HomeMy WebLinkAboutDRC-2012-001543 - 0901a068802e024fDENISO
MINES
May 25, 2012
DRC-2012-001543
Denison Mines (USA) Corp.
1050 17th Street, Suite 950
Denver, CO 80265
USA
Tel • 303 628-7798
Fax. 303 389-4125
www.denisonmines.com
VIA PDF AND FEDERAL EXPRESS
Mr. Rusty Lundberg
Executive Secretary
Utah Radiation Control Board
Co-Executive Secretary
Utah Water Quality Board
State of Utah Department of Environmental Quality
195 North 1950 West
P.O. Box 144850
Salt Lake City, UT 84114-4850
Re: Acquisition by Energy Fuels Inc. of Denison Mines Corp.'s U.S. Operations and
Name Change. State of Utah Radioactive Materials License No. UT1900479 and State of
Utah Ground Water Discharge Permit No. UGW370004
Dear Mr. Lundberg:
This is a notice of an intended acquisition by Energy Fuels Inc. ("Energy Fuels") of all of
Denison Mines Corp.'s ("Denison's") United States operations, and a request under Utah
Administrative Code ("UAC") R313-19-34(2) for approval by the Executive Secretary of the
State of Utah Radiation Control Board (the "Executive Secretary") of the resulting indirect
change of control of State of Utah Radioactive Matenals License No UT1900479 (the "Mill
License") for the White Mesa uranium mill (the "Mill") from Denison to Energy Fuels Denison is
the ultimate parent company of Denison Mines (USA) Corp. ("DUSA"), the holder of the Mill
License. The Mill License will continue to be held by DUSA.
As the Mill's State of Utah Ground Water Discharge Permit No. UGW370004 (the "GWDP") and
the Mill License will continue to be held by DUSA, Denison does not believe that the indirect
change of control described below will constitute a transfer of the GWDP as contemplated by
Part IV L of the GWDP or UAC R317-6-6.18. However, should the Co-Executive Secretary of
the State of Utah Water Quality Board (the "Co-Executive Secretary") determine otherwise,
please consider this to also be a notice pursuant to Part IV L of the GWDP and UAC R317-6-
6.18.
Description of the Transaction
On May 23, 2012, Denison entered into an Arrangement Agreement (the "Agreement") with
Energy Fuels, pursuant to which Energy Fuels will, subject to receipt of regulatory and other
approvals, acquire all of Denison's U.S subsidianes and hence all of Denison's U.S operations,
Letter to Mr. R. Lundberg
May 25, 2012
Page 2 of 8
including the Mill More specifically, the implementation of the terms of the Agreement will result
in Denison selling all of the outstanding shares of common stock of Denison's wholly-owned
subsidiaries, Denison Mines Holdings Corp ("DMHC"), a Delaware corporation, and White
Canyon Uranium Limited ("White Canyon"), an Australian corporation, which together own all of
DMHC's direct and indirect subsidianes (collectively, the "Denison U.S Group"), in exchange for
common shares of Energy Fuels (the "EF Shares"), which EF Shares will then be distributed by
Denison on a pro rata basis to Denison's shareholders (collectively, the "Transaction")
Denison, an Ontano corporation listed on the Toronto Stock Exchange and the NYSE MKT, is
engaged in uranium exploration, development, mining and milling, with uranium production and
development projects in both the United States and Canada and uranium development projects
in Canada, the United States, Zambia and Mongolia. While Denison owns U S and non-U S
assets, this Transaction only involves Denison's U.S. assets
All of Denison's U.S. assets are held directly or indirectly through DMHC. Denison, either
directly or through its wholly owned subsidiary White Canyon, holds all of the outstanding
shares of common stock of DMHC. DMHC holds its uranium mining and milling assets through
wholly-owned subsidiaries, including the Mill through Denison White Mesa LLC, a Colorado
limited liability company. All of Denison's U.S. properties are operated by DUSA, a wholly-
owned Delaware subsidiary of DMHC. A chart showing Denison and its U S. subsidianes is
attached hereto as Attachment A.
Energy Fuels, an Ontano corporation listed on the Toronto Stock Exchange, is a uranium and
vanadium exploration and development company, with its current projects, located in the states
of Colorado, Utah, Arizona, Wyoming and New Mexico, owned and operated through a number
of wholly-owned subsidiaries. A chart showing Energy Fuels and its subsidianes is attached
hereto as Attachment B
The Transaction will result in Energy Fuels, through a number of subsidianes, owning the Mill,
along with all of Denison's existing uranium/vanadium development properties in Utah, Colorado
and Arizona and Energy Fuels' existing uranium/vanadium properties in the same geographic
regions in Utah, Colorado and Wyoming. A chart showing Energy Fuels and its subsidiaries,
after completion ofthe Transaction, is attached hereto as Attachment C.
