DNN Stock: From $1.14 To $1.08 (5.26% Decrease) Explanation

By Amit Chowdhry ● May 4, 2021
  • The stock price of Denison Mines Corp (NYSEAMERICAN: DNN) fell from $1.14 to $1.08 (down 5.26%) today. This is why it happened.

The stock price of Denison Mines Corp (NYSEAMERICAN: DNN) fell from $1.14 to $1.08 (down 5.26%) today. Investors appear to be responding negatively to the company announcing that it has delivered a binding offer (Denison Offer) to Overseas Uranium Resources Development Co., Ltd. (OURD) to buy 100% ownership of OURD’s wholly-owned subsidiary JCU (Canada) Exploration Company, Limited (JCU).

Currently, JCU holds a portfolio of uranium project joint venture interests in Canada, including a 10% interest in Denison’s 90% owned Wheeler River uranium project.

The Denison Offer includes the following features:

— Consideration including cash payments of up to CAD$40.5 million and the assumption of JCU’s existing liabilities (see below). And the cash payments include a CAD$10.0 million refundable deposit on signing of a definitive agreement, an additional CAD$28 million on closing, and a further amount of up to CAD$2.5 million – which is expected to be paid within 45 days of the closing date and is subject to adjustment based upon JCU’s actual working capital on the closing date.

— Binding subject only to the completion of definitive documentation, regulatory approvals (if applicable), and the termination of OURD’s existing definitive purchase agreement with UEX Corporation (TSX: UEX) in accordance with its terms.

— No conditions for (i) due diligence on the assets of JCU, or (ii) obtaining the necessary financing to fund the purchase price – as Denison already possesses sufficient cash to fully fund the acquisition.

— A commitment to OURD that JCU will be maintained as a corporate subsidiary in order for JCU to meet its joint venture commitments.

— Assumption of JCU’s outstanding liabilities owed to the Japan Atomic Energy Agency.

If the Denison Offer is accepted by OURD, then Denison understands that the deal will be subject to approval by OURD’s shareholders.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.