Second chance for Vimy, Deep Yellow deal

John Borshoff’s Deep Yellow and WA uranium play Vimy Resources have agreed to terms for a proposed $658 million merger, some four months after Vimy first put Mulga Rock on the market.

Since entering a trading halt on Monday, the companies have landed on a 0.294 Deep Yellow share for one Vimy share merger ratio that is set to take place via a scheme of arrangement.

It marks an improvement on Deep Yellow’s rejected one for 3.74 offer it made for Vimy and its undeveloped Mulga Rock uranium project near Kalgoorlie last November.

Vimy has had Mulga Rock on the market since and, in the last four months, positioned itself as the only uranium company in the state with a shot at reaching production after retaining its ministerial approval in December.

From Deep Yellow’s end, it puts John Borshoff and his team back in the Australian uranium space and for Vimy, could alleviate some of the financial challenges in developing a uranium project alone.

On a corporate level, it marks the biggest uranium domestic deal in a decade and is slated to create a ‘new global uranium player’ according to the two, that will combine Vimy’s WA asset and Deep Yellow’s Tumas Project in Namibia.

Once implemented, Deep Yellow will hold 53 per cent of the merged group and Vimy with 47 per cent.

The Vimy board has unanimously recommended the deal and encouraged its shareholders do the same, in absence of a superior proposal.

Deep Yellow managing director John Borshoff said the merger had significant value-creating opportunity.

“The merger combines two world class assets, both in Tier-1 mining jurisdictions, into a single group with scale and know-how,” Mr Borshoff said in a statement.

“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.

“Our vision has been to deliver growth organically and inorganically to Deep Yellow shareholders and I am very pleased we have started to achieve that in this process.”

Vimy managing director Steven Michael said the merger de-risks and underpins a path to development for Mulga Rock.

“The combined financial, processing and operating strengths of both companies will enable greater optimisation and the delivery of Mulga Rock,” Mr Michael said.

“The Merger provides Vimy Shareholders the opportunity to share in the expected significant benefits of being part of a larger, geographically diverse Merged Group, with the expertise to develop the full portfolio of assets in the near term.”

The deal comes during an active period for uranium, with Russia’s invasion of Ukraine, perceived energy security threats, and a broader decarbonisation thematic seemingly contributing to renewed investor interest.