DRC-2015-002397 - 0901a06880529ea2

ENERGY FUELS
Energy Fuels Resources (USA) Inc.
225 Union Blvd. Suite 600
Lakewood, CO, US, 80228
303-974-2140
DRC-2015-002397 www.energyfuels.com
May 7, 2015
VIA EMAIL AND US MAIL WAV Q S 2015
Mr. Rusty Lundberg, Director
Utah Division of Radiation Control
Utah Department of Environmental Quality
195 North 1950 West
P.O. Box 144850
Salt Lake City, UT 84116-4850
RE: White Mesa Mill, State of Utah Radioactive Materials License No. UT1900479 and
Groundwater Discharge Permit No. UGW37004, Notice of Intended Transaction
and Request for Confirmation
Dear Mr. Lundberg:
This is a notice of an intended transaction (the "Transaction") pursuant to which Energy Fuels
Inc. ("Energy Fuels") will acquire all of the outstanding shares of Uranerz Energy Corporation
("Uranerz"), and a request for confirmation under R313-19-34(2), R317-6-6.18 and Part IV.L of
Energy Fuels Resources (USA) Inc.'s ("EFRI's") Ground Water Discharge Permit No.
UGW370004 (the "GWDP") that the Transaction will not involve a direct or indirect transfer of
control of EFRI's Radioactive Materials License No. UT1900479 (the "Mill License") or GWDP
relating to the White Mesa Mill (the "Mill"). The Transaction will result in Uranerz becoming a
wholly owned subsidiary of Energy Fuels Holdings Corp. ("EFHC"), which is a wholly owned
subsidiary of Energy Fuels and the parent company of EFRI, the holder of the License and
GWDP. EFHC is also the parent company of EFR White Mesa LLC ("EFRWM"), the owner of
the Mill.
Uranerz is a widely held publicly traded Nevada corporation, with its shares listed on the NYSE
MKT, Toronto Stock Exchange and Frankfurt exchange. Uranerz holds a number of uranium
properties and resources in Wyoming, with its primary property being the Nichols Ranch project,
located in the Powder River Basin of Wyoming. The Nichols Ranch project is a fully permitted
and operating In Situ Recovery uranium operation, which is operating under a Source Material
License (the "Nichols Ranch License") issued by the US Nuclear Regulatory Commission (the
"NRC"), as well as under other permits issued by the State of Wyoming and other regulatory
agencies.
For the reasons set forth below, EFRI does not believe the intended Transaction will constitute
the direct or indirect transfer of control of the Mill License to any person, within the meaning of
Utah Rule R313-19-34(2), as interpreted by NRC's Guidance About Changes of Control and
About Bankruptcy Involving Byproduct, Source, or Special Nuclear Materials Licenses - Final
Report (NUREG-1556, Vol. 15) ("NUREG-1556). In addition, EFRI does not believe the
intended Transaction will constitute the transfer of the GWDP to any person, within the meaning
of Utah Rule R317-6-6.18 and Part IV.L. of the GWDP. Accordingly, we do not believe that this
business transaction will require any form of consent from the Director with regard to the Mill
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License or GWDP. However, this courtesy notice is being provided to inform you of the
intended Transaction so that you will be able to make your own determination in that regard.
Description of the Transaction
Pursuant to an executed definitive merger agreement (the "Definitive Agreement") filed with the
US Securities and Exchange Commission on Form 8-K on January 12, 2015, the Transaction
will result in Energy Fuels acquiring all of the issued and outstanding shares of common stock of
Uranerz. In accordance with Nevada law, the Transaction will be carried out by way of a merger
of EFR Nevada Corp with and into Uranerz, combined with the issuance by Energy Fuels of its
own common stock in exchange for all outstanding shares of Uranerz. EFR Nevada Corp. is a
wholly owned subsidiary of EFHC, which in turn is a wholly owned subsidiary of Energy Fuels.
As a result of the Transaction, Uranerz will continue as a surviving operating corporation and as
a wholly owned subsidiary of EFHC, and an indirect wholly owned subsidiary of Energy Fuels.
The corporate organizational structure of these company relationships pre- and post-
Transaction are included as Attachments A and B, respectively, to this letter.
Pursuant to the Definitive Agreement, at the effective time of the Transaction, each issued and
outstanding share of common stock of Uranerz will be canceled and extinguished and
automatically converted into the right to receive 0.255 common shares of Energy Fuels. Based
on the current outstanding shares of Energy Fuels and Uranerz, this share exchange will result
in the shareholders of Uranerz owning approximately 55% of the outstanding shares of Energy
Fuels upon completion of the Transaction.
