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Here is why I am bitterly disappointed with Fission management following the announcement of the merger. I was invested in Fission Uranium because I was convinced the shares would appreciate significantly with a year due to an expanded resource estimate, a positive PEA and a possible buyout of the PLS deposit. Like many other investors, I am not interested in a 2-5 year investment from here. If the merger succeeds I do not see the opportunity for significant upside in the next year.

The reason that investors have been selling off DML and FCU since the announcement is because shareholders of both companies were expecting a buyout/price appreciation in the short term and now they have lower expectations. Frankly there are better opportunities in the market than the proposed Denison Energy.

Here is some of my reasoning:

1. TIME IS MONEY

Managements stated logic for initiating the merger is that Denison Energy has more long term potential for investor interest than Fission Uranium in 2-5 years. Even if that turns out to be true, many things that could change in 2-5 years and there is no guarantee that Uranium prices will be higher then. Also this argument ignores the time value of money.

Denison Energy has less upside potential in the short term so investors would be advised to sell Fission now and perhaps buy Denison Energy again in 2 years or so

Personally I would never have bought FCU if I thought I would not get a return for 2-5 years. Even if there was no buyout, the PEA would have provided enough of a boost that I could have turned a profit in 2015. With the merger I have significantly less potential for a profit in the short run.

2. DENISON ASSETS ARE OF SIGNIFICANTLY LESS VALUE THAN PLS

The dilution and lack of meaningful assets that Denison brings to the table will mean that the PEA on PLS will have little or no impact on the shares of Denison Energy. So we cannot expect a significant return in the near future (2015). Even If the PEA and revised resource estimate is out prior to October, it will have little impact on the FCU price because of the merger proposal.

To be fair to FCU shareholders, the ratio should be at least 1.5 shares of DML for each share of FCU. At 1.26 DML shares per FCU share, DML shareholders would normally be ecstatic except that they to realize that their opportunity for a reasonable return on investment under the arrangement is lost for the time being.

3. SHORT TERM VS LONG TERM

Most FCU (and DML) retail investors were invested for a buyout and /or price spike that they assumed would come within a year. People are bailing from the stock mainly because of the upcoming dilution and lack of comparable assets. However they also have less interest in an investment that is 2-5 years off. If people wanted a long term investment they would invest in blue chip dividend paying stocks not the junior market.

4. HOSTILE BID

Management’s reason for proposing the merger was to avoid Cameco (etc) from stealing the PLS deposit by making a low ball offer at a time when the SP was low. Even if the deal goes through the shares of Denison Energy will only be trading between $1.00 and $1.40 following the roll back (investors will continue to bid it back). At the time the deal was announced Fission was trading at $1.06. So in the fall Cameco will be able to buy Denison Energy at less than $1.50, own a percentage of the Mill, the Triple R deposit and Wheeler River Deposit and sell off the rest of the low value exploration properties. This is an even better deal for Cameco than if they had bought PLS for say $1.30 in July. Dev will have created an even cheaper more attractive hostile takeover target than existed before the deal was worked out and the shareholders of Fission Uranium won’t even get their initial investment back. He will have created the very situation he was trying to avoid.

In summary:

There is a better chance of someone being successful with a low ball hostile bid for Denison Energy trading at $1.40 (after dilution), than there was for a hostile takeover of Fission Uranium trading at $1.06 on July 3 (before dilution). Thus the main reasoning management gave for the merger was bogus. Clearly they did not do a proper valuation of Denison’s assets and did not anticipate the market reaction.

The Denison Assets are worth far less than PLS so the ratio should be at least 1.5 shares DML for each share of FCU.

The share value of Denison Energy after dilution will only be between $1.00 and $1.40.

Junior mining investors have little interest in investments of 2 or more years.

The only logical conclusion is that Fission Management took care of their own interests at the expense of the Fission Shareholders. Dev and Ross see themselves as mining executives earning millions in salaries and bonuses to say nothing of the payout they will receive for brokering this deal.

The only way a Fission Shareholder can expect to see any return on investment in the foreseeable future is to vote against the merger.