Uranium producer Energy Fuels acquires Base Resources for US$241M

Uranium and rare earths producer Energy Fuels (TSE: EFR; NYSE: UUUU) has agreed to acquire 100% of the issued shares in Base Resources (ASX: BSE; AIM: BSE), in a deal worth A$375 million (US$241.9 million).

The news sent the Australian junior’s shares skyrocketing 123% on Monday, while market reaction was more muted on the Toronto stock exchange; Energy Fuels stock was down 12% by market close on Monday. Base Resources shares traded at A23¢ each on Tuesday, valuing the company at A$259.5 million; while Energy Fuels shares traded for $7.25 apiece, giving the company a market capitalization of $1.1 billion. 

The transaction will establish a global leader in the critical minerals sector with a focus on rare earth elements, uranium and heavy mineral sands production and a clear strategic development pathway, Base Resources said in its statement.

The deal will also create a platform for the funding and development of Base Resources’ Toliara project in Madagascar, with future monazite production from the project to be processed at Energy Fuels’ operating White Mesa mill in Utah.

“For the past four-plus years, Energy Fuels has innovated a new way to produce critical minerals, that we believe is more cost competitive than traditional approaches, by leveraging our uranium processing expertise and infrastructure to develop a secure, U.S.-centric REE oxide supply chain,” Energy Fuels CEO Mark Chalmers said in a news release.

“We have secured long-term sources of REE concentrate through offtake (Chemours), and direct ownership (the company’s 100% owned Bahia project in Brazil once developed, and potentially 100% ownership of Base Resources’ Toliara project, and further potential offtakes through a joint venture being negotiated with Astron Corporation Limited (the Astron Donald Project in Australia),” Chalmers said.

“Toliara is expected to be the cornerstone source of feedstock supply to the Mill, with the scale to provide an average of 21,800 tonnes of rare earth-bearing monazite per year at a cost that we believe will be at or below other leading global REE producers, including those in China.”

The acquisition deal comes as uranium prices remain at their highest level in 16 years, with the latest spot price reaching US$87.75 per pound as nuclear power experiences a resurgence as a cleaner energy option compared to fossil fuels. The deal also comes four months after Energy Fuels started uranium production at its La Sal and Pandora mines in Utah, and at the Pinyon Plain project in Arizona. 

The Denver-based company grabbed headlines in 2021 when it and Neo Performance Materials (TSX: NEO) created a new United States-to-Europe rare earth supply chain. It has been selling into the commercial rare earth elements (REE) market since.

EFR announced early this year it is gearing up two more uranium mines for production in in Colorado and Wyoming.

Base Resources’ leadership team will continue to oversee the development and operation of the Toliara project and the completion of operations and closure of Kwale Operations, as well as the progression of other mineral sands and rare earths interests of the combined group, Energy Fuels said.

Once in production, the Monazite from Toliara will provide a large portion of the raw materials needed for Energy Fuels’ expanding REE oxide production facility at the Mesa Mill.

Base Resources shareholders will receive 0.0260 Energy Fuels common shares plus a dividend of A$0.065 for each Base Resources share held, for total consideration of approximately A$0.302 per share, which represents a premium to Base Resources’ last closing price of 188%, and a premium to the 20-day volume-weighted average price (VWAP) of Base Resources shares of 173%.