UEX Corp (UEX) - UEC Acquisition & Placement Explained

UEX Corp. is a Canadian junior exploration and development company as well as one of the largest resource holders in the Athabasca Basin. The company has five projects that will be entering production shortly as well as various grass-roots exploration projects.

Company Overview

The company announced at the beginning of June 2022 that it had filed an updated technical report for both its Shea Creek and Horseshoe-Raven projects. The technical report of the Shea Creek project includes an updated mineral resource estimate (MRE) of 2,056,000 tons of uranium mineralisation in the indicated category at an average grade of 1.491% U3O8 totalling 67.57 million pounds of U3O8 and 1,254,000 tons of mineralisation in the inferred category at an average grade of 1.015% U3O8 totalling 28.06 million pounds of U3O8. The technical report of the Horseshoe-Raven project contains an updated MRE for both the Horseshoe and Raven deposits of the project. The combined mineral resources of the deposits total approximately 37.2 million tons of U3O8 in the indicated category. The company also announced on the 8th of July that it had filed an updated technical report for its Christie-Lake project. The mineral resource estimate (MRE) of the project consists of 588,000 tons of mineralisation at a grade of 1.57% U3O8 totalling 20.35 million pounds of U3O8 in the Inferred category.

UEX Corp. also announced in June 2022 that it had entered into a definitive arrangement agreement with Uranium Energy Corp (UEC) for its acquisition by UEC. The acquisition consists of a private placement which entails the issuing of 1,627,907 common shares of UEX Corp. at an issue price of CAD$ 0.43 per common share for total gross proceeds of CAD$ 5 million towards the company.

The acquisition serves in creating the largest diversified North American-focused uranium company globally as well as providing UEX Corp. shareholders exposure to production-ready uranium assets in the United States. The gross proceeds of the acquisition will be implemented by UEX Crop. towards the exploration and advancement of its uranium projects in the Athabasca basin and Nunavut.

Acquisition

The acquisition of UEX Corp. by Uranium Energy Corp. will consist of Uranium Energy Corp. acquiring all of the issued and outstanding shares of UEX Corp. The terms of the agreement set out that each holder of a UEX Corp. common share will receive 0.0831 of one Uranium Energy Corp. common share. The share exchange ratio implies a consideration of approximately CAD$ 0.43 per UEX Corp. common share, resulting in a premium of approximately 50%. The closing of the agreement will see 13.7% of Uranium Energy Corp. common shares held by previous UEX Corp. shareholders. Roger Lemaitre, the president and CEO of UEX Corp. explains the acquisition simply as follows:

“It’s a share deal, so it's an all-shares deal. For every UEX share, you get 0.831 UEC shares. So it's a share flip but if you don't like the deal, because of the liquidity involved, you could just walk in, essentially you get cash so we have an offer.”

The closing of the acquisition agreement will also see Uranium Energy Corp. become the largest diversified North American-focused uranium company globally. Lemaitre explains the magnitude of the acquisition and the effect on the resource base of Uranium Energy Corp. as follows:

“…they've gone from being a 75 million pounds resource company that has had those Texas assets ready to move forward to being a 300 million pounds company with our acquisition with production imminent in several spots plus our mid-short, mid-term production portfolio through Wheeler, Millennium, etc.”

The acquisition provides UEX shareholders exposure to the strong balance sheet and liquidity of Uranium Energy Corp. which will enable the company to fund continued exploration and growth at its projects in the Athabasca Basin as well as in Nunavut. The shareholders of UEX Corp. will also receive substantial exposure to production-ready uranium assets in the United States, which will complement the portfolio of UEX Corp. composed of development stage assets in Canada. The acquisition will also enable the company to have an enhanced capital markets presence, with pro forma market capitalisation above CAD$ 1.75 billion.

Uranium Energy Corp. in late 2021 acquired Uranium One Inc. The acquisition consisted of a total purchase price of USD$ 112 million with an estimated additional USD$ 2.9 million in estimated working capital.

Lemaitre explains the significance of the Uranium One Inc. acquisition by Uranium Energy Corp. as beneficial and alluring for the acquisition agreement of UEX Corp. The larger resource base, as well as the past-producing nature of the Uranium One Inc. assets, add to the value of Uranium Energy Corp., he states:

“I think the Uranium One asset makes it a much more attractive opportunity for us without a doubt because of where it positions the company in terms of total resources because those Uranium One assets have been producers and they've been sitting in that care and maintenance process and done extraordinarily well. In everything they brought an awful lot of, they had the expertise in Texas they brought an awful lot of other expertise to the company as well through the Wyoming assets”

