White Canyon Uranium Limited
TSX VENTURE : WU
ASX : WCU

White Canyon Uranium Limited

February 23, 2011 09:16 ET

White Canyon Uranium Recommends Cash Takeover Offer by Denison Mines

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 23, 2011) - White Canyon Uranium Ltd (TSX VENTURE:WU)(ASX:WCU) ("White Canyon") is pleased to announce that it has reached an agreement with Denison Mines Corp ("Denison"), a publicly listed company headquartered in Canada, under which Denison will offer to acquire 100% of the fully paid ordinary shares in White Canyon by way of an off-market takeover (the "Offer").

The Offer

The Offer price is $0.24 cash per White Canyon share ("Offer Price").

The Offer Price values White Canyon at approximately A$57 million and represents a significant premium to White Canyon's recent share price as follows:

  • a premium of 20% over the closing price of White Canyon's shares on the last day prior to the trading halt pending this announcement (18 February 2011) of $0.200;
  • a premium of 23% over the volume weighted average share price of White Canyon's shares in the 30 trading day period prior to 18 February 2011, being $0.194; and
  • a premium of 51% over the volume weighted average share price of White Canyon's shares in the 90 trading day period prior to 18 February 2011, being $0.159.

The Offer is subject to an Implementation Agreement entered into by White Canyon and Denison on 23 February 2011 and will be conditional upon the satisfaction of certain conditions, including the requirement that Denison acquires a relevant interest in at least 90% of White Canyon's ordinary share capital on issue during, or at the end of, the Offer period. A full list of the conditions of the Offer is attached to this announcement as Appendix A.

The Implementation Agreement also includes a break fee of $500,000 (excluding GST) payable by either party in certain circumstances, as well as customary "lock-up" restrictions in connection with competing proposals. A summary of the key terms of the Implementation Agreement is attached to this announcement as Appendix B.

The Directors of White Canyon have engaged PKF as an Independent Expert to opine on whether the Offer is fair and reasonable.

Mike Shumway, the operations manager of White Canyon and substantial shareholder, has entered into a Pre-Bid Acceptance Deed with Denison, agreeing to accept the Offer, or any improvement of the Offer, in the absence of a Superior Proposal and subject to the Independent Expert not opining that the Takeover Bid is not fair and not reasonable to shareholders of White Canyon. This acceptance of the Offer is with respect to those shares held by Mike Shumway that represent 19.9% of the fully diluted shares of White Canyon.

Recommendation

The Directors of White Canyon, with the assistance of its advisors, have carefully considered the intended Offer and unanimously recommend that Shareholders accept the Offer in the absence of a superior proposal and subject to an independent expert not opining that the Offer is not fair and not reasonable. The Directors further advise that they will accept the Offer in respect of any shares in White Canyon that they own or control, whether currently held or those to be issued upon exercise of any White Canyon options held, subject in each case to there being no superior proposal and subject to an independent expert not opining that the Offer is not fair and not reasonable. The Directors collectively have a relevant interest in approximately 8.5% of White Canyon's fully diluted share capital.

Comment

Commenting on the Offer, the Chief Executive Officer of White Canyon, Mr Mike Bynum, said "The White Canyon Uranium Board of Directors has invested a great deal of time and effort in closely evaluating the offer by Denison. After thorough consideration of all aspects of the company's future prospects and challenges, we unanimously support and recommend the Offer from Denison as being in the best interest of White Canyon Uranium and our shareholders."

Timetable

White Canyon understands that the Bidder's Statement will be lodged with ASIC and dispatched to White Canyon Shareholders around mid-March 2011. This document will outline the full details of the Offer and the Offer process, as well as instructions on how to accept the Offer.

Advisors

White Canyon is being advised by Apex Capital Partners as financial advisor and Norton Rose Australia as Australian legal advisor and Salley Bowes Harwardt as Canadian legal advisor.

Denison is being advised by Cormark Securities as financial advisor and Blakes, Cassels & Graydon as Canadian legal advisor and Price Sierakowski as Australian legal advisor.

White Canyon has appointed PKF as an independent expert, as well as Ross Glanville and Bruce McKnight as mining valuation experts.

About White Canyon

White Canyon Uranium Ltd is a Perth, Western Australia-based company focused on acquisition, exploration, and development of uranium producing properties. The company's U.S. operations are headquartered in Moab, Utah and comprise multiple mining tenements covering approximately 15,500 acres in Southern Utah.

