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    uranium investing

    China's CGN Mining to Invest $82 Million in Fission Uranium

    Written by Vivien Diniz
    |
    Dec. 21, 2015 11:30AM PST

    China is showing its commitment to a nuclear future with an $82-million investment in Canada’s Fission Uranium.

    In a market beset by downward price movements and a lack of investor interest, Fission Uranium (TSX:FCU) shareholders can rest easy knowing that the company continues to take positive steps forward.
    Kicking off the second-to-last week of 2015, Fission announced that it’s entered into a binding letter of intent (LOI) with CGN Mining Company, a Chinese investment holding company engaged in trading natural uranium. Under the LOI, CGN will make a strategic investment in Fission worth approximately $82 million.
    CGN’s investment will consist of a $82,226,059 private placement for roughly 96,736,540 common shares, plus an additional number of common shares; all in all, the investment will bring CGN’s stake in Fission to 19.99 percent. The shares will be priced at $0.85 each.
    In a note to clients, Cantor Fitzgerald analyst Rob Chang states that in his firm’s opinion, the valuation of the transaction is low; however, he chalks that up to weak market conditions. Chang concludes, “[g]iven the weak financing markets and a need to add cash, FCU has added a highly sought-after partner at a 25% premium to its market price.”


    “We are thrilled that CGN Mining has chosen to invest in Fission, PLS and the Triple R deposit,” Fission CEO Dev Randhawa adds in a press release. “CGN Mining’s understanding of the uranium business is superb and we are excited at the opportunity to work with them. CGN Mining’s knowledge and expertise will be invaluable as we progress PLS and add to shareholder value.”

     A first for China: Investing in Canadian uranium

    While the investment is big news for Fission, it is also a big move for China. As Randhawa outlines in Fission’s release, “[t]his is an historic moment for Canada’s uranium industry. It is the first time a Chinese company has invested directly in a Canadian uranium company.”
    Likewise, Chang believes the transaction “highlights [China’s] desire for stable jurisdictions with a solid history of production.”
    Given the many high-grade, highly feasible uranium projects in Canada’s north, the move by CGN could be indicative of things to come. Indeed, Canada is the second-largest uranium producer globally, and as such is well positioned to help China fill its growing need for uranium.
    CGN’s controlling shareholder, China Uranium Development Company, is a wholly owned subsidiary of China General Nuclear Power, a leading energy company in China. CGN’s strategic investment in Fission comes only days after China’s State Council approved the construction of four additional nuclear power generators, bringing the total number of reactors approved for construction in 2015 to eight.
    Through its aggressive reactor construction plans, and this latest investment, China is leaving no doubt that it is committed to nuclear power as a means of energy generation. The country’s plans are expected to help bolster prices, which are still sitting at US$36 per pound of U3O8.

    Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned. 
    Related Reading:
    Nuclear Energy Takes Center Stage During Quiet Market
    Uranium News: China and France Strengthen Nuclear Partnership

    cantor fitzgeraldlargest uranium producernuclear energychinauranium investingcanadanuclear power
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