Merger shakes uranium landscape

Access to mill may dampen push to revive Naturita-area operation

The proposed Piñon Ridge uranium mill would sit on the flat land in the foreground in this view of the Paradox Valley, in between Naturita and the hamlet of Paradox, in Montrose County. Uranium mines – some abandoned – dot the cliffs on either side of the valley. Enlarge photo

Joe Hanel/Herald file photo

The proposed Piñon Ridge uranium mill would sit on the flat land in the foreground in this view of the Paradox Valley, in between Naturita and the hamlet of Paradox, in Montrose County. Uranium mines – some abandoned – dot the cliffs on either side of the valley.

Energy Fuels Corp., the company that wants to build a uranium mill in Montrose County, announced a merger this week that will make it the dominant U.S. uranium company.

The merger with Denison Mines Corp. also gives Energy Fuels an operating uranium mill in Utah and raises the prospect that it might not build the Montrose County mill.

Denver-based Energy Fuels wants to build the Piñon Ridge uranium mill in the Paradox Valley, outside the town of Naturita. It would be the first new uranium mill in the United States in 30 years.

Colorado’s health department approved Energy Fuels’ permit to build the Piñon Ridge mill, but opponents have sued to stop it.

The company has spent $11 million on getting the mill permitted and is committed to securing approval to build it, Energy Fuels CEO Steve Antony said on a Tuesday conference call.

But whether Piñon Ridge actually gets built is another question altogether.

“We intend to complete the defense of the license, and at that time, depending on market conditions, any kind of decisions to go forward with actual construction will most likely be market-driven and based on market opportunity,” Antony said.

A company spokesman said Thursday that hedging on Piñon Ridge is nothing new.

“That’s been the plan all along. Nothing’s really changed,” said Curtis Moore, director of communications and legal affairs.

Jennifer Thurston of Sheep Mountain Alliance, which sued the state to overturn the mill permit, said this is the first time she’s heard Energy Fuels executives express hesitation about Piñon Ridge.

“For people who have been skeptical about the mill, it’s been a question of market economics all along,” Thurston said.

Denison runs the country’s only operating uranium mill, the White Mesa mill near Blanding, Utah. The merger gives Energy Fuels access to a mill right away, instead of waiting for the regulatory and legal process to be settled with Piñon Ridge, Moore said.

Denison milled only ore from its own mines at the White Mesa mill, so Energy Fuels did not have a place to process uranium from the mines it owns before the merger.

But there still might be an economic reason to build the Montrose County mill.

“We believe there’s plenty of uranium ore on the Colorado Plateau to support two mills,” Moore said.

Energy Fuels plans to acquire Denison in a stock deal worth about $107 million based on Monday’s share price.

The deal is set to close June 30, Moore said.

Denison shareholders, led by Korea Electric Power Corp., will own about two-thirds of Energy Fuels stock once the deal is completed.

Denison lost $71 million last year as the uranium market plunged after the power plant meltdown in Fukushima, Japan.

Energy Fuels stock jumped 14 percent overnight Monday after the merger announcement. However, Energy Fuels stock has fallen sharply over the last year. It was trading Thursday at 30 Canadian cents on the Toronto Stock Exchange, down from a high of 58 cents a share in April 2011.

Earlier this month, Energy Fuels completed its merger with Titan Uranium, which nearly tripled the Denver company’s uranium reserves. The purchase of Titan gave Energy Fuels the “critical mass” it needed to acquire Denison, Moore said.

Energy Fuels currently has 25 to 30 employees, most of whom are based in Denver. With the merger, about 400 Denison employees – mill workers, truck drivers, mine operators and more – will join Energy Fuels.

jhanel@durangoherald.com

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