About Denison

Denison Mines Corp. is an intermediate uranium producer in North America, with mining assets in the Athabasca Basin region of Saskatchewan, Canada and the southwest United States including Colorado, Utah and Arizona. The company has ownership interests in two conventional uranium mills in North America. Denison also has a strong exploration and development portfolio including the Phoenix discovery in the Athabasca Basin as well as large land positions in the United States, Canada, Mongolia and Zambia.

Attachments

  1. Conditions of the Offer

  2. Summary of Key Terms of Implementation Agreement  

Attachment A: Conditions of Offer

The completion of the Offer and any contract that results from acceptance of the Offer are subject to fulfilment or waiver of the following conditions:

1. Minimum Acceptance
   
  At or before the end of the Offer Period, Denison has a relevant interest in more than 90% (by number) of the sum of the Shares on issue at that time.
   
   
2. Regulatory approvals
   
  The Offer is subject to all necessary relevant Regulatory Approvals being obtained.
   
   
3. Change in control by contract
   
  The Offer is subject to there being no existing material agreements or arrangements under which other parties have rights to terminate or vary a material agreement or arrangement with White Canyon or acquire a material interest in White Canyon as a result of Denison's acquisition of Shares, except where a waiver has been given.
   
   
4. Material Adverse Change and Prescribed Occurrence
   
  There being no Material Adverse Change or Prescribed Occurrence between 23 February 2011 and the end of the Offer Period (each inclusive).
   
   
5. No material failure in ASX filings
   
  Between 23 February 2011 and the end of the Offer Period, Denison does not become aware that a document filed by White Canyon with the ASX contains a materially incorrect or misleading statement or has material omission and, if capable of remedy, that statement is not remedied by White Canyon within 5 Business Days of receiving notice from Denison or ASX of the details of the statement or omission.

Attachment B: Summary of the Implementation Agreement

The following is a summary of the key terms of the Implementation Agreement between White Canyon and Denison.

1.   No-Shop Obligation
 
1.1   No Solicitation  
 
    Subject to paragraph 1.3, during the No-Shop Period, White Canyon must ensure that neither it nor any of its employees, officers, agents, consultants or Advisers (and, to the extent it is reasonably able to influence them, its associates), except with the prior written consent of Denison, directly or indirectly solicit or initiate any expression of interest, offer or proposal by any person other than Denison to:
   
   
   
 
    (a)   acquire or become the holder (whether by share purchase, scheme, capital reconstruction, purchase of assets, tender offer or otherwise) of, or otherwise have an economic interest in:
       
         
        (1)   all or a substantial part of White Canyon's business; or
             
        (2)   greater than 20% of White Canyon's share capital;
             
    (b)   acquire control (as determined in accordance with section 50AA of the Corporations Act) of White Canyon; or
         
    (c)   otherwise acquire or merge with White Canyon (whether by way of joint venture,dual listed company structure or otherwise),
         
    but nothing in this paragraph prevents either party continuing to make normal presentations to brokers, portfolio investors and analysts in the ordinary course of business.  
     
     
1.2   White Canyon Board's Obligations
 
    Subject to paragraph 1.3 during the No-Shop Period, White Canyon Board must not:
 
    (a)   approve, or recommend to Shareholders any transaction of the kind set out in paragraphs 1.1(a), 1.1(b), and 1.1(c); or
       
         
    (b)   give any information regarding the business or affairs of either White Canyon or Denison or any of their controlled entities:
       
        (1)   that is confidential and commercially sensitive; and
             
        (2)   that could be used by a competitor or potential competitor of that Party to cause material prejudice to the Party or any of its controlled entities, or the Takeover Bid,
           
           
    to a competitor or potential competitor of White Canyon or Denison respectively.      
     
     
1.3   Response to Superior Proposal
 
    Neither paragraphs 1.1, 1.2 or 1.4:
 
    (a)   require White Canyon to perform any obligation which:
         
        (1)   would, in the opinion of White Canyon Board determined in good faith,involve a breach of the fiduciary duties owed by any White Canyon director;
           
            or
             
        (2)   would otherwise be unlawful;
             
    (b)   prevent White Canyon or any of its employees, officers, agents, consultants or Advisers continuing to make normal presentations to brokers, portfolio investors and analysts in the ordinary course of business; or
       
       
    (c)   for the avoidance of doubt, but without limiting paragraphs 1.3(a) or 1.3(b), prevent White Canyon meeting or negotiating with, and providing information concerning White Canyon or its Subsidiaries to, any person who makes an unsolicited offer which, in the reasonable judgment of White Canyon Board, is likely to lead to a Superior Proposal.
       
