Denison Mines Corp. Reports First Quarter 2014 Results
TORONTO, ONTARIO--(Marketwired - May 8, 2014) - Denison Mines
Corp. ("Denison" or the "Company") (TSX:DML)(NYSEMKT:DNN) today
reported its results for the three months ended March 31, 2014. All
amounts in this release are in U.S. dollars unless otherwise
stated.
Highlights
- Discovered a new zone of high grade mineralization, named the
Gryphon zone, on the Wheeler River property. During the winter
drill program, drill hole WR-556 intersected basement hosted
uranium mineralization averaging 9.7% eU3O8 over 4.6 metres. The
first follow-up hole, drill hole WR-560, also intersected high
grade basement hosted uranium mineralization averaging 17.3% e U3O8
over 4.2 metres. The mineralization at the Gryphon zone is
approximately 200 metres beneath the sub-Athabasca unconformity and
is open in both strike directions and at depth. The Gryphon zone is
located 3.0 kilometres northwest of the Phoenix deposit.
- Reported several high grade intersections at Phoenix Zone A, on
the Wheeler River property, including drill hole WR-548 which
returned an assay of 36.83% U3O8 over 6.5 metres. These
intersections have expanded the zone of higher grade mineralization
at Phoenix Zone A.
- Received the first truckload of ore from Cigar Lake at the
McClean Lake mill. Processing of the ore is scheduled to begin in
the second half of 2014.
- Signed a definitive arrangement agreement with International
Enexco Limited ("IEC"), on April 14, 2014, to acquire all of the
issued and outstanding common shares of IEC by way of a plan of
arrangement ("IEC Arrangement"). The IEC Arrangement provides that
IEC shareholders will exchange each IEC share for 0.26 of a Denison
common share and a share in a company indirectly holding 100% of
IEC's Contact Copper Project and all other U.S. mineral properties
currently owned by IEC. IEC's uranium assets consist of a 30%
interest in the Mann Lake uranium exploration project and a 20%
interest in the Bachman Lake Joint Venture. The Mann Lake
exploration project is operated by Cameco Corp. (52.5% interest).
It is located 25 kilometres southwest of the McArthur River mine
and is on trend between Cameco Corp.'s Read Lake project and
Denison's 60% owned Wheeler River project in the eastern Athabasca
Basin. Upon completion of the IEC Arrangement, it is anticipated
that IEC shareholders, other than Denison, will own approximately
2.1% of Denison.
- Acquired the remaining 10.38% non-controlling interest in
Rockgate Capital Corp. ("Rockgate"), on January 17, 2014, pursuant
to a plan of arrangement ("Rockgate Arrangement"). Under the
Rockgate Arrangement, Denison acquired the outstanding shares of
Rockgate that were not already owned by Denison in exchange for
0.192 of a Denison common share for each Rockgate common share,
resulting in the issuance of an additional 2.3 million shares of
Denison. Denison now owns 100% Rockgate and the Falea uranium
project in Mali.
Financial Results
The Company recorded a net loss of $12,667,000 ($0.03 per share)
for the three months ended March 31, 2014, compared with a net loss
of $5,469,000 ($0.01 per share) for the three months ended March
31, 2013. The net loss for the first quarter of 2014 includes
mineral property exploration expenses of $6,597,000, foreign
exchange losses of $4,115,000, and an impairment charge against the
company's carrying value of mineral property of $1,658,000.
