CORPUS CHRISTI, Texas,
Sept. 7, 2021 /PRNewswire/ - enCore
Energy Corp. ("enCore") (TSXV: EU) (OTCQB: ENCUF) and Azarga
Uranium Corp. ("Azarga") (TSX: AZZ) (OTCQB: AZZUF) (FRA:
P8AA) are pleased to announce that they have entered into a
definitive arrangement agreement (the "Agreement") whereby
enCore will acquire all of the issued and outstanding common shares
of Azarga pursuant to a court-approved plan of arrangement (the
"Transaction"). The Transaction consolidates an industry
leading pipeline of exploration and development staged in-situ
recovery ("ISR") focused uranium projects located in
the United States, including the
licensed Rosita & Kingsville Dome past producing uranium
production facilities in South
Texas, the advanced stage Dewey Burdock development project
in South Dakota, which has been
issued its key federal permits, the PEA-staged Gas Hills Project
located in Wyoming, and a
portfolio of resource staged projects throughout the United States. The combined company will
possess a uranium resource base of 90.0 million pounds in the
measured & indicated category, 9.9 million pounds in the
inferred category, as well as 68.4 million pounds in the historic
category*.
Under the terms of the Agreement, Azarga shareholders will
receive 0.375 common shares of enCore for each Azarga common share
held (the "Exchange Ratio"). The Exchange Ratio implies
consideration of $0.71 per Azarga common share based on the
closing price of the enCore common shares on the TSX Venture
Exchange on September 3rd, 2021.
Additionally, the Exchange Ratio will be subject to an
adjustment mechanism at the closing of the Transaction (the
"Closing Exchange Ratio"). The Closing Exchange Ratio shall
be equal to the greater of: (i) the Exchange Ratio; or (ii) an
exchange ratio calculated as $0.54
divided by enCore's 15-day volume-weighted average price prior to
the closing of the Transaction, subject to a maximum Closing
Exchange Ratio of 0.49 common shares of enCore for each share of
Azarga outstanding.
Transaction Highlights
- Creation of a top-tier American uranium ISR mining company with
multiple assets at various stages of development;
- Two licensed ISR production facilities and multiple potential
satellite exploration and development projects in South Texas;
- Advanced stage Dewey Burdock development project in
South Dakota with key federal
permits issued;
- Recently published preliminary economic assessment for the Gas
Hills project in Wyoming;
- Large uranium resource endowment in New Mexico including the Marquez-Juan Tafoya
project, for which a recent preliminary economic assessment was
published and the Crownpoint and
Hosta Butte project;
- Well positioned to benefit from America's nuclear renaissance,
which boasts bi-partisan political support; and
- Management team and board with unrivaled experience in the
permitting, development, and mining of ISR uranium deposits in the
USA.
Paul Goranson, CEO of enCore, commented: "enCore is delighted to
combine our assets with those of Azarga. Dewey Burdock is an
excellent ISR uranium project and we look forward to building upon
Azarga's successes to create additional value through development
progress and eventually production. In addition to the execution of
plans for near term production in Texas and a dominant mineral position in
New Mexico, this combination will
see enCore take another leap forward towards realizing the goal of
becoming a larger and more diversified uranium development company
during a time of positive sentiment for nuclear energy."
Blake Steele, President & CEO
of Azarga, further added: "We are pleased to partner with enCore as
a result of this transaction, while realizing a material premium
for shareholders in the process. Scale is important in the natural
resource sector and this transaction will position the new company
among the top uranium miners based in the USA. enCore possesses a great depth of uranium
development and mining experience within its management team and
board of directors. As such, we are confident that the combined
portfolio will be in good hands for the benefit of both sets of
shareholders."
William Sheriff, Executive
Chairman of enCore, stated: "This strategic acquisition fills the
gap in enCore's pipeline of projects with key intermediate
development opportunities in Wyoming and South
Dakota, in between initial production in Texas and longer-term opportunities in New
Mexico. This second major acquisition for enCore within the
last 12 months is in keeping with our announced aggressive M&A
strategy which was successfully employed at Energy Metals Corp,
which was sold for $1.6 billion
during the last cycle. Consolidation in conjunction with an
elite operational team are the keys to success in building a
leading US ISR company."
Transaction Details
Pursuant to the terms of the Agreement, all of the issued and
outstanding common shares of Azarga will be exchanged for common
shares of enCore at the Closing Exchange Ratio. Outstanding and
unexercised warrants and stock options to purchase common shares of
Azarga will be adjusted in accordance with their terms based on the
Closing Exchange Ratio.
