New $658m uranium major emerges as Deep Yellow ties the knot with Vimy Resources
Vimy shareholders will own 47% of the newly merged entity, which will have an estimated value of $658 million.
After advanced uranium explorer Deep Yellow (ASX: DYL) made a takeover bid and was knocked back last year, Vimy Resources (ASX: VMY) has found common ground with Deep Yellow, which paves the way for a $658 million merger of their Australian and Namibia projects.
Deep Yellow is to acquire 100% of Vimy under a scheme of arrangement.
Vimy shareholders will receive 0.294 Deep Yellow stock for every 1 Vimy share held, with Vimy shareholders to represent 47% of the new Deep Yellow.
The new entity will own two advanced projects expected to begin the development pipeline voyage later this year or in 2023.
At Mulga Rock in Western Australia Vimy has completed a definitive feasibility study and the merged group will look to produce a revised DFS that increases the value of the project by undertaking additional work.
The existing Deep Yellow team will lead the studies on Mulga Rock.
At Deep Yellow’s Namibia flagship project, the Tumas DFS is on track for completion this year.
Borshoff had left the door open for a merger
Deep Yellow managing director and chief executive officer John Borshoff last November disclosed that his company had sent Vimy a detailed case for a merger, but the latter company allowed the offer to lapse.
He said at that time Deep Yellow remained open to talks with Vimy, adding that an agreed merger was still the best option for the two companies.
Deep Yellow has approached Vimy on several occasions since September 2021 with plans to merge their projects and create a tier one uranium player with assets in Namibia and Australia.
The previous offer would have seen Vimy shareholders having agreed to one Deep Yellow share for 3.74 Vimy shares, a premium of 14%.
‘New global uranium player’ with significant scale
The new scheme of arrangement has the unanimous support of all Vimy directors.
The joint announcement said that merger is expected to create a new global uranium player with significant scale, cash resources of $106 million, a global uranium resource of 389 pounds of uranium oxide and two projects in tier one locations.
The merged group will be led by Mr Borshoff in his present roles, with Deep Yellow chairman Chris Salisbury to head the board.
The managing director and chief executive officer at Vimy, Steven Michael, will become an executive director of the merged entity.
Mr Borshoff said the merger has the potential to be a significant value-creating opportunity for the shareholders of both companies.
“The expanded strong technical team of Deep Yellow, together with Vimy personnel, positions us well to bring both projects online when uranium prices support the generation of long-term, sustainable positive cash flows,” he added.
Mr Michael said the merger de-risks development at Mulga Rock.