Pursuant to the Definitive Agreement, upon consummation of the Transaction, Energy Fuels
shall cause two nominees of Uranerz to be appointed to the Board of Directors of Energy Fuels,
which shall consist of eight directors. There will be no changes to the management of Energy
Fuels, other than the creation of a new position of Executive Vice President, ISR Operations,
which will be filled by the current President and Chief Operating Officer of Uranerz, and the title
of Energy Fuels' existing Executive Vice President and Chief Operating Officer will be changed
to Executive Vice President, Mining and Milling Operations. Both of those positions will report
directly to Energy Fuels' existing President and Chief Executive Officer. As a result, there will
be no change in control of the Energy Fuels Board or any significant changes in management of
Energy Fuels, as a result of the Transaction. Further, as the Uranerz shares are generally
widely held and the shareholders are not acting in concert, it is not expected that the existing
shareholders of Uranerz, upon becoming shareholders of Energy Fuels, will, individually or as a
group, be able to exert any influence on the Board of Energy Fuels.
The Transaction will be subject to the approval of at least a majority of the holders of the
outstanding common shares of Uranerz, as well as at least a majority of the votes cast by
Uranerz shareholders, excluding directors and officers of Uranerz, at a special meeting to be
called by Uranerz to consider the Transaction. Pursuant to the rules of the Toronto Stock
Exchange, the Transaction is also subject to the approval of at least a majority of the votes cast
by Energy Fuels shareholders at a special meeting to be called by Energy Fuels to consider the
Transaction. In addition, pursuant to the Definitive Agreement, the completion of the
Transaction is conditional upon a number of items, including, without limitation, the shareholder
approvals referred to above, receipt of all necessary regulatory approvals, and other customary
conditions to closing. The Transaction is expected to close in June or July 2015.
Page 2
Transaction Not a Change of Control
As described above, the Transaction will result in Uranerz becoming a wholly owned subsidiary
of EFHC, with Energy Fuels continuing to be the top company. Uranerz is a widely held public
company, with no shareholder holding greater than 10% of the shares of Uranerz. Although
Uranerz shareholders will acquire 0.255 common shares of Energy Fuels stock for each issued
and outstanding share of Uranerz common stock and, collectively, will hold approximately 55%
of the outstanding shares of Energy Fuels after completion of the Transaction, no one person
will acquire a controlling interest in Energy Fuels. It should be noted that Uranerz has applied to
the NRC under NUREG-1556 for approval of the indirect change of control of the Nichols Ranch
License from Uranerz to Energy Fuels, as a result of Transaction. As Energy Fuels will be
considered to be the ultimate controlling party of Uranerz and the Nichols Ranch License after
completion of the Transaction, Energy Fuels must also be considered to continue to be the
ultimate controlling party of the Mill License and GWDP after completion of the Transaction.
No Changes to Personnel or Duties.
The Mill License and GWDP will continue to be held by EFRI, and the Mill will continue to be
owned by EFRWM. EFRI and EFRWM will continue to be wholly owned by Energy Fuels
through EFHC. There will be no changes in the personnel of EFRI or EFRWM, the continued
owner of the Mill as a result of the Transaction, except for the minor changes set out above.
EFRI will continue to operate the Mill and be the holder of the Mill License and GWDP. Hence,
there will be no changes in the personnel or duties that relate to the Mill License or GWDP
program. Existing Mill License and GWDP contacts at EFRI and the Mill will continue
unaffected.
No Changes in Organization, Location, Facilities, Equipment or Procedures.
This Transaction merely involves the addition of Uranerz to Energy Fuels' group of companies.
The ownership, operation and management of the Mill will not be impacted. There will be no
changes in the organization, location, facilities, equipment or procedures that relate to the Mill
License program or GWDP. The location of the principal corporate offices of EFRI, and the
EFRI management personnel responsible for the Mill License will not change.
Status of Surveillance Program at the Mill
The surveillance programs at the Mill are currently in compliance with Mill License and GWDP
conditions. The Transaction will have no impact on the status of the surveillance systems at the
Mill.
Records.
As the Transaction will have no impact on Mill operations, there will be no transfer of records
concerning the safe and effective decommissioning of the Mill.
No Transferee
As the Transaction will not involve the transfer of control of the Mill License or GWDP to any
person, there is no need to consider whether or not a transferee will abide by all constraints,
conditions, requirements and commitments of EFRI or whether or not a transferee will submit a
PaKe 3
complete description of the proposed licensed program. EFRI, as licensee and Permittee, will
continue to abide by all constraints, conditions, requirements and commitments in the Mill
License and GWDP.