       
 
1.4   Notification of Approaches
 
    During the No-Shop Period, White Canyon must, subject always to paragraphs 1.3, notify Denison promptly if it becomes aware of any negotiations or discussions, or of any approach to initiate any negotiations or discussions in respect of any expression of interest, offer or proposal or any formal expression of interest, offer or proposal of a kind referred to in paragraph 1.1, which is to proceed or in respect of which due diligence investigations are to be undertaken.  
   
   
   
 
2.   Break Fee  
 
2.1   Payable by White Canyon
 
    White Canyon undertakes to Denison that if the BIA is terminated by Denison:
 
    (a)   under paragraphs 3.1(b) , 3.1(c), 3.1(e) or 3.1(j) set out below; or
         
    (b)   pursuant to a breach of a representation or warranty given by White Canyon under the BIA,  
       
    then White Canyon must pay to Denison the Break Fee within 10 Business Days of receipt of notice in accordance with the BIA.    
     
2.2   Repayment by Denison
 
    If:    
 
    (a)   Denison or White Canyon (as applicable) terminates the BIA in accordance with paragraphs 3.1(c) or 3.1(e); and
       
    (b)   White Canyon has paid the Break Fee to Denison; and
         
    (c)   Denison makes a proposal for White Canyon within 2 months of the date the BIA is terminated in accordance with paragraphs 3.1(c) or 3.1(e) which is superior to the Superior Proposal and is recommended by White Canyon Board,
       
       
    then Denison must repay the Break Fee to White Canyon within 10 Business Days of the Target Board recommending the proposal.
 
2.3   Payable by Denison
 
    The Denison must pay to White Canyon the Break Fee within 10 Business Days of receipt of notice in accordance with this Agreement if:
     
    (a)    Denison withdraws the Takeover Bid other than in accordance with paragraph 3.1 or the Corporations Act; or
 
    (b)     there is a breach of a representation or warranty given by Denison under the BIA.
 
       
         
3.    Termination Rights
     
3.1   Right to Terminate
 
    The BIA may be terminated at any time prior to the last day of the Offer Period:
 
    (a)   by either Denison or White Canyon if any court or regulatory authority has issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Takeover Bid, or has refused to do anything necessary to permit the Takeover Bid, and the order, decree, ruling, other action or refusal has become final and non-appealable;
       
       
       
    (b)   by either Denison or White Canyon if the other is in material breach of the BIA and, to the extent that where the breach is capable of rectification, the Party not in breach has given written notice to the other setting out the relevant circumstances and stating an intention to terminate, and the breach has not been rectified within 5 Business Days or within the period ending on 5pm on the day prior to the last day of the Offer Period (whichever is the shorter period);
       
       
       
         
    (c)   by Denison if:
         
        (1)   White Canyon Board has received a Superior Proposal; and
             
        (2)   White Canyon Board withdraws or adversely modifies White Canyon Board Recommendation and concurrently approves or recommends the implementation of a Superior Proposal;
           
           
    (d)   by White Canyon or Denison if Denison does not receive acceptances of Offers for 90% of the Shares at the end of the Offer Period in accordance with the minimum bid acceptance condition in the Agreed Bid Terms and Denison has not otherwise waived that condition;
       
       
       
    (e)   by either White Canyon or Denison if:
         
        (1)   White Canyon Board has received a Superior Proposal; and
             
        (2)   pursuant to that Superior Proposal the proponent of the Superior Proposal becomes entitled to or increases its entitlement to more than 50% of the voting power (as defined in the Corporations Act) in White Canyon,
           
        during the Offer Period;
(f)   by Denison if there is a breach by White Canyon of a representation or warranty given by White Canyon under the BIA;
         
(g)   by either Party if any of the Agreed Bid Terms is not satisfied or waived;
         
(h)   by either Party if the Independent Expert opines that the Takeover Bid is not fair and not reasonable to Shareholders;
         
(i)   by White Canyon if the terms and conditions of the Offer differ in any material respect from the Agreed Bid Terms;
         
(j)   by Denison if:
         
    (1)   any director of White Canyon does not recommend or indicates that he or she will not recommend the Offer; or
         
    (2)   any director of White Canyon does not accept the Offer in respect of any Shares that they, or their associates, own or control; or
         
    (3)   all of the Options have not been either cancelled or acquired by Denison pursuant to an agreement to cancel or acquire as contemplated in the BIA,
         
    and both:
         
    (4)   White Canyon has not received a Superior Proposal; and
         
    (5)   the Independent Expert does not opine and continues to not opine that the Takeover Bid is not fair and not reasonable to Shareholders; or
         
(k)       by White Canyon or Denison if the Offer lapses or the Offer Period expires and the Takeover Bid has not been declared free from the Agreed Bid Terms (i.e. become unconditional) prior to the expiry of the Offer Period.
         
