TORONTO, May 2, 2018 /CNW/ - Denison Mines Corp.
("Denison" or the "Company") (DML: TSX, DNN: NYSE MKT) today filed
its Consolidated Financial Statements and Management's Discussion
& Analysis ("MD&A") for the quarter ended March 31, 2018. Both documents can be found
on the Company's website at www.denisonmines.com or on SEDAR
(at www.sedar.com) and EDGAR (at www.sec.gov/edgar.shtml).
The highlights provided below are derived from these
documents and should be read in conjunction with them. All
amounts in this release are in Canadian dollars unless otherwise
stated.
David Cates, President and CEO of
Denison commented, "Today, Denison reported its results
from the first quarter of 2018 – which proved to be another
productive quarter, with numerous results showcasing the Company's
assets in the Athabasca Basin. The Company reported
significant increases in the estimated mineral resources at our
Wheeler River and Midwest projects, as well as exploration
successes from each of our winter drilling programs. At
Wheeler River, the exploration team is approaching 2018 with the
view of making a new discovery to complement the already impressive
Gryphon and Phoenix deposits. At
Waterbury, the winter program returned the second best drill hole
to date at the Huskie zone, and at Hook-Carter, Denison initiated
its inaugural drill program on the property and returned results
that are indicative of the continuation of the mineralizing system
within the Patterson Lake Corridor. As we progress
through the second quarter of the year, I am pleased to report that
we are advancing on schedule with the Wheeler River Pre-Feasibility
Study – which remains on track for completion during the second
half of 2018. With a combination of company specific and
industry related catalysts on the horizon, 2018 continues to have
the potential to be a very exciting year.
PERFORMANCE HIGHLIGHTS
- Announced increase in mineral resources estimated for
Wheeler River
On January 31, 2018, Denison
announced an 88% increase in the Indicated Mineral Resources
estimated for the Wheeler River project (63.3% Denison owned). The
result was attributable to an increase in the estimated resources
at the Gryphon deposit, which is estimated to include, above a
cut-off grade of 0.2% U3O8, 61.9 million
pounds of U3O8 (1,643,000 tonnes at 1.71%
U3O8) in Indicated Mineral Resources, plus
1.9 million pounds of U3O8 (73,000 tonnes at
1.18% U3O8) in Inferred Mineral Resources.
Together with the resources estimated for the Phoenix deposit, the Wheeler River project is
now host to 132.1 million pounds U3O8 in
total Indicated Mineral Resources – which will be used to support
the Pre-Feasibility Study ('PFS') for the project, that was
initiated in July 2016 and is
expected to be completed during the second half of 2018. Following
the resource update, Wheeler River retained and improved its
standing as the largest undeveloped high-grade uranium project in
the infrastructure rich eastern portion of the Athabasca Basin.
- Discovered high-grade uranium northeast of Wheeler River's
Gryphon deposit
On April 18, 2018, Denison reported
preliminary, radiometric equivalent uranium
('eU3O8') results from the Wheeler River
winter 2018 diamond drilling program, which totalled 21,153 metres
in 29 holes. High-grade uranium drill intercepts were obtained at
the sub-Athabasca unconformity 600
metres and 1 kilometre to the northeast of the Gryphon deposit
along the K-North trend. Results included 0.55%
eU3O8 over 5.6 metres (including 2.3%
eU3O8 over 1.0 metre) in drill hole WR-704,
and 0.94% eU3O8 over 3.5 metres (including
2.7% eU3O8 over 1.0 metre) in drill hole
WR-710D1.
- Expanded the high-grade, basement-hosted, Huskie Zone on the
Waterbury Lake property
On April 25, 2018, Denison reported
assay results from the winter 2018 diamond drilling program on the
Waterbury Lake project (64.22% Denison). The winter drilling
program, totalling 9,794 metres in 19 holes, was focused on testing
for extensions to the Huskie zone, which was discovered by Denison
in July 2017. The program was
highlighted by drill hole WAT18-452, which intersected 4.5%
U3O8 over 6.0 metres (including 5.8%
U3O8 over 4.5 metres) approximately 50 metres
down-dip of the mineralization identified during 2017. The result
from WAT18-452 suggests that mineralization at Huskie may be
controlled by cross-cutting, northeast striking faults, interpreted
to be associated with the regional Midwest structure, which
presents additional targets for exploration during the summer of
2018.
