Shares in West Perth-based uranium explorer Energy Metals Ltd shot up 29 cents today after the company announced it had formed a strategic alliance with Canadian uranium producer Denison Mines Inc.
Shares in West Perth-based uranium explorer Energy Metals Ltd shot up 29 cents today after the company announced it had formed a strategic alliance with Canadian uranium producer Denison Mines Inc.
At market close, Energy Metals' share price was $2.20.
Denison Mines will raise $4.5 million through its subscription for 3 million Energy Metals shares at an issue price of $1.50. The funds will be used to fast track exploration of Energy Metals' Bigryli and Ngalia Regional projects in the Northern Territory.
Energy Metals listed on the ASX in September last year. Denison is listed on the TSX and has a market capitalisation of approximately A$487 million.
Below is the edited announcement:
FORMS STRATEGIC ALLIANCE WITH DENISON MINES
The Directors of Energy Metals Limited (ASX: EME) wish to advise of the formation of a Strategic Alliance, with Canadian uranium producer Denison Mines Inc. (TSX: DEN).
As part of this Strategic Alliance Denison Mines Inc. ("Denison") will subscribe for 3 million Energy Metals shares (subject to a 12 month hold period) at an issue price of $1.50, to raise $4,500,000. This represents a small premium to the Energy Metals volume weighted average share price of $1.46 over the past month.
Funds raised from the issue will be used mainly to fast track exploration of Energy Metals' highly prospective uranium projects in the Northern Territory. Particular emphasis will be directed towards the high grade Bigrlyi deposits and recently granted tenements forming part of the Ngalia Regional project, (refer to Energy Metals' ASX announcement of 21 February 2006 for further details). Funds will also be utilised for the acquisition of new uranium exploration and development opportunities in Australia, and for the upgrading of calcrete uranium prospects held in Western Australia.
After the issue Denison will hold approximately 12% of the issued capital of the Company (on an undiluted basis), making Denison the second largest shareholder of Energy Metals. Energy Metals will also offer Denison the opportunity to take part in future capital raisings and will grant Denison a first right of refusal over Energy Metals' uranium properties in respect to any sale or joint venture arrangement, provided Denison holds no less than 7.5% of Energy Metals' issued capital.
The Strategic Alliance with Denison will not only allow Energy Metals to accelerate exploration (and potential development) of the Company's existing projects but will also allow Energy Metals to more aggressively pursue new uranium opportunities in Australia. The Strategic Alliance also gives Energy Metals access to Denison's considerable expertise in mining and marketing uranium.
The Directors of Energy Metals warmly welcome Denison as a partner and substantial shareholder.
