More Information, Comments, Questions : Pre-Vote
1. The value of assets being contributed by FCU is greater than those being contributed by DML. FCU = +/- 135 million pounds of near-surface, high grade, open-pittable uranium from PLS. DML = +/- 70 million pounds of Athabasca uranium from a variety of - we believe - lower quality deposits, the largest of which is Wheeler River. DML's share of Wheeler River is approximately 42 million pounds; the deposit is accepted as deep, and may prove to be challenging. DML is also contributing their +/- 22% interest of Mill worth approximately $70 miilion based on expected cash-flows. DML is also contributing some other off-shore assets - which we believe to be less than significant - that are not congruous to FCU.
2. There a Two Flagship Properties. FCU's PLS and DML's Wheeler River Phoenix Deposit.Wheeler River is host to the Phoenix Deposit and the Gryphon Discovery.
PLS is a 100+ million pound - and growing - resource of uranium. This excludes FCU's summer drilling program. The resource is accepted as high grade, low production cost, rapid payback.
This is compared to Phoenix which is anticipated to be a higher-cost effort, given the potential for flooding, and some unknown's related to the mining of the world's highest grade uranium deposit. The Gryphon Discovery may be of no material importance at this time - given the lackluster summer drilling results.
3. FCU's PLS deposit has a conservative PEA suggesting a payback of under two years and a NPV - Net Present Value - of over one billion dollars. Additional resources that have not been fully defined will be added to this.
FCU shareholders are being asked to vote on the Arrangement without knowing the full value of PLS. There is no PEA for DML's Wheeler River. So, how do you make a deal of this magnitude without all of the information at hand?
4. The Arrangement effectively values PLS at +/- $266,000,000 - or less than $2.00 per pound of uranium. As such, the Arrangement severely undervalues PLS by almost any measure. Recent transactions for Athabasca uranium have been in the $8.00 - $10.00 range.
Why were FCU shareholders being led to believe that the In situ value of PLS was less than $2.00 per pound?
5. In defense of the proposed Arrangement FCU management positioned it as protection from a low-ball offer or hostile bid - a way to protect shareholder value. Prior to the strong PEA for FCU's 600W deposit FCU management mused aloud about the value of FCU at $3.00 per share. The Arrangement currently values FCU at approximately $0.88 cents per share - and this only after a recent share price rally. The Arrangement - what is the DML offer in essence - has become the de-facto low-ball bid shareholders were supposedly being protected against.
Does, or did, the FCU BOD believe that FCU was or will be the subject of a hostile bid? Does the BOD have a strategy in place in the event such a bid should materialize?
6. Since the Arrangement was announced there has been material increase in the FCU assets. PLS has been de-risked and has strong economics. Summer drilling results for RRR and 600W have been positive. The assets of DML have remained static, have seen lesser exploration success, thus the value and economics remain somewhat opaque.
Why was there no contingency in the Agreement that spoke to the possibility of a robust PEA and a contingency for same. Why was there no contingency in the Agreement that spoke to the possibility of "summer success" at RRR and 600W?
7. The Fairness Opinion rendered by Dundee Capital Markets is materially out-dated. Produce on July 6th, 2015 the Opinion does not take in account the PLS PEA. How is THIS fair to FCU shareholders? Please take a moment or two, or three, to read the document - we believe you'll find it interesting if nothing else. See The MIC - Appendix "C"
8. Okay, so a couple of the well know comments by the CEO that have made the rounds and have stuck in shareholders heads are; "The deal really came together over a weekend" - and - "I don't have my head wrapped around it yet". Okay, so we all say things at times, and wonder why we did after the fact. We get it. In the case of the first comment, the Management Information Circular clearly delineates the time line as at least a year. So a year is not a weekend, and a year is usually enough time to have fully considered something. That's it for us on these two. We're sure they echo of the walls at FCU HQ, along with that $3 one.....
9. Since the announcement of the Arrangement has there been other offers or discussions? Note : We heard on October 6th at the Royal York that there had not been.
10. FCU shareholders are contributing the largest and most valuable asset to the "merger" yet DML shareholders will end up with +/- 52% of the new company. How is that a "merger of equals" or otherwise? Looks like a de-facto take-over to many.
11.The CEO and COO are being paid some $1.2 million to complete the Arrangement. Does this put them in a conflict of interest with FCU shareholders? If the Arrangement succeeds they will also be appointed to the same or similar executive roles in the new company - to be called Denison Energy.
12. What are the analysts saying? To paraphrase Rob Chang of Cantor Fitzgerald - why didn't FCU wait until after the PEA? To paraphrase David Sadowski of Raymond James - this is a win for DML shareholders and a paradigm shift for FCU. Why does Nick Hodge say to vote no? "This one is special" Dundee Capital Markets analyst David Talbot said in a note. He called the resource numbers "truly phenomenal" .....Phenomenal is good right?
13. If the No Vote prevails will FCU accept it or look to extend the Arrangement somehow? Note : Answered at the Royal York 10-6-15 No = No. No extending. Back to business.
14. Mission Abandoned! Why has FCU management abandoned the mission - the shareholder expectation - of de-risk, prove-up, and sell? To simplify the press release stream - This is good. This is really good. This is better. This is even better than that. This is GREAT! Excuse us of course :-)
15. We see no real synergies. Yes, there would be a larger company, but that result doesn't appear to us to have any clear or obvious benefits for FCU shareholders. We do see however the rationale for serious discussion with Nexgen.
MAYBE Nexgen and Fission could spend a weekend together.....Next year.