The Fukushima nuclear disaster may have winded the nuclear power and uranium markets, but the furious pace of consolidation in the uranium mining sector is leaving investors betting on the next takeover target.
So far this year, no less than eight uranium players have disappeared from the market.
In early January Rio Tinto (RIO-N) acquired Hathor Exploration and its Roughrider deposit in Canada’s Athabasca basin. In early February Macusani Yellowcake (YEL-V) acquired Southern Andes Energy, the largest landowner in Peru’s emerging Macusani uranium district. Energy Fuels’ (EFR-T) takeover of Titan Uranium and its Sheep Mountain project in the Crooks Gap district of Wyoming followed in late February.
March saw three uranium deals. Uranium Resources (URRE-Q) acquired Neutron Energy, a private uranium exploration and development company with assets in New Mexico, South Dakota and Wyoming. China’s Guangdong Nuclear Power Corporation (CGNPC) gobbled up Extract Resources (EXT-T) and its massive Husab project in Namibia, and Uranium Energy (UEC-X) picked up CUE Resources and its Yuty project in Paraguay.
Energy Fuels was back at it in April with a takeover of Denison Mines’ (DML-T, DNN-X) U.S. uranium assets, including the White Mesa mill in Utah — the only conventional uranium mill operating in the U.S. Fission Energy (FIS-V) has stated it would obtain Pitchstone Exploration, whose property portfolio includes 13 projects in the eastern Athabasca basin — five of which are wholly owned — two joint-venture projects in Namibia and several joint-venture projects in the Hornby Bay basin of Nunavut.
Looking ahead to mergers and acquisitions in the sector, David Talbot, a mining analyst at Dundee Capital Markets in Toronto, believes that takeover targets could include UEX (UEX-T), Fission Energy (FIS-V) and Forum Uranium (FDC-V).
Commenting in an April research note, Talbot says his top developer pick is UEX. “While its 88-million-lb., high-grade, uranium oxide Shea Creek project is likely coveted by others, we believe the 40 million lb. at Hidden Bay located 4 km from Cameco’s Rabbit Lake mill, and its potential for becoming a tailings management facility, is the near-term prize,” he reasons, noting that Cameco (CCO-T, CCJ-N) already owns 23% of the company and participated in the latest UEX financing. He holds a “buy” rating on the stock with a target price of $1.85 per share.
As for Fission Energy, Talbot argues it is “growing its 9-million-lb., high-grade J-zone deposit, and appears to be on the verge of another discovery at PLS.”
Forum Uranium is on Talbot’s Exploration watch list as another Athabasca basin potential takeover target.