Analyst Actions: Denison Mines Corp 2014 Estimate, Target Raised at Credit Suisse; But Still Underperform

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Credit Suisse says: "Goin' Fission; Raising 2014 Estimate and Target Price to C$1.50 (from C$1.40)"

Event: "DML announced that it has signed a binding letter of intent (LOI) with Fission Energy Corp. (FIS.TO, not rated) whereby DML will acquire certain FIS assets for 0.355 DML shares (total transaction value $70Mln). FIS's key asset is a 60% interest in the Waterbury Lake project. The transaction includes a NewCo to be spun out, which includes FIS's 50% interest in Paterson Lake South, $18Mln in cash, plus other exploration assets."

Impact: "Consolidation continues in the eastern Athabasca Basin. Terms of the LOI values the DML assets to be acquired at $0.52 per FIS share. FIS's key asset (Waterbury Lake) is located in the eastern Athabasca Basin (60% FIS; 40% KEPCO) which has a current resource of ~13Mln lbs U3O8 (incl. Inferred) and is located in close proximity to Rio Tinto's Roughrider deposit and DML's Midwest project (25.17%-owned) and McLean Lake mill (22.5%-owned). On a resource/lb (in-situ) basis, we estimate the transaction values the FIS assets being acquired by DML at $1.90/lb (incl. Inferred) which we view as largely in-line with precedent transactions for early-stage exploration assets. Following closing of the transaction, FIS shareholders will own approximately 11% of DML."

Catalysts: "Transaction expected to close April 2013. FIS's BoD has approved and recommended shareholders vote in favor of the transaction. Completion is conditional on approval of the shareholders of FIS at a special shareholders meeting, receipt of all necessary regulatory approvals and satisfaction of other customary deal conditions."

Valuation: "Deal accretive to NAV. Our TP of $1.50 (from C$1.40) is based on 1x our revised cash-adjusted NAVPS of C$1.48 (from C$1.40, or +5.7%). Our NAVPS now includes in-situ valuation for Waterbury Lake (in-line with our Wheeler River methodology) of $4/lb plus other exploration assets at $2-3/lb. EPS revisions reflect updated assumptions for shares outstanding."

"We are raising our 2014 EPS estimate to C$0.04 (from C$0.05)."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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