Upon completion of the Transaction, Energy Fuels will increase the size of its Board of Directors
from 8 to 10, and will fill these two additional Board positions with nominees provided by
Denison. After completion of the Transaction, the current President and Chief Executive Officer
of Energy Fuels, Mr. Stephen P. Antony, will continue to be the President and Chief Executive
Officer of Energy Fuels, and the current Executive Vice President, U.S. Operations of DUSA,
Mr. Harold R. Roberts, will become the Executive Vice President and Chief Operating Officer of
Energy Fuels. Mr Gary R. Steele, the current Executive Vice President Corporate Marketing
and Secretary of Energy Fuels, will become Senior Vice President Corporate Marketing of
Energy Fuels. Mr. Jeffrey L. Vigil, the current Vice President and Chief Financial Officer of
Energy Fuels, will continue in that position. The current Vice President, Regulatory Affairs and
General Counsel of DUSA, Mr. David C. Frydenlund, will become the Senior Vice President,
Regulatory Affairs and General Counsel of Energy Fuels. There will be no changes of any
significance in the management of DUSA responsible for operation of the Mill and compliance
with the Mill License and GWDP, as a result ofthe Transaction
DENISO
MINES
Letter to Mr. R. Lundberg
May 25, 2012
Page 3 of 8
Upon completion of the Transaction, DUSA will change its name to "Energy Fuels Mines Corp."
or a similar name. At such time that the Transaction is complete, DUSA will advise the
Executive Secretary and Co-Executive Secretary of its change of name and request that the Mill
License and GWDP be amended to reflect the name change. Please advise us if there is any
reason why such a change of name would not be approved by the Executive Secretary and Co-
Executive Secretary as an administrative matter. The names of Denison's other existing U S
subsidianes will also be changed in a similar fashion.
Special meetings for the shareholders of each company to approve the Transaction are
currently scheduled to be held on or about June 25, 2012. The parties expect the transaction to
be completed on or before June 30, 2012.
Transaction Involves an Indirect Change of Control
As described above. Energy Fuels will be acquinng all of the shares of White Canyon and
DMHC. DUSA, the holder of the Mill License and GWDP is a wholly owned subsidiary of
DMHC. As a result, although the Mill License and GWDP will continue to be held by DUSA, the
Transaction will involve an indirect change of control of DUSA Approval of this indirect change
of control, as it relates to the Mill License, is therefore required under UAC R313-19-34(2), and
IS consistent with the U S. Nuclear Regulatory Commission's Guidance About Changes of
Control and About Bankruptcy Involving Byprotduct, Source, or Special Nuclear Materials
Licenses - Final Report (NUREG-1556, Vol. 15).
As stated above, however, because the Transaction does not involve a transfer of the Mill
License or GWDP, Denison does not believe that the provisions of Part IV L of the GWDP and
UAC R317-6-6.18 are applicable.
No Changes to Personnel or Duties.
The Mill License and GWDP will continue to be held by DUSA DUSA will continue to be wholly
owned by DMHC. There will be no changes of any significance in the personnel of DUSA or
Denison White Mesa LLC, the continued owner of the Mill, as a result of the Transaction DUSA
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 or to the Mill License or
GWDP programs. Existing Mill License and GWDP contacts at DUSA and the Mill will continue
unaffected. No new individuals will be required to be listed on the Mill License or GWDP. The
completion of the Transaction will result in the addition of Energy Fuels personnel to the existing
DUSA management team.
No Changes in Organization, Location, Facilities, Equipment or Procedures.
This Transaction merely involves Energy Fuels acquiring White Canyon and DMHC This will
involve an indirect change in control of DUSA, from one publicly traded company to another
publicly traded company. The direct ownership, operation and management of the Mill will not
be impacted. There will be no changes in the organization, location, facilities, equipment or
procedures (operating or emergency) that relate to the Mill License or GWDP programs The
location of the pnncipal facilities and the DUSA management personnel responsible for the Mill
License and GWDP will not change.
DENISO
MINES
Letter to Mr. R. Lundberg
May 25, 2012
Page 4 of 8
Status of Surveillance Programs 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. All records will remain with
DUSA, the holder of the Mill License and GWDP. Descnptions of the facility with regard to
existing contamination and ambient radiation levels can be found in the Mill's quarterly
Groundwater Monitoring Reports, Semi-Annual Effluent Reports and other periodic reports filed
with the Co-Executive Secretary and the Executive Secretary. These descnptions will not be
impacted by the Transaction. Energy Fuels is knowledgeable of the extent and levels of
contamination and applicable decommissioning requirements at the Mill.
Financial Surety
The financial surety for the Mill will continue to be provided by DUSA, and will be unaffected by
the Transaction. A bond rider will be provided after the closing of the Transaction and change
of name of DUSA, to reflect the change of name.
