Australia-based uranium explorer Deep Yellow has agreed to merge with rival Vimy Resources in an all-stock deal worth $492m (A$658m).
The merger would create a new global uranium player, with a considerable scale and global uranium mineral resource inventories of 389Mlbs.
It is planned to be executed under a court-approved scheme of arrangement, whereby Deep Yellow will acquire 100% of the Vimy Resources’ shares on issue.
As per the agreed terms of the scheme, Deep Yellow will issue Vimy Resources’ shareholders with 0.294 Deep Yellow shares for every ordinary fully paid Vimy share they hold.
Upon completion of the transaction, Deep Yellow’s shareholders will own a 53% stake in the combined company while the remaining 47% stake will be held by Vimy Resources’ shareholders.
Vimy Resources managing director and CEO Steven Michael said: “The merger provides Vimy shareholders the opportunity to share in the expected significant benefits of being part of a larger, geographically diverse merged group, with the expertise to develop the full portfolio of assets in the near term.”
The combined company’s portfolio will include Vimy’s Mulga Rock uranium project, in Western Australia, and Deep Yellow’s Tumas project, in Namibia. The projects are said to be in the advanced development stage.
The merged entity’s exploration projects will include Vimy Resources’ Australian Alligator River uranium project, in the Northern Territory, and Deep Yellow-owned Omahola uranium project, in Namibia.
Deep Yellow managing director and CEO John Borshoff said: “This merger has the potential to be a significant value-creating opportunity for both Deep Yellow and Vimy Shareholders. The merger combines two world class assets, both in Tier-1 mining jurisdictions, into a single group with scale and know-how.
“The expanded strong technical team of Deep Yellow, together with Vimy personnel, positions us well to bring both projects online when uranium prices support the generation of long-term, sustainable positive cash flows.”
The merger is backed by Paradice Investment Management, which owns a 7.5% stake in Vimy Resources, and 7.8% in Deep Yellow.
Vimy’s board has unanimously recommended the deal in case it does not receive superior proposal. The implementation date for the scheme of arrangement is estimated to be July 2022.