Virginia Energy’s assets include a 100% stake in the Coles Hill Uranium Project located in south central Virginia, US.
According to the agreed terms, shareholders of Virginia Energy will receive 0.26 common shares of Consolidated Uranium for each share held.
Upon completion of the transaction, Consolidated Uranium and Virginia Energy shareholders will respectively hold 82.4% and 17.6% stakes in the combined company.
The transaction has an implied equity value of $32.2m.
Consolidated Uranium chairman and CEO Philip Williams said: “The acquisition of Coles Hill complements our existing US portfolio of assets, while significantly increasing our uranium exposure globally.
“We have three buckets of projects in our portfolio: near-term production, mid-term exploration and development and longer-term call options which provide exposure to large, high-quality projects with historic impediments to advancement. Today, Coles Hill fits into the latter category.”
In relation to the transaction, Consolidated Uranium has signed a subscription agreement with Virginia Energy.
As part of the subscription agreement, Virginia Energy will issue two million of its shares, at $0.50 apiece, on a non-brokered private placement basis to Consolidated Uranium.
With the private placement, Consolidated Uranium will own 3% of the issued and outstanding shares of Virginia Energy.
Proceeds of the concurrent private placement will be used by Virginia Energy to fund the project’s lease extensions, general and administrative expenses and transaction expenses.
Virginia Energy chairman and CEO Walter Coles Sr said: “We see this transaction as a tremendous outcome for Virginia Energy shareholders who will receive an immediate and substantial premium to the Virginia Energy share price.
“Importantly, the transaction will preserve our shareholders’ exposure to the Coles Hill project while providing diversification to an excellent portfolio of near-term productions assets in the US, as well as a robust portfolio of exploration and development projects around the world.”
The Coles Hill Project is said to be the country’s largest undeveloped uranium deposit and among the largest projects by total uranium resources in the world.
Virginia Energy subsidiary Virginia Uranium controls the mineral rights, certain surface rights, and leasehold development and operating rights at the Coles Hill project.