Lemaitre further explains that there are some institutions and investors that believe that the acquisition agreement could have been concluded for a larger sum of money and that UEX Corp. was wrong in accepting the agreement, he, however, points out that discoveries amongst all things add the most value to a company, and that through the acquisition, UEX Corp. will be more able to continue exploration and advancing its projects, making discoveries he states:

“…they're entitled to their opinion and I respect it. And I understand exactly where they're coming from. I would argue that the only thing that's going to change the value of UEX is that next discovery, we were in a position where we were going to have to raise some money this year. You can imagine where the stock would be today, if we didn't have the 50% premium with UEC, and have been in the market, knowing that we're going to have to go and raise money. So short-term, this deal helps us out a little bit, long-term, it's the long-term dilution on capital, or on the company that I think the balance sheet that UEC brings to the table really helps the UEX assets towards that discovery stage.”

The new operation will see Lemaitre remain at the helm of the Canadian assets.

Private placement and exploration initiatives

UEX Corp. recently concluded with a private placement offering with Uranium Energy Corp. consisting of the issuing of 11,627,907 common shares of the company at CAD$ 0.43 per common share for the gross proceeds of CAD$ 5 million to the company. The proceeds of the raise are to be deployed towards funding the company’s various planned exploration programs at its projects in the Athabasca Basin as well as towards general working capital purposes.

The company announced on the 14th of July 2022, that it had commenced its 2022 summer exploration drilling program at its Christie Lake project, located in the Athabasca Basin as well as at its Waterfound River project located in the Eastern Athabasca Basin.

The Christie Lake exploration program is planned to occur at three predetermined targets implementing two drill rigs. The exploration program will consist of 12 drill holes totalling 8,000 m of drilling. The summer exploration drilling program will follow up on the encouraging results of the completed winter exploration program at the project. The exploration drilling will be aimed at basement-hosted uranium near the Paul Bay, Ken Pen and Ōrora Deposits, down-dip of existing mineralized holes that are located in the gap areas between the three deposits along the Yalowega Trend.

The summer program will also test for the down-plunge extension of the Paul Bay deposit, with previous drilling campaigns encountering two intervals of uranium mineralization within a wide alteration zone.

Shea Creek and Horseshoe-Raven Technical reports

UEX Corp announced at the beginning of June 2022 that it had filed an updated technical report for both its Shea Creek and Horseshoe-Raven projects. The company also published an updated technical report for its Christie Lake project at the start of July.

The technical report of the Shea Creek project includes an updated mineral resource estimate (MRE) of 2,056,000 tons of uranium mineralisation in the indicated category at an average grade of 1.491%, totalling 67.57 million pounds of U3O8. The uranium mineralisation in the Inferred category totals 28.06 million pounds of U3O8 consisting of 1,254,000 tons of uranium mineralisation at an average grade of 1.015% U3O8.

The technical report of the Horseshoe-Raven project contains an updated MRE for both the Horseshoe and Raven deposits of the project. The mineral resource estimate of the Horseshoe deposit consists of 4,982,500 tons of uranium mineralisation at an average grade of 0.215% in the indicated category totalling 23,594,000 pounds of U3O8. The mineral resource estimate of the Raven deposit consists of 5,370,000 tons of uranium mineralisation at an average grade of 0.117% in the indicated category totalling 13,832,400 pounds of U3O8. The combined mineral resources of the deposits total approximately 37.2 million tons of U3O8 in the indicated category.

The company also announced on the 8th of July that it had filed an updated technical report for its Christie-Lake project. The mineral resource estimate of the project consists of 588,000 tons of uranium mineralisation at an average grade of 1.57% U3O8 totalling 20.35 million pounds of U3O8 in the Inferred category.

Wheeler River project exploration approval

UEX Corp. also announced in July 2022, that the operator of its Wheeler River project, Denison Mines Corp., had received approval from the province of Saskatchewan to prepare, construct, and operate the facilities required to carry out the In-Situ Recovery Feasibility Field Test work planned at the project’s Phoenix deposit. The Wheeler River project is 10% owned by JCU Exploration Company Ltd. and 90% by Denison Mines Corp. UEX Corp. owns 50% of JCU Exploration Company Ltd.

The construction of the feasibility field tests is to commence shortly, with the company underway with obtaining a Nuclear Substance Licence, which is required to be able to possess and store a nuclear substance.

Future

The company will, in the near future, continue with the closing of the acquisition agreement between itself and Uranium Energy Corp. The deadline for voting regarding the acquisition by the shareholders of UEX Corp. is the 5th of August 2022, with the company encouraging its shareholders to vote well before the date.

Lemaitre states that when the acquisition closes the company will be able to give better insight into the way forward and various planned activities.

To find out more, go to the UEX Corp website