The Agreement includes standard deal protection provisions,
including non-solicitation, right-to-match, and fiduciary out
provisions, as well as certain representations, covenants and
conditions that are customary for a transaction of this nature,
along with a termination fee of $4
million payable to enCore in certain circumstances.
The proposed Transaction will be effected by way of a plan of
arrangement completed under the Business Corporations Act
(British Columbia). The
Transaction will require approval by at least 66 2/3% of the votes
cast by Azarga shareholders and, if required by Multilateral
Instrument 61-101, a simple majority of the votes cast by Azarga
shareholders excluding certain interested or related parties, in
each case by shareholders present in person or represented by proxy
at a special meeting of the shareholders of Azarga to be called in
connection with the Transaction (the "Azarga Special
Meeting").
The Azarga Special Meeting is expected to be held in October or
November 2021. An information
circular detailing the terms and conditions of the Transaction will
be mailed to the shareholders of Azarga in connection with the
Azarga Special Meeting. All shareholders are urged to read the
information circular once available, as it will contain important
additional information concerning the Transaction.
Closing of the Transaction is subject to the receipt of
applicable regulatory approvals and the satisfaction of certain
other closing conditions customary in transactions of this nature,
including, without limitation, court and stock exchange approval.
Closing of the Transaction is anticipated to occur in November 2021.
None of the securities to be issued pursuant to the Transaction
have been or will be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any
state securities laws, and any securities issuable in the
Transaction are anticipated to be issued in reliance upon available
exemptions from such registration requirements pursuant to Section
3(a)(10) of the U.S. Securities Act and applicable exemptions under
state securities laws. This press release does not constitute an
offer to sell or the solicitation of an offer to buy any
securities.
Management and Board of Directors
The combined company will be managed by the current enCore
executive team, led by Paul Goranson as CEO & Director,
William Sheriff as Executive
Chairman, Carrie Mierkey as Chief
Financial Officer, and Dennis
Stover, as Chief Technical Officer. Blake Steele, current President & CEO of
Azarga, will continue as a Strategic Advisor to the combined
company and John Mays, current COO
of Azarga, will continue as Chief Operating Officer of the Azarga
subsidiary, with a core focus to manage the continued advancement
of the Dewey Burdock and Gas Hills projects.
Upon closing of the Transaction, Sandra
MacKay, a current director of Azarga, will be appointed to
the board of enCore.
In connection with the closing of the Transaction, enCore
intends to seek the listing of its shares on the NYSE-AMEX or
NASDAQ exchange which may include a share consolidation in order to
meet initial listing requirements.
Board Recommendations and Voting Support
The Agreement has been unanimously approved by the boards of
directors of both enCore and Azarga, and Azarga's board unanimously
recommends that its shareholders vote in favour of the
Transaction.
Officers and Directors of Azarga holding approximately 7% of the
outstanding shares of Azarga have entered into customary voting
support agreements pursuant to which they have agreed, among other
things, to vote their Azarga common shares in favour of the
Transaction.
Clarus Securities Inc. has provided a fairness opinion to the
Board of Directors of enCore, to the effect that, as of the date of
such opinion, and based upon and subject to the assumptions,
limitations and qualifications set out in such opinion, the
consideration to be paid by enCore pursuant to the Transaction is
fair, from a financial point of view, to enCore.
Each of Haywood Securities Inc. and Evans & Evans, Inc. have
provided fairness opinions to the Board of Directors of Azarga, to
the effect that, as of the date of such opinion, and based upon and
subject to the respective assumptions, limitations and
qualifications set out in such opinion, the consideration to be
received by Azarga shareholders pursuant to the Transaction is
fair, from a financial point of view, to Azarga shareholders.
Advisors and Counsel
PowerOne Capital Markets Ltd. is acting as financial advisor to
enCore. Morton Law LLP is acting as legal counsel to enCore.
Haywood Securities Inc. is acting as financial advisor to
Azarga. Blake, Cassels & Graydon LLP is acting as legal counsel
to Azarga.
Conference Call & Webcast
enCore and Azarga will be hosting a joint online investor
webinar on Thursday, September 9,
2021 at 10:00 AM EDT /
7:00 AM PDT to discuss the
Transaction.
