Denison and Energy Fuels – it’s not all about the US assets….

The recent announcement that Denison is merging its US assets with Energy Fuels created a huge wave of interest in both companies and was the catalyst for media headlines proclaiming the creation of the largest pure-play uranium producer in the US. For those interested in US-based uranium sources it is indeed of interest. After all, the deal means that Energy Fuels will account for more than 25% of estimated U.S. uranium production, hold 49.8 M lbs of Measured and Indicated U3O8 resources in addition to 17.9 M lbs of Inferred U3O8.

However, if you’re serious about uranium you’ll know that the Athabasca Basin in Canada, which contains the highest uranium grades on the planet, is responsible for nearly 20% of the world’s uranium supply. Having offloaded it’s US assets, Denison becomes a 100% Athabasca-based company. Why is this relevant? In one of my earliest blog posts I commented on Rio Tinto’s hostile takeover of Hathor – an aggressive move designed to give Rio a solid foothold in the Basin. It paid $654 million in order to get that foothold, beating off Cameco’s bid during the process.

Denison’s move essentially turns it into a clean and potentially inviting target for a takeover. How likely is this takeover? Well I’m not about to speculate on the plans of other companies in this blog, however, I will point out that consolidation in the Athabasca Basin is something that many industry watchers have been predicting for some time.