Fission creates a world-class diverse uranium producer operating in multiple countries, with a high-quality portfolio of production, development and exploration assets,” Paladin CEO Ian Purdy said in a release.

Scrutiny of Chinese influence

Over the last few years, Chinese investment in Canadian resource projects has drawn particular scrutiny from the government, which has tightened its approval process.

In granting its approval for the acquisition, the government has imposed a number of restrictions on Paladin.

The company’s senior executives cannot have business or financial relationships with Chinese state-owned companies and all board members must be independent.

Paladin also must appoint a Canadian citizen who resides in Canada to its board within 12 months.

In addition, Paladin cannot sell any uranium produced from PLS to any customers or end-users in China, except for sales to CGN in line with its rights under the existing offtake agreement. Finally, no funds sourced from China can be used to finance PLS operations.

While Purdy told The Northern Miner in July that he was comfortable with the review process, others in the mining space have sought to redomicile from Canada to avoid such reviews.

Paladin shares gained 1.3% to A$7.81 in Sydney on Thursday, giving it a market capitalization of A$2.3 billion. In Toronto, Fission shares rose 4.1% to 75¢ on Thursday morning, for a market capitalization of $644 million.