A deal that was originally scheduled to close in September is being further delayed by the Canadian federal government’s extension of a national security review of the acquisition of Canadian-based Fission Uranium (TSX: FCU | OTCQX: FCUUF) by Paladin Energy (ASX: PDN | OTCQX: PALAF), an Australian uranium mining company.
Canada Gets Involved Over National Security
On October 1, Fission announced that Canada’s Minister of Innovation, Science and Industry had initiated a national security review under the Investment Canada Act (ICA). This step extended the review process, adding uncertainty to the deal’s timeline. Fission stated it was considering its options and exploring ways to address the Minister’s concerns.
The strategic significance of uranium, a resource essential to clean energy, is the focus of the national security review. With Fission’s PLS project located in Canada, a politically stable region, the government likely sees potential risks in foreign control over this critical asset.
Another Delay Adds More Pressure
The challenges continued when Fission announced on November 19 that the Minister of Innovation, Science and Industry had extended the national security review period until December 30, 2024. This extension increases uncertainty and further delays the acquisition timeline.
Fission remains engaged with the Minister to address the review’s concerns but has acknowledged that there’s no guarantee of obtaining ICA clearance. The deal will fail if the clearance is not granted, preventing Paladin from acquiring Fission Uranium and the PLS project.
Background on the Deal
Paladin Energy announced in June that it would spend $1.14 billion to purchase Fission Uranium. The agreement aimed to combine Paladin’s current global portfolio with Fission’s Patterson Lake South (PLS) project, a significant uranium discovery in the Athabasca Basin of Saskatchewan. Paladin offered Fission stockholders 0.1076 of its shares for every Fission share, a 26% premium.
But this deal has run into several problems. A major shareholder, CGN Mining Company, opposed the plan, and the Canadian government launched a national security review, further delaying the acquisition.
A Previous Win in Court
Despite the national security concerns, Fission obtained a final order from the Supreme Court of British Columbia approving the arrangement with Paladin. This was a significant legal victory for the deal. However, Fission reminded shareholders that the national security review under the ICA must be resolved before the acquisition can proceed.
Without clearance from the Canadian government, the deal cannot be completed. This development emphasized how regulatory hurdles, not shareholder approval, now stand in the way.
Why This Deal Matters
If the deal goes through, the resulting mining company could control 10% of the world’s uranium supply. It would provide Paladin with important assets in Australia, Namibia, and Canada, putting the business in a position to satisfy the rising need for nuclear energy.
However, CGN Mining’s opposition and Canada’s regulatory review highlight how geopolitical factors and resource security concerns are shaping the deal’s outcome.
Now that the court has ruled in Paladin’s favour, everyone is waiting for the Minister to make a decision, expected by December 30. The outcome will determine whether Paladin can proceed with the deal or whether Canada’s political will stops it.
For more information about the deal, see our previous article: Paladin’s Fission Uranium Acquisition Hits a Chinese Roadblock
FIGURE 1: Uranium Mining and Specialty Companies
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