Denison Mines (DNN -1.00%), which is again ramping up significant exploration of the Phoenix deposit (Wheeler River) in 2014, is a very compelling long with or without acquisition rumors. Past rumors have suggested Cameco (CCJ 0.16%) could be an interested buyer. That actually makes sense considering the McClean Lake Facility in Saskatchewan, in which Denison owns a 22.5% stake, is the only Athabasca Basin mill that processes high-grade uranium from Cigar Lake without down blending. Therefore the present valuation of Denison, which is still trying to acquire 100% of Rockgate Capital (it currently owns 89%), may ultimately be too hard for Cameco to pass up since it could be well-served to add production through acquisition of depressed assets.
Shares of Denison Mines have been in quicksand in recent months, but it's worth noting KEPCO's stake in Denison seems to have dropped below 9.5% according to an article that appeared in late December in The Korea Herald. KEPCO, which has a flow-through offering with Denison, had just under a 13% stake in the company according to Denison's third quarter filings, so it may account for the lack of upside in shares of Denison. Considering the Korean government has called on companies, including KEPCO, to cut debt by selling non-core assets, a further declining stake below 5% could negate KEPCO's right of first opportunity under that flow-through offering if Denison intends to sell any of its substantial assets. This is a scenario that, if played out, may attract would-be suitors to take a more serious look at acquiring Denison.
