Energy Fuels Inc. (TSX:EFR) (NYSE: UUUU), a U.S.-based uranium and rare earth producer, has agreed to acquire 100% of the issued shares of Base Resources, a junior mineral exploration company in Australia, in a deal valued at 375 million Australian dollars (approximately 240 million U.S. dollars) in equity and cash.
Under the terms of the agreement, shareholders of Base Resources will receive 0.026 common shares of Energy Fuels and a special dividend of 0.065 Australian dollars per share, resulting in a total consideration of approximately 0.302 Australian dollars per share. This represents a premium of 188% over the recent closing price and a 173% premium over the 20-day volume-weighted average price. Following the transaction, Base Resources shareholders are expected to hold approximately 16.4% equity in the combined company, with an estimated market value of around 1.14 billion U.S. dollars.
After the announcement, Base Resources’ stock price surged by 123%, while Energy Fuels’ stock price on the Toronto Stock Exchange fell by 10% at the close of Monday’s trading.
The core asset of this transaction is Base Resources’ Toliara project in Madagascar, a late-stage, low-cost, and large-scale heavy mineral sands project, including ilmenite, titanium, and zircon production, as well as a significant amount of monazite. The Toliara project is expected to supply an average of 21,800 tons of monazite annually to be processed into rare earth oxides at Energy Fuels’ White Mesa plant in Utah, USA. The cost is projected to be on par with or lower than other leading rare earth mineral producers globally, including those in China.
The two companies have stated that this will establish a new paradigm for low-cost, globally competitive, U.S.-centered rare earth oxide production. As the transition to clean energy continues, critical minerals present new challenges to energy security. As a result, the United States has been striving to promote cooperation with allies and strengthen domestic processing capabilities to reduce dependence on Chinese products. In 2022, the U.S. and major partner countries, including Canada, established the Critical Minerals Security Partnership (CMSP). That same year, Canada’s Department of Natural Resources released a critical minerals strategy and introduced a “Critical Minerals List” containing 31 minerals.
In 2021, Energy Fuels, together with Neo Performance Materials Inc (TSX: NEO), established a U.S.-Europe rare earth supply chain and announced the advancement of two new uranium mines in Colorado and Wyoming earlier this year.
Mark Chalmers, CEO of Energy Fuels, stated that the company has secured long-term rare earth mineral concentrates supply through offtake agreements (Kemerton), direct ownership (100% ownership of the Brazil Bahia project and Base Resources’ Toliara project), and offtake agreements through a joint venture with Astron Corporation (Astron Donald project in Australia).
