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Fission Uranium (FCUUF) Agrees to be Acquired by Paladin Energy

Shares of Fission Uranium FCUUF gained 15% on the announcement that it inked a deal with the Australian miner, Paladin Energy Limited, per which the latter will acquire its outstanding shares for an implied total equity value of C$1.14 billion ($833 million).

The combined company will have a pro-forma market capitalization of $3.5 billion. It will be placed among the largest pure-play global uranium companies with a combined mineral resource of 544 million pounds of uranium and ore reserves of 157 million. It will have a solid portfolio of exploration, development and production assets, and a substantially increased international capital markets exposure.

Fission Uranium’s shareholders will receive 0.1076 fully paid shares of Paladin for each share held in FCUUF. The transaction is expected to close in the September 2024 quarter, subject to the satisfaction of all conditions under the agreement. On completion, existing Paladin and Fission shareholders will own around 76% and 24% of the combined entity, respectively.

Paladin has applied for listing of its shares on the Toronto Stock Exchange, concurrent with the completion of the transaction. Consequently, Fission Uranium shareholders will receive TSX-listed Paladin Shares.

Paladin Energy is an independent uranium producer with 75% ownership of the world-class long-life Langer Heinrich Mine located in Namibia. Paladin also owns a portfolio of uranium exploration and development assets in Canada and Australia.  Through its Langer Heinrich Mine, Paladin delivers uranium to major nuclear utilities across the world. It has a 17-year estimated mine life and a nameplate annual capacity of 6 million pounds of uranium.

The acquisition of Fission Uranium will make Paladin the 100% owner of the Patterson Lake South uranium property. It is a proposed high-grade uranium mine and mill in Canada’s Athabasca Basin region. The feasibility study for the property projects a 10-year mine life with an annual production of 9.1 million pounds of uranium.

This move will help Paladin capitalize on the growing demand for uranium. Several factors are driving this demand, such as the need for more electricity generation and the global push to decarbonize electrical grids, among others.
 
Over the past few years, the global uranium market has undergone a shift from inventory-driven to a production-driven market.  Underinvestment in uranium mining operations over the past decade has been the reason for a structural deficit between global production and uranium requirements.  In 2024 and 2025, the gap between production and demand is projected to be more than 66 million pounds of uranium and is expected to reach more than 400 million pounds by 2034. Uranium prices will be supported by robust demand and tight supply.

Price Performance

Shares of Fission Uranium have surged 93.9% in the past year compared with the industry's 36.4% growth.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Zacks Rank & Stocks to Consider

Fission Uranium currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are Ero Copper Corp. ERO, Ecolab Inc. ECL and ATI Inc. ATI. ERO sports a Zacks Rank #1 (Strong Buy) at present, and ECL and ATI have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ero Copper’s 2024 earnings is pegged at $1.66 per share. The consensus estimate for 2024 earnings has moved 20.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 53.9%. ERO shares have gained 9.5% in a year.

The consensus estimate for Ecolab’s 2024 earnings is pegged at $6.59 per share, indicating an increase of 26.5% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.3%. ECL shares have gained 34.5% in a year.

The Zacks Consensus Estimate for ATI’s 2024 earnings is pegged at $2.41 per share. The consensus estimate for ATI’s current-year earnings has been revised 3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 8.3%. The company’s shares have gained 65.9% in the past year.

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