During the last quarter of 2008, I spoke about an expectation of mergers and consolidations in the junior resource market. Crosshair Exploration and Target Exploration announced on January 6, 2009, that they have entered into a Letter Agreement to merge. This comes as good news to both companies considering it gives Crosshair an additional uranium asset that is both outside the Central Mineral Belt of Labrador and inside an existing uranium producing region, while providing Target with the necessary capital to continue to advance its flagship Bootheel project in Wyoming towards production.
Growing Demand
Although recent months have seen most sectors (and especially the junior exploration and mining sector) take a serious beating, it shouldn’t end up being a permanent situation. The spot price of uranium has increased by about 20% since the end of October and although it levelled off during the holiday season while activity dropped, it is expected to continue its upward trend in 2009. With a continually growing demand for uranium, and the supply side seeing several companies putting their projects on hold, Crosshair and Target appear well positioned with a project that is near-term and appears to have low capital and operating costs.
A Great Project
In June 2008, Target began drilling on their Bootheel Property in the Shirley Basin, Wyoming. Not only is Wyoming a uranium-mining-friendly state, but it has already produced close to 200 million pounds of uranium and currently has two producing ISR (In-Situ Recovery) mines with several more in the permitting stage. Because Bootheel is located in an area where the uranium is hosted by sandstones in roll-front settings, the company should be able to use ISR mining techniques which are a more environmentally-friendly and less expensive way to mine uranium.
Bootheel is also slated to be producing uranium in as little as four years. This relative short timeline is due in part to the fact that an ISR mine can be constructed far more rapidly than a conventional mine and also because you only need approximately 5 million pounds in the ground to go into production. With a historic uranium resource of nearly 11 million pounds, Target possesses a project that has strong potential. With the cash that Crosshair can supply, this merged company promises to be one of the survivors that makes it through these tough times. For more details on the project, please visit the project page on Target’s website: http://www.target-mining.com/s/ShirleyBasin.asp.
Keeping Busy
Crosshair currently controls just over 17 million pounds of uranium in the Central Mineral Belt of Labrador. In March of this year, the Nunatsiavut Government passed legislation placing a three-year moratorium on uranium mining within the Nunatsiavut’s self-governed Labrador Inuit Land (LIL). Although all of the company’s principal assets fall outside of LIL, “it has affected market sentiment and this cannot be ignored,” says Mark Morabito, President and CEO of Crosshair. With this new acquisition, the company will not only increase its overall uranium resource base, but will also control a project located in a region already producing uranium. And make no mistake about it, one day the Central Mineral Belt should be back. Crosshair has a firm hold on its assets there with much of the licenses good through 2017.
Deal Details
The merger will occur on the basis of 1.2 common shares of Crosshair being issued for each outstanding share of Target. Crosshair will issue approximately 14.6 million shares for 100% of the outstanding Target shares representing 15.4% of Crosshair’s shares outstanding. The transaction remains subject to regulatory approval for both companies as well as shareholder approval for Target and is expected to be completed by the end of March 2009.
Bottom Line
The merger works for both companies. It will create a uranium exploration and development company with a timeline to production. Crosshair will acquire an excellent project in a highly sought after area for much less than it would be spending to explore for uranium. Target will have the money to fully complete its earn-in and the much needed 43-101 resource to put the Bootheel project on the path to production. Although several uranium deposits have been put on hold or are being shut down, it is actually a good time for these types of deposits (ie. ISR), since they are much cheaper to get up and running and also much cheaper to operate. This new company has the money and the project to be one of the few to make it through these rough times.
Please Note – TEM and CXX are clients of Grandich Publications See disclosure
Tags: Crosshair Exploration, Grandich, Mining Shares, Target Exploration
Peter, If the US dollar collapses and is valueless, how would we treat our paper stock on its value ? Will we be dealing in credits of some kind ? Owning the physical metal gold and silver in the form of coins or small ingots is a lot easier than carrying around a pound of Uranium. It is quite confusing as to why should we own paper stock certicates when its value is considered in dollars or any other paper money!
iS IT POSSIBLE THAT THE DOLLAR WILL NOT COLLAPSE, historically I know it can as evidenced by France, Germany and other monetary systems by other countries, but is it possible to have the dollar survive without having to start all over again? I wonder if the MAYANS considered this when their calendar called for the end to occur in December of 2012 ?
