Denison Mines Corp. ("Denison" or the "Company") (TSX:DML)(NYSE
MKT:DNN) today reported its results for the three months and six
months ended June 30, 2013. All amounts in this release are in U.S.
dollars unless otherwise stated.
Second Quarter 2013 Highlights
-- Commenced a summer exploration campaign involving diamond drilling,
geophysical surveying and linecutting on eight properties in the
Athabasca Basin. To date, the highlight of the program has been the
intersection, at Phoenix A, of 43.2% eU3O8 over 10.3 metres for a grade
x thickness product ("GT") of 445.0 %m, the highest GT of any hole
drilled to date on the Wheeler River property.
-- Expanded mineralization at the recently discovered 489 Zone on the
Wheeler River property. Mineralization of 0.32% eU3O8 over 3.2 metres
was intersected along strike 300 metres to the northeast of the
previously reported mineralization. Drilling at the 489 Zone continues
to show positive indications for the potential discovery of higher grade
mineralization, including the presence of strong graphitic fault zones
in the basement and encouraging sandstone alteration and geochemistry.
-- Closed a CAD$15.0 million ($14.4 million) flow-through share offering,
which will fund the Company's Canadian exploration programs through to
the end of 2014.
-- Completed the acquisition of a portfolio of assets ("Fission
Arrangement") from Fission Energy Corp. ("Fission"), which included its
60% interest in the Waterbury Lake uranium project, its interests in all
other properties in the eastern part of the Athabasca Basin, Quebec and
Nunavut, as well as its interests in two joint ventures in Namibia.
Financial Results
The Company recorded a net loss from continuing operations of
$2,430,000 ($0.01 per share) and $7,899,000 ($0.02 per share) for
the three months and six months ended June 30, 2013, compared with
a net loss from continuing operations of $1,699,000 ($0.01 per
share) and $11,215,000 ($0.03 per share) for the three months and
six months ended June 30, 2012. During the three months and six
months ended June 30, 2012, the Company also recorded a loss of
$50,361,000 ($0.13 per share) and $92,836,000 ($0.24 per share)
from discontinued operations.
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Three months ended Six months ended
(in thousands, except for per June 30, June 30, June 30, June 30,
share amounts) 2013 2012 2013 2012
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Results of Operations:
Total revenues from continuing
operations $ 2,902 $ 2,431 $ 5,193 $ 6,035
Net income (loss) from
continuing operations (2,430) (1,699) (7,899) (11,215)
Net income (loss) from
discontinued operations - (50,361) - (92,836)
Basic and diluted earnings
(loss) per share from
continuing operations (0.01) (0.01) (0.02) (0.03)
Basic and diluted earnings
(loss) per share from
discontinued operations - (0.13) - (0.24)
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As at As at
June 30, December 31,
(in thousands) 2013 2012
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Financial Position:
Cash and cash equivalents $ 31,441 $ 38,188
Working capital 31,406 35,298
Long-term investments 921 2,843
Property, plant and equipment 318,184 247,888
Total assets 361,608 300,356
Total long-term liabilities $ 25,750 $ 28,630
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Revenue
Revenue from Denison Environmental Services ("DES") for the
three months and six months ended June 30, 2013 was $2,446,000 and
$4,353,000 compared to $1,996,000 and $5,165,000 in the same
periods in 2012.
Revenue from the management contract with Uranium Participation
Corp. ("UPC") for the three months and six months ended June 30,
2013 was $456,000 and $840,000 compared to $435,000 and $870,000 in
the same periods in 2012.
Operating Expenses
Commissioning of the McClean Lake mill began in the second
quarter in preparation for processing of Cigar Lake ore later in
2013. The Cigar Lake joint venture continues to pay nearly all of
the expenses under the terms of a toll milling agreement. Denison's
share of operating costs for the three months and six months ended
June 30, 2013 totaled $203,000 and $473,000 compared to $749,000
and $1,259,000 for the three and six months ended June 30, 2012.
Operating costs were lower in 2013 primarily due to lower
expenditures on the Surface Access Borehole Resource Extraction
("SABRE") program. The SABRE program costs are wholly funded by the
McClean Lake joint venture.
Operating expenses include costs relating to DES amounting to
$2,102,000 and $4,039,000 for the three and six months ended June
30, 2013 compared to $2,065,000 and $5,086,000 for the same periods
in 2012.
