Consolidated Uranium Closes Acquisition And Strategic Alliance With Energy Fuels

Consolidated Uranium Inc. (“CUR”) (TSXV: CUR) (OTCQB: CURUF) and Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) (“Energy Fuels”) are pleased to announce the closing of the acquisition (the “Transaction”), previously announced on July 15, 2021, of a portfolio of conventional uranium projects located in Utah and Colorado (the “Projects”) pursuant to the asset purchase agreement (the “Purchase Agreement”) among CUR and certain wholly-owned subsidiaries of Energy Fuels (collectively, the “EF Parties”). In connection with the closing of the Transaction, the companies have also entered into toll-milling, operating and investor rights agreements with respect to the Projects.
Transaction Highlights:
New Entrant into the U.S. Uranium Sector – The acquisition establishes CUR as a new player in the U.S. uranium sector. The U.S. is currently the largest generator of nuclear power in the world and, by extension, the largest consumer of uranium. Over the past 15 years, production from these mines have totalled over 1 million pounds of uranium, which would rank these mines 5th among all U.S. producers during that time.
Unlocks the Value of Past Producing, Permitted Mines Well-Positioned for Rapid Restart – The portfolio of Projects acquired pursuant to the Transaction includes, among other assets, the following three permitted, past-producing mines in Utah, which will be the immediate focus of CUR:
Tony M Mine – Located in the Henry Mountains area of southeastern Utah, the Project is a large-scale, fully-developed and permitted underground mine that operated most recently in 2008.
Daneros Mine – Located in the White Canyon District, the Project is a fully-developed and permitted underground mine that was most recently in production in 2013.
Rim Mine – Located in the East Canyon portion of the Uravan Mineral Belt, the Project is a fully-developed and permitted underground mine that was most recently in production in 2009.
Strategic Alliance with Energy Fuels, the Leading U.S. Uranium Producer – With the toll-milling agreement now executed, CUR becomes the only current U.S. uranium company (other than Energy Fuels) with guaranteed access to Energy Fuels’ White Mesa Mill, which is the only permitted and operating conventional uranium mill in the U.S. Further, the operating agreement allows the Projects to continue to be managed by the experienced team at Energy Fuels.
Board of Directors Strengthened with Addition of Mark Chalmers. Mr. Chalmers, President and CEO of Energy Fuels, will join the CUR Board of Directors effective immediately. Mr. Chalmers, a mining engineer by training, is a recognized leader in the uranium sector, both in the U.S. and globally, and will bring decades of experience in uranium project development and mining to CUR, including significant experience in the region of these assets.
Philip Williams, President and CEO of CUR commented, “This is a seminal moment for Consolidated Uranium. With the closing of this acquisition and entering into of the toll-milling and operating agreements, CUR is firmly established as a U.S. uranium player with near term production potential from a portfolio of past producing mines with a clear pathway to production from guaranteed access to the White Mesa Mill. We have been very busy in the background putting plans in place to accelerate development of these projects and look forward to updating the market on that plan in due course. Finally, on behalf of myself and the rest of the directors of CUR, I would formally like to welcome Mark to the Board and look forward to working closely together as we advance this exciting portfolio of projects.”
Mark Chalmers, President and CEO of Energy Fuels Stated: “We are pleased to partner with Consolidated Uranium in unlocking the value of these significant U.S. uranium assets. Energy Fuels will continue to focus on our core, low-cost uranium projects – the Nichols Ranch and Alta Mesa ISR facilities, and the Pinyon Plain, La Sal and other conventional properties, in addition to our quickly emerging rare earth business at the White Mesa Mill. We have long believed that markets have not properly value these mines and properties within our asset portfolio. We look forward to working with Phil and his team to advance these projects in the near term, while also providing our shareholders with an opportunity to enjoy significant exposure to the future share price performance of CUR.”
Terms of the Purchase Agreement
Pursuant to the Purchase Agreement, CUR has acquired from the EF Parties a 100% interest in the Tony M, Daneros and Rim mines in Utah, as well as the Sage Plain property and eight U.S. Department of Energy Leases in Colorado, for the following consideration:
the payment of US$2.0 million in cash at closing;
the issuance of 11,860,101 CUR common shares (“CUR Shares”) at closing, which has resulted in Energy Fuels holding 19.9% of the outstanding CUR Shares;
the payment of Cdn$3.0 million in cash on or before the 18-month anniversary of closing of the Transaction (the “First Deferred Payment”);
the payment of an additional Cdn$3.0 million in cash on or before the 36-month anniversary of closing of the Transaction (the “Second Deferred Payment”); and
the payment of up to Cdn$5.0 million in contingent cash payments tied to achieving commercial production at the Tony M Mine, the Daneros Mine and the Rim Mine.