If you agree that the Transaction will not involve a transfer of control within the meaning of
R313-19-34(2), or transfer of the GWDP within the meaning of R317-6-6.18 and Part IV.L. of the
GWDP, which would require consent of the Director, please confirm your agreement in writing to
EFRI. However, if, based on the foregoing, you believe that the Transaction will in fact involve
such a transfer of control of the Mill License or transfer of the GWDP, then EFRI hereby
requests that you provide your written consent to such transfer(s), as required.
If you have any questions or require any further information, please contact the undersigned or
Scott Bakken, EFRI's Director, Permitting & Environmental Affairs at [phone].
Davia C. Frydenlund
Sr. Vice President, General Counsel
and Corporate Secretary
cc: Phil Goble
John Hultquist
Harold R. Roberts
Scott Bakken
Kathy Weinel
Page 4
Attachment A - Corporate Organization Structure Pre-Transaction
Existing Energy Fuels Inc
Shareholders
I007n
Energy Fuels Inc
(Ontario)
1007c
Magnum Uranium Corp
(British Columhia)
100%
Titan Uranium Inc
(Canada)
3%
100%
Uranium Power Corp
(British Columbia)
20%
100%
Energy Fuels Exploration
Inc
(Canada)
100%
Slrathmore Minerals Corp
(Bnlish Columbia)
77%
Energy Fuels Holdings Corp
(Delaware)
j 100%.
Strath more
Resources (US)
Ltd
(Nevada)
60%
Roca Honda
Resources LLC
(E)elaware)
100%
Wyoming Gold
Mining Company
(Wyoming)
Magnum Minerals
USA Corp
(Nevada)
Energy Fuels
Wyoming Inc
(Nevada)
EFR Arizona
Strip LLC
(Colorado)
| 50%
Wate Mining
Company LLC
(Arizona)
Energy Fuels
Resources (USA)
Inc (Delaware)
EFR While Mesa
LLC
(Colorado)
EFR Henry
Mountains LLC
(Colorado)
EFR White
Canyon Corp
(Delaware)
EFR Colorado
Plateau LLC
(Colorado
EFR Properties
LLC
(Colorado)
100%
Arizona Strip
Partners LLC
(Delaware)
100%
Colorado Plateau
Partners LLC
(Delaware)
50%
West Lisbon LLC
(Delaware)
100%
Arizona Strip
Resources IV.
LLC
(Delaware)
EFR Recovery
Corp
(Delaware)
EFR Recovery
LLC
(Delaware)
| 50%
Unzon Recovery
Systems LLC
(Delaware)
Attachment - B Corporate Organization Structure Post-Transaction
Existing Energy Fuels Inc.
Shareholders
Existing Uranerz
Shareholders
45%
Energy Fuels Inc
(Ontario)
55%
100%
Magnum Uranium Corp.
(British Columbia)
100%
Titan Uranium Inc.
(Canada)
100%
Uranium Power Corp.
(British Columbia)
?% 20%
100"
Energy Fuels Exploration
Inc.
(Canada)
100%
Strathmore Minerals Corp
(British Columbia)
77%
100%
Strathmore
Resources (US)
Ltd.
(Nevada)
100%
Wyoming Gold
Mining Company
(Wyoming)
Energy Fuels Holdings Corp.
(Delaware)
60%
Roca Honda
Resources LLC
(Delaware)
EFR Recovery
Corp
(Delaware)
Magnum Minerals
USA Corp.
(Nevada)
Energy Fuels
Wyoming Inc.
(Nevada)
EFR Arizona
Strip LLC
(Colorado)
50%
Wate Mining
Company LLC
(Arizona)
Energy Fuels
Resources (USA)
Inc. (Delaware)
EFR White Mesa
LLC
(Colorado)
EFR Henry
Mountains LLC
(Colorado)
EFR While
Canyon Corp.
(Delaware)
EFR Colorado
Plateau LLC
(Colorado
Uranerz Energy
Corporation
(Nevada)
EFR Properties
LLC
(Colorado)
100%
Arizona Strip
Partners LLC
(Delaware)
100%
Colorado Plateau
Partners LLC
(Delaware)
50%
West Lisbon, LLC
(Delaware)
100%
Arizona Strip
Resources JV,
LLC
(Delaware)
EFR Recovery
LLC
(Delaware)
] 50%
Urizon Recovery
Systems LLC
(Delaware)