Mineral Property Exploration
Denison is engaged in uranium exploration in Canada, Zambia,
Namibia and Mongolia, as both operator and non-operator of joint
arrangements and as operator of its own properties. Exploration
expenditures for the three months and six months ended June 30,
2013 were $2,502,000 and $7,211,000 compared to $4,396,000 and
$7,416,000 for the same periods in 2012. The decrease in
expenditures for the three months ended June 30, 2013 is primarily
due to reduced spending on the Mongolian properties offset
partially by increased spending on Canadian properties.
In Canada, Denison's share of exploration spending on its
Canadian properties totaled $2,306,000 and $6,479,000 for the three
months and six months ended June 30, 2013 compared to $1,223,000
and $3,818,000 for the same periods in 2012.
At the 60% owned Wheeler River project, a summer drill program
started in mid-June 2013. A total of 23 drill holes are planned and
the program is expected to be completed in early August. Highlights
of the program to date are summarized in the table and discussion
below:
Wheeler River Summer 2013 Drilling Highlights To Date
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From To Length
Hole-ID Area (m) (m) (m) eU3O8 (1) (%)
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WR-525 Phoenix A 401.6 411.9 10.3 43.2
WR-527 Phoenix A 403.5 405.2 1.7 16.4
WR-528 Phoenix A 403.7 406.8 3.1 13.0
WR-518 489 Zone 411.1 414.3 3.2 0.3
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(1) eU3O8 is radiometric equivalent uranium calculated from a total gamma
down-hole probe
Four drill holes have been completed at the Phoenix A deposit
and were designed to evaluate possible high grade extensions
outside of the higher grade domain as defined in the most recent
mineral resource estimate dated December 31, 2012. Three of the
four drill holes have intersected high grade mineralization. WR-525
was drilled to the west of the current western margin of the higher
grade domain and intersected 10.3 metres of 43.2% eU3O8 (GT=445.0
%m). WR-527 and WR-528 were drilled east of the current eastern
margin of the higher grade domain and intersected 1.7 metres of
16.4% eU3O8 (GT=27.9 %m) and 3.1 metres of 13.0% eU3O8 (GT=40.3
%m), respectively.
The other objectives of the summer program were to follow-up the
low grade mineralization identified at the 489 Zone and complete
further drilling at the Phoenix North area. At the 489 Zone, low
grade mineralization was intersected in WR-518 on the first fence
to follow up on mineralization intersected in the winter 2013
drilling program. This first fence was a 300 metre step out along
strike to the northeast of previous mineralization. Drill hole
WR-518 intersected 3.2 metres of 0.32% eU3O8. Drilling at the 489
Zone continues to show positive indications for the discovery of
higher grade mineralization, including the presence of strong
graphitic fault zones in the basement and encouraging sandstone
alteration and geochemistry. Drilling in the Phoenix North area has
not returned any significant mineralization at this time. Several
targets remain to be tested in this area.
In Zambia, exploration expenditures of $140,000 and $335,000 for
the three months and six months ended June 30, 2013 were incurred
on the Company's Mutanga project compared to $657,000 and $776,000
for the same periods in 2012. Soil geochemical surveying and radon
sampling programs started in February 2013 and are still in
progress at the end of June.
In Mongolia, exploration expenditures on the Company's Gurvan
Saihan joint venture ("GSJV") properties totaled $56,000 and
$397,000 for the three months and six months ended June 30, 2013,
compared to $2,516,000 and $2,822,000 for the same periods in 2012.
Exploration activities have been reduced in 2013, as the Company
focuses on completing the field programs and studies necessary to
convert the Company's exploration licenses to mining licenses. By
comparison, the Company completed a 29,600 metre drill program on
the Urt Tsav and Ulziit properties in the second quarter of
2012.
The Company and Mon-Atom LLC, the Mongolian state-owned uranium
company, are continuing to pursue restructuring of the GSJV to meet
the requirements of the Nuclear Energy Law. The Company currently
has an 85% interest in the GSJV, with Mon-Atom LLC holding the
remaining 15% interest. Depending on the amount of historic
exploration that was funded by the Government of Mongolia, Mon-Atom
LLC is entitled to hold a 34% to 51% interest in the GSJV.
Discussions with relevant government agencies are on-going, and the
timing for completion of the restructuring is uncertain at this
time.
