Denison Mines Corp. ("Denison" or the "Company") (TSX:DML)(NYSE
MKT:DNN)(NYSE Amex:DNN) today reported its financial results for
the nine months ended September 30, 2012. All amounts in this
release are in U.S. dollars unless otherwise indicated.
The Company recorded a net loss from continuing operations of
$9,647,000 or $0.03 per share for the three months ended September
30, 2012 compared with net income from continuing operations of
$7,853,000 or $0.02 per share for the same period in 2011.
For the nine months ended September 30, 2012, the net loss from
continuing operations was $20,854,000 or $0.05 per share compared
to a net loss from continuing operations of $8,513,000 or $0.02 per
share for the nine months ended September 30, 2011. The net loss
from discontinued operations was $92,648,000 or $0.25 per share for
the nine months ended September 30, 2012 compared to net income of
$3,181,000 or $0.01 per share for the nine months ended September
30, 2011.
The results of the discontinued operations include a charge of
$97,944,000 for the nine months ended September 30, 2012 related to
an impairment of the U.S. Mining Division which was recorded as a
result of the transaction with Energy Fuels Inc. which closed on
June 29, 2012.
Financial Highlights
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Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
(in thousands except September September September September
for per share amounts) 30, 2012 30, 2011 30, 2012 30, 2011
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Results of Operations:
Total revenues $ 2,496 $ 5,513 $ 8,531 $ 21,364
Net income (loss)
from continuing
operations (9,647) 7,853 (20,854) (8,513)
Net income (loss)
from discontinued
operations 188 7,631 (92,648) 3,181
Basic and diluted
income (loss) per
share from
continuing
operations (0.03) 0.02 (0.05) (0.02)
Basic and diluted
income (loss) per
share from
discontinued
operations - 0.02 (0.25) 0.01
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As at As at
September December
30, 2012 31, 2011
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Financial Position:
Working capital $ 39,063 $ 93,516
Property, plant and
equipment 249,970 367,370
Total assets 303,018 504,486
Total long-term
liabilities $ 29,978 $ 38,391
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Revenue
Revenue from the environmental services division ("DES") for the
three months and nine months ended September 30, 2012 was
$2,080,000 and $7,245,000 compared to $5,064,000 and $12,195,000 in
the same periods in 2011. Revenue is lower than 2011 due to the
expiry of the Faro contract in March 2012.
Revenue from the management contract with Uranium Participation
Corporation for the three months and nine months ended September
30, 2012 was $416,000 and $1,286,000 compared to $449,000 and
$1,476,000 in the same periods in 2011.
Operating Expenses
The McClean Lake mill remains on stand-by. The Cigar Lake Joint
Venture continues to pay nearly all of the stand-by expenses under
the terms of the toll milling agreement. Operating costs for the
three months and nine months ended September 30, 2012 totaled
$906,000 and $2,165,000 including stand-by costs compared to
$154,000 and $1,145,000 for the three months and nine months ended
September 30, 2011. Operating costs were higher in 2012 than 2011
due to increased funding of the Surface Access Borehole Resource
Extraction ("SABRE", formerly known as MED) program, which is not
part of stand-by costs.
Operating costs include expenses relating to DES amounting to
$1,992,000 for the three months and $7,078,000 for the nine months
ended September 30, 2012 compared to $4,825,000 and $11,660,000 for
the same periods in 2011.
Mineral Property Exploration
Denison is engaged in uranium exploration, as both operator and
non-operator of joint ventures and as operator of its own
properties in Canada, Mongolia and Zambia. For the three months
ended September 30, 2012 exploration expenditures totaled
$3,269,000 as compared to $6,395,000 for the three months ended
September 30, 2011. For the nine months ended September 30, 2012
exploration expenditures totaled $10,685,000 compared to
$11,986,000 for the same period in 2011.
Denison's share of exploration spending on its Canadian
properties, located in the Athabasca Basin region of northern
Saskatchewan, totaled $1,206,000 for the three months ended
September 30, 2012 compared to $2,541,000 for the three months
ended September 30, 2011 and totaled $5,024,000 for the nine months
ended September 30, 2012 compared to $6,264,000 for the nine months
ended September 30, 2011. The 15,000 metre 2012 summer drilling
program is complete on the Company's 60% owned Wheeler River
project (see news release dated October 4, 2012). A total of 9,200
metres of drilling was completed in 19 holes during the quarter.
The results from 2011 and 2012 drilling will be incorporated in a
revised resource estimate for the Phoenix deposit with expected
completion by the end of 2012.
