LAKEWOOD, Colo. - Energy Fuels (TSX:EFR) Inc. (NYSE American: UUUU) (TSX: EFR) announced a definitive agreement to acquire all issued shares of Base Resources Limited (ASX: BSE) (AIM: BSE), a move that will solidify its position in the global critical minerals market.
The transaction, valued at approximately A$375 million, will give Energy Fuels full ownership of the Toliara heavy mineral sands project in Madagascar, known for its low-cost monazite production, a byproduct of titanium and zirconium.
The acquisition is expected to set a new standard for cost-effective, U.S.-centered rare earth oxide production, leveraging the capabilities of Energy Fuels' White Mesa Mill in Utah. The Toliara project is projected to provide Energy Fuels with a significant quantity of monazite, which is essential for electric vehicles (EVs) and other advanced technologies.
Energy Fuels has been in high-level talks with various U.S. government agencies for support on critical mineral projects. The transaction complements the company's existing uranium production and is in line with its strategy to strengthen its critical mineral supply chain.
Senator Mike Lee of Utah praised the acquisition, highlighting its importance for domestic critical mineral sources.
The Toliara project's monazite production is anticipated to be globally competitive in cost, positioning Energy Fuels as a leading rare earth oxide producer. The company also expects to benefit from Base Resources' experienced team, known for its success in operating heavy mineral sand operations in Africa.
Base Resources shareholders will receive a combination of Energy Fuels common shares and cash as consideration for the transaction, which is subject to customary closing conditions, including shareholder and court approvals. The deal has received a unanimous recommendation from Base Resources' Board of Directors, with major shareholders indicating their intent to vote in favor.
The acquisition is set to close in the third quarter of 2024, pending necessary approvals. The Toliara project, which has been on hold due to negotiations with the Government of Madagascar, is expected to resume development once legal and fiscal stability is achieved.
The information in this article is based on a press release.
InvestingPro Insights
As Energy Fuels Inc. (NYSE American: UUUU) gears up to acquire Base Resources Limited and enhance its foothold in the critical minerals market, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, Energy Fuels has witnessed a substantial revenue growth of 203.06% over the last twelve months as of Q1 2023. This impressive increase is indicative of the company's expanding operations and could signal potential for future profitability.
Despite a negative P/E ratio of -125.86, suggesting that the market may expect future growth or that the stock is currently overvalued, the company's liquid assets exceed its short-term obligations. This financial stability, highlighted by an InvestingPro Tip, is crucial as Energy Fuels embarks on this significant acquisition. Additionally, the company's gross profit margin stands at 52.06%, reflecting a strong ability to manage its production costs relative to revenue.
While the InvestingPro Tips point out that net income is expected to drop this year, analysts predict that the company will remain profitable, supporting its strategic growth initiatives. For investors seeking more detailed insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/UUUU. These tips can be accessed with an exclusive offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Investors should also note that Energy Fuels does not pay a dividend, which could be a relevant factor for those who prioritize income-generating investments. However, the potential for capital appreciation may still present an attractive opportunity for growth-focused investors.
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