The Purchase Agreement includes provision for the return of the Projects to Energy Fuels in the event that CUR does not make the First Deferred Payment or Second Deferred Payment, as described above. In the event that CUR proposes to complete a private placement or prospectus offering for minimum gross proceed of Cdn$1,000,000 within 36 months, the EF Parties will have the right to accelerate (the “Acceleration Right”) a portion of the First Deferred Payment and the Second Deferred Payment, as applicable, through the issuance of CUR Shares up to a maximum amount equal to the product of: (A) the gross proceeds of the financing, multiplied by (B) the EF Parties’ then current cumulative percentage ownership of CUR Shares on a non-diluted basis prior to completion of the financing. The CUR Shares issued pursuant to the Acceleration Right will be based on the market price of the CUR Shares at the time of issuance and will be subject to the approval of the TSX Venture Exchange (the “TSXV”).
CUR engaged Cantor Fitzgerald Canada Corporation (“Cantor Fitzgerald”) as its financial advisor in connection with the Transaction. Pursuant to such engagement, CUR has agreed to pay Cantor Fitzgerald an advisory fee comprised of $450,623.98 in cash and 83,786 CUR Shares at a deemed price of Cdn$2.90 per CUR Share, subject to the approval of the TSXV.
All securities issued in connection with the Transaction are subject to a hold period expiring four months and one day from the date of issuance.
The Strategic Alliance
The strategic alliance between CUR and Energy Fuels for the Projects involves three key components:
The Toll-Milling Agreement – Under this agreement, the EF Parties will toll-mill ore mined from the Projects at the White Mesa Mill, subject to payment by CUR of a toll-milling fee and certain other terms and conditions.
The Operating Agreements – Under these agreements, the EF Parties will provide ongoing services for a fee to maintain the Projects in good standing, as well as additional services as agreed to by the parties.
The Investor Rights Agreement – Under this agreement, for so long as Energy Fuels’ equity ownership in CUR remains at or above 10%, it will be entitled to equity participation rights to maintain its pro rata equity ownership in CUR and to appoint one nominee to the CUR Board of Directors. Energy Fuels has also agreed to certain resale restrictions on the CUR Shares it holds and to provide voting support in certain circumstances.
Early Warning Disclosure
Pursuant to the Transaction, Energy Fuels acquired 11,860,101 CUR Shares, representing approximately 19.9% of the issued and outstanding CUR Shares on a non-diluted basis. Immediately prior to completion of the Transaction, Energy Fuels owned nil CUR Shares.
While Energy Fuels currently has no plans or intentions with respect to the CUR Shares, subject to the resale restrictions noted above, and depending on market conditions and/or other relevant factors, Energy Fuels may from time to time in the future decide to acquire additional securities or to dispose of some or all of the existing CUR Shares or other securities of CUR it holds.
About Consolidated Uranium
Consolidated Uranium Inc. (TSXV: CUR) (OTCQB: CURUF) was created in early 2020 to capitalize on an anticipated uranium market resurgence using the proven model of diversified project consolidation. To date, the company has acquired or has the right to acquire uranium projects in Australia, Canada, Argentina and the United States each with significant past expenditures and attractive characteristics for development. Most recently, the Company entered a transformational strategic acquisition agreement and alliance with Energy Fuels Inc (NYSE American: UUUU) (TSX: EFR), a leading U.S.-based uranium mining company, to acquire a portfolio of permitted, past-producing conventional uranium and vanadium mines in Utah and Colorado. These mines are currently on stand-by, ready for rapid restart as market conditions permit, positioning CUR as a near-term uranium producer.
About Energy Fuels Inc.
Energy Fuels is a leading U.S.-based uranium mining company, supplying U3O8 to major nuclear utilities. Energy Fuels also produces vanadium from certain of its projects, as market conditions warrant, and is ramping up to commercial production of rare earth carbonate in 2021. Its corporate offices are in Lakewood, Colorado, near Denver, and all of its assets and employees are in the United States. Energy Fuels holds three of America’s key uranium production centers: the White Mesa Mill in Utah, the Nichols Ranch ISR Project in Wyoming, and the Alta Mesa ISR Project in Texas. The White Mesa Mill is the only conventional uranium mill operating in the U.S. today, has a licensed capacity of over 8 million pounds of U3O8 per year, has the ability to produce vanadium when market conditions warrant, as well as rare earth carbonate from various uranium-bearing ores. The Nichols Ranch ISR Project is on standby and has a licensed capacity of 2 million pounds of U3O8 per year. The Alta Mesa ISR Project is also on standby and has a licensed capacity of 1.5 million pounds of U3O8 per year. In addition to the above production facilities, Energy Fuels also has one of the largest NI 43-101 compliant uranium resource portfolios in the U.S. and several uranium and uranium/vanadium mining projects on standby and in various stages of permitting and development.