The effort by Australian-listed Paladin Energy [ASX:PDN] to acquire Fission Uranium TSX:FCU, the TSX-listed uranium explorer, has seemingly been blocked by a major Chinese investor in Fission. CGN Mining is a subsidiary of China General Nuclear Power, which currently controls an 11.26% stake in Fission Uranium.
The deal has been in the pipeline for some time now, with Paladin announcing back in June that it wanted to acquire Fission Uranium for USD 845mn. It needed the approval of two thirds of Fission’s shareholders to get the deal over the line however.
The acquisition, if successful, would create the third largest publicly-traded uranium stock in the world. Paladin had already committed to listing the new entity in Canada. The combined group would be worth approximately USD 3.5bn and could be responsible for around 10% of total global uranium output.
The deal is now in front of the courts in British Columbia with hearings due to continue today (26 September).
CGN Mining was “on board”
The issue of the Chinese minority shareholder had been raised by The Armchair Trader at a previous investor meeting with Fission Uranium in London. At the time management assured investors that the CGN Mining was “on board” with the deal, although it now seems to have changed its mind.
CGN Mining is known to be at the forefront of China’s efforts to secure supplies of vital minerals outside China. Uranium is near the top of the company’s shopping list. CGN has been very active in the acquisition of uranium mines in Namibia (Husab) and Kazakhstan.
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CGN’s overseas acquisition campaign has partly been driven by its efforts to break the monopoly of big brother and former shareholder China National Nuclear Corp (CNNC). It has, for example, secured a JV in Semizbay U with Kazatomprom.
The Canadian government has been seeking to reduce the level of Chinese participation in the local mining sector, although according to research from the University of Alberta, Chinese investors have started buying into smaller miners in Canada, which are still hungry for finance. Some USD 1.6bn is known to have flowed into Canadian miners from Hong Kong and China in 2023 alone.
According to the University of Alberta, much will depend on the sort of mining project the deal is exposed to, and the posture of both parties. Chinese investors remain among the most active in Canadian mining stocks, and it will be tough for smaller miners to turn them away.
Call for shareholder support
Fission Uranium had been having difficulty rallying sufficient support for the deal from existing shareholders, due to a lack of participation in the process from its considerable base of retail investors. It had taken the unusual step of asking a British Columbia court to allow owners of options on the stock to also vote on the deal.
Fission Uranium had also been facing legal challenges from First Nations, which management said had been unexpected, as most First Nations parties with interests in the miner’s Canadian projects had already been consulted. The Métis Nation are believed to have brought a case to a local court in Saskatchewan as part of an opening gambit in talks with Fission Uranium.
The proposed deal comes at a time when uranium demand is being driven up by the global trend towards decarbonisation. Nuclear energy is the second largest source of clean energy globally. With China poised to become the largest consumer of uranium by 2029, the US government is known to be keen to secure supplies of uranium from nearby and friendly countries like Canada.
Fission Uranium is currently in the process of awaiting its final EIS (Environmental Impact Study) on Patterson Lake South. Meeting with investors in London last week, Bob Hemmerling, part of the Fission management team, said that elections in the province of Saskatchewan had the potential to slow the application process down.
