Denison Mines looks very attractive to suitors these days

Uranium miner Denison Mines Corp. may have sold its U.S. assets for cheaper than many analysts expected recently, but the sale now makes the company an attractive takeover prospect.

Denison Mine’s remaining Canadian properties are especially lucrative for any potential buyers, said RBC Capital Markets analyst Adam Schatzker.

“We think that senior uranium producers will be very interested in the strategic value of the McLean Lake mill, the Wheeler River exploration project, and potential for relatively near-term production from McLean North Underground,” he said in a note.

Denison agreed on Monday sell its assets in the United States to uranium and vanadium miner Energy Fuels, in a deal that will see Denison receive 425 million shares of Energy Fuels in exchange for the properties. Based on Energy Fuel’s closing price of 25¢ a share on Monday, that values the U.S. assets at $106-million.

Mr. Schatzker does note, however, that the sale price is significantly lower than RBC’s net asset value estimate of $312-million.

That led Mr. Schatzker to lower his 12-month target price on the stock from $2 to $1.50.

The analyst left his rating of sector perform unchanged, labeling the stock a speculative risk. He also hinted that the price target could change if a future suitor does come knocking.

“Our price target and recommendation do not consider a future acquisition of Denison,” Mr. Schatzker said.