Leading US uranium producer, Energy Fuels (TSX:EFR, NYSEMKT:UUUU) kicked off the first full week of March with the announcement of its acquisition of Mesteña, a well-known, closely-held uranium producer that operates the Alta Mesa ISR project in Texas.

For investors unfamiliar with Mesteña’s Alta Mesa project, it is a fully-permitted and constructed in situ recovery operation, complete with processing facility, and a well-established track record of lower cost uranium production. The Alta Mesa operation brings with it a large land package, totaling 195,501 contiguous acres, including 4,575 acres currently under a lease and mining permit. The remaining 190,926 acres are under a lease-option and exploration/testing permit.

Between October 2005 and November 2013, Alta Mesa produced a total of 4.6 million pounds of uranium. As a past producing project, Alta Mesa is currently on standby, ready to be restarted once the uranium market starts moving in a more positive direction.

To facilitate the transaction, Energy Fuels will issue roughly 4.5 million shares to the current owners of Mesteña. The transaction is expected to close on May 4, 2016.

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Adding to the low cost production profile

Energy Fuels has had a long standing position as the only conventional uranium producer in the United States. The company has benefited greatly from a portfolio of conventional uranium projects in  Wyoming, Utah and Arizona. However, given the sluggish nature of the uranium market, the company has turned to diversifying its uranium asset base.

In June of 2015, Energy Fuels made its first acquisition in the ISR uranium space through the purchase of Uranerz. The acquisition provided the company with access to the newly minted producing Nichols Ranch ISR mine. Now with the acquisition of Mesteña, Energy Fuels has created significant value for shareholders.

“Most importantly, the Alta Mesa Project is fully-permitted and constructed, and ready to go into production within a short period of time.” Stephen Antony, CEO of Energy Fuels said in a company statement.

“This mine definitely produced on the lower end of the global cost curve,” the CEO Antony told BNN.

Energy Fuels increases interest in Roca Honda

Apart from the acquisition of Mesteña, Energy Fuels also announced on March 4 that it had entered into a non-binding letter of intent with Sumitomo Corporation to acquire its 40 percent interest in the Roca Honda project.

Roca Honda, as investors may be aware, is one of the largest and highest grade uranium projects in the US. With the increase of 40 percent, the company will become a 100% owner of Roca Honda, which boasts also boasts an attractive cost profile and a total expected production of 25 million pounds of uranium for the project’s 9 year mine life.

“With the expected acquisition of the remaining interest in the Roca Honda Project from Sumitomo, we will have obtained 100% control over a World-class uranium project in the advanced stages of permitting.  This is particularly valuable to us, because we also own the only operating mill that can produce the uranium extracted from the Roca Honda Project.” Antony said in a statement.

Bottom line

“We have an array of projects. And that’s one thing that makes Energy Fuels different.” Antony said on BNN.

Indeed, with the largest 43-101 compliant resource in the US, spread over several production sources, the company is stacking the deck in its favor.

Unfortunately, like many other players in the sector, the depressed uranium price has left many companies’ share price, Energy Fuels included, battered and bruised. However, as the only conventional and ISR producer in the United States, the company is ready for when the market finally does pick up.

On the back of the acquisition news, Energy Fuels saw its share price increase by 4.85 percent to end the day at $3.89.

Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article. 

Energy Fuels is a client of the Investing News Network. This article is not paid-for content

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