|
Three Months |
|
|
Three Months |
|
|
Ended |
|
|
Ended |
|
|
March 31, |
|
|
March 31, |
|
(in thousands, except per share amounts) |
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
Results of Operations: |
|
|
|
|
|
|
|
|
Total revenues |
$ |
2,174 |
|
|
$ |
2,291 |
|
|
Net income (loss) for the period |
|
(12,667 |
) |
|
|
(5,469 |
) |
|
Basic and diluted earnings (loss) per share |
|
(0.03 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
As at |
|
|
As at |
|
|
March 31, |
|
|
December 31, |
|
(in thousands) |
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
20,151 |
|
|
$ |
21,786 |
|
|
Short term investments |
|
5,536 |
|
|
|
10,040 |
|
|
Long term investments |
|
1,869 |
|
|
|
5,901 |
|
|
Cash, equivalents and investments |
|
27,556 |
|
|
|
37,727 |
|
|
|
|
|
|
|
|
|
|
Working capital |
|
24,581 |
|
|
|
29,391 |
|
|
Property, plant and equipment |
|
266,755 |
|
|
|
281,010 |
|
|
Total assets |
|
312,552 |
|
|
|
330,969 |
|
|
Total long-term liabilities |
$ |
39,232 |
|
|
$ |
41,283 |
|
Revenue
Revenue from Denison Environmental Services ("DES") for the
three months ended March 31, 2014 was $1,625,000 compared to
$1,907,000 in the same period in 2013. Revenue decreased in 2014,
due to a reduction in activity at certain care and maintenance
sites, and the change in foreign exchange rates applicable on the
translation of Canadian dollar denominated revenues.
Revenue from the Company's management contract with Uranium
Participation Corporation ("UPC"), for the three months ended March
31, 2014, was $549,000, compared to $384,000 in the same period in
2013. The revenue increase in 2014 is due to additional fees earned
from UPC in connection with UPC's purchase of additional uranium
holdings.
Operating Expenses
In Canada, commissioning of the McClean Lake mill continued
during the first quarter of 2014 with the Cigar Lake joint venture
("CLJV") continuing to pay nearly all of the expenses under the
terms of a toll milling agreement. The first shipment of ore to the
McClean Lake mill from Cigar Lake was received during the first
quarter, and together with further ore shipments, will be
stockpiled until the mill restarts operations during the second
half of 2014.
Denison's share of operating costs in Canada, for the three
months ended March 31, 2014, totaled $141,000 compared to $283,000
for the three months ended March 31, 2013. Operating costs
decreased in 2014 primarily due to reductions in expenditures on
the Surface Access Borehole Resource Extraction ("SABRE") program,
which is not part of the stand-by costs paid by the CLJV.
In Africa, the Company completed a site visit and detailed
review of the recently acquired Falea project in Mali. During the
quarter, engineering studies, a metallurgical test work program and
environmental programs originally initiated by Rockgate were also
completed. Operating expenses in Africa for the three months ended
March 31, 2014 totaled $695,000, and were primarily attributable to
the Falea project. Operating expenses in Africa for the three
months ended March 31, 2013, by comparison, totaled $45,000.
Operating expenses also include costs relating to DES of
$1,583,000 for the three months ended March 31, 2014, as compared
to $1,937,000 for the same period in 2013. DES costs decreased in
2014, due to a reduction in activity at certain care and
maintenance sites, and the change in foreign exchange rates
applicable on the translation of Canadian dollar expenses.
Mineral Property Exploration
Denison is engaged in uranium exploration and/or development in
Canada, Zambia, Mali, Namibia, Niger and Mongolia. While the
Company has material interests in uranium projects in Asia and
Africa, the Company is focused primarily on the eastern Athabasca
Basin in Saskatchewan, Canada, with 43 projects covering 582,000
hectares.
Global exploration expenditures for the three months ended March
31, 2014 were $6,597,000 compared to $4,709,000 for the three
months ended March 31, 2013 with nearly 95% of exploration
expenditures being incurred in Canada during the first three months
of 2014 as compared to roughly 89% of expenditures during the same
period in 2013. The increase in global exploration expenditures in
2014 is due to an increase in exploration activity in Canada,
offset somewhat by a reduction in exploration expenditures in other
jurisdictions.
In Canada, Denison's share of exploration spending on its
Canadian properties totaled $6,254,000 for the three months ended
March 31, 2014 as compared to $4,173,000 for the three months ended
March 31, 2013. The winter exploration program commenced in January
2014 and was completed in April 2014.
In Zambia, exploration expenditures of $47,000 were incurred
during the three months ended March 31, 2014, as the Company
prepares for geological mapping, geochemical and trenching programs
expected to be carried out later in the year on the Company's
Mutanga project. During the same three months in 2013, exploration
expenditures totaled $195,000.