General and Administrative
General and administrative expenses totaled $2,049,000 and
$3,952,000 for the three months and six months ended June 30, 2013
compared with $2,225,000 and $4,830,000 for the same periods in
2012. General and administrative expenses consist primarily of
payroll and related expenses for personnel, contract and
professional services, stock option expense and other public
company expenditures. The decline in general and administrative
expenditures in 2013 is largely a result of a decrease in
share-based compensation and personnel costs from the
implementation of various staff reduction plans late in 2012 and
early 2013.
Liquidity & Capital Resources
Cash and cash equivalents were $31,441,000 at June 30, 2013
compared with $38,188,000 at December 31, 2012. The decrease of
$6,747,000 was primarily due to cash used in operations of
$13,527,000, cash used in investing activities of $5,648,000,
offset by cash provided by financing activities of $13,579,000.
Net cash used in operating activities of $13,527,000 in the six
months ended June 30, 2013 is comprised of net loss for the period
adjusted for non-cash items and changes in working capital items.
Significant changes in working capital items during the period
include an increase of $699,000 in trade and other receivables and
a decrease of $2,435,000 in accounts payable and accrued
liabilities.
Net cash used in investing activities of $5,648,000 consists
primarily of $4,058,000 spent in connection with the Fission
Arrangement, $949,000 spent on property, plant and equipment
expenditures, and $715,000 spent in connection with the JNR
Arrangement.
Net cash from financing activities totaled $13,579,000,
primarily due to the issue of flow-through common shares, net of
issue costs.
The Company has in place a revolving credit facility for up to
$15,000,000 (the "Credit Facility"). On June 27, 2013, the Company
extended the maturity date of the Credit Facility from June 28,
2013 to January 31, 2014. At June 30, 2013, the Company is in
compliance with its facility covenants and there is no debt
outstanding under this facility; however, $9,221,000 of the
facility was used as collateral for certain letters of credit. As
part of the Credit Facility, the Company has provided an unlimited
full recourse guarantee and a pledge of all of the shares of
Denison Mines Inc.
Outlook for 2013
The Company has refined its 2013 budget for exploration,
development and operations in Canada, Zambia and Mongolia as
outlined below:
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Spend to
Original Revised June 30,
(in thousands) Budget Budget 2013(2)
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Canada - Mining
Exploration $ 9,900(1) $12,100(1) $6,489
Development/Operations 1,114(1) 1,614(1) 641
Zambia 3,500 3,100 1,357
Mongolia 1,700 1,400 874
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Total $16,214 $18,214 $9,361
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(1) Budget figures have been converted using a US$to CAD$exchange rate of
1.0000.
(2) Represents a non-GAAP measure and excludes non-cash depreciation and
amortization amounts of $252,000.
Canada
Exploration
With the addition of several new properties from the Company's
recent acquisition of Fission, the Company has increased its
exploration budget for 2013. Based on the revised budget, Denison
is now expecting to spend $12,100,000 on Canadian exploration
during 2013, as compared to the previously announced budget of
$9,900,000. Through to the end of June 2013, the Company has spent
$6,489,000, with the remaining budget planned on the following
summer programs:
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Property Activity
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Wheeler River (60% Denison) Drilling (7,830 metres)
Crawford Lake (100% Denison) Drilling (600 metres)
Gumboot (100% Denison) Drilling (1,500 metres)
Johnston Lake (100% Denison) Geophysical surveys & drilling (2,800 metres)
Moon Lake (56.6% Denison) Drilling (1,570 metres)
Packrat (100% Denison) Drilling (1,200 metres)
South Dufferin (100% Denison) Drilling (1,500 metres)
Waterbury (60% Denison) Geophysical surveys & drilling (2,460 metres)
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In addition to the above programs, International Enexco Ltd. is
funding a five drill hole exploration program to earn a 20%
interest in the Bachman Lake (100% Denison) property.
Development / Operations
Approximately $3,500,000 (Denison's share $814,000) continues to
be budgeted for the Midwest and McClean Underground development
stage projects and the SABRE program for 2013. The majority of the
expenditures are planned for the evaluation of the 2012 SABRE test
program, the design of a semi-commercial field program for 2014,
and the preliminary evaluation of the use of SABRE mining method
for the Caribou deposit. The McClean Underground project
Feasibility Study was completed in the fourth quarter of 2012, and
a production decision was deferred due to the poor condition of the
uranium market. A production decision will be revisited in the
fourth quarter of 2013. Very little work is currently planned on
the Midwest project.
Commissioning of the McClean Lake mill has started in
preparation for processing of Cigar Lake ore later in 2013. As a
result of changes to the anticipated mill feed schedule, Denison's
share of operating and capital expenditures in 2013 has been
revised from $1,800,000, as originally budgeted, to $1,100,000.
