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« Nuclear reactor not to be kept on stand-by | Main | Nuclear Safety and the East Coast Earthquake »
Monday
Aug292011

Cameco announces hostile bid for junior uranium producer Hathor Exploration

Hathor Exploration (TES:HAT) is now the target of the uranium's sectors giant, Cameco Corporation (CCJ) which announced Friday that it is making a $520-million hostile bid for junior uranium explorer Hathor Exploration Ltd. after the two companies couldn't find enough common ground to reach a friendly deal.
"I guess the bottom line was we just couldn't see each other's goal posts with respect to valuation," Cameco chief executive officer Tim Gitzel told a conference call.
Cameco approached Hathor a week ago with a $3.75-per-share cash offer — about $1 per share more than the trading price at the time — but came away empty-handed.
Although the discussions were "cordial," Gitzel said "we couldn't get near agreement on valuation, so we had to go our separate ways."
Cameco (TSX:CCO) said it will go directly to Hathor shareholders with the takeover bid, which it said would provide them with an immediate premium above recent stock prices.
Hathor (TSX:HAT) was the most actively traded company on the Toronto Stock Exchange on Friday, with 25 million shares changing hands as the stock gained $1.21 to close at $3.88. That was up 45 per cent from the Thursday closing price of $2.67.
For Cameco, the main prize would be Hathor's Roughrider uranium deposit — about 25 kilometres northwest of Cameco's Rabbit Lake mill.
A Hathor spokeswoman said Cameco's offer doesn't recognize any value for its other assets and undervalues Roughrider.
"Roughrider is a very unique project and it has scarcity value, and I believe that's why Cameco probably did a hostile (bid) instead of working with management toward a win-win situation," said Hathor's Kelsea Murray.
Hathor deserves a bid of at least $6 per share based on other recent acquisitions in the uranium space and analyst targets for the company, she said.
The market activity suggests investors expect a rival bid will emerge or Cameco will increase its offer to win shareholder approval.
Cameco shares dropped 16 cents to $21.87.
On the call, Gitzel gave Hathor credit for the work it's done on the Roughrider deposit. But he said it will take far more expertise and capital than Hathor currently has to move the mine into development.
"It is clearly a promising advanced exploration property, but not yet a development property," he said.
The geology in the Athabasca region of Saskatchewan is challenging and it could cost more than $500 million and take 10 years for Hathor to build a mill to process uranium from Roughrider.
"Building a new mill is a risky venture, particularly for a junior exploration company. And this is especially true given the volatility of the capital markets over the past several years. Going down this path could result in significant dilution for Hathor shareholders," Gitzel said.
"Cameco, on the other hand, already has extensive experience operating and developing projects in this region. We already have two mills in the area, and this acquisition could help optimize our existing capacity."
The Saskatoon-based company is one of the world's largest uranium producers. It has mines, mills and conversion plants in Canada, the United States and abroad and produces fuel that runs nuclear power plants around the world.
Cameco aims to double uranium production by 2018 to 40 million pounds, and the Hathor acquisition would help accomplish that goal, Gitzel told the call.
"We want to have ... good, low-cost production sources ready to go at that time," he said.
"But we don't just want to peak at 2018, and then say 'well that's it, we made it and we're done.'"
This article is courtesy of the Winnipeg Free Press.
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Reader Comments (3)

"I guess the bottom line was we just couldn't see each other's goal posts with respect to valuation," Cameco chief executive officer Tim Gitzel told a conference call.

WAY WAY TO CHEAP - HAT has unmatched Grade at the SURFACE Easy mining worh at least $7 a share CCO is trying to buy CHEAP

REFUSE the OFFER and remember FIS next door is part owned by KEPCO

I will sell my HAT for $10 a share Min.

August 30, 2011 | Unregistered CommenterParadigm

Fortunately I own FSSIF - Fission energy Corp-- which also seems to be getting a pop from this deal. Hathor property is virtually tied in with Fission’s... so Cameco needs to buy Fission too I think

http://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=30120810&l=0&r=0&s=FIS&t=LIST

August 30, 2011 | Unregistered Commenterrob

Fission Energy Corp is an interesting one, the price is on the move, put on another 4.41% today and has gained about 50% this month.

August 31, 2011 | Registered CommenterUranium Stocks

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