A cross section of the world's highest grade uranium mine, McArthur River (Source: International Enexco)

A cross section of the world's highest grade uranium mine, McArthur River (Source: International Enexco)

The small cap uranium explorer, International Enexco (IEC:TSXV), announced today that it has agreed to be acquired by Lukas Lundin's Denison Mines (DML:TSX) for shares.  Denison already owns roughly 8.4% of the company and they are acquiring the remaining shares for 0.26 Denison shares.  Based on Denison's closing price of $1.77, this equates to ~$0.46 per IEC share, representing an 18% premium for their uranium only assets.  Plus shareholders get pro-rata shares in a spinco which will hold advanced-stage copper assets (see below).

Denison is only undertaking 2.1% dilution to acquire these strategic uranium assets.

International Enexco is a 30% partner in the Mann Lake project with Cameco (52.5% operator) and AREVA (17.5%).  They also hold a 20% interest in the Bachman Lake project (Denison holds remaining 80%).  Last week, Cameco announced an initial discovery on the Mann Lake project by intersecting 5.1m of 2.31% eU308 including 0.4m of 10.92% eU308 (read: International Enexco Hits Thickest and Highest Grade Hole to date at Mann Lake).

Skyharbour Resources recently acquired a 60% interest in their own Mann Lake property which is adjacent to Enexco's.  At a well attended presentation last night, Skyharbour's President, Jordan Trimble, said his focus for this year may include spending on exploration on that side of the basin based on International Enexco's discovery there.

Ron Hochstein - President and CEO of Denison and board member of International Enexco (Source: BNN)

Ron Hochstein - President and CEO of Denison and board member of International Enexco (Source: BNN)

As we stated in our article last week, by Patterson Lake standards 5.1m of 2.31% uranium does not seem like a particularly exciting hole.  However, given that this eastern side of the Athabasca Basin is where Cameco, AREVA and others have vast amounts of experience in, it remains a focus for them.  Furthermore, it is important to understand just how rich 2.31% uranium is.  To put it in context, 1% uranium at $50 per pound is equal to ~25g/t gold or ~15% copper.

Lukas Lundin, Chariman of Denison commented: "Denison continues to focus on becoming the preeminent exploration company in the Athabasca Basin, and we believe that the acquisition of IEC represents another logical step towards achieving that goal."

As part of the transaction, International Enexco will not only get 0.26 shares of Denison but they will also get shares in a spinco called CopperBank Resources.  CopperBank will be formed out of a three-way merger between Rob McLeod's Full Metal Minerals (FMM:TSXV), Gianni Kovacevic's Choice Gold (CHF:CSE) and the spinout assets of Enexco.

Choice will acquire Full Metal for 2 shares and 1 warrant and International Enexco for 8.8 shares and 4.4 warrants.  Choice is required to raise no less than $2 million to complete the deal.  They will roll the Choice shares back 5-for-1.  Full Metal, Choice and Enexco will own 19%, 6% and 60% of the new company, respectively (with new investors expected to hold the remaining 15%).

This represents, to Full Metal shareholders, a 178% premium to the close today of $0.015.

CopperBank will be an advanced-stage pure play copper play and will hold the Contact and Pyramid copper projects.  Contact holds over 1 billion pounds of copper in Nevada and is in the feasibility stage.

Read: Denison Mines Announces Letter of Intent for Acquisition of International Enexco

Read:  Full Metal Signs LOI with International Enexco and Choice Gold to Consolidate Copper Assets