No Transferee
There will be no transferee of the Mill License, GWDP or DUSA. The Mill License and GWDP
will remain with DUSA. However, there will be an indirect change of control of DUSA through
the acquisition by Energy Fuels of all of the shares of White Canyon and DMHC As the
Transaction will not involve a transfer 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 DUSA or whether or not a transferee will submit a complete
description of the proposed licensed program. There is also no need for a written agreement
between the existing and new permittee, containing a specific date for transfer of permit
responsibility, coverage, and liability between them, as referenced in Part IV L ofthe GWDP and
UAC R317-6-6.18, because DUSA will continue to be the permittee. DUSA, as licensee and
permittee, will continue to abide by all constraints, conditions, requirements and commitments in
the Mill License and GWDP. No amendments to the Mill License or GWDP will be required as a
result of the Transaction, other than to reflect the change of name of DUSA, as holder of the Mill
License and GWDP, after consummation of the Transaction and change of name of DUSA
This is therefore not an application for a new or amended Mill License or GWDP Applications
to amend the Mill License and GWDP to reflect the name change will be submitted after
completion of the Transaction.
DUSA hereby requests that the Executive Secretary provide written consent to the indirect
change of control of DUSA, the Mill License holder, as a result of the Transaction, as required
by UAC R313-19-34(2).
DUSA also requests that the Co-Executive Secretary confirm that the Transaction does not
involve a transfer within the meaning of Part IV L of the GWDP and UAC R317-6-6.18, or, if the
DENISO
MINES
Letter to Mr. R. Lundberg / • i ' • '
.:May25,,2012:;lV-/••"^^• ^'/Z}:^'" / V^ :^•''-•V..i^
.Page 5 of 8,^^^::.;': : ''r ^y:- ' \\^^^^^^
Co-Executive SecretaiV determines that the Transaction involves such a transfer, that the Co-
Executive Secretary provide wntten consent to such transfer under Part IV L of the GWDP and
UAC R317-6-6 18. - - i
If you have any -questions or require any further information, please contact the undersigned at
303-389-4130: - : | ;
Yours trj
DaVid C. Frydenlund
Vice President and General Counsel
cc: Ron F Hochstein
Harold R. Roberts v ; /•' ; ^ ^
V Jo Ann S: Tischler ;: •
Stephen P. Antony, Energy Fuels
DENISO
MINES
Letter to Mr. R Lundberg
May 25, 2012
Page 6 of 8
Attachment A-Pre-Transaction Organizational Structure of Denison^s U.S. Operations
100%
Denison Mmes
(U S A) Corp
(Delaware)
Denison Mmes Corp
(Ontano)
70
Deiuson Mines
Holdings Corp
(Delaware)
100°b
Deiuson White
Mesa LLC
(Colorado)
29 0%
White Canyon L'ranium
Limited
. , (Australia)
100%
Demson Henr\
Mountams LLC
(Colorado)
100° 100%
Ulah Energy Corporation
(Delaware)
100%
Denison Colorado
Plateau LLC •
(Colorado)
Denison Arizona
Strip LLC
(Colorado)
Denison Properties LLC
(Colorado)
DENISO
MINES
Letter to Mr. R. Lundberg
May 25, 2012
Page 7 of 8
Attachment B-Existing Energy Fuels Organization Structure
Energy Fuels Inc
(Ontano)
1 1 100%
Energy Fuels Resources
Corporation
(Colorado)
100%
Magnum Uranium Corp
(British Columbia)
100%
Magnum Minerals USA
Corp
(Nevada)
\00%
Titan Uranium Inc
(Canada)
100%
Uranium Power Corp
(Bntish Columbia)
I00°/o
Energy Fuels Wyoming
Inc
(Nevada)
DENISO
MINES
Letter to Mr. R. Lundberg
May 25, 2012
Page 8 of 8
Attachment C-Post Transaction Organization Structure
Energy Fuels Inc
(Ontano)
100%
Energ)' Fuels Resources
Corporation
(Colorado)
Magnum Uraruum Corp
(Bntish Columbia)
100%
Magnum Mmeral LI S A
Corp
(Ne%'ada)
100<"o
Denison Mmes
(L'S A)Corp
(Delaware)
100%
Titan l.'raniiun hic
(Canada)
Uranium Power Corp
(Bntish Columbia)
100%
Titan Uranium Ll S A Inc
(Nevada)
11)0%
While Canyon L'ranium
Limited
(.Australia)
70
Denison Mines
Holdmgs Corp
(Delaware)
100%
Denison WTute
Mesa LLC
(Colorado)
29 9°b
1W%
Denison Heru>
Mountams LLC
(Colorado)
100% 100% 100%
L'tah Energy Corporation
(Delaware)
Denison Colorado
Plateau LLC
(Colorado)
Denison Anzona
Stnp LLC
(Colorado)
Denison Properties LLC
(Colorado)
DENISO
MINES