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Uranium Energy Corp Announces Merger To Acquire The Anderson Property In Arizona

NYSE Amex Equities Exchange Symbol - UEC


CORPUS CHRISTI, TX, May 6 /PRNewswire-FirstCall/ - Uranium Energy Corp (NYSE-AMEX: UEC) (the "Company" or "UEC") and Concentric Energy Corp. ("Concentric") announced today that their respective boards of directors have approved a stock-for-stock merger (the "Merger") to be effected under the laws of Nevada, and that the companies have signed a definitive Merger Agreement & Plan of Merger (the "Merger Agreement").  Upon completion of the Merger, it is anticipated that approximately 1,253,440 shares of UEC common stock will be issued to the former Concentric stockholders to acquire Concentric and its undivided 100% interest in the Anderson Property, a 5,785-acre mineral claim block located in Yavapai County, Arizona, with a previous history of small-scale uranium production.

The Anderson Property

The Anderson Property is comprised of 289 contiguous, unpatented lode mining and placer claims covering 5,785 acres (nine square miles).  It is located in a remote area of Yavapai County, Arizona, approximately 75 miles northwest of Phoenix.  In 2001, Concentric staked this claim block, which consolidated portions of the mineral claims held in the 1970s by Minerals Exploration Company ("MinEx"), a subsidiary of Unocal Corporation, and Urangesellschaft U.S.A., Inc. ("UG").

Public filings indicate that anomalous radioactivity was first detected in 1955 near the Anderson Property, which led to small-scale open pit mining at its north end resulting in a total of 10,758 tons of ore averaging 0.15% or 33,230 pounds of U 3O 8 being shipped to Tuba City, Arizona, for custom milling.  Production ceased in 1959 when the Atomic Energy Commission terminated its ore purchasing program.  This information was obtained from a report by Sherborne in 1979 entitled "Major Uranium Discovery in Volcaniclastic Sediments, Basin and Range Province, Yavapai County, Arizona".

Since then, over 1,400 exploration drill holes have been completed on the Anderson Property, including 1,320 downhole gamma surveys and 5,596 chemical assays, almost all of which were completed in the 1970s by MinEx on the northern section and by UG on the southern section.  In late 1977, a preliminary feasibility study relating to the northern section of the Anderson Property was completed for MinEx by Morrison-Knudsen Company, Inc. ("MK").  By mid-1978, based on the favorable economics indicated in the preliminary feasibility study, a detailed final feasibility study was completed for MinEx by MK which evaluated a 2,000 ton per day mill to support open pit mining on the Anderson Property.  In September 1979, UG's engineering group completed an internal preliminary feasibility study of an underground mine relating to the southern section of the Anderson Property.  These reports are further supported by numerous other positive studies including third party resource analyses by Chapman, Wood and Griswold, metallurgical studies and leach pilot tests by Hazen Research.  However, these historical studies pre-date NI 43-101 and should not be treated as current.  The Company has not performed the necessary work to verify these historical studies and the results should not be relied upon.  By the end of 1979, global and market events led both MinEx and UG to abandon their mineral claims in the Anderson Property.

In 2006, Concentric conducted the first drill program on the Anderson Property since the abandonment by MinEx and UG.  A 25-hole drill program was completed to confirm the historical MinEx exploration database by "twinning" a significant number of former MinEx drill holes.  A total of 24 rotary and one core drill holes totalling 8,087 feet were completed.  No confirmation holes were drilled on the former UG portion of the Anderson Property. In 2008, Concentric commissioned Mountain States Research & Development International, Inc. to complete a process engineering assessment, the results of which are presented in a report entitled "Final Report Preliminary Process Engineering and Cost Estimates, Anderson Uranium Project, Yavapai County, Arizona."

Terms of the Merger

Under the terms of the Merger Agreement, Concentric's stockholders will receive 0.1075 of one share of UEC common stock for every one share of Concentric common stock.  With 11,659,905 shares of Concentric common stock outstanding, it is anticipated that approximately 1,253,440 shares of UEC common stock will be issued to the former Concentric stockholders upon completion of the Merger, representing approximately 1.7% of the issued and outstanding common stock of UEC.  Based on the closing market price of UEC's common stock of $3.20 per share on May 5, 2011, the total share consideration to be issued to Concentric's stockholders will have value of approximately $4.011 million.  Upon completion of the Merger, a wholly-owned subsidiary of UEC will be the surviving corporation and become vested with all of Concentric's assets and property.

It is a condition precedent to the completion of the Merger that the Company is able to achieve a contemporaneous closing of the full assignment to UEC of Global Uranium Corp.'s ("Global") rights (the "Rights") under the terms and conditions of an underlying Option and Joint Venture Agreement dated April 13, 2010 between Global and Concentric, with respect to the Anderson Property.  As a consequence, the Company has recently entered into an Acquisition Agreement with Global (the "Global Acquisition Agreement") to acquire such Rights in consideration of UEC's delivery to Global of (i) an initial payment of $150,000, (ii) a further $200,000 payment thereby releasing and assigning to the Company any security previously granted by Concentric to Global and (iii) 350,000 restricted shares of the Company's common stock and a final payment of $150,000 at the closing of the Merger.

The Merger is subject to various other conditions, including: the approval of the stockholders of Concentric; completion within 30 days by each party, to its satisfaction, of due diligence investigation of the other party's business and affairs to determine the feasibility, economic or otherwise, of the Merger; the number of holders of Concentric common stock exercising dissent rights available to them under Nevada law shall not exceed 5% of the total issued and outstanding shares of Concentric common stock; and other customary conditions.  In addition, each party's obligation to consummate the Merger is subject to the accuracy of the representations and warranties of the other party and material compliance of the other party with its covenants.

The ratio (the "Exchange Ratio") which determines the number of shares of UEC common stock that are to be issued on completion of the Merger for all of the shares of Concentric common stock is subject to reduction by the shares of Concentric common stock held by those stockholders, if any, who elect to exercise dissent rights under Nevada law.  The Exchange Ratio also may be adjusted by good faith negotiation between the parties, if required, having regard to the results of the due diligence investigation of either party's business and affairs by the other party.

The Merger Agreement also contemplates that: (a) all of the outstanding common stock purchase warrants of Concentric (the "Concentric Warrants") will be disposed of by the holders thereof in consideration for the issuance by UEC of non-transferable common stock purchase warrants (the "UEC Exchange Warrants").  The number of UEC Exchange Warrants issuable will be determined with reference to the Exchange Ratio.  Currently, the Exchange Ratio is anticipated to be 0.1075 of one UEC Exchange Warrant for every one Concentric Warrant.  The exercise price of each UEC Exchange Warrant is anticipated to be determined by dividing the per share exercise price of the corresponding Concentric Warrants by 0.1075, subject to adjustment if the Exchange Ratio is adjusted.

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