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
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