In Mali, exploration activities were minimal during the first
quarter of 2014. As a result, exploration expenditures of only
$29,000 have been incurred on the Falea project during the first
three months of 2014. Geological field programs and geophysics are
planned for the second quarter in Mali.
In Namibia, Rio Tinto Mining and Exploration Limited ("Rio")
terminated its option to earn an interest in the Dome project under
the provisions of an earn-in agreement between the parties. Rio
discontinued activities at the site at the end of February 2014.
The Company is evaluating options for moving forward with the Dome
project.
In Mongolia, exploration expenditures on the Company's Gurvan
Saihan joint venture ("GSJV") properties totaled $247,000
for the three months ended March 31, 2014, compared to $341,000 for
the three months ended March 31, 2013. Expenditures in Mongolia
during the first quarter of 2014 and 2013 relate primarily to
annual license payments required to maintain the GSJV properties in
good standing while the Company continues to explore strategic
alternatives regarding its ownership interest in the GSJV. The
Company currently has an 85% interest in the GSJV, with Mon-Atom
LLC holding the remaining 15% interest.
General and Administrative
General and administrative expenses totaled $2,403,000 for the
three months ended March 31, 2014 compared with $1,903,000 for the
three months ended March 31, 2013. These expenses consist primarily
of payroll and related expenses for personnel, contract and
professional services, stock option expense and other public
company expenditures. General and administrative expenditures were
higher in 2014 primarily due to special project costs, as well as
an increase over 2013 in the performance bonuses paid in the first
quarter.
Other Income and Expenses
Other income (expense) totaled ($3,402,000) for the three months
ended March 31, 2014 compared with ($929,000) for the three months
ended March 31, 2013. The Company realized foreign exchange losses
of ($4,115,000) during the three months ended March 31, 2014, as
compared to foreign exchange losses of only ($80,000) during the
three months ended March 31, 2013. The Company also recognized
$664,000 in gains on investments carried at fair market value
during the three months ended March 31, 2014, as compared to a loss
of ($697,000) on investments during the three months ended March
31, 2013.
Liquidity & Capital Resources
Cash and cash equivalents were $20,151,000 at March 31, 2014
compared with $21,786,000 at December 31, 2013. The decrease of
$1,635,000 was primarily due to cash used in operations of
$9,195,000 and an unfavourable movement in foreign exchange rates,
offset by cash provided by investing activities of $7,913,000.
Net cash used in operating activities of $9,195,000 in the three
months ended March 31, 2014 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 $4,887,000 in trade and other receivables
and an increase of $1,452,000 in prepaid expenses and other assets,
offset by an increase of $4,936,000 in accounts payable and accrued
liabilities. The increase in trade and other receivables and
accounts payable is due to the increase in activity at the McClean
Lake mill.
Net cash provided by investing activities of $7,913,000 consists
primarily of cash provided by the sale or maturity of debt
instruments accounting for $8,608,000, offset by $336,000 in cash
spent on property, plant and equipment, and $320,000 used to fund
the Elliot Lake reclamation trust fund.
On January 31, 2014, the Company entered into a revolving term
credit facility (the "Credit Facility") for CAD$15,000,000. The use
of the Credit Facility is restricted to the issuance of
non-financial letters of credit and contains a covenant to maintain
a certain level of tangible net worth, which must be greater than
or equal to $150,000,000. The Credit Facility terminates on January
31, 2015. At March 31, 2014, the Company is in compliance with the
covenants of the Credit Facility, and CAD$9,698,000 of the Credit
Facility was being 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.
Subsequent Events
On April 14, 2014, Denison announced the signing of an agreement
to acquire all of the issued and outstanding shares, options and
warrants of IEC by way of the IEC Arrangement. IEC's uranium assets
consist of a 30% interest in the Mann Lake exploration project and
a 20% interest in the Bachman Lake Joint Venture, both located in
Saskatchewan, Canada. IEC also owns a subsidiary indirectly holding
100% of IEC's Contact Copper project and its other US properties
("Spinco"). Denison currently owns 3,600,000 shares and 1,800,000
share purchase warrants of IEC and expects to complete the IEC
Arrangement before June 30, 2014.
