Vimy holds out for better offer

Vimy Resources has knocked back a $687 million merger proposal from fellow uranium aspirant Deep Yellow, choosing instead to start a strategic review and open the bidding to other potential buyers.

Deep Yellow, led by former Paladin Energy boss John Borshoff, had offered Vimy shareholders 30.25 cents based on a proposed merger ratio of one Deep Yellow share for every 3.74 Vimy shares held, on November 15.

“Disappointingly, the proposal was not accepted; nor was there, in Deep Yellow’s view, meaningful engagement by Vimy,” Deep Yellow’s statement to the ASX read.

Vimy informed the market yesterday it had received a unsolicited approaches from a number of parties, and as result had decided to initiate a strategic review for the project.

The company indicated it was open to potential corporate transactions as an alternative to advancing Mulga Rock entirely on its own.

Mr Borshoff said the rationale for the bid was to potentially form the next tier-one uranium producer.

“The merger would have delivered to Vimy’s projects an experienced technical team of proven uranium mine builders, able to expedite the development of Mulga Rock,” he said.

“Completion of the merger would have achieved the market consolidation we consider necessary to establish as a first step, a company with significant size and scale to create a leading tier one uranium producer, well positioned to supply a growing uranium market.”

Vimy owns the Mulga Rock project in the Shire of Menzies, one of only a handful of uranium mines in Western Australia with environmental approval.

The company has pointed to a resurgence in uranium prices and “strong interest” in assets similar to Mulga Rock, but said there would be no guarantee of any takers for its flagship.

The WA government currently has a no-uranium condition on future mining leases.

Macquarie Capital Australia and MinterEllison have been brought on to support the strategic review.

Vimy shares are up 9.43 per cent to trade at 29 cents.

Deep Yellow shares are off 0.47 per cent to trade at $1.06.