- Reported increase in mineral resources estimated for
Midwest
On March 27, 2018, Denison reported
an updated mineral resource estimate for the Midwest Main and
Midwest A deposits located on the Midwest property (25.17% Denison
owned), which is operated by Orano Canada Inc. ('Orano Canada').
Inferred Mineral Resources for the property increased by 13.50
million pounds of U3O8 and currently total
18.2 million pounds of U3O8 (846,000 tonnes
at 1.0% U3O8) above a cut-off grade of 0.1%
U3O8. Indicated Mineral Resources for the
property increased by 2.08 million pounds of
U3O8 and currently total 50.78 million pounds
of U3O8 (1,019,000 tonnes at 2.3%
U3O8) above a cut-off grade of 0.1%
U3O8.
CHANGE IN PRESENTATION CURRENCY
Effective January 1, 2018, Denison
changed its presentation currency to Canadian dollars ('CAD') from
US dollars ('USD'). This change in presentation currency was made
to better reflect the Company's business activities, which,
following the divestiture of the Mongolian and African mining
divisions in 2015 and 2016, are now solely focused in Canada, with the majority of the Company's
entities, including all of its operating entities, having the
Canadian dollar as their functional currency. The consolidated
financial statements, for all periods presented, are shown in the
new presentation currency.
SELECTED QUARTERLY FINANCIAL INFORMATION
|
|
|
|
|
|
(in thousands, except
for per share amounts)
|
|
|
Q1
2018
|
|
Q1
2017
|
|
|
|
|
|
|
Total
revenues
|
|
$
|
3,573
|
$
|
3,735
|
Net loss
|
|
$
|
(6,968)
|
$
|
(1,124)
|
Basic and diluted
loss per share
|
|
$
|
(0.01)
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
As
at March
31, 2018
|
|
As
at December
31, 2017
|
|
|
|
|
|
|
Financial
Position:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
35,768
|
$
|
3,636
|
Investments in debt
instruments (GICs)
|
|
$
|
-
|
$
|
37,807
|
Cash, cash
equivalents and GIC's
|
|
$
|
35,768
|
$
|
41,443
|
|
|
|
|
|
|
Working
capital
|
|
$
|
33,958
|
$
|
38,065
|
Property, plant and
equipment
|
|
$
|
248,088
|
$
|
249,002
|
Total
assets
|
|
$
|
316,146
|
$
|
326,300
|
Total long-term
liabilities(1)
|
|
$
|
82,730
|
$
|
84,252
|
|
|
|
|
|
|
(1)
|
Predominantly
comprised of the non-current portion of deferred revenue,
non-current reclamation obligations, and deferred income
taxes.
|
RESULTS OF CONTINUING OPERATIONS
Revenues
On February 13, 2017, Denison
closed an arrangement with Anglo Pacific Group PLC and one of its
wholly owned subsidiaries (the 'APG Transaction') under which
Denison received an upfront payment of $43,500,000 in exchange for its right to receive
future toll milling cash receipts from the MLJV under the current
toll milling agreement with the Cigar Lake Joint Venture ('CLJV')
from July 1, 2016 onwards. The APG
Transaction represents a contractual obligation of Denison to
forward to APG any cash proceeds of toll milling revenue earned by
the Company, after July 1, 2016,
related to the processing of specified Cigar Lake ore through the
McClean Lake mill, and as such, the upfront payment has been
accounted for as deferred revenue.
Effective January 1, 2018, upon
adoption of IFRS 15, the accounting policy applicable to the toll
milling deferred revenue arrangement has changed and the
comparative period has been restated to reflect this change. Refer
to the Company's unaudited interim consolidated financial
statements and related notes for more details on the accounting for
the APG Transaction related revenue.
During Q1 2018, the McClean Lake mill processed 4.4 million
pounds U3O8 for the CLJV. The Company
recorded toll milling revenue of $780,000 and related accretion expense of
$829,000.
