24 June 2007
Denison revives OmegaCorp bid
ANDY HOFFMAN, Globe and Mail Update
Denison Mines Corp. is set to revive a failed takeover bid for Australia's OmegaCorp Ltd., according to sources, in an attempt to add properties in Africa to its stable of uranium development projects.
Toronto-based Denison is expected to offer $1.30 (Australian) in cash for each OmegaCorp share, or about $1.18 Canadian, the sources said.
OmegaCorp is developing potential uranium mines in Zambia, Tanzania, Mozambique and Zimbabwe. Its most advanced property is the Kariba uranium project in Zambia, which contains roughly 13.7 million pounds of the metal used to power nuclear reactors.
“[Kariba] will be a nice little deposit for Denison. It should add between 750,000 to one million pounds [of uranium] per year and they should be able to get it going by 2010,” said a source familiar with Denison's plans.
Denison launched an ultimately unsuccessful attempt to acquire OmegaCorp in December, initially offering $1.10 (Australian) per share. Denison later raised its bid to $1.15 a share but managed to gain control of only a third of OmegaCorp's outstanding shares.
In April, London's Central African Mining & Exploration Co. (Camec) swooped in with an all stock offer that valued OmegaCorp at roughly $222-million (Australian). The Camec bid was worth about $1.44 a OmegaCorp share at the time it was announced.
However, a sharp decline in the African-focused mining company's share price reduced the value of the offer and the company withdrew its bid earlier this month. Camec, whose chairman is former England Test Cricketer Phil Edmonds, saw its shares fall as much as 25 per cent from the level they were at when it announced the OmegaCorp offer.
Camec said it had pulled its offer because OmegaCorp had breached its bid conditions by disposing of assets and proceeding with a spin-off of its Mavuzi copper and gold project in Mozambique.
The Denison bid, which sources said could be announced this week, caps a frenzy of merger and acquisition activity in the red-hot uranium sector. French nuclear giant Areva Group offered $2.5-billion (U.S.) for Toronto Stock Exchange listed UraMin Inc. this month. The UraMin bid came less than two weeks after aggressive industry consolidator Uranium One Inc. tabled a $1.75-billion (Canadian) takeover bid for Vancouver's Energy Metals Corp., which owns a slew of uranium projects in the United States and a processing facility.
The price for uranium concentrate or yellowcake has soared to $135 (U.S.) a pound, a sixfold increase in the past three years. The staggering increase in the spot price has been driven by renewed interest in nuclear power which is seen as an environmentally preferable alternative to coal-fired power stations.
With a market value of $2.6-billion, Denison is one of only a handful of publicly traded companies that actually produce uranium concentrate. Through its 22.5 per cent interest in the McLean Lake joint venture in Saskatchewan, Denison is expected to produce roughly 800,000 pounds of uranium this year. The company has development projects in Canada, the United States and Mongolia and hopes to produce over 5 million pounds by 2011.
Denison teamed with Vancouver's International Uranium Corp. in a $1.8-billion merger last year.
OMC
omegacorp limited
