Northern Continental gets superior bid from Hathor

A potential bidding war over Northern Continental Resources (NCR-V, NCLRF-O) may signal better days ahead for the uranium explorer.

Uranium junior Hathor Exploration (HAT-V, HTHXF-O) has topped a recent bid by Denison Mines (DML-T, DNN-X) ) for Northern Continental. Denison Mines has until July 20 to exercise its right to match the Hathor offer.

News of the Hathor bid sent Northern Continental shares up 54.05% or 10 apiece to close at 28.5, with 1 million shares changing hands.

Hathor currently owns a 40% stake in Northern Continental’s Russell Lake project. The project is on strike between two world-class uranium deposits; 30 km north of the past-producing Key Lake mine, which serves as Cameco‘s (CCO-T, CCJ-N) regional uranium processing facility and 15 km south of Cameco’s producing McArthur River mine. Indeed the road between the McArthur River mine and the Key Lake mill runs right through the Russell Lake property.

McArthur River is the world’s largest high-grade uranium deposit, with proven and probable reserves of 332.6 million lbs. of U308 at an average grade of 20.69% and accounts for about 60% of Canada’s total uranium production.

Northern Continental declined to comment on Hathor’s “superior” bid, which offers Northern Continental shareholders 0.1389 of a Hathor share for each share of Northern Continental they hold.

In early June, Denison Mines and Northern Continental inked an arrangement agreement for all-share deal involving one share of Northern Continental for each 0.092of a Denison share or one share of Denison for every 10.87shares of Northern Continental.

Denison’s offer represented a 28.7% premium to the 20-day volume-weighted average trading price of Northern Continental and Denison shares.

In a June 25 information circular to shareholders regarding Denison’s bid, Northern Continental said a larger combined company would give Northern Continental shareholders better access to capital, projects, and acquisition opportunities in what was becoming an increasingly competitive market.

“While some sector-specific recovery has been seen for certain commodities, the financial markets have generally deteriorated quite dramatically since the early part of last year and we believe that a stronger company will be better equipped to deal with the challenges ahead and to take advantage of the opportunities for growth that will inevitably arise,” the information circular asserted.

“In the longer term, we seek to combine with a company better positioned to attract investment capital in a market increasingly populated by the very largest global mining companies and more junior companies. By acting now, we seek to gain an early advantage in an industry that we believe will see further consolidation in the period ahead.”

Hathor Exploration is focused on projects in the Athabasca Basin of northern Saskatchewan. The company’s main exploration properties are on the eastern side of the Athabasca Basin. Its most advanced project, the Midwest Northeast property, about 4 km northeast of the Midwest uranium ore body owned by Areva, Denison Mines and OURD Canada, contains 41.7 million pounds of uranium oxide at a grade of 5.47% U3O8 in addition to 4.37% nickel and 0.33% cobalt.

Denison is an intermediate uranium producer. It has mining assets in the Athabasca basin and a portfolio of exploration projects in the U.S., Canada, Mongolia and Zambia. Moreover it has ownership stakes in two of the four conventional uranium mills operating in North America. In June it raised $94.9 million in an equity financing.

At presstime Hathor Exploration was trading at $1.89 per share (and has a 52-week trading range of $1.03-$4.40) while Denison was trading at $1.98 per share (and has a 52-week range of 69-$8.88 per share).