Revenue from the Company's DES division was $2,378,000 and revenue from the Company's
management contract with UPC was $415,000 during Q1 2018.
Operating expenses
Operating expenses in the Canadian mining segment include
depreciation, mining and other development costs, as well as
adjustments, where applicable, to the estimates of future
reclamation costs in relation to the companies mining
properties. Operating expenses during Q1 2018 were
$1,442,000, including $839,000 of depreciation from the McClean Lake
mill, which is associated with the processing and packaging of
U3O8 for the CLJV.
Operating expenses at DES during Q1 2018 totaled $2,024,000 and relate primarily to care and
maintenance, and environmental consulting services provided to
clients, and includes labour and other costs.
Exploration and evaluation
During Q1 2018, the Company continued to focus on its highest
priority projects in the Athabasca
Basin region in Saskatchewan. Denison's share of exploration
and evaluation expenditures in the quarter was $6,254,000. The Company's Athabasca land package increased during the
first quarter from 351,365 hectares (267 claims) to 353,007
hectares (270 claims) owing to selective staking contiguous with
Denison's existing claims.
Wheeler River
Project Highlights:
- Updated resource estimate confirms Wheeler River as the
largest undeveloped high-grade uranium project in the eastern
Athabasca
On January 31, 2018, Denison
announced an updated mineral resource estimate for the Gryphon
deposit following drilling results from a further 144 drill holes
completed during 2016 and 2017. The updated mineral resource
estimate for Gryphon, above a cut-off grade of 0.2%
U3O8, includes 61.9 million pounds of
U3O8 (1,643,000 tonnes at 1.71%
U3O8) in Indicated Mineral Resources, and 1.9
million pounds of U3O8 (73,000 tonnes at
1.18% U3O8) in Inferred Mineral
Resources.
The Phoenix deposit, located
approximately three kilometres southeast of Gryphon, is estimated
to include Indicated Mineral Resources of 70.2 million pounds of
U3O8 above a cut-off grade of 0.8%
U3O8 (166,000 tonnes at 19.1%
U3O8). The mineral resource estimates are, as
disclosed in the Technical Report with an Updated Mineral Resource
Estimate for the Wheeler River Uranium Project, Northern Saskatchewan, Canada dated
March 9, 2018 and prepared by
Mark Mathisen, C.P.G. of Roscoe
Postle Associates Inc. and Ken
Reipas, P.Eng of SRK Consulting (Canada) Inc.
With the update to the Gryphon deposit resource estimate, the
combined Indicated Mineral Resources estimated for Wheeler River
have increased by 88% to 132.1 million pounds
U3O8, which will be used to support the
Pre-feasibility study ('PFS') initiated for the project in 2016 and
expected to be completed in the second half of 2018.
- Proximal to existing uranium mining and milling
infrastructure
The property is located in the infrastructure rich eastern
portion of the Athabasca Basin,
which is host to existing uranium mining and milling
infrastructure, including the 22.5% Denison owned McClean Lake
mill. The Wheeler River property lies alongside provincial highway
914 and a provincial powerline.
- Increasing Denison ownership
As previously announced on January
10, 2017, Denison entered into an agreement with its Wheeler
River Joint Venture partners, Cameco Corp ('Cameco') and JCU
(Canada) Exploration Company,
Limited ('JCU'), to fund 75% of Joint Venture expenses in 2017 and
2018 (ordinarily 60%) in exchange for an increase in Denison's
interest in the project up to approximately 66%. Under the terms of
the agreement, Cameco is funding 50% of its ordinary 30% share in
2017 and 2018, and JCU continues to fund based on its 10% interest
in the project. On January 31, 2018,
Denison announced it had increased its interest in the Wheeler
River project during 2017 from 60% to 63.3%, in accordance with
this agreement.
Exploration Program:
Denison's share of exploration costs at Wheeler River amounted
to $3,127,000 during Q1 2018. The
program was completed in early April
2018, with a total of 21,153 metres drilled in 29 diamond
drill holes. The winter 2018 drilling program was focused on
step-out drilling along strike of the Gryphon deposit and
reconnaissance level regional exploration along the K-North and
K-West trends. Refer to Denison's press release dated April 18, 2018 for results of the winter 2018
drill program.
