Denison Mine Inks Option Deal With Foremost Lithium for Uranium Assets
Denison Mine Corp DNN has entered into an option agreement with Foremost Lithium Resource & Technology Ltd (to be renamed as Foremost Clean Energy Ltd following the transaction), which allows the latter to acquire up to 70% of Denison Mine’s interest in 10 uranium exploration properties. This deal, with an aggregate value of up to $30 million, will support Foremost Lithium’s transition to uranium exploration.
The collaboration with Foremost Lithium is expected to increase exploration activity on a portfolio of non-core Denison properties. DNN will receive consideration in the form of Foremost Lithium’s common shares (representing around 19.95% ownership in Foremost Lithium post transaction), cash or common share milestone payments and up to $20 million in project exploration expenditures.
DNN’s 10-Project Portfolio Subject to the Option Agreement
The option agreement entails Denison Mine’s certain properties in the promising Athabasca Basin, Saskatchewan. These include Murphy Lake South, Hatchet Lake, Turkey Lake, Torwalt Lake, Marten, Wolverine, Epp Lake, Blackwing, GR and CLK.
These properties cover a total area of 330,000 acres. Denison Mine has full ownership of the properties except Hatchet Lake, in which it has a 70.15% stake.
Overview of DNN & Foremost Lithium Deal
Under the terms of the agreement, Foremost Lithium may acquire up to 70% of Denison Mine’s interest in the Exploration Properties. Foremost Lithium may earn up to a 51% interest in the Hatchet Lake joint venture.
The option agreement will be carried out in three phases with Foremost Lithium increasing its stake in the projects, with various commitments at each stage, including share issuance, cash payments and exploration expenditures. Foremost Lithium is expected to act as the project operator during the term of the option agreement.
Currently named Foremost Lithium Resource & Technology Ltd., it intends to change its name to Foremost Clean Energy Ltd. following the transaction. With interests in 10 prospective properties spanning the promising, uranium-rich Athabasca Basin, Foremost Lithium is set to be an emerging North American uranium exploration company.
DNN will retain direct interests in the properties and will become Foremost Lithium’s largest shareholder. It will have certain strategic rights to participate in future exploration success from the properties.
DNN Stock’s Price Performance
Denison Mine’s shares have gained 9.8% in the past year compared with the industry’s 2.6% growth.
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Denison Mine’s Zacks Rank & Stocks to Consider
DNN currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, Eldorado Gold Corporation EGO and IAMGOLD Corporation IAG. Each of these stocks sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.06 per share. The consensus estimate for earnings has moved 17% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS’ shares have gained 135% in a year.
The consensus estimate for Eldorado Gold’s 2024 earnings is pegged at $1.32 per share. The consensus estimate for earnings has moved 16% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 430%. EGO’s shares have gained 94.9% in a year.
The Zacks Consensus Estimate for IAMGOLD’s 2024 earnings is pegged at 39 cents per share. The consensus estimate for earnings has moved 44% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG’s shares have gained 163% in a year.
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