TORONTO (miningweekly.com) – Uranium producer Energy Fuels has agreed to buy Uranerz Energy in an all-scrip deal valued at about $150-million, which would see the two companies create one of the largest integrated uranium companies in the US.

Energy Fuels on Monday said the deal would create the only integrated conventional and in-situ recovery (ISR) uranium mining company focused solely on the US and would create a combined Canadian National Instrument (NI) 43-101 resource base that would be the largest in the US among producers and near producers.

The US is the largest consumer of uranium globally, with 100 nuclear reactors currently in operation and five under construction. Yet, despite being the world's largest producer of uranium as recently as the early 1980s, the US was now heavily reliant on imported uranium to fuel its reactor fleet.

The two companies believed that Energy Fuels would be well positioned, in terms of size, operational scale and diversification, as a preferred US uranium supplier. The deal was also expected to result in significant cost savings and synergies.

“Energy Fuels has already established itself as a leading producer of uranium in the US and the premier consolidator of US-based uranium assets. By adding Uranerz to our corporate umbrella, we are creating a multisource uranium production platform that is better positioned to respond to the dynamic and volatile nature of the uranium market," Energy Fuels president and CEO Stephen Antony said in a statement.

Following Japan’s Fukushima earthquake in 2011, many significant utilities and other parties operating in the uranium market retreated from the commodity, eventually pushing uranium’s price down from $70/lb to as low as $34.50/lb. Late last year, however, the spot price started rising again to as high as $44/lb. This was owing to expanding demand from China, significant spot sales to utilities, as well as Japan, in December, approving the restarting of certain nuclear reactors.

Energy Fuels was currently positioned as the second-largest uranium supplier within the US. It currently accounted for about 20% of US uranium production from its wholly owned White Mesa uranium mill, the only licensed and operating conventional uranium mill in the US.

Uranerz is the newest uranium producer in the US, located in one of the most prolific areas of uranium production in the country. Uranerz recently started production at its Nichols Ranch ISR uranium project and held one of the largest prospective land positions for ISR-amenable deposits in Wyoming.

The combined company would have a combined ISR and conventional asset base, extending from the ISR-amenable Powder River basin of Wyoming to the conventional uranium mining districts of New Mexico, Colorado, Utah and Arizona.

ISR uranium production in the Powder River basin is a source of relatively lower-cost uranium production and large multinational companies such as Cameco and Uranium One were active in the basin. The combined asset base of the company, anchored by two distinct production centres, would be better positioned to create shareholder value in the current low uranium price environment while maintaining what Energy Fuels and Uranerz believed would be substantial organic production growth potential at higher uranium prices.

"Wyoming has been an area of focus for Energy Fuels and the Uranerz team has done an exceptional job of exploring, permitting, building and operating their Nichols Ranch project in Wyoming,” Antony noted.

Energy Fuels would also gain control over Uranerz’s deep development pipeline of projects, highlighted by conventional assets such as the Canyon mine, in Arizona, the Sheep Mountain project, in Wyoming, the Henry Mountains project, in Utah, and the Roca Honda project, in New Mexico. Paired with Wyoming ISR development assets, including the Jane Dough, Hank, West North Butte and Reno Creek projects, the wider asset base would provide Energy Fuels with the ability to significantly scale up production in the coming years as uranium prices increased.

Under the terms of the deal, Uranerz shareholders would receive 0.255 common shares of Energy Fuels, worth $1.57 at Friday's closing price, for each share of Uranerz held, representing a premium of 37% to Uranerz's closing price on Friday.

The deal was expected to close during the second quarter, pending shareholder and regulatory approvals, and included a $5-million break-up fee.