Exploration expenditures of $309,000 for the three months ended
September 30, 2012 ($2,802,000 for the three months ended September
30, 2011) and $3,131,000 for the nine months ended September 30,
2012 ($3,771,000 for the nine months ended September 30, 2011) were
incurred in Mongolia on the Company's Gurvan Saihan Joint Venture
("GSJV") properties. A 29,600 metre drill program was completed on
the Urt Tsav and Ulziit properties in the second quarter. The
drilling on Ulziit in 2012 approximately doubled the defined extent
of the mineralized system.
The Company currently has an 85% interest in the GSJV in
Mongolia. The other party to the joint venture is the Mongolian
government with a 15% interest. Under the Nuclear Energy Law of
Mongolia, the Mongolian participant in the GSJV is entitled to hold
a 34% to 51% interest in the GSJV, depending on the amount of
historic exploration that was funded by the Government of Mongolia,
to be acquired at no cost to the Mongolian participant. This
interest would be held by Mon-Atom LLC, the Mongolian state-owned
uranium company.
The Company and Mon-Atom are proceeding with restructuring the
GSJV to meet the requirements of the Nuclear Energy law, pending
receipt of mining licences and government reviews and
authorizations. In March 2012, the Company acquired the 15%
interest of Geologorazvedka, a Russian entity, for cash
consideration of $742,000 and the release of Geologorazvedka's
share of unfunded joint venture obligations. This additional
interest is expected to be transferred to Mon-Atom as part of the
restructuring plan. The final restructuring of the GSJV is expected
to result in the Company having its interest reduced to 66%. As a
result of the parliamentary elections in Mongolia this year,
efforts on this front have been delayed. Discussions are on-going
and the timing for completion of the restructuring is uncertain at
this time.
Exploration expenditures of $1,754,000 and $2,530,000 for the
three and nine months ended September 30, 2012 were made on the
Company's Mutanga project in Zambia as compared to $1,052,000 and
$1,951,000 for the three and nine months ended September 30, 2011.
A total of 8,900 metres of drilling was completed in 70 drill holes
during the quarter. In early 2012, the company estimated an
Inferred Mineral Resource for the newly discovered Dibwe East
deposit, consisting of 28,246,000 lbs. contained in 39,800,000
tonnes grading 322 ppm U3O8 (above a cutoff grade of 100 ppm U3O8).
A 17,000 metre drilling program is ongoing on this project with the
objective of further increasing the Mineral Resources.
Discontinued Operations
On June 29, 2012, the Company and Energy Fuels Inc. ("EFR")
completed a transaction (the "Transaction") whereby EFR acquired
all of Denison's subsidiaries comprising the US Mining Division
from Denison in exchange for 425,440,872 common shares of EFR (the
"EFR Share Consideration"). Immediately following the closing of
the Transaction, Denison completed a Plan of Arrangement (the
"Denison Arrangement") whereby it reorganized its capital and
distributed the EFR Share Consideration to Denison shareholders on
a pro rata basis as a return of capital in the course of that
reorganization. Upon completion of the Denison Arrangement, Denison
shareholders of record on June 29, 2012 received approximately
1.106 common shares of EFR for each common share of the Company
they owned while retaining their Denison shares.
Immediately prior to the sale, the Company tested the U.S.
Mining Division for impairment using the fair value of the EFR
Share Consideration as the recoverable amount. The Company
concluded that the recoverable amount of the U.S. Mining Division
was lower than its carrying value. As a result, the Company
recognized an impairment charge of $97,944,000 in the nine months
ended September 30, 2012.
As a result of the Transaction, Denison has accounted for its
U.S. Mining Division as a discontinued operation.
Liquidity & Capital Resources
Cash and cash equivalents were $40,657,000 at September 30, 2012
compared with $53,515,000 at December 31, 2011. The decrease of
$12,858,000 was due primarily to expenditures on property, plant
and equipment totaling $12,236,000.
Net cash used in operating activities was $870,000 during the
nine months ended September 30, 2012 and is comprised of net loss
for the period adjusted for non-cash items and for changes in
working capital items. Significant changes in working capital items
during the period include an increase of $13,943,000 in inventories
and a decrease of $9,067,000 in trade and other receivables.
Net cash used in investing activities was $13,302,000 consisting
primarily of expenditures on property, plant and equipment of
$12,236,000 and an increase in restricted cash of $631,000 and cash
divested of $552,000.
Net cash from financing activities totaled $42,000 consisting of
an increase in debt obligations.