To register and attend the webinar please visit:
https://attendee.gotowebinar.com/register/1027177374309475597
Additionally, Mr. Goranson and Mr. Sheriff will join Smith
Weekly Research in discussing the Transaction that will be
available at this link:
Smith Weekly Research - enCore Energy & Azarga Uranium
Business Combination
enCore Resource Summary
Project
|
Million
Tons
|
Grade
eU3O8%
|
U3O8
(M lbs.)
|
Crownpoint and
Hosta Butte(1)
|
|
|
|
Indicated
|
12.68
|
0.105%
|
26.6
|
Inferred
|
2.76
|
0.110%
|
6.1
|
Marquez-Juan
Tafoya(2)
|
|
|
|
Indicated
|
7.1
|
0.127%
|
18.1
|
Historic Mineral
Resources*
|
|
|
|
Marquez-Juan
Tafoya: Sunshine(3)
|
1.1
|
0.11%
|
2.48
|
Nose
Rock(4)(5)
|
11.8
|
0.148%
|
35.0
|
West
Largo(6)(7)
|
2.9
|
0.300%
|
17.2
|
Ambrosia
Lake(8)(9)
|
2.0
|
0.176%
|
7.1
|
Moonshine
Springs(9)
|
1.4
|
0.165%
|
4.7
|
Butler
Ranch(10)
|
0.4
|
0.15%
|
1.3
|
Rosita(11)
|
0.4
|
0.082%
|
0.6
|
Total
Historic Resources*
|
|
|
68.4
|
1.
|
NI 43-101,
Technical Report, Crownpoint & Hosta Butte , McKinley County,
New Mexico, prepared by BRS Engineering, dated May 14, 2012.
Crownpoint & Hosta Butte hosts Indicated resource of 12.7 Mt of
0.105% eU3O8 totaling 26.6 M lbs, Inferred resource of 2.8 Mt of
0.110% eU3O8 totaling 6.1 M lbs.
|
2.
|
Beahm, Douglas L.,
P.E., P.G., BRS Inc., Terence P. McNulty, P.E., PHD, McNulty
and Associates, "NI 43-101 Technical Report, Preliminary
Economic Assessment, Marquez-Juan Tafoya Uranium Project", prepared
by BRS Engineering, dated June 9. 2021. Mineral resources
that are not mineral reserves do not have demonstrated economic
viability.
|
3.
|
Carter, Geoffrey
S., P.Eng., 2014, "NI 43-101 Technical Report on Mineral Resources:
Juan Tafoya Uranium Project, Cibola, McKinley, and Sandoval
Counties, New Mexico, USA", reported and effective May 15, 2014,
prepared for Uranium Resources Inc. by Broad Oak Associates. Carter
reports the non-contiguous Southeast Deposit located about 1 mile
southeast of the Marquez-Juan Tafoya Deposit has an historic
estimated Inferred Resource of 1,125,900 tons containing 2.481
million pounds U3O8 at an average grade of 0.110 %, with a cutoff
grade of 0.05% U3O8.
|
4.
|
M. Hassan Alief,
Technical Report on Section 1, T18N, R12W, Nose Rock Uranium
Property, McKinley County, New Mexico, reported an effective
February 9, 2009 for Strathmore Minerals Corp.
|
5.
|
Behre Dolbear
& Company (USA) Inc., 2011, Technical Report on the Nose Rock
Project of Uranium Resources Inc., prepared by Robert D. Maxwell,
CPG.
|
6.
|
Behre Dolbear
& Company (USA) Inc., 2011, Technical Report on the West Largo
Project of Uranium Resources Inc., prepared by Robert D. Maxwell,
CPG.
|
7.
|
Conoco Inc.,
Internal Memorandum, Treeline Uranium Property, McKinley County,
New Mexico, 1978.
|
8.
|
Behre Dolbear
& Company (USA) Inc., 2010, Technical Report on the Ambrosia
Lake Project of Uranium Resources Inc., prepared by Robert D.
Maxwell, CPG and Bernard J. Guarnera, RPG, CPG. The report
references Historic Mineral Resources with sources
including:
|
|
1.
|
Sec 27-14N-10W
estimated by Capitan, Melvin, Feb 25, 2008, Uranium Resources Inc.,
"Ore Reserve Calculation Sheet 3, T14N R10W Section 27", in
Maxwell, Robert, CPG and Bernard Guarnera, March 1, 2010, Technical
Report on Ambrosia Lake Project, Section 27, et al., Behre Dolbear
Report 07-019
|
9.
|
Wilton, Dean T.,
CPG, PG, MAIG, Chief Geologist Westwater Resources, 2018, Technical
Report on the Ambrosia Lake Uranium Project, McKinley County, USA.
