Deep Yellow and rival Australian uranium explorer Vimy Resources have agreed to merge in an all-stock deal worth A$658m ($492m).
The merger is aimed at creating a new global uranium player having considerable scale and uranium mineral resource inventories of 389Mlbs around the world.
The combined group will have complementary asset bases.
Its portfolio will include Vimy Resources’ Mulga Rock uranium project in Western Australia and Deep Yellow’s Tumas project in Namibia. Both the projects are said to be in advanced stages of development.
The pipeline of exploration projects of the combined company includes Vimy Resources’ Alligator River uranium project in the Northern Territory, Australia and Deep Yellow’s 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 will be executed under a court-approved scheme of arrangement, under which Deep Yellow will acquire 100% of the Vimy Resources’ shares on issue.
As per the terms of the scheme, Vimy Resources’ shareholders will be issued 0.294 Deep Yellow shares for every ordinary fully paid Vimy Resources share they hold.
Post-merger, Deep Yellow’s shareholders will have a stake of 53% in the combined company, while Vimy Resources’ shareholders will hold the remaining 47%.
Vimy Resources managing director and CEO Steven Michael said: “This Merger de-risks and underpins our path to development at Mulga Rock.
“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.
“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.”
Vimy Resources’ board has unanimously recommended the deal in the absence of a superior proposal and is subject to an independent expert ruling that the scheme is in the best interest of the company’s shareholders.
The merger is backed by Paradice Investment Management, which has a stake of 7.5% in Vimy Resources and 7.8% in Deep Yellow. Paradice Investment Management is the largest shareholder in both firms.
The implementation date for the scheme of arrangement is estimated to be July 2022.
