Premier American Uranium: Acquisition of Nuclear Fuels Inc. Creates Significant US Exposure

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Before the market open on June 5, Premier American Uranium (PUR) and Nuclear Fuels Inc. (NF) jointly announced that they have entered into an arm’s length definitive agreement in which Premier has agreed to acquire all of the issued and outstanding common shares of Nuclear Fuels by way of court-approved plan of arrangement. Under the terms of the arrangement, shareholders of Nuclear Fuels are to receive 0.33 of a common share of Premier American Uranium for each NF Share held. On closing of the arrangement (expected in sometime in Q3/2025 after a scheduled NF Special Meeting and receipt of all necessary regulatory approvals), existing shareholders of Premier American Uranium and Nuclear Fuels will own approximately 59% and 41% (on a basic shares outstanding basis), respectively, of the pro forma outstanding PUR shares. The exchange ratio of 0.33 implies a consideration of C$0.43 per NF share, implying a 54% premium to NF’s pre-announcement close on June 4. That said, keep in mind that following a November 2024 financing, NF currently holds ~$0.12 per share of cash in treasury.

With a combined 12 total development projects, once the transaction closes sometime in Q3/2025, Premier American will become among the largest pure-play uranium exploration/ development companies in the US. Moreover, on a pro-forma basis, ownership will remain dominated by a collection of uranium industry stalwarts with long standing experience in the US uranium space. Premier American is once again executing on its plan of being a consolidator in the US uranium sector. We maintain our C$3.00 per share 12-month price objective which equates to potential upside of +127% from the most recent close.

BUILDING CRITICAL MASS IN ALL THE KEY DOMESTIC URANIUM JURISDICTIONS

Before the market open on June 5, Premier American Uranium (PUR) and Nuclear Fuels Inc (NF) jointly announced that they have entered into an arm’s length definitive agreement in which Premier has agreed to acquire all of the issued and outstanding common shares of Nuclear Fuels by way of court-approved plan of arrangement. Provided that the transaction closes sometime in Q3/2025, the combined company will rank as one of the largest from a pure-play US project standpoint - 12 projects spanning the Four Corners States and Wyoming. The total portfolio (totaling over 104,000 acres) will be highlighted by various prospective exploration projects along with numerous projects with past uranium production. Just as importantly, the acquisition of Nuclear Fuels will add much needed size, scale and liquidity to Premier American. This will allow the company to stand out among a very fractured US exploration/development sector while also providing for a broader shareholder base and capital markets visibility. Given that both companies accounted for a combined 209,490 feet of drilling in FY/2024 (far exceeding their peer group), we expect plenty of news flow and catalysts for many of the projects, over the remainder of the year.

Since IPO on the TSXV in December 2023, management has been active with making transformational acquisitions and taking the role as consolidator. Following the acquisition of American Future Fuel (Cebolleta) in June 2024, the announced acquisition of Nuclear Fuels marks the latest transformational acquisition for Premier American. As evidenced by an exploration target estimated between 11.5M-30.0M lbs U3O8, Kaycee provides large scale exploration upside given historic and 2024 drilling on the property. Other uranium projects coming by way of Nuclear Fuels include Tensleep, Bobcat and Bootheel (all in Wyoming), Lisbon Valley in Utah and Moonshine, located in Arizona. The acquired portfolio fits well with the various projects currently in the Premier American portfolio, highlighted by the past producing Cebolleta flagship project located in New Mexico (18.6M lbs Indicated at 0.14% U3O8 and 3.9M lbs Inferred at 0.10% U3O8) and the Cyclone project located in Wyoming (exploration target between 7.9M-12.6M lbs U3O8). Cyclone (Great Divide Basin) is located approximately 150 miles from Kaycee, which lies in Wyoming’s Powder River Basin. These two Basins form two of the US’ most productive ISR areas. The acquisition of Nuclear Fuels is being backed by current founding Premier American shareholders which include Sachem Cove Partners LLC, and IsoEnergy (ISO).