In total, these sources and uses of cash resulted in a net cash
outflow after the effect of foreign exchange of $12,858,000 during
the period.
On October 26, 2012, the Company completed a private placement
of 4,145,000 common shares issued on a "flow through" basis
pursuant to the Income Tax Act (Canada) at a price of CAD$1.69 per
share for gross proceeds of CAD$7,005,050.
Outlook
Denison's exploration and development plans for Canada and
Mongolia for the year are largely complete. The exploration program
in Zambia is nearing its final stages and will be completed in
November. Total expenditures on development and exploration
projects in 2012 are estimated at $19.6 million. Exploration and
development plans for 2013 are currently being determined.
Qualified Person
The disclosure of scientific and technical information regarding
Denison's properties in this press release was prepared by or under
the supervision of Steve Blower, P. Geo., the Company's Vice
President, Exploration, and Terry Wetz, P.E., Vice President,
Project Development, who are Qualified Persons in accordance with
the requirements of National Instrument 43-101.
Additional Information
Denison's consolidated financial statements for the nine month
period ended September 30, 2012 and related management's discussion
and analysis are available on Denison's website at
www.denisonmines.com or under its profile on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov/edgar.shtml.
About Denison
Denison Mines Corp. is a uranium exploration and development
company with interests in exploration and development projects in
Saskatchewan, Zambia and Mongolia. As well, Denison has a 22.5%
ownership interest in the McClean Lake uranium mill, located in
northern Saskatchewan, which is one of the world's largest uranium
processing facilities. Denison's exploration project portfolio
includes the world-class Phoenix deposit located on its 60% owned
Wheeler River project also in the Athabasca Basin region of
Saskatchewan.
Denison is engaged in mine decommissioning and environmental
services through its Denison Environmental Services (DES) division.
Denison is also the manager of Uranium Participation Corporation
(TSX:U), a publicly traded company which invests in uranium oxide
in concentrates and uranium hexafluoride.
Cautionary Statements
Certain information contained in this press 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"
or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", 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".
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 correct and such forward
looking information included in this press release should not be
unduly relied upon. This information speaks only as of the date of
this press release. In particular, this press release may contain
forward looking information pertaining to the following: the
estimates of Denison's mineral resources; capital expenditure
programs; estimated production costs, exploration and development
expenditures and reclamation costs; expectations of market prices
and costs; supply and demand for uranium; possible impacts of
litigation and regulatory actions on Denison; exploration,
development and expansion plans and objectives; Denison's
expectations regarding raising capital and adding to its mineral
resources through acquisitions and development; and receipt of
regulatory approvals, permits and licences and treatment under
governmental regulatory regimes.
There can be no assurance that such statements will prove to be
accurate, as Denison's actual results and future events could
differ materially from those anticipated in this forward-looking
information as a result of those factors discussed in or referred
to under the heading "Risk Factors" in Denison's Annual Information
Form dated March 28, 2012, available at http://www.sedar.com, and
in its Form 40-F available at http://www.sec.gov, as well as the
following: global financial conditions; the market price of
Denison's securities; volatility in market prices for uranium;
ability to access capital; changes in foreign currency exchange
rates and interest rates; liabilities inherent in mining
operations; uncertainties associated with estimating mineral
reserves and resources and production; uncertainty as to
reclamation and decommissioning liabilities; failure to obtain
industry partner and other third party consents and approvals when
required; delays in obtaining permits and licenses for development
properties; competition for, among other things, capital,
acquisitions of mineral reserves, undeveloped lands and skilled
personnel; public resistance to the expansion of nuclear energy and
uranium mining; uranium industry competition and international
trade restrictions; incorrect assessments of the value of
acquisitions; property title risk; geological, technical and
processing problems; the ability of Denison to meet its obligations
to its creditors; actions taken by regulatory authorities with
respect to mining activities; the potential influence of or
reliance upon its business partners, and the adequacy of insurance
coverage.
Accordingly, readers should not place undue reliance on forward
looking statements. These factors are not, and should not be
construed as being, exhaustive. 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. The forward looking information contained in this press
release is expressly qualified by this cautionary statement.
Denison does not undertake any obligation to publicly update or
revise any forward-looking information after the date of this press
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 Resources: This press release
may use the terms "Measured", "Indicated" and "Inferred" 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.
Contacts: Denison Mines Corp. Ron Hochstein President and Chief
Executive Officer (416) 979-1991 Extension 232 Denison Mines Corp.
James R. Anderson Executive Vice President and Chief Financial
Officer (416) 979-1991 Extension 372 www.denisonmines.com
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