Base Resources has agreed to a takeover by Energy Fuels, with the latter set to acquire all issued shares of Base Resources.
This acquisition, structured as a scheme of arrangement, values Base Resources at A$375m.
Shareholders of Base Resources are poised to receive both Energy Fuels shares and a cash dividend, marking a substantial premium over recent trading prices.
Under the signed binding scheme implementation deed (SID), Base Resources shareholders will receive 0.0260 Energy Fuels common shares and an unfranked special dividend of A$0.065 for each share they hold.
This offer equates to A$0.302 per Base Resources share, marking a 188% premium over the closing price on 19 April 2024, and a 173% premium on the 20-day volume-weighted average price up to that date.
Upon completion, Base Resources shareholders will own around 16.4% of the merged entity, with a pro forma market capitalisation of nearly $1.14bn.
The Base Resources board has unanimously endorsed the transaction, urging shareholders to vote in its favour, barring a superior offer and pending an independent expert's approval.
Base Resources' two largest shareholders, Pacific Road Capital and Sustainable Capital, have expressed intentions to vote in support of the scheme.
The acquisition promises significant benefits including continued investment in the Toliara Project in Madagascar and enhanced funding opportunities through the combined group's increased market presence.
Additionally, the deal opens up the potential for Base Resources to tap into the REEs market, leveraging Energy Fuels' White Mesa mill in Utah.
However, this is contingent on Energy Fuels successfully commissioning its REE separation facility and securing funding for further development phases.
Furthermore, the transaction could facilitate access to strategic US Government funding for the Toliara Project and the expansion of rare earth oxides production at the White Mesa mill.
Base Resources shareholders will also gain exposure to Energy Fuils' uranium business, diversifying their investment portfolio.
The combined group will be led by Base Resources' proven leadership team, which will continue to manage the Toliara Project and oversee the closure of Kwale Operations.
The merger is expected to create a diversified entity with multiple avenues for strategic growth in REE, uranium and mineral sands.
Completion of the deal is subject to the approval of the Federal Court of Australia, Base Resources shareholders and other standard conditions.
The agreement includes a break fee clause, with a $2.4m fee payable to Energy Fuels under certain conditions, and a reverse break fee to Base Resources.
In light of the transaction's importance, Base Resources' Board has decided to offer an additional A$275,000 incentive to its managing director Tim Carstens, contingent on the scheme's implementation by 31 December 2024.
Carstens said: “This Transaction, which is the culmination of 12 months of discussions between Base Resources and Energy Fuels, reflects the exceptional quality of the Toliara Project and the efforts of the Base Resources team over the past several years to advance the project towards construction readiness.
“The combined group will have the financial and technical capability to not only build Toliara into one of the best critical mineral projects in the world but also to develop an integrated value chain for the rare earth elements that are essential to the global energy transition.
“Shareholders of Base Resources will receive both a compelling and immediate premium, and the opportunity to further participate in the market recognition and development of a company with a unique diversified position in the critical minerals landscape.”
