KEY POINTS
- Paladin Energy’s $845 million bid to acquire Fission Uranium faces opposition from Chinese investor CGN Mining.
- The merger, which would create the third-largest uranium producer, is now being decided by the British Columbia Supreme Court.
- Fission’s Patterson Lake South project is crucial for Paladin’s expansion, aligning with rising global demand for uranium.
Paladin Energy (ASX: PDN) has encountered a stumbling block in its proposed acquisition of Fission Uranium (TSX: FCU) after a Chinese investor in the target company challenged the transaction.
The Western Australia-based miner stated on Monday that CGN Mining Company, a subsidiary of China General Nuclear Power with an 11.26% holding in Fission, is opposed to the merger.
Fission shareholders reschedule the vote
Paladin moved in June to buy the Canadian miner for C$1.14 billion ($845 million), subject to at least two-thirds of Fission shareholders voting in favor of the transaction by August 26.
The bid occurred during the global trend toward nuclear energy that began a year ago, when a supply problem arose and utilities sought to obtain long-term contracts, driving the spot price to a 16-year high in January.
According to Mining.com, the planned acquisition would have made the business the third-largest publicly traded uranium producer, but nearly half of eligible shareholders failed to submit proxies by the deadline.
He added that a special general meeting was rescheduled for September 9, and 67.9% of Fission shareholders approved the transaction. The dispute is currently before the Supreme Court of British Columbia, which will make a final decision on the acquisition.
Court ruling awaited as Paladin seeks global uranium expansion
Speaking further, the court proceedings started on September 13 and are set to resume on September 26. Paladin’s CEO, Ian Purdy, said Fission’s Patterson Lake South project in Saskatchewan, Canada, is a logical fit for the company.
“It has medium-term development potential to supplement production from Namibia’s recently reactivated Langer Heinrich Mine,” he said.
Fission’s asset is also appealing because of its closeness to Paladin’s main customer, the United States, which provides the opportunity to establish a hub with Paladin’s existing tenancy in Canada – Michelin.
The combined group would be valued at $3.5 billion, have dual listings in Australia and Canada, and produce 10% of the world’s uranium supply. As uranium mining is banned in Western Australia and Queensland, Paladin has been looking for development opportunities outside of its native nation.
The company believes there is a scarcity of primary output coming out of the ground, and this tendency is likely to continue.
“There is a high demand for our Langer Heinrich product. And we anticipate that when we are ready to bring our clients to support PLS later this decade, demand will be extraordinarily high,”
Purdy said during a July visit to Toronto. Paladin shares fell on Monday, hitting an intra-day low of $8.97 on the ASX. The stock ended 1.81% lower at A$9.20 a share, giving the company a market capitalization of A$2.75 billion ($1.86 billion).