KAYCEE PROVIDES FOR LARGE EXPLORATION UPSIDE POTENTIAL IN WYOMING

Historic exploration at the Kaycee Project, (3,800 drill holes drilled mostly in the late 1970s) has confirmed uranium mineralization over more than 1,000 vertical feet in all three historically productive sandstones within the Powder River Basin. This makes the Kaycee Project unique as the only project in the Powder River Basin where all three formations (Wasatch, Fort Union, and Lance), are known to be mineralized and potentially amenable to ISR extraction. The majority of the mineralized trends have yet to be explored with drilling concentrated only on approximately 10% of the trend. Nuclear Fuels management was very active on the exploration front last year - between July-December 2024, the company drilled 206 holes at Kaycee, totaling 124,720 feet. Over the last two years, 411 exploration drill holes were drilled totaling 225,260 feet.  Some more recent drilling highlights included 0.205% eU3O8 over 8.0ft for a GT of 1.640 at the Stirrup West Zone, 0.233% eU3O8 over 7.0ft for a GT of 1.631 at the Saddle Zone, and 0.117% eU3O8 over 5.0ft for a GT of 0.585 at the Spur Zone. Coupled with the 3,800 historic drill holes, a NI43-101 compliant Technical Report was published last year with a total exploration target on Kaycee estimated between 11.5M lbs U3O8 (0.061%) and 30.0M lbs U3O8 (0.10%). 

 Strategically located in the Powder River Basin in north-east Wyoming, notable ISR projects located in close vicinity to Kaycee include Nichols Ranch and Hank (both, owned by Energy Fuels, UUUU), Irigaray and Christensen Ranch (both owned by Uranium Energy Corp, UEC), and North Butte (Cameco, CCJ).

TRANSACTION CLOSE EXPECTED IN Q3/2025

The Nuclear Fuels special meeting is expected towards the end of Q3/2024. The transaction will be effected by way of a plan of arrangement completed under the Business Corporations Act (British Columbia). The Transaction will require approval by at least 66 2/3% of the votes cast by Nuclear Fuels shareholders. Closing of the transaction is subject to the receipt of applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature. Note that a break fee of $2.0M will be payable to Premier American under certain circumstances should the transaction not conclude. At close, the company’s BOD is expected to be comprised of up to five members from the current directors or management of Premier American Uranium and two nominees from the current directors or management of Nuclear Fuels. The Company will be managed by the current executive team of Premier American Uranium, led by Colin Healey as CEO. That said, the acquisition of Nuclear Fuels is being backed by current founding shareholders of Premier American which include Sachem Cove Partners LLC, and IsoEnergy (ISO). The estimated post-transaction ownership will include Sachem Cove Partners LLC (23.2%), enCore Energy Corp. (9.5%), IsoEnergy Ltd. (5.4%) and Mega Uranium Ltd. (2.3%).

EXPECTED NEAR-TERM TIMELINE

• July 2024: Drill program to commence at Cyclone

• Summer 2024: Published Preliminary Economic Assessment (PEA) for Cebolleta

• Q3/2025: Nuclear Fuels special shareholders meeting

• Q3/2025: Nuclear Fuels transaction close

VALUATION

The transaction exchange ratio of 0.33 PUR shares for every one of NF implies a consideration of C$0.43 per NF share, implying a 54% premium to NF’s pre-announcement close on June 4. Note as well that this sizeable premium takes into consideration the ~C$12M of cash (or ~$0.12 per share) NF currently holds in treasury given a financing which closed in November 2024. As such, backing out of the cash component reduces the implied premium.

Though not entirely like-for-like in the table above, strictly for benchmarking purposes, on an EV/lb basis, NF trades at a current $12.18 multiple, owing to the minimal 1.7M lb historic resource at Kaycee. When factoring the mid point of the current exploration target at Kaycee (20.8M lbs), the valuation multiple declines to a very modest $0.99. This is considerably lower than most peers within the Four Corners or Wyoming region.

Factoring corporate adjustments and using a per lb valuation for both Cyclone and Cebolleta, we derive a C$4.87 per share valuation. Applying a 0.60x NAV multiple, we maintain our C$3.00 per share (rounded), 12-month price objective. This equates to upside of +127% from the most recent close. Shares of Premier American Uranium currently trade at a P/NAV of 0.27x.