Crosshair Freezes Plans in Labrador
January 9, 2009
The President of Crosshair Exploration Mark Morabito says the moratorium on uranium mining imposed by the Nunatsiavut government is a deal breaker for investors. Crosshair Exploration has spent over 30 million dollars in Labrador over the last few years and employed up to 75 workers in their exploration for uranium. President Mark Morabito says by putting a freeze on the leading Labrador project – the Aurora Energy Project – the Nunatsiavut government has scared away investors. Since there’s no more money coming in, Crosshair has been forced to change their focus to a more “friendly” mining environment. Morabito says it’s unfortunate because he knows the Labrador economy benefited from their project, and things were going well. He says they created a relationship with all the workers over the years, and that everyone did a fantastic job. Before the moratorium things were going really well, and the project was held in high regard. Even though Crosshair’s major discovery is outside the moratorium area, investors say the freeze places uncertainty on all of Labrador.
[...] Crosshair Exploration and Target Exploration See commentary [...]
WOW,,,,,,,,,,,,,,,,,,BUYERS moved into CXX with record volume………………the LIGHTS lite up the BOARD all day,,,,,,,looks like a nice BASE formation over the last year………….TAX LOSS selling makes CXX cheap with fatigued investors selling at any cost……..URANIUM is so BEATEN up and NUCLEAR is not going away,,,,,,,,,,,,SPEC money got CRUSHEd,,,,,,,,,,buying ON THE dip………some like BUYING on the SPIKE
Aurora Acknowledges Fronteer Mailing of Take-Over Bid Circular
1/23/2009 3:26:41 PM – Market Wire
ST. JOHN’S, NEWFOUNDLAND AND LABRADOR, Jan 23, 2009 (MARKET WIRE via COMTEX News Network) —
The special committee of independent directors (the “Special Committee”) of Aurora Energy Resources Inc. (”Aurora” or the “Company”) (TSX: AXU) today acknowledged that Fronteer Development Group Inc. (”Fronteer”) has announced that it has filed with securities regulators in Canada and the United States and has commenced the mailing of its formal offer (the “Fronteer Offer”) to acquire all of the common shares of Aurora that it does not already own on the basis of 0.825 of a Fronteer common share for each Aurora common share. The Fronteer Offer will expire at 8:00 p.m. (Toronto time) on March 2, 2009, unless extended or withdrawn, and is subject to certain conditions.
As previously announced, the Special Committee has retained National Bank Financial Inc. as its financial advisor to give it financial and strategic advice in connection with the Fronteer Offer in its efforts to maximize shareholder value. National Bank Financial Inc. has commenced a process of canvassing potential parties to identify possible alternative transactions that would provide greater value to shareholders than the Fronteer Offer, although there can be no assurance that any such alternative transaction will emerge. National Bank Financial Inc. will also assess the fairness of the Fronteer Offer consideration, from a financial point of view, to the Company’s shareholders, other than Fronteer and its affiliates.
There is no immediate urgency for Aurora shareholders to do anything with respect to the Fronteer Offer. The Aurora Board of Directors will communicate further with shareholders prior to the expiry of the Fronteer Offer, including the mailing of a directors’ circular to shareholders, so that Aurora shareholders will have updated information in deciding whether or not to tender to the Fronteer Offer. The Special Committee advises Aurora shareholders to defer making any decision with respect to the Fronteer Offer until the Aurora Board of Directors formally communicates its position on the Fronteer Offer.
ABOUT AURORA
Aurora is a uranium exploration and development company active in the Central Mineral Belt of coastal Labrador – one of the world’s most promising uranium districts – and in Nunavut, Canada, where it has acquired an interest in the Baker Lake Basin property.
Aurora has no debt and approximately C$99 million in cash that is fully liquid and held with a large Canadian commercial bank.
Aurora is committed to responsible
bodes well for CXX ………