         
4. Definitions
 
     
Term   Meaning
     
Adviser   means a lawyer, accountant, banker, financier or other professional adviser, engaged or consulted by a Party;
   
     
Agreed Bid Terms   means the terms and conditions on which the Takeover Bid is made in accordance with the BIA.
   
     
BIA   means the agreement entered into between Denison and White Canyon dated 23 February 2011 pursuant to which Denison will make the Takeover Bid.
   
   
     
Break Fee   means $500,000.
     
Denison   Denison Mines Corp.
     
Material Adverse Change    means, between 23 February 2011 and the end of the Offer Period (each inclusive), any matter, event or circumstance that is, or is reasonably likely to have a materially adverse effect on:   
     
    (i)   the ability of White Canyon to perform its obligations under the BIA;
       
    (ii)   the financial position, performance or prospects of White Canyon or any of its Subsidiaries or their respective businesses or affairs,
       
       
    that, individually or when aggregated together, would reasonably be expected to result in a diminution of the net assets of White Canyon by more than $500,000, other than:
   
   
    (iii)   any matter, event or circumstance which the parties agree in writing is not a Material Adverse Change;
       
     
    (iv)   matters that are required to be done in order to implement the Takeover Bid; or
       
     
    (v)   matters which White Canyon fully and fairly disclosed to Denison or in an announcement made to the ASX prior to the Announcement Date.
       
     
No-Shop Period    means the period from and including 23 February 2011 to the earlier of:   
     
    (i)   6 months from the date of the BIA;
         
    (ii)   the termination of the BIA in accordance with its terms; and
       
    (iii)   the last day of the Offer Period.
     
Offer    means the offer to acquire the Shares made in connection with the Takeover Bid.   
     
Offer Period    means the period that the Offer is open for acceptance.   
     
Options   means the options to be issued to the directors and the company secretary as approved by the shareholders of White Canyon at the Annual General Meeting held on 30 November 2010.
   
     
Prescribed Occurrence   means (other than as required or contemplated by the BIA) the occurrence of any of the following: 
     
    (i) White Canyon converting all or any of its Shares into a larger or smaller number of Shares under section 254H of the Corporations Act;
     
         
    (ii) White Canyon or a Subsidiary of White Canyon resolving to reduce its share capital in any way or reclassifying, combining, splitting or redeeming or repurchasing directly or indirectly any of its shares;
     
     
       
    (iii) White Canyon or a Subsidiary of White Canyon:
         
      A.   entering into a buy-back agreement; or
         
      B.   resolving to approve the terms of a buy-back agreement under section 257C(1) or 257D(1) of the Corporations Act;
       
       
    (iv) White Canyon or a Subsidiary of White Canyon declaring, paying or distributing any dividend, bonus or other share of its profits or assets which has not been declared on or before the date of BIA;   
     
     
       
    (v) White Canyon or a Subsidiary of White Canyon issuing shares, or granting an option over its shares, or agreeing to make such an issue or grant such an option, other than:
       
      A.  the issue of Options to the directors and the company secretary of White Canyon; and
       
      B.   the conversion of the $US2.5 million secured convertible note established on 16 July 2010 with Ms Lulu Yu into 23,583,626 Shares;
       
       
    (vi) White Canyon or a Subsidiary of White Canyon issuing or agreeing to issue, securities convertible into Shares or debt securities;  
     
     
    (vii) White Canyon or a Subsidiary of White Canyon making any change to its constitution;
     
    (viii) White Canyon or a Subsidiary of White Canyon disposing, or agreeing to dispose, of the whole, or a substantial part, of its business or property;
       
    (ix)  White Canyon or a Subsidiary of White Canyon: 
         