Under the terms of the IEC Arrangement, Denison will acquire all
of the issued and outstanding IEC shares on the basis of 0.26 of a
Denison share for each IEC share. Any outstanding warrants and
options of IEC as of the completion of the IEC Arrangement will be
exchanged for options and warrants of Denison adjusted with
reference to the exchange ratio of 0.26. The Denison options
received as a result of this exchange will expire 90 days after the
completion of the IEC Arrangement while the new Denison warrants
will expire in accordance with the expiry dates of the existing IEC
warrants. Upon completion of the IEC Arrangement, it is anticipated
that IEC shareholders, other than Denison, will own approximately
2.1% of Denison.
As part of the Arrangement, IEC's shareholders will also receive
a pro rata distribution of Spinco shares on a one-for-one basis and
one-half of a warrant to acquire an additional Spinco share,
exercisable for 6 months, at a price of CAD$5.00 for each whole
share to be acquired. Each holder of IEC options and warrants will
also receive replacement options and warrants, as the case may be,
from Spinco with the same terms and conditions as the IEC options
and warrants being replaced.
Outlook for 2014
The Company's exploration, development and operation plans for
2014 remain largely unchanged at the end of the first three months
of the year. The Company has completed a significant winter
exploration program in Canada and plans to follow up with a summer
exploration program on certain high priority projects.
|
|
|
|
Actual to |
|
|
Current |
|
|
March 31, |
|
(in thousands) |
Budget (1) |
|
|
2014 (3) |
|
Canada (2) |
|
|
|
|
|
|
|
|
Mineral sales |
$ |
1,155 |
|
|
|
- |
|
|
Toll milling fees |
|
850 |
|
|
|
- |
|
|
Exploration |
|
(14,276 |
) |
|
|
(6,222 |
) |
|
Development/operations |
|
(1,564 |
) |
|
|
(141 |
) |
|
|
(13,835 |
) |
|
|
(6,363 |
) |
Africa |
|
|
|
|
|
|
|
|
Mali |
|
(2,000 |
) |
|
|
(858 |
) |
|
Zambia |
|
(1,830 |
) |
|
|
(365 |
) |
|
|
(3,830 |
) |
|
|
(1,223 |
) |
Asia |
|
|
|
|
|
|
|
|
Mongolia |
|
(962 |
) |
|
|
(467 |
) |
|
|
|
|
|
|
|
|
Services and Other (2) |
|
|
|
|
|
|
|
|
Management fees and commissions |
|
1,996 |
|
|
|
549 |
|
|
Environmental services |
|
604 |
|
|
|
5 |
|
|
Corporate general and administration |
|
(4,433 |
) |
|
|
(1,269 |
) |
|
|
(1,833 |
) |
|
|
(715 |
) |
|
|
|
|
|
|
|
|
Total |
$ |
(20,460 |
) |
|
$ |
(8,768 |
) |
(1) |
Only
Denison's material operations are shown in the above table. |
(2) |
Budget figures have been converted using a US$ to CAD$ exchange
rate of 0.95. |
(3) |
The
Company budgets on a cash basis. As a result, the actual figure
represents a non-GAAP measure and excludes non-cash depreciation
and amortization amounts of $205,000. |
Canada
Mineral Property
Exploration
The Company is planning to spend approximately CAD$15,000,000 on
exploration activities in Canada during 2014. At this time, the
winter portion of the 2014 exploration program has been completed.
Denison is planning to carry out additional geophysical surveying
on several properties and is also planning to carry out further
drilling on five projects, of which Wheeler River will continue to
be the primary focus. Drilling at Wheeler River will continue to be
focused on the K trend, including follow-up at the Gryphon zone
discovery. Approximately 15,000 metres of drilling is planned at
Wheeler River during the summer program.
