Gold Near US$1,800, UEC and Denison Fight for UEX

Top Stories This Week: Gold Hits US$1,800, UEC and Denison Fight for UEXyoutu.be

The gold price was relatively steady this week, pushing briefly past the US$1,800 per ounce mark midway through the period before falling back. The yellow metal was around US$1,790 at the time of this recording on Thursday (August 11).

In focus this week was the latest US inflation data, which shows that the Consumer Price Index (CPI) was flat month-on-month in July after rising 1.3 percent in June. It was up 8.5 percent year-on-year compared to June’s 9.1 percent increase.

What’s more, the Producer Price Index, which looks at prices for final demand products, fell 0.5 percent from June, marking its first month-on-month decrease since April 2020.

Eyes are now turning to the US Federal Reserve’s September meeting, with market watchers wondering whether it will hike rates by 50 or 75 basis points.

Moving on from gold, let’s take a look at the uranium sector, where Uranium Energy (NYSEAMERICAN:UEC) and Denison Mines (TSX:DML,NYSEAMERICAN:DNN) are engaged in a bidding war for UEX (TSX:UEX,OTCQB:UEXCF).

To recap, in mid-June, UEC announced plans to acquire UEX in a deal that it said would create the largest diversified North America-focused uranium company; Denison then put in a competing bid on July 28. That offer from Denison ultimately expired, and UEX and UEC shared an amended agreement on August 8.

It seemed like that might be the end of the saga, but the very next day Denison made another proposal to acquire UEX. UEX considers the new Denison proposal superior to UEC’s latest offer, meaning that UEC has five business days from August 9 to respond.

We’re recording on the afternoon of August 11, so it’s very possible that by the time we publish this video the situation will have developed even further. As it stands, under the new Denison offer, UEX shareholders would receive 0.32 Denison shares in exchange for each UEX share held. According to Denison, that’s an implied purchase price of C$0.51 per UEX share, on a spot basis, as of the market close on August 8.

“In making this further offer, we recognize that UEC remains in the ‘driver’s seat’ through its right to match, and that our offer may not ultimately prevail.

That said, we believe that the UEX assets are so complementary to our own portfolio and Athabasca Basin specialization that it would be short-sighted not to afford another opportunity for both Denison and UEX shareholders to prosper from this combination” — David Cates, Denison Mines

With the battle for UEX in focus, we asked our Twitter followers this week if they expect to see more M&A in the uranium sector moving forward. The poll was ongoing at the time of this recording, but the vast majority of respondents said yes.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource and follow me @Charlotte_McL to share your thoughts! We’ll also keep you posted on which company comes out on top in the competition for UEX.

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