Additionally, Denison has reduced its revenue projection for U3O8
sales and toll milling fees from $1,500,000 to $300,000 due to a
reduction in U3O8 sales. Construction on the McClean Lake mill
expansion, which is 100% funded by the Cigar Lake joint venture,
began last summer and will increase annual production capacity to
24 million pounds U3O8.
International
On its wholly owned Mutanga project in Zambia, the Company is
carrying out an extensive program of geological mapping as well as
geochemical and geophysical surveying to increase the confidence in
existing drill targets and identify new targets. At this point no
exploration drilling is planned for 2013. The Zambian program
budget has been reduced from $3,500,000 to $3,100,000 for the
year.
On the newly acquired Dome project in Namibia, where Denison
currently holds an approximate 71% interest, Denison has been
advised that Rio Tinto plans to spend $1,400,000 on a 2,000 metre
drill program starting in the third quarter of 2013, as part of
that company's earn in obligations. Rio Tinto must spend $5,000,000
by September 2016 to earn 49% of Denison's interest in the joint
arrangement.
In Mongolia, mining license applications for its four license
areas were submitted in 2011 and the Company is continuing to work
to restructure the GSJV to meet the requirements of the Mongolian
Nuclear Energy Law. The focus in 2013 will be on the ongoing
restructuring efforts and the work necessary to obtain mining
licenses. The Mongolian project budget has been reduced from
$1,700,000 to $1,400,000 for the year.
Qualified Person
The disclosure of a scientific or technical nature regarding
Denison's properties in the MD&A was prepared by or reviewed by
Steve Blower, P. Geo., the Company's Vice President, Exploration,
and Terry Wetz, P.E., the Company's Vice President, Project
Development, who are Qualified Persons in accordance with the
requirements of NI 43-101. For a description of the quality
assurance program and quality control measures applied by Denison,
please see Denison's Annual Information Form dated March 13, 2013
available at http://www.sedar.com, and its Form 40-F available at
http://www.sec.gov/edgar.shtml.
Additional Information
Denison's consolidated financial statements for the six month
period ended June 30, 2013 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 is a uranium exploration and development company with
interests in exploration and development projects in Canada,
Zambia, Namibia, and Mongolia. Including the high grade Phoenix
deposits, located on its 60% owned Wheeler project, Denison's
exploration project portfolio includes 49 projects and totals
approximately 603,000 hectares in the Eastern Athabasca Basin
region of Saskatchewan. Denison's interests in Saskatchewan also
include a 22.5% ownership interest in the McClean Lake joint
venture, which includes several uranium deposits and the McClean
Lake uranium mill, one of the world's largest uranium processing
facilities, plus a 25.17% interest in the Midwest deposit and a 60%
interest in the J-Zone deposit on the Waterbury property. Both the
Midwest and J-Zone deposits are located within 20 kilometres of the
McClean Lake mill. Internationally, Denison owns 100% of the
conventional heap leach Mutanga project in Zambia, an approximate
71% interest in the newly acquired Dome project in Namibia, and an
85% interest in the in-situ recovery projects held by the Gurvan
Saihan joint venture ("GSJV") in Mongolia.
Denison is engaged in mine decommissioning and environmental
services through its DES division and is the manager of UPC, a
publicly traded company which invests in uranium oxide and uranium
hexafluoride.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING 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 reserves and mineral resources;
expectations regarding the toll milling of Cigar Lake ores; capital
expenditure programs, estimated exploration and development
expenditures and reclamation costs; expectations of market prices
and costs; supply and demand for uranium ("U3O8"); possible impacts
of litigation and regulatory actions on Denison; exploration,
development and expansion plans and objectives; expectations
regarding adding to its mineral reserves and resources through
acquisitions and exploration; and receipt of regulatory approvals,
permits and licenses 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 the factors discussed in or referred to
under the heading "Risk Factors" in Denison's Annual Information
Form dated March 13, 2013 available at http://www.sedar.com, and in
its Form 40-F available at http://www.sec.gov/edgar.shtml.
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 Mineral Resources: This press
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.
Contacts: Denison Mines Corp. Ron Hochstein President and Chief
Executive Officer (416) 979-1991 ext 232 (416) 979-5893 (FAX)
Denison Mines Corp. Sophia Shane Investor Relations (604) 689-7842
www.denisonmines.com
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