      A.  acquiring or disposing of;  
         
      B.  agreeing to acquire or dispose of; or 
         
      C. offering, proposing, announcing a bid or tendering for, 
         
      any business, assets, entity or undertaking ("Acquisition or Disposal Event"), the value of which, when aggregated with any other Acquisition or Disposal Event, exceeds $500,000, without Denison's prior written consent (consent will be deemed to be given by Denison if Denison does not respond in writing to White Canyon's request for consent within 2 Business Days after White Canyon's request is given to Denison) otherwise than in the ordinary course of business;   
         
    (x)  White Canyon or a Subsidiary of White Canyon creating, or agreeing to create, any mortgage, charge, lien or other encumbrance over the whole, or a substantial part, of its business or property otherwise than:  
         
      A.  in the ordinary course of business; and 
 
         
      B.  a lien or other encumbrance which arises by operation of law or legislation securing an obligation that is not yet due; 
         
    (xi)  White Canyon or a Subsidiary of White Canyon:  
         
      A.  entering into any contract or commitment requiring payments by White Canyon and its Subsidiary in excess of $500,000 ("Contract"); or
         
      B.  accepting as a settlement or compromise of a material matter (relating to an amount in excess of $500,000), less than the full compensation due to White Canyon or a Subsidiary of White Canyon, 
         
      otherwise than in the ordinary course of business except with the prior written consent of Denison (consent will be deemed to be given by Denison, if Denison does not respond in writing to White Canyon's request for consent within 2 Business Days after White Canyon's request is given to Denison);  
         
    (xii)  the Court making an order for the winding up of White Canyon or of a Subsidiary of White Canyon;  
         
    (xiii)  an administrator of White Canyon or of a Subsidiary of White Canyon being appointed under the Corporations Act;  
         
    (xiv)  White Canyon or a Subsidiary of White Canyon being deregistered as a company or otherwise dissolved;  
         
    (xv)  White Canyon or a Subsidiary of White Canyon executing a deed of company arrangement;  
         
    (xvi)  a receiver, or a receiver and manager, being appointed in relation to the whole, or a substantial part, of the property of White Canyon or of a Subsidiary of White Canyon; or  
         
    (xvii)  White Canyon or a Subsidiary of White Canyon licensing, selling or otherwise giving any third party rights under any of the material Intellectual Property that White Canyon or a Subsidiary of White Canyon owns or has a right to use, other than in the ordinary course of business or pursuant to contractual requirements in effect on the date of the BIA.  
         
Regulatory Approvals   means any consent, registration, filing, agreement, notarisation, certificate, licence, approval, permit, authority or exemption from, by or with a Governmental Agency necessary to implement the Takeover Bid.
   
   
     
Share   means a fully paid ordinary share in the capital of White Canyon, including all shares on issue as at the end of the Offer Period.
   
     
Subsidiary   has the meaning given in Section 9 of the Corporations Act.
     
Superior Proposal   means a bona fide written offer made by a person other than Denison to: 
       
    (i) acquire or become the holder (whether by share purchase, scheme, capital reconstruction, purchase of assets, tender offer or otherwise) of, or otherwise have an economic interest in:
     
      A. all or a substantial part of White Canyon's business; or
       
      B. greater than 20% of White Canyon's share capital;
    (ii) acquire control (as determined in accordance with section 50AA of the Corporations Act) of White Canyon; or
     
         
    (iii) otherwise acquire or merge with White Canyon (whether by way of joint venture, dual listed company structure or otherwise),
     
       
    on terms which White Canyon Board determines in good faith (after consultation with its Advisers) to be superior from the viewpoint of White Canyon and its Shareholders (taking into account, among other things, all legal, financial, regulatory and other aspects of the offer and the identity of the offer or) to the Takeover Bid provided for in the BIA.
   
   
   
     
Takeover Bid   means a takeover bid made by Denison that satisfies the requirements of the BIA and complies with all applicable provisions of the Corporations Act.
   
   
White Canyon   White Canyon Uranium Limited (ACN 115 453 962)
         
White Canyon Board   means the board of directors of White Canyon.
         
White Canyon Board
Recommendation
  means the statement of White Canyon Board unanimously recommending the transaction the subject of the BIA subject to:
     
    (i) White Canyon Board withdrawing its recommendation in the discharge of its fiduciary duties, including in the event that:
     
     
      (A) White Canyon receives a Superior Proposal; or
         
      (B) the Independent Expert opines that the Takeover Bid is not fair and not reasonable to White Canyon Shareholders; and
       
       
    (ii) any White Canyon directors' duties under White Canyon's constitution, the Corporations Act and at general law.
     

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information