Vimy Resources and Deep Yellow have entered into an agreement which will see the two companies merge to create a global uranium company.
Under the terms of the agreement, Vimy shareholders will receive 0.294 Deep Yellow shares for every Vimy share held on the scheme record date. The merger would see Deep Yellow shareholders hold 53 per cent of the merged group with Vimy shareholders owning the remaining 47 per cent.
The transaction implies a price of $0.29 per Vimy share, which represened a 18.8 per cent premium to the closing Vimy share price on March 25, and 35.3 per cent premium to the 30-day volume-weighted average price (VWAP).
The merged entity will have a pro-forma market capitalisation of approximately $658 million, cash resources of $106 million and no balance sheet debt.
The expanded company would be represented by two advanced uranium projects – Vimy’s Mulga Rock project in Western Australia and Deep Yellow’s Tumas project in Namibia. These boast an annual production potential of 3.5 million pounds (Mlbs) and 2.5Mlbs respectively.
Deep Yellow managing director and chief executive officer John Borshoff said the two companies complement each other well.
“The merger combines two world class assets, both in Tier-1 mining jurisdictions, into a single group with scale and know-how,” he said.
“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.”
Vimy managing director and chief executive officer Steven Michael said the transaction strongly positions Mulga Rock moving forward.
“This merger de-risks and underpins our path to development at Mulga Rock,” he said. “The combined financial, processing and operating strengths of both companies will enable greater optimisation and the delivery of Mulga Rock, as well as an established exploration team that can unlock considerable value at Alligator River.”
Vimy’s Alligator River project in Northern Territory has an inferred resource of 26Mlbs at 1.3 per cent triuranium octoxide (U3O8).
It comes after Vimy brushed off an initial attempt from Deep Yellow to acquire the company in November 2021. The proposal was underpinned by a price of $0.30 per Vimy share, indicating a ratio of one Deep Yellow share for every 3.74 Vimy shares at the time.