Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Energy Fuels Acquires Strathmore Minerals, Announces Potential For 500% Production Increase

Energy Fuels (TSE:EFR), one of America's largest conventional uranium producers supplying approximately 25 per cent of the uranium produced in the U.S., announced the completion of its acquisition of Strathmore Minerals Corp. (TSE:STM), a Canadian-based resource company, Tuesday, putting it on track to increase production by up to 500 per cent.

Under the terms of the transaction, the Toronto-based uranium producer acquired, by way of a plan of arrangement, all of the issued and outstanding shares of Strathmore effective August 30. The arrangement stipulated that Strathmore shareholders received 1.47 common shares of Energy Fuels for each common share of Strathmore held, and now own approximately 19.5 per cent of the common shares of Energy Fuels currently outstanding.

The acquisition was approved by shareholders of Energy Fuels earlier in August, who also gave the go-ahead for a share consolidation the same day, with approval levels for the two propositions topping 99 per cent and 98 per cent, respectively. The share consolidation has not yet been implemented.

Also effective as of the closing of the transaction, Energy Fuels increased the size of its board of directors to 11, adding former president and director of Strathmore, Steven Khan, and Vice President Overseas Resources Project Development for Korea Electric Power Corporation, Eun Ho Cheong.

"Energy Fuels' acquisition of Strathmore Minerals is an important step toward achieving our goal of becoming the dominant uranium producer within the US, which is the world's largest nuclear power market and heavily dependent on imported uranium for over 90 per cent of its supply requirements," said president and CEO of Energy Fuels, Stephen P. Antony, in a company statement released with the announcement.

Energy Fuels operates the only conventional uranium mill currently operating in the U.S., the White Mesa Mill, which is capable of processing 2,000 tons per day of uranium ore. Energy Fuels, which is also a significant producer of vanadium, has projects located throughout the western United States, including producing mines and mineral properties in various stages of permitting and development.

The company, which has steadily grown its resource base, found an ideal fit with Strathmore, one of the largest holders of in-the-ground uranium in the U.S. The all-stock transaction combines Strathmore's Gas Hill assets in Wyoming with Energy Fuels' Sheep Mountain project, in close proximity, into a stand-alone production facility.

"Energy Fuels possesses a large, unique portfolio of US uranium assets, which should grow in strategic importance, as we believe the US will increasingly focus on secure, domestic energy supplies. In my opinion, the need for a secure, domestic supplier of uranium for the US market will be underscored following the expiration later this year of the US-Russia HEU agreement, which currently provides approximately half of the uranium supply imported into the US. In the past 15 months, we have grown to become the second largest uranium producer in the U.S., with expected production of approximately 1.15 million lbs. of U3O8 during FY-2013," Antony went on to say.

"Furthermore, I believe Energy Fuels now has the potential over time to increase our production, as market conditions warrant, to four to five times current FY-2013 levels, which I believe would represent industry leading production growth potential on a global scale. "

Energy Fuels was trading at 21 cents per share on the Toronto Stock Exchange the Friday before the acquisition closed. Shares inStrathmore Minerals closed at 30.5 cents in Toronto the last trading session before the announcement.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.