REG-Base Resources Limited: Proposed combination with Energy Fuels to create global critical minerals business

Base ResourcesAnnouncement

22/04/2024 24:15

AIM and Media Release 

22 April 2024

Base Resources Limited
Proposed combination with Energy Fuels to create global critical minerals
business

Key Points
* Base Resources and Energy Fuels have reached a binding agreement for Energy
Fuels, a US-based uranium and critical minerals producer, to acquire 100% of
the issued shares in Base Resources by way of scheme of arrangement.
* Base Resources shareholders to receive 0.0260 Energy Fuels common shares
plus an unfranked special dividend of A$0.065 for each Base Resources share
held, equating to total consideration of approximately A$0.302 per share. 
* Represents a premium to Base Resources' last closing price of 188%, and a
premium to the 20-day VWAP of Base Resources shares of 173%.
* Base Resources' Board unanimously recommends shareholders vote in favour of
the Scheme and each Director owning Base Resources shares intends to vote all
those shares in favour of the Scheme(1).
* Voting intention statements from each of Base Resources' two major
shareholders (respectively owning 26.5% and 24.8% of the shares on issue)
received confirming that they each intend to vote in favour of the Scheme(1).
* Transaction will establish a global leader in the critical minerals sector
with a focus on rare earth elements, uranium and heavy mineral sands
production and a clear strategic development pathway.
* Transaction will also create a platform for the funding and development of
Base Resources' world-class Toliara Project in Madagascar, with future
monazite production from the project to be processed at Energy Fuels'
operating White Mesa mill in the United States.
* Base Resources' proven leadership team to be retained and continue to
oversee the development, and operation of the Toliara Project and the
completion of operations and closure of Kwale Operations, as well as the
progression of other mineral sands and rare earths interests of the combined
group.
[Note (1): In each case, in the absence of a superior proposal and subject to
the Independent Expert concluding (and continuing to conclude) that the Scheme
is in the best interests of shareholders.]

Base Resources Limited (ASX & AIM: BSE) (Base Resources) has entered a binding
scheme implementation deed (SID) with Energy Fuels Inc. (NYSE American: UUUU,
TSX: EFR) (Energy Fuels) pursuant to which Energy Fuels has agreed to acquire
100% of the issued shares in Base Resources by way of scheme of arrangement
(Transaction or Scheme).

Under the terms of the Transaction, Base Resources shareholders will be
entitled to receive 0.0260 Energy Fuels common shares (Share Consideration),
plus A$0.065 in cash via an unfranked special dividend payable by Base
Resources(2) (together, the Transaction Consideration), for each Base
Resources share held.

The Transaction Consideration implies an offer price of A$0.302 per share(3)
and a total equity value for Base Resources of A$375 million(4), and
represents a premium of:
* 188% to Base Resources' last closing price of A$0.105 per share on 19 April
2024.
* 173% to Base Resources' 20-day volume weighted average price (VWAP) to 19
April 2024 of A$0.111 per share.
Following implementation of the Transaction, Base Resources shareholders will
hold approximately 16.4% of the combined group, which will have a pro forma
market capitalisation of approximately US$1,144 million(5).

The Base Resources Board unanimously recommends that shareholders vote in
favour of the Transaction in the absence of a Superior Proposal (as defined in
the SID) and subject to the Independent Expert concluding, and continuing to
conclude, that the Transaction is in the best interests of Base Resources
shareholders.  Subject to these same qualifications, each Director also
intends to vote, or procure the voting of, all Base Resources shares held by
or on behalf of them (representing 1.2% of the shares on issue) in favour of
the Scheme.

Base Resources has also received voting intention statements from each of its
two largest shareholders, Pacific Road Capital(6) (owning 26.5% of the Base
Resources shares on issue) and Sustainable Capital Ltd (owning 24.8% of the
Base Resources shares on issue), confirming that they each intend to vote all
of the Base Resources shares that they hold or control in favour of the
Scheme, in the absence of a Superior Proposal and subject to the Independent
Expert concluding (and continuing to conclude) that the Scheme is in the best
interests of shareholders.

