Anatolia Energy and Uranium Resources Announce Merger

Anatolia Energy Ltd. (ASX:AEK) announced that it has reached an agreement with Uranium Resource Inc. (NASDAQ:URRE) to combine the two companies to create a larger, diversified uranium development and exploration business.

As quoted in the press release:

The transaction will provide a potential avenue for accelerated recommencement of uranium production for Uranium Resources, and is expected to provide significant benefits to both companies’ shareholders, including the potential for significant capital cost savings (up to US$11 million in potential capital savings identified), and operational efficiencies that are unique to a merger between Uranium Resources and Anatolia. Following completion of the Merger, Uranium Resources will be positioned as one of the next low cost uranium producers, with a strong growth pipeline in the USA and Turkey.

The Exchange Ratio represents an offer price of A$0.1154 per Anatolia share, and based on the respective volume weighted average prices (VWAPs5) of each of URI and Anatolia over the following time periods to June 2, 2015 (in the case of URI) and June 3, 2015 (in the case of Anatolia), the Exchange Ratio represents offer premia of: ƒ

• 29.1% based on each company’s most recent closing price prior to announcement of the Merger; ƒ
• 47.3% based on the 30 day VWAPs; ƒ
• 47.6% based on the 60 day VWAPs; and ƒ
• 58.5% based on the 90 day VWAPs.

Upon completion of the Merger, the expanded Uranium Resources will have: ƒ

• Potential for near term uranium production from the high-grade Temrezli Project in central Turkey; ƒ
• Two 800,000 lb pa ISR uranium processing plants and associated infrastructure in South Texas; ƒ
• Significant Mineral Resource base at the high grade Temrezli Project, including: − 2.008M Tonnes @ 1378 ppm U3O8 for 6.1M lb U3O8 (Measured) − 2.178 M Tonnes @ 1080 ppm U3O8 for 5.2 M lb U3O8 (Indicated) − 1.020 M Tonnes @ 888 ppm U3O8 for 2.0 M lb U3O8 (Inferred) ƒ
• Exploration ground of approximately 17,000 acres in South Texas, 195,000 acres in New Mexico1, and 45,000 acres in central Turkey; ƒ
• Combined cash of more than US$10.5 million (A$13.5 million)2, excluding restricted cash of US$3.9 million; ƒ
• Quotation on the NASDAQ Stock Market and a proposed secondary listing on the ASX, with a combined market capitalisation of approximately US$68.1 million (A$88.7 million)3; ƒ
• A Nuclear Regulatory Commission (NRC) licence to produce up to 3 million lb pa U308 on certain properties in New Mexico;
• and ƒ A strong global institutional share register, with support from major shareholders of both Uranium Resources and Anatolia

Paul Cronin, managing director of Anatolia, commented:

The Merger with Uranium Resources provides an excellent solution to Anatolia’s current objectives to advance Temrezli into production as quickly and efficiently as possible, and brings with it the possibility of greatly reducing the upfront capital costs if we can successfully relocate and utilise Uranium Resources’ Rosita ISR processing plant in South Texas as currently expected. The Rosita processing plant had major upgrades and additions in 2007-2008 before construction was halted. It is fit for our Temrezli Project, and has the added benefit of already being designed and constructed with the ability to scale up the production profile from 800,000 lb U308 per annum to 1.6 million lb U308 per annum with some additional upgrades, which would accommodate potential future production from satellite operations that may feed into the Temrezli central processing plant.

Christopher Jones, CEO of Uranium Resources, commented:

This is a transformational merger for our shareholders that we believe positions our combined company as a leading international uranium developer with the potential for near term production growth from the high grade Temrezli Project in Turkey. We will target initial production from Turkey to commence as soon as possible, aligning with analysts’ estimates for a uranium price recovery. Our internal technical design and production team’s skillset, combined with the Anatolia team already in place in Turkey, along with expected utilisation of our Rosita processing plant at the Temrezli Project help make this a compelling combination. Add to that the new global investor base and we have a newer, stronger platform for further growth. We appreciate the support for the Merger we have enjoyed from our major shareholder Resource Capital Funds and Anatolia’s major institutional shareholders.

Click here to read the full Anatola Energy Ltd. (ASX:AEK) press release.