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To: Goose94 who wrote (2469)	8/29/2013 6:09:50 PM
From: Goose94	Read Replies (1) \| Respond to of 202716

Fission Uranium (FCU-V) May Go Hostile with Alpha Minerals (AMW-V) Canadian miner Fission Uranium Corp. (FCU-V) is considering a hostile bid for Alpha Minerals Inc. (AMW-V), its 50% joint venture in the Patterson Lake South uranium exploration project, after Alpha asked for more than 48 hours to consider Fission’s C$171 million buyout offer. “If Alpha continues to refuse to engage with Fission on the proposal, Fission will consider making a formal offer directly to Alpha’s shareholders,” Fission said on Monday. Last Friday, Aug. 23, Fission extended an offer to Alpha’s board of directors to acquire all issued and outstanding shares via a share transaction. Under the offer each AMW shareholder would have received 5.3 commons shares of FCU, or C$7.26 per AMW share, a 6% premium to AMW’s Aug. 23 closing price. But Alpha was given a little over two days, from 4:00pm Aug. 23 to 5:00pm Aug. 25, to make a decision. In Monday’s announcement on the offer, Fission said that Alpha Minerals had not “engaged in any meaningful discussions.” Alpha, meanwhile, said in an Aug. 26 statement that it sent Fission a written response before the deadline, asking for more time to consider the proposal and expressing concern about its timing, considering “the on-going active and very material drill program” at Patterson Lake South. “In light of these considerations, Alpha requested additional time from Fission beyond the expiry time to consider the proposal and its implications to the Alpha shareholders,” Alpha explained. Poison Pill Without Consolidation For its part, Fission said that the current JV is “sub-optimal from both a development and value maximizing perspective” and “represents a built in ‘poison pill’ on PLS. “However, we believe it has outlived its usefulness,” said Fission. “Given the strength of the results, (the JV) actually leaves both parties exposed to not trading with the proper premium, given that neither company has control of PLS.” The poison pill argument is one institutional investors are concerned with. “ As is,” wrote Cantor Fitzgerald’s Rob Chang in an Aug. 26 update, “AMW and FCU are a poison pill for each other.” Chang echoed some of Fission’s arguments for a merger, adding that “a larger public float given the combination of both companies…will lead to increased liquidity.” Dundee Capital Markets concurred. “The inherent ‘poison-pill’ has gone from benefitting shareholders to probably negatively impacting both,” wrote Dundee’s David Talbot on Aug. 26. “As it stands potential suitors would be required to purchase both companies to control 100% of the project,” he continued. “The current 50:50 structure makes that a much more challenging and expensive process as both FCW and AMW would have to be purchased. “A combined entity presents a tighter package and more appealing take-over target. For that reason we don’t see any other logical buyer for just Alpha itself, although it remains a possibility,” Talbot concluded. Investors More Confident in Fission Team But it isn’t as though the two companies haven’t already been weighing a tie-up. In its Aug. 26 statement, Alpha said it and Fission have been in talks about consolidating their operations “over the past several months,” given their 50-50 joint venture and the consistently spectacular exploration and assay results from the deposit, which is located in Saskatchewan’s Athabasca Basin. Fission Uranium itself was only recently established, the result of Denison and Fission Energy’s property swap and spin out of the Patterson Lake South asset under the ownership of Fission Uranium. With respect to the timing of Fission’s move, Cantor’s Rob Chang offered some insight, noting that AMW is scheduled to take over project management next April when the biannual operatorship changeover occurs. “We have more faith in the execution and ability of the FCU management team than the AMW management team,” Chang wrote. FCU “is responsible for all of the developments since April 2012—which is ostensibly all of it.” Based on the share prices of each company in the two weeks leading up to the offer, it would appear that investors are also more confident in the Fission team. Both Cantor and Dundee noted that Alpha has traded at a discount to Fission at an average of some 6% during the period. A Dundee analysis showed that trading volumes for Fission averaged 5.53 million shares between Aug. 12-23, at an average dollar volume of C$7.1 million. By contrast, just 280,000 AMW shares were traded during the same period, at an average dollar volume of C$1.83. Still, Cantor Fitzgerald believes it is “a little too early” for PLS to be consolidated because Cameco, Denison or even Rio Tinto could “swoop in and offer a (theoretical) 50% premium and steal the project before it develops further.” Drilling at the 31,039 hectare Patterson Lake South project has discovered significant high-grade and shallow uranium mineralization in 4 on-strike zones along a 1.05 kilometer trend. A C$6.95 million, 44 hole, 11,000 meter drill program and ground geophysics surveys is currently in progress at the deposit.