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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