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Uranium Update: Urasia (UUU.v) & SXR (SXR.to) to merge
Holders of Urasia shares will get 0.45 shares of SXR for each share of Urasia they own. The merger will create the second largest uranium company (by market capitalization) in the world. This is the second recent major uranium merger. Of course Denison mines and International Uranium merged in 2006. That company now trades under DML.to in Toronto. The Urasia-SXR combo will trade under SXR. SXR evolved from the Aflease-Southern Cross merger.
While SXR was down today, Urasia stock moved predictably higher on the news. We added Urasia to the Model Portfolio on March 31 of last year and are up 107% on this position. For now, we will hold Urasia (until the deal closes) and then reevaluate. When mergers occur, it takes time for the stocks involved to digest whatever gains or technical dislocations that occur.
Last week there were rumors of the uranium price hitting $80/lb. There was officially no change in the price, though it is likely that the price eclipses $80 before March. For now the price is at $75/lb. Today was a good day for the uranium stocks considering the broad weakness in commodity stocks. I should have a uranium stock update coming in a day or two.
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