[Notes: (2): Payment of the special dividend is conditional on the Scheme
becoming legally effective. (3): Based on Energy Fuels' last closing price on
19 April 2024 of US$5.84 per share and a AUD:USD exchange rate of 0.640. (4):
Based on 1,239,116,949 fully diluted Base Resources shares on issue. (5):
Based on 163,651,897 Energy Fuels common shares on issue and Energy Fuels'
last closing price on 19 April 2024 of US$5.84 per share. (6): Pacific Road
Capital means Pacific Road Capital Management GP II Limited and Pacific Road
Capital II Pty Limited.]
Potential Benefits to Base Shareholders
In addition to the significant premium offered, the Transaction provides
several other potential benefits to Base Resources shareholders, including:
* Continued exposure to Base Resources' world-class Toliara Project in
Madagascar.
* A strong platform for the funding and development of the Toliara Project,
through the significantly greater market capitalisation, trading liquidity,
market profile and funding capacity of the combined group.
* Exposure to the opportunity to add significant value to the monazite
produced at the Toliara Project by capturing a greater share of the rare earth
element (REE) value chain through processing at Energy Fuels' operating White
Mesa mill in Utah (Mill) into separated rare earth oxides (REOs).  This
opportunity remains subject to Energy Fuels completing commissioning of Phase
1 of its REE separation facility at the Mill, and then arranging funding for
and making a development decision on Phases 2 and 3 of this facility.
* Enhanced opportunity to secure strategic, low-cost United States Government
funding support for the development of the Toliara Project, as well as the
Phase 2 and 3 expansions of the REO production capacity at the Mill.
* Increased commodity diversification via exposure to Energy Fuels' uranium
business, with the White Mesa mill being the only operating conventional
uranium mill, and Energy Fuels currently being the largest producer of
yellowcake, in the United States. 
* Continued exposure to Base Resources' proven leadership team, who will
continue to oversee the development and operation of the Toliara Project and
the completion of operations and closure of Kwale Operations, as well as
enhance Energy Fuels' teams on the progression of other mineral sands and rare
earths interests of the combined group. 
* A combined group with multiple potential value drivers (REE, uranium,
mineral sands) providing risk diversification and multiple directions for
strategic growth, including further down the REE value chain.
Managing Director of Base Resources, Tim Carstens, said:
"This Transaction, which is the culmination of 12 months of discussions
between Base Resources and Energy Fuels, reflects the exceptional quality of
the Toliara Project and the efforts of the Base Resources team over the past
several years to advance the project towards construction readiness.  The
combined group will have the financial and technical capability to not only
build Toliara into one of the best critical mineral projects in the world, but
also to develop an integrated value chain for the rare earth elements that are
essential to the global energy transition.  Shareholders of Base Resources
will receive both a compelling and immediate premium, and the opportunity to
further participate in the market recognition and development of a company
with a unique diversified position in the critical minerals landscape."
Key Conditions and Terms
In summary, conditions for implementation of the Scheme include:
* Base Resources shareholder approval by the required majorities.
* the Independent Expert concluding (and continuing to conclude) that the
Transaction is in the best interests of Base Resources shareholders.
* approval by Australia's Foreign Investment Review Board.
* approval of the Federal Court of Australia.
* no material adverse change and no prescribed occurrences in relation to
either Energy Fuels or Base Resources.
* other regulatory approvals, including necessary NYSE and TSX listing
approvals and a U.S. Securities Act exemption for the Share Consideration, and
approvals of the Competition Authority of Kenya and Malagasy Competition
Council.
* other customary conditions.
The SID also contains customary deal protections and exclusivity terms in
favour of Energy Fuels, including "no shop", "no talk", "no due diligence",
"notification" and "matching right" obligations, subject to a "fiduciary out"
in certain circumstances.

The SID includes certain circumstances in which a break fee of US$2.4 million
would be payable to Energy Fuels, or a reverse break fee (of also US$2.4
million) would be payable to Base Resources.

Recognising the significance of the Transaction to Base Resources, the Board
has determined to provide an additional award opportunity of A$275,000 to
Managing Director, Tim Carstens, under the Company's Short Term Incentive
Plan, payment of which is conditional on implementation of the Scheme by 31
December 2024.
Indicative Timetable, Next Steps and Attachments
Base Resources shareholders do not need to take any action at this stage.

As outlined above, the Scheme is subject to several conditions, including
approval of Base Resources shareholders at a Scheme Meeting, which is expected
to be held in late July / early August 2024.

Base Resources will send a Scheme Booklet to shareholders in due course.  The
Scheme Booklet will contain information relating to the Transaction and the
Independent Expert's Report.  Base Resources has appointed PwC as the
Independent Expert.

If the Transaction is approved by Base Resources shareholders and the other
conditions precedent are satisfied or waived, the Scheme is expected to be
implemented in the third quarter of 2024.

Base Resources is currently admitted to trading on AIM and subject to the
Scheme becoming Effective, an application will be made to the London Stock
Exchange to cancel the admission to trading of Base Resources depositary
interests on AIM. The Scheme Booklet will include clear disclosures about the
proposed timetable for the Scheme, including the proposed date of the Scheme
Meeting and timeline for implementation and cancellations of admission to
trading on ASX and AIM.