This report outlines several Historic Mineral Resources
including:
|
|
1.
|
Sec 25-14N-10W
estimated by Yancy & Associates, May 1997, Mine Plan - Sections
23 and 25 Ambrosia Lake, New Mexico, for Rio Algom Mining
Corporation, Quivira Mining Company
|
|
2.
|
Sec 7-14N-10W
estimated by Pathfinder Mines, 1980, Mine PlanExxon Minerals
Company, Moonshine Springs, Mohave County, Arizona,
1982.
|
|
3.
|
Sec 17-13N-9W
estimated by Nelson, Jon, Uranium Resources Inc., January 18,
2008.
|
|
4.
|
Sec 13-13N-9W
estimated by Nelson, Jon, Uranium Resources Inc., June 29,
2007.
|
10.
|
Uranium Resources,
Inc., News Release dated July 7, 2015
|
11.
|
Uranium Resources
Inc., Form 10K, US Security and Exchange Commission, March 27,
2014.
|
*A Qualified Person (as defined in NI43-101) has not done
sufficient work to classify the historical estimates as current
mineral resources. Additional work will be required to verify and
update historical estimates, including a review of assumptions,
parameters, methods and testing. Historical estimates do not use
the current mineral resource categories prescribed under NI43-101.
enCore is not treating the historical estimates as current mineral
resources and they should not be relied upon.
Azarga Resource Summary
Project
|
Million
Tons
|
Grade
U3O8%
|
U3O8
(M lbs.)
|
Dewey
Burdock(1)
|
|
|
|
Measured &
Indicated (ISR)
|
7.39
|
0.116%
|
17.12
|
Inferred
(ISR)
|
0.65
|
0.055%
|
0.71
|
Centennial(2)
|
|
|
|
Measured &
Indicated (ISR)
|
6.87
|
0.09%
|
10.37
|
Inferred
(ISR)
|
1.36
|
0.09%
|
2.33
|
Aladdin(3)
|
|
|
|
Measured &
Indicated
|
0.47
|
0.111%
|
1.04
|
Inferred
|
0.04
|
0.119%
|
0.10
|
Gas
Hills(4)
|
|
|
|
Measured &
Indicated (ISR)
|
3.83
|
0.101%
|
7.71
|
Measured &
Indicated (non-ISR)
|
3.20
|
0.048%
|
3.06
|
Inferred
(ISR)
|
0.41
|
0.052%
|
0.43
|
Inferred
(non-ISR)
|
0.11
|
0.030%
|
0.06
|
Juniper
Ridge(5)
|
|
|
|
Measured &
Indicated (non-ISR)
|
5.14
|
0.058%
|
6.01
|
Inferred
(non-ISR)
|
0.11
|
0.085%
|
0.18
|
1.
|
NI 43-101
Technical Report, Preliminary Economic Assessment, Dewey-Burdock
Uranium ISR Project, South Dakota, USA, completed by Woodard &
Curran and Rough Stock Mining Services (effective 3 December
2019).
|
2.
|
NI 43-101
Preliminary Assessment, Powertech Uranium Corp., Centennial Uranium
Project, Weld County, Colorado, completed by SRK Consulting
(effective 2 June 2010).
|
3.
|
Technical Report
on the Aladdin Uranium Project, Crook County, Wyoming, completed by
Jerry D. Bush, certified Professional Geologist (effective 21 June
2012).
|
4.
|
NI 43-101
Technical Report, Preliminary Economic Assessment, Gas Hills
Uranium Project, Fremont and Natrona Counties, Wyoming, USA,
completed by WWC Engineering and Rough Stock Mining Services
(effective 28 June 2021).
|
5.
|
Juniper Ridge
Uranium Project, Carbon County, Wyoming, USA, Amended and Restated
NI 43-101 Mineral Resource and Preliminary Economic Assessment,
completed by Douglas L. Beahm, P.E., P.G., Principal Engineer, BRS
Inc. and Terrence P. (Terry) McNulty, P.E., D.Sc., T.P McNulty and
Associates (effective 9 June 2017).
|
|
Mineral Resources
that are not mineral reserves do not have demonstrated economic
viability
|
Qualified Persons
The technical information in this news release has been prepared
in accordance with the Canadian regulatory requirements set out in
NI 43-101 and reviewed and approved on behalf of enCore by
Douglas H. Underhill, PhD, CPG, and
on behalf of Azarga by John Mays, P.E. and Chief Operating Officer
of Azarga, each of whom are a "Qualified Person" as defined by NI
43-101.
