Mineral sands miner Base Resources Ltd and US-based Energy Fuels Inc. have announced plans to merge to create a global critical minerals business, which will focus on development of the “world-class” Toliara project in Madagascar.

ASX- and AIM-listed Base Resources is an established mid cap “pure” mineral sands company, with operations also in Kenya. NYSE- and TSX-listed Energy Fuels Inc. is a leading US producer of uranium, rare earth elements (REEs), and vanadium.

The companies said on April 22 that they have reached a binding agreement for Energy Fuels to acquire 100% of the issued shares in Base Resources by way of a scheme of arrangement.

Toliara is an advanced-stage, large-scale critical mineral deposit underpinned by the Ilmenite, Zircon and Monazite-rich Ranobe deposit in the southwest of the country.

Future monazite production from the African project will be processed at Energy Fuels’ fully-owned White Mesa Mill in the US into separated rare earth element (REE) oxides, “at low capital and operating cost, setting a new paradigm for low-cost, globally competitive” US-centred rare earth oxide production.

Base’s management will continue to oversee Toliara and the completion of operations and closure of Kwale operations in Kenya.

“The combined group will have the financial and technical capability to not only build Toliara into one of the best critical mineral projects in the world,” said Tim Carstens, Base Resources managing director, “but also to develop an integrated value chain for the rare earth elements that are essential to the global energy transition”.

Energy Fuels is currently engaged in high-level discussions with various US government agencies and other offices that provide support for critical mineral projects, domestically and abroad, the US company said.

“The transaction is complementary to and further strengthens Energy Fuels' US-leading uranium production capability and plans,” it added.

Base shareholders are to receive 0.0260 Energy Fuels common shares plus an unfranked special dividend of AUD0.065 for each Base share held, equating to total consideration of about AUD0.302 a share.

Following implementation of the transaction, Base shareholders will hold about 16.4% of the combined group, which will have a pro forma market capitalisation of about $1.14mn.

Shareholders in Base will receive shares and a special dividend worth in total approximately AUD0.302 (15.7p) per share, a premium of 188% to the last closing price.

Two major investors in Base (owning 26.5% and 24.8% of the shares on issue) have said they will vote in favour, according to the statement.