Further information in relation to the Transaction, its rationale and Energy
Fuels is set out in the investor presentation attached to this announcement. 
A copy of the SID, which sets out the full terms and conditions of the
Transaction and associated matters, is also attached to this announcement.
Investor Briefings
Base Resources will host two investor briefings to discuss the Transaction on
Monday, 22 April 2024 at 10:00am and 6:00pm (Australian Western Standard
Time).  The briefings will be hosted by Tim Carstens (Managing Director) and
will be by webcast and teleconference.  Access details are outlined below. 
Participants will be able to ask questions via the messaging function on the
webcast platform or via the teleconference line.  Participants that propose
using the teleconference line will need to pre-register their details using
the teleconference registration URL provided below. Upon registering,
participants will receive an email with their unique PIN and dial-in details
so that they can join the call on the day without speaking to an operator.

Webcast and teleconference - Asia Pacific

Date: Monday, 22 April 2024
Time: 10:00am AWST / 12:00pm AEST
Webcast URL: https://registrations.events/direct/OCP7022547013
Teleconference pre-registration URL:
https://webcast.openbriefing.com/bse-mu-2024-aus/

Webcast and teleconference - UK/Europe

Date: Monday, 22 April 2024
Time: 6:00pm AWST / 11.00am (London time)
Webcast URL: https://registrations.events/direct/OCP5249348

Teleconference pre-registration URL:
https://webcast.openbriefing.com/bse-mu-2024-uk/
Advisers
Base Resources has appointed Azure Capital as its financial adviser and
Herbert Smith Freehills as its Australian legal adviser.

ENDS.

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the UK MAR) which is part
of UK law by virtue of the European Union (Withdrawal) Act 2018.  The
information is disclosed in accordance with the Company's obligations under
Article 17 of the UK MAR.  Upon the publication of this announcement, this
inside information is now considered to be in the public domain.

For further information contact:

 Australian Media Relations        UK Media Relations             
 Morrow Sodali                     Tavistock Communications       
 Cameron Gilenko and Michael Weir  Jos Simson and Gareth Tredway  
 Tel: +61 8 6160 4900              Tel: +44 207 920 3150          

This release has been authorised by the Board of Base Resources.

About Base Resources

Base Resources is an Australian based, African focused, mineral sands producer
and developer with a track record of project delivery and operational
performance.  The Company operates the established Kwale Operations in Kenya
and is developing the Toliara Project in Madagascar.  Base Resources is an
ASX and AIM listed company.  Further details about Base Resources are
available at www.baseresources.com.au.

About Energy Fuels

Energy Fuels is a leading US-based uranium and critical minerals company.
Energy Fuels, as the leading producer of uranium in the United States,
operates mines and produces natural uranium concentrates that are sold to
major nuclear utilities for the production of carbon-free nuclear energy.
 Energy Fuels' White Mesa Mill is the only conventional uranium mill
operating in the US today, has a licensed capacity of over 8 million pounds of
U(3)O(8) per year, and also produces vanadium when market conditions warrant,
from various uranium-bearing ores.  Energy Fuels recently began production of
advanced REE materials at White Mesa, including mixed REE carbonate, and plans
to produce commercial quantities of separated REE Oxides commencing in 2024
with plans to further expand this production capability over the coming years
as monazite feedstock volumes are secured.

In addition to the above production facilities, Energy Fuels also has one of
the largest NI 43-101 compliant uranium resource portfolios in the US and
several uranium and uranium/vanadium mining projects in production, on standby
and in various stages of permitting and development.  Energy Fuels recently
acquired the Bahia Project in Brazil, which is believed to have significant
quantities of ilmenite, rutile, zircon and monazite.  Energy Fuels also
recently announced a Memorandum of Understanding for the potential acquisition
of a 49% interest in the Donald Rare Earth & Mineral Sand Project in Victoria,
Australia held by Astron Corporation Limited (ASX:ATR).

The primary trading market for Energy Fuels' common shares is the NYSE
American under the trading symbol "UUUU".  Energy Fuels is also listed on the
Toronto Stock Exchange under the trading symbol "EFR". Further details about
Energy Fuels are available at www.energyfuels.com

BASE RESOURCES PRINCIPAL & REGISTERED OFFICE
Level 3, 46 Colin Street
West Perth, Western Australia, 6005
Email:  info@baseresources.com.au
Phone: +61 8 9413 7400
Fax: +61 8 9322 8912

BASE RESOURCES NOMINATED ADVISER & JOINT BROKER
Canaccord Genuity Limited
James Asensio / Raj Khatri / George Grainger
Phone: +44 20 7523 8000

BASE RESOURCES JOINT BROKER
Berenberg
Matthew Armitt / Detlir Elezi
Phone: +44 20 3207 7800

 Investor Presentation (https://mb.cision.com/Public/22548/3964868/82800bcf6adc4465.pdf)  Scheme Implementation Deed (https://mb.cision.com/Public/22548/3964868/95489bf8ad9c18de.pdf)  



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