About enCore
enCore Energy Corp. is a U.S. domestic uranium developer focused
on becoming a leading in-situ recovery (ISR) uranium producer. The
company is led by a team of industry experts with extensive
knowledge and experience in the development and operations of in
situ recovery uranium operations. enCore Energy's opportunities are
created from the company's transformational acquisition of its two
South Texas production facilities,
the changing global uranium supply/demand outlook and opportunities
for industry consolidation. These short-term opportunities are
augmented by our strong long term commitment to working with local
indigenous communities in New
Mexico where the company holds significant uranium
resources.
About Azarga
Azarga Uranium is an integrated uranium exploration and
development company that controls ten uranium projects and
prospects in the United States of
America ("USA") (South
Dakota, Wyoming,
Utah and Colorado), with a primary focus of developing
in-situ recovery uranium projects. The Dewey Burdock in-situ
recovery uranium project in South Dakota,
USA (the "Dewey Burdock Project"), which is the company's
initial development priority, has received its Nuclear Regulatory
Commission License and Class III and Class V Underground Injection
Control permits from the Environmental Protection Agency and the
company is in the process of completing other major regulatory
permit approvals necessary for the construction of the Dewey
Burdock Project.
Cautionary Statements
Certain information contained herein constitutes forward-looking
information or statements under applicable securities legislation
and rules. All statements, other than statements of historical
fact, are forward-looking statements. Forward-looking statements
are frequently identified by such words as "may", "will", "plan",
"expect", "anticipate", "estimate", "intend", "indicate",
"scheduled", "target", "goal", "potential", "subject", "efforts",
"option" and similar words, or the negative connotations thereof,
referring to future events and results. Forward-looking
statements in this press release include, but are not limited to,
statements related to the anticipated completion of the
Transaction, the terms of the Transaction, the benefits of the
Transaction, the combined company, the directors and officers of
the combined company, the merits of the properties of enCore and
Azarga, the potential share consolidation and listing of the shares
of the combined company on a U.S. stock exchange and all statements
related to the business plans, expectations and objectives of
enCore and Azarga.
Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made and
are subject to known and unknown risks, uncertainties and other
factors that may cause the actual results, level of activity,
performance or achievements of enCore and/or Azarga to be
materially different from those expressed or implied by such
forward-looking statements, including, but not limited to: any
inability of the parties to satisfy the conditions to the
completion of the Transaction on acceptable terms or at all;
receipt of necessary stock exchange, court and shareholder
approvals; the ability of enCore and Azarga to achieve their stated
goals and objectives; the costs associated with the companies'
objectives; risks and uncertainties related to the COVID-19
pandemic and measures taken to attempt to reduce the spread of
COVID-19; and the risks and uncertainties identified in enCore's
Management's Discussion and Analysis for the six months ended
June 30, 2021 and Azarga's Annual
Information Form for the year ended December
31, 2020, each filed on SEDAR at www.sedar.com. Although
management of each of enCore and Azarga has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking statements,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate. Accordingly, readers
should not place undue reliance on forward-looking statements.
Neither party will update any forward-looking statements or
forward-looking information that are incorporated by reference
herein, except as required by applicable securities laws. The
parties caution readers not to place undue reliance on these
forward-looking statements and it does not undertake any obligation
to revise and disseminate forward-looking statements to reflect
events or circumstances after the date hereof, or to reflect the
occurrence of or non-occurrence of any events.
This press release is not and is not to be construed in any way
as, an offer to buy or sell securities in the United States. The distribution of the
enCore common shares in connection with the transactions described
herein will not be registered under the United States Securities
Act of 1933 (the "U.S. Securities Act") and the enCore common
shares may not be offered or sold in the
United States absent registration or an applicable exemption
from the registration requirements of the U.S. Securities Act and
applicable state securities laws. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy
the enCore common shares, nor shall there be any offer or sale of
the enCore common shares in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
Neither the TSX, the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX and TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/encore-energy-and-azarga-uranium-to-combine-to-create-leading-american-uranium-isr-company-301370315.html
SOURCE enCore Energy Corp.