Atomic fusion, the process that powers the stars, occurs at astronomically high temperatures. And Canadian miners SXR Uranium One and UrAsia Energy are coming together at a time when the uranium market is white-hot. Oddly enough, uranium's renaissance is partly down to growing alarm over the environment. Nuclear power may produce radioactive waste, but it is largely free of carbon dioxide emissions. In addition, neither Russia nor the Middle East have a stranglehold over reserves of uranium. Having risen more than seven-fold since 2003, uranium now trades at $75 a pound - its highest level, in real terms, since 1980.

SXR is capitalising on this to engineer an all-stock reverse takeover of UrAsia. In spite of contributing only 40 per cent of the combined group's pro forma equity, SXR will provide its chief executive and most members of the new board. There are two reasons why UrAsia would agree to this. The first is diversification away from an asset base concentrated in Kazakhstan. The second is the price. Based on estimated resources of 116m pounds of uranium oxide, SXR is offering $24/lb for UrAsia, on an enterprise value basis - compared with an implied valuation for SXR's own uranium resources of less than $6/lb. Against that, SXR expects an estimated production cash cost for the combined group of $10/lb-$12/lb by 2012 - compared with analysts' long-term uranium price assumptions of about $40 to $50.

SXR already missed out on one deal, to buy some US uranium assets from Rio Tinto, after the latter decided last month to keep hold of them. On Monday, investors knocked SXR's shares down by 4 per cent, cutting the premium to UrAsia's closing share price on Friday implied by the offer from 13.2 per cent to under 9 per cent. Given that and the potential economics on offer, SXR must be concerned about potential interlopers. Rio and BHP Billiton, both cash rich and playing up the uranium growth story themselves, spring to mind.