Evaluation Program:
During Q1 2018, Denison's share of evaluation costs at Wheeler
River amounted to $866,000, which
related to work on PFS engineering and environmental
activities.
PFS Activities highlights include:
- The advancement of engineering activities: including
Gryphon shaft design; Gryphon mine ground stability and support
analysis; Gryphon mine backfill trade-off study; radiological
assessments; Phoenix ground freeze
engineering; Phoenix mine design;
water treatment plant design; Wheeler surface facilities;
metallurgical analysis and milling capacity assessment; and
metallurgical test programs.
- The continuation of environmental and sustainability
activities: including the community consultation and engagement
process; data collection and assessment of aquatic environment,
terrestrial environment and atmospheric environment; and waste rock
geochemical testing.
Exploration Pipeline Properties
During the 2018 winter season, Denison also carried out drilling
programs at Waterbury Lake and Hook-Carter, while Orano Canada
completed a winter drilling program, as operator, at the Midwest
property.
At Waterbury Lake (Denison 64.22% interest and operator), the
winter drilling program involved 9,794 metres of diamond drilling
in 19 drill holes, and was focused on 50 metre step-out drilling
along strike and down-dip of the Huskie zone, as well as
wider-spaced reconnaissance drilling to the west along the
geological trend. The winter drilling program is part of a larger
14,400 metre drill program planned for Waterbury Lake in 2018, with
the remainder expected to be completed during the summer months.
Refer to Denison's press release dated April
18, 2018 for results of the winter 2018 drill program at
Waterbury Lake.
At Hook Carter (Denison 80% interest and operator), Denison
completed 3,062 metres of diamond drilling in four drill holes. All
four holes encountered hydrothermal alteration in both the
sandstone and the basement lithologies associated with graphitic
structures, which are indicative of the continuation of the
mineralizing system within the Patterson Lake Corridor.
At Midwest (25.17% Denison owned), the winter 2018 drill program
comprised 4,709 metres in 12 completed diamond drill holes. On
March 27, 2018, Denison also reported
an updated mineral resource estimate for the Midwest Main and
Midwest A deposits located on the Midwest property.
General and administrative expenses
Total general and administrative expenses were $1,832,000 during Q1 2018. These costs are
mainly comprised of head office salaries and benefits, office costs
in multiple regions, audit and regulatory costs, legal fees,
investor relations expenses, project costs, and all other costs
related to operating a public company with listings in Canada and the
United States, as well as non-recurring project or legal
costs.
Other income and expenses
During Q1 2018, the Company recognized a loss of $3,456,000 in other income. The loss is
predominantly due to net losses on investments carried at fair
value of $3,405,000.
Equity share of income from associates
During Q1 2018, the Company recognized a loss of $643,000 from its 18.55% equity share of its
associate GoviEx Uranium Inc.
Liquidity and capital resources
Cash and cash equivalents were $35,768,000 at March 31,
2018.
In April 2018, the Company amended
its CAD$24 million credit facility
with the Bank of Nova Scotia. The amendment was related to
the Company's change in presentation currency, discussed above.
The covenant to maintain a specified level of tangible net
worth has been changed to $131,000,000 (from USD$150,000,000). The credit facility is fully
utilized for non-financial letters of credit in relation to future
decommissioning and reclamation obligations.
Outlook for 2018
There was no change in the Company's outlook for 2018.
ABOUT DENISON
Denison was formed under the laws of Ontario and is a reporting issuer in all
Canadian provinces. Denison's common shares are listed on the
Toronto Stock Exchange (the 'TSX') under the symbol 'DML' and on
the NYSE American (formerly NYSE MKT) exchange under the symbol
'DNN'.
