The all-scrip deal, announced in March, would see the issue of 0.294 Deep Yellow shares for every Vimy Share, which would see Vimy shareholders own 47% of the merged group.

 

Deloitte estimates a fair value for Vimy of A20-28c.

 

At the time the deal to create one of the world's largest uranium resource owners had an implied value of 28.5c per Vimy share. It raised $17 million at 17c just before the marriage was agreed to.

 

The markets have proven volatile since the merger was announced, with the spot uranium price peaking at US$64.50 per pound and falling about 26% to a current level around $48/lb, with the shares of both uranium juniors also declining.

 

Its fair value for the expanded Deep Yellow is between A69-92c.

 

Deloitte noted that Deep Yellow's shares have been particularly impacted because of its dependency on a favourable long-term uranium price to progress development of its flagship Tumas project in Namibia, which requires a US$65/lb price.

 

Deep Yellow chair Chris Salisbury says the A$250 million acquisition of Vimy is "the first major step" in the creation of a global uranium player with combined resources of 389 million pounds.

 

He said the importance of "the first major transaction in the uranium sector since 2012" could not be underestimated.

 

For Deep Yellow, it accelerates a strategy to become a multi-mine 5-10Mlb per annum producer with developments at Mulga Rock in Western Australia and Tumas in Namibia that could deliver 6.5Mlbpa into an expected uranium supply shortfall this decade. 

 

The more diversified group would be the largest uranium-focused company on the ASX, eclipsing peers such as Paladin Energy, Berkeley Energia, NexGen Energy, and Bannerman Energy both in resources and potential production profile. 

 

It would also have proven mine builder John Borshoff and members of the ex-Paladin team.

 

Expansion options would come from the group's other assets.

 

Vimy has a large position in the Northern Territory's world-class Alligator River uranium province, including the advanced Angularli deposit, plus the Kingston base metal exploration play, although that would likely become surplus to requirements in a pure-play uranium business

 

Deep Yellow is focused on Namibia, the world's fourth largest uranium producer, with upside at Tumas, the 100%-owned Omahola project plus a 39.5% stake in the Nova joint venture and 85% in the dormant Yellow Dune JV.

 

A break fee of $2.5 million is payable in some circumstances. Vimy has already spent some $4.5 million in the deal.

 

At the July 20 Vimy shareholder meeting more than 50% of those voting and at least 75% of shares must back the acquisition by Deep Yellow.

 

Vimy's board, and largest shareholder Paradice Investment Management, support the deal as "the most compelling currently available". 

 

No superior proposal has emerged so far.

 

Vimy shares have traded between 9.4-32.5c over past year and closed yesterday at 17.5c, valuing it at $203 million.

 

Based on its closing price of 65c yesterday, Deep Yellow was worth $252 million. It has trade between 58.5c and $1.37 over the past year.

 

The merged group is expected to be worth between $508 million and $675 million.