|12/22/2015 by mdc|
|Fission announced that it entered into a binding letter of intent (LOI) with CGN Mining Company, a Chinese investment holding company engaged in trading natural uranium. Under the LOI, CGN will make a strategic investment in Fission worth approximately $82 million.|
CGN investment will consist of a $82,226,059 private placement for roughly 96,736,540 common shares, plus an additional number of common shares; all in all, the investment will bring CGN stake in Fission to 19.99 percent. The shares will be priced at $0.85 each.
Cantor Fitzgerald analyst Rob Chang states that the valuation of the transaction is low however ... he chalks that up to weak market conditions. Chang concludes, that given the weak financing markets and a need to add cash, Fission has added a highly sought-after partner at a 25% premium to its market price.
While the Chinese the investment is big news for Fission Uranium, it is also a big move for China.The Fission news release states that this is a historic moment for the Canadian uranium industry. It is the first time a Chinese company has invested directly in a Canadian uranium company. Likewise, the Chinese news releases states that they believe the transaction highlights the desire of China for stable jurisdictions with a solid history of production.
Given the many high-grade, highly feasible uranium projects in the Canadian north, the move by CGN could be indicative of things to come. Indeed, Canada is the second-largest uranium producer globally, and as such is well positioned to help China fill its growing need for uranium.
The CGN, the controlling shareholder - China Uranium Development Company, is a wholly owned subsidiary of China General Nuclear Power, a leading energy company in China. The CGN strategic investment in Fission comes only days after the Chinese State Council approved the construction of four additional nuclear power generators, bringing the total number of reactors to 8.