Denison is a uranium exploration and development company with
interests focused in the Athabasca
Basin region of northern Saskatchewan,
Canada. In addition to its 63.3% owned Wheeler River
project, which hosts the high grade Phoenix and Gryphon uranium deposits,
Denison's exploration portfolio consists of numerous projects
covering approximately 353,000 hectares in the Athabasca Basin region, including 332,000
hectares in the infrastructure rich eastern portion of the
Athabasca Basin. Denison's
interests in Saskatchewan also
include a 22.5% ownership interest in the McClean Lake Joint
Venture ('MLJV'), which includes several uranium deposits and the
McClean Lake uranium mill, which is currently processing ore from
the Cigar Lake mine under a toll milling agreement, plus a 25.17%
interest in the Midwest deposits and a 64.22% interest in the J
Zone deposit and newly discovered Huskie zone on the Waterbury Lake
property. Both the Midwest and J Zone deposits, as well as the
Huskie zone, are located within 20 kilometres of the McClean Lake
mill.
Denison is engaged in mine decommissioning and environmental
services through its Denison Environmental Services ('DES')
division, which manages Denison's Elliot
Lake reclamation projects and provides post-closure mine and
maintenance as well as environmental consulting services to a
variety of industry and government clients.
Denison is also the manager of Uranium Participation Corporation
('UPC'), a publicly traded company listed on the TSX under the
symbol 'U', which invests in uranium oxide in concentrates
('U3O8') and uranium hexafluoride
('UF6').
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
Certain information contained in this news release constitutes
'forward-looking information', within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and similar
Canadian legislation concerning the business, operations and
financial performance and condition of Denison.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as 'plans', 'expects',
'budget', 'target', 'scheduled', 'estimates', 'forecasts',
'intends', 'anticipates', or 'believes', or the negatives and/or
variations of such words and phrases, or state that certain
actions, events or results 'may', 'could', 'would', 'might' or
'will be taken', 'occur', 'be achieved' or 'has the potential
to'.
In particular, this news release contains forward-looking
information pertaining to the following: the benefits to be derived
from corporate transactions; the estimates of Denison's mineral
reserves and mineral resources; exploration, development and
expansion plans and objectives, including the results of the PEA,
the completion of the PFS, and statements regarding anticipated
budgets, fees and expenditures; capital expenditure programs and
reclamation costs and Denison's share of same; expectations
regarding Denison's joint venture ownership and other contractual
interests in its properties and projects and the continuity of its
agreements with its partners and other counterparties; expectations
regarding adding to its mineral reserves and resources through
acquisitions and exploration; expectations regarding the toll
milling of Cigar Lake ores; expectations regarding revenues and
expenditures from operations at DES; expectations regarding
revenues from the UPC management contract; and expectations of the
impacts of changes in accounting policies. Statements relating to
'mineral reserves' or 'mineral resources' are deemed to be
forward-looking information, as they involve the implied
assessment, based on certain estimates and assumptions that the
mineral reserves and mineral resources described can be profitably
produced in the future.
Forward looking statements are based on the opinions and
estimates of management as of the date such statements are made,
and they are subject to known and unknown risks, uncertainties and
other factors that may cause the actual results, level of activity,
performance or achievements of Denison to be materially different
from those expressed or implied by such forward-looking statements.
Denison believes that the expectations reflected in this
forward-looking information are reasonable but no assurance can be
given that these expectations will prove to be accurate and may
differ materially from those anticipated in this forward looking
information. For a discussion in respect of risks and other factors
that could influence forward-looking events, please refer to the
factors discussed in Denison's Annual Information Form dated
March 27, 2018 under the heading
'Risk Factors'. These factors are not, and should not be construed
as being exhaustive.
Accordingly, readers should not place undue reliance on
forward-looking statements. This cautionary statement expressly
qualifies the forward-looking information contained in this news
release. Any forward-looking information and the assumptions made
with respect thereto speaks only as of the date of this news
release. Denison does not undertake any obligation to publicly
update or revise any forward-looking information after the date of
this news release to conform such information to actual results or
to changes in Denison's expectations except as otherwise required
by applicable legislation.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred Mineral
Resources: This news release may use the terms 'measured',
'indicated' and 'inferred' mineral resources. United States investors are advised that while
such terms are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does not recognize
them. 'Inferred mineral resources' have a great amount of
uncertainty as to their existence, and as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or other economic
studies. United States
investors are cautioned not to assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. United States
investors are also cautioned not to assume that all or any part of
an inferred mineral resource exists, or is economically or legally
mineable.
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SOURCE Denison Mines Corp.