ATHA Energy Corp. (CSE: SASK) (FRA: X5U) (OTCQB: SASKF) is set to acquire two uranium companies with assets in other Canadian mining jurisdictions, thereby creating a leading influence in the industry.
On Thursday, the Athabasca Basin uranium explorer announced that it had entered an agreement to acquire Latitude Uranium Inc. (CSE: LUR) (OTCQB: LURAF) and Australia-based 92 Energy Limited (ASX: 92E) (OTCQX: NTELF). The combined company will have 7.1 million acres of uranium exploration territory in Canada’s top jurisdictions: the Athabasca Basin, Nunavut and Labrador.
ATHA will complete a $14 million financing in connection with the acquisitions, which will be partly funded by two investors: IsoEnergy Ltd. (TSX‐V: ISO) and Mega Uranium (TSX: MGA). The merger inherently creates a company with a much larger market capitalization, thereby resulting in improved liquidity and interest from institutional investors.
“We are thrilled for ATHA to have such an incredible opportunity to create Canada’s premier exploration company during a period where the world’s increasing adoption of nuclear energy is calling for new supplies of uranium,” ATHA CEO Troy Boisjoli said.
“By combining highly complimentary exploration assets from across the exploration risk curve in top-tier Canadian mining jurisdictions, we believe the combined entity will own one of the most complete portfolios of uranium assets in the entire sector.”
He added that the new organization is now positioned to leverage the combined team’s technical and financial resources to maximize the value of this opportunity.
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The company will be well-funded with no debt
Upon conclusion of the transaction, ATHA will have a cash balance of over $55 million and no outstanding debt. The company’s exploration activities appear fully funded well into 2025.
Nunavut’s Angilak deposit held by Latitude is estimated to contain 2.8 million tons of ore at 0.69 per cent triuranium octoxide/yellowcake (U3O8) and 43.3 million pounds (lbs) of U3O8 inferred. Latitude’s Moran Lake and Anna Lake deposits in Labrador’s Central Mineral Belt (collectively the CMB project) are estimated to contain substantial uranium resources as well.
Moran Lake holds an estimated 14.7 million tons at 0.03 per cent U3O8 with 5.2 million lbs of U3O8 indicated and 28.3 million tons at 0.03 per cent U3O8, containing 4.4 million pounds of U3O8 inferred. Anna Lake contains an estimated 5.1 million tons at 0.04 per cent U3O8 with 4.9 million lbs of U3O8 Inferred.
“This merger helps realize the true value of 92 Energy assets while combining three excellent teams that have the resources to pursue uranium exploration at an unprecedented scale,” 92 Energy CEO Siobahn Lancaster said.
ATHA says 92 Energy’s Gemini discovery in the Basin adds tremendous discovery potential in an underexplored corridor, another positive aspect of the merger. The Athabasca Basin project portfolio acquired from 92 Energy also includes the Wares, Tower, Clover, Wormboiler, Cypress and Powerline projects.
“Our shareholders will be given the opportunity to be part of the premier Canadian uranium explorer,” Lancaster added, “with outstanding growth potential underpinned by a significant discovery, immense exploration upside, robust funding, highly regarded management, and extensive local contact network.”
92 Energy’s Athabasca Basin projects in blue. Image via 92 Energy Limited
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Exploration lies ahead
Next year’s exploration program is expected to include post-discovery corridor expansion geophysics and drilling. It also sets up a series of greenfield exploration programs. Results from the 2023 summer exploration program conducted by the leading uranium company NexGen Energy Ltd. (TSX: NXE) will be considered too.
Those drill results will be partly derived from an area of NexGen’s portfolio that ATHA holds a 10 per cent carried interest on. This summer’s exploration program was the largest NexGen has completed since it discovered the Rook I project’s Arrow deposit.
“We are very excited to be part of such a transformative transaction to create an unparalleled uranium exploration company focused on Canada’s three major uranium districts,” John Jentz, CEO of Latitude Uranium, said.
The company’s amalgamated board and management team now consists of individuals experienced and skilled in all aspects of uranium exploration and development. With decades of experience, they are adequately equipped to propel the company forward and increase shareholder value.
‘The benefits for Latitude shareholders are clear: an immediate increase in value combined with ongoing exposure to one of the most robust portfolios of high-upside uranium assets in the entire sector,” Jentz said.
He said ATHA will become a go-to name in the uranium mining industry as a result, holding a suite of valuable assets.
ATHA shareholders are positioned to benefit from the deal through exposure to the underexplored Angilak project and its expansion. The deposit hosts an estimated 43 million lbs of U3O8 and is open in every direction. It is one of the world’s highest-grade uranium deposits.
ATHA’s entry into the Central Mineral Belt in Labrador promises to be beneficial as well. The CMB project is estimated to contain 14 million lbs of U3O8. It is situated adjacent to Paladin Energy Limited’s (ASX: PDN) (OTCQX: PALAF) Michelin deposit, one of North America’s largest uranium resources.
Overall, the increased size of the company enables greater access to capital, expanded research coverage and superior liquidity.
We have to explore, we have to discover, we have to develop additional #uranium assets in order to meet the future demand profile in the #nuclear energy space. $SASKF $SASK.CN
🔊 “Our strategy is to leverage modern technology and modern geophysical techniques to drive discovery… pic.twitter.com/VWvpedJd9w
— ATHA Energy Corp $SASK.V $SASKF (@athaenergycorp) December 6, 2023
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A 78 per cent premium on 92 Energy’s shares
ATHA expects the Latitude transaction to close by the end of Q1 next year. Latitude’s shares will be delisted from the Canadian Securities Exchange.
Latitude shareholders will get an immediate premium of 56.1 per cent based on ATHA’s closing share price on Dec. 6.
Shareholders of 92 Energy receive 0.58 of an ATHA share for each share they hold. The implied consideration of the 92 shares, based on ATHA’s reference price of $1.00, is $0.58 a piece. This represents a 78 per cent premium to 92 Energy’s closing price on Dec. 7, 2023.
The conclusion of the 92 Energy acquisition is expected to occur before the end of Q2 next year. Shares of 92 Energy will be delisted from the Australian Securities Exchange.
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rowan@mugglehead.com