In addition to the Wheeler River program, summer drill programs
are also planned at Crawford Lake, Bachman Lake, Packrat and
McClean Lake. At Crawford Lake, 3,550 metres of drilling is planned
for six drill holes to evaluate geophysical targets and follow up
on drilling results in 2013. Drilling at Bachman Lake will consist
of 3,050 metres in five drill holes to evaluate geophysical targets
there. At Packrat, a four hole, 800 metre drilling program is
planned to follow-up on weak uranium mineralization intersected in
2013. McClean Lake is also planning a five hole, 1,500 metre,
drilling program.
Development/Operations
At McClean Lake, the expansion of the mill from 13 to 24 million
pounds annual U3O8 capacity is being fully funded by the CLJV and
is well underway. First ore from the Cigar Lake mine was received
during the first quarter and processing of ores from the McClean
Lake SABRE program and from Sue B, blended with Cigar Lake ore, is
scheduled to begin during the second half of 2014. Denison's share
of operating and capital expenditures at the mill in 2014 is
estimated at CAD$1.1 million. Denison's expenditures are expected
to be offset by revenue from the sale of approximately 30,000
pounds U3O8, recovered from McClean Lake ores processed at the
mill, and from toll milling fees. Total revenue from operations is
projected at CAD$1.9 to 2.4 million.
Due to low uranium prices, the Midwest and McClean underground
projects will continue to remain on stand-by in 2014. Total
expenditures on these projects is budgeted at CAD$0.9 million
(Denison's share, CAD$212,000). While significant milestones were
achieved by the McClean joint venture in the development of the
SABRE mining technology in 2012 and 2013, a decision was made by
the joint venture to put this program on stand-by. As a result,
SABRE expenditures are expected to be reduced in 2014 to
CAD$650,000 (Denison's share, CAD$146,000).
International
On its wholly owned Mutanga project in Zambia, the Company plans
to carry out further geological mapping, geochemical and trenching
programs to follow up on the results of the work completed in 2013.
The Zambian program is estimated to total $1.8 million.
On its wholly owned Falea project in Mali, the Company is
planning to carry out geological field programs and metallurgical
test work. The Mali program is estimated to total $2.0 million.
In Mongolia, the 2014 expenditures are estimated to total $1.0
million.
Other Activities
Revenue from operations at DES is budgeted at CAD$7.0 million
and operating expenses are forecast to be CAD$6.3 million for 2014.
Capital expenditures and reclamation funding are projected to be
CAD$0.7 million.
Management fees from Denison's contract with UPC are budgeted at
CAD$2.1 million in 2014.
Corporate administration expenses are forecast to be CAD$4.6
million in 2014 and include all head office wages, benefits, office
costs, public company expenses, legal, audit and investor relations
expenses.
Qualified Person
The disclosure of scientific and technical information regarding
Denison's properties in this press release was prepared by or
reviewed by Steve Blower, P. Geo., the Company's Vice President,
Exploration, and Terry Wetz, P.E., the Executive Director of the
GSJV, 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 14, 2014 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 three month
period ended March 31, 2014 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, Mali, Namibia, Niger and Mongolia. Including the high grade
Phoenix deposit, located on its 60% owned Wheeler project,
Denison's exploration project portfolio consists of 43
projects and totals approximately 582,000 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, 100% of the uranium/copper/silver Falea
project in Mali, a 90% interest in the Dome project in Namibia, and
an 85% interest in the in-situ recovery projects held by the 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 likelihood of completing and benefits to be derived from
corporate transactions; 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 licences 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 under the heading
"Risk Factors" in Denison's Annual Information Form dated March 14,
2014 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.
Denison Mines Corp.Ron HochsteinPresident and Chief Executive
Officer(416) 979-1991 ext 232Denison Mines Corp.Sophia
ShaneInvestor Relations(604) 689-7842www.denisonmines.com
Denison Mines (AMEX:DNN)
Historical Stock Chart
From Apr 2024 to May 2024
Denison Mines (AMEX:DNN)
Historical Stock Chart
From May 2023 to May 2024