Denison Mines Corp. ("Denison" or the "Company") (TSX:DML)(NYSE
MKT:DNN) today reported its results for the three months ended
March 31, 2013. All amounts in this release are in U.S. dollars
unless otherwise stated.
First Quarter 2013 Highlights
-- Discovered new unconformity related uranium mineralization approximately
2.1 kilometres northeast of the Phoenix deposits (the "489 Zone") at
Wheeler River. Rock types, alteration and structure are similar to the
Phoenix deposits. Mineralization has been intersected on both drill hole
fences completed to date, and the zone is open along strike in both
directions.
-- Completed a plan of arrangement ("JNR Arrangement") with JNR Resources
Inc. ("JNR") and acquired all of the outstanding common shares of JNR,
at an exchange ratio of 0.073, on January 31, 2013. The acquisition
increased Denison's interests in five exploration property joint
arrangements with JNR to 100%, and added seven exploration properties to
Denison's property portfolio in Saskatchewan as well as two properties
in Newfoundland.
-- Entered into an arrangement agreement ("Fission Arrangement") with
Fission Energy Corp. ("Fission") on March 7, 2013, and in the second
quarter completed the acquisition of a portfolio of assets from Fission
including Fission's 60% interest in the Waterbury Lake uranium project,
as well as Fission's exploration interests in all other properties in
the eastern part of the Athabasca Basin, Quebec and Nunavut, plus
interests in two joint ventures in Namibia. Fission shareholders
received 0.355 of a common share of Denison and CAD$0.0001 for each
share of Fission.
Financial Results
The Company recorded a net loss from continuing operations of
$5,469,000 ($0.01 per share) for the three months ended March 31,
2013, compared with a net loss from continuing operations of
$9,516,000 ($0.03 per share) for the three months ended March 31,
2012. During the three months ended March 31, 2012, the Company
also recorded a loss of $42,475,000 ($0.11 per share) from
discontinued operations.
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Three Months Three Months
Ended Ended
March 31, March 31,
(in thousands, except per share amounts) 2013 2012
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Results of Operations:
Total revenues $ 2,291 $ 3,604
Net income (loss) from continuing
operations (5,469) (9,516)
Net income (loss) from discontinued
operations - (42,475)
Basic and diluted earnings (loss) per
share from continuing operations (0.01) (0.03)
Basic and diluted earnings (loss) per
share from discontinued operations - (0.11)
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As at As at
March 31, December 31,
(in thousands) 2013 2012
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Financial Position:
Cash and cash equivalents $ 26,907 $ 38,188
Working capital 27,372 35,298
Long-term investments 1,817 2,843
Property, plant and equipment 255,601 247,888
Total assets 297,295 300,356
Total long-term liabilities $ 27,213 $ 28,630
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Revenue
Revenue from Denison Environmental Services ("DES") for the
three months ended March 31, 2013 was $1,907,000 compared to
$3,169,000 in the same period in 2012. Revenue decreased in 2013
due to the expiry of the Faro contract in March 2012.
Revenue from the management contract with Uranium Participation
Corp. ("UPC") for the three months ended March 31, 2013 was
$384,000 compared to $435,000 for the same period in 2012.
Operating Expenses
The McClean Lake mill remained on stand-by during the first
quarter of 2013. The Cigar Lake joint venture continues to pay
nearly all of the stand-by expenses under the terms of a toll
milling agreement. Denison's share of operating costs for the three
months ended March 31, 2013 totaled $270,000 compared to $510,000
for the three months ended March 31, 2012. Operating costs were
lower in 2013 primarily due to lower expenditures on the Surface
Access Borehole Resource Extraction ("SABRE") program, which is not
part of stand-by costs. The mill is anticipated to restart
operations later in 2013 to begin processing of ore received from
the Cigar Lake mine.
Operating expenses also include costs relating to DES amounting
to $1,937,000 for the three months ended March 31, 2013 compared to
$3,021,000 for the same period in 2012. DES costs decreased in 2013
due to the expiry of the Faro contract in March 2012.
Mineral Property Exploration
Denison is engaged in uranium exploration, as both operator and
non-operator of joint arrangements and as operator of its own
properties in Canada, Zambia and Mongolia. Exploration expenditures
for the three months ended March 31, 2013 were $4,709,000 compared
to $3,020,000 for the three months ended March 31, 2012. The
increase in exploration expenditures during the first three months
of 2013 was due to increased exploration activity in Canada.
In Canada, Denison's share of exploration spending totaled
$4,173,000 for the three months ended March 31, 2013 and $2,595,000
for the three months ended March 31, 2012.
At the 60% owned Wheeler River project, a total of 14,577 metres
of exploration and infill drilling was completed in 27 drill holes
during the three months ended March 31, 2013. Sixteen of the drill
holes were completed on five different exploration target areas
(489 Zone, K Zone, Phoenix North, 232 area and the REA area) on the
Wheeler River property. The highlight of the winter program was the
discovery of new unconformity related uranium mineralization at the
489 Zone. Located approximately 2.1 kilometres northeast of the
Phoenix deposits, the 489 Zone straddles the sub-Athabasca
unconformity at a vertical depth of 380 metres below surface. The
rock types, alteration and structure are similar to the Phoenix
deposits. Mineralization has now been intersected on both drill
hole fences completed to date, which are about 65 metres apart. The
zone is open along strike in both directions. A summer drill
program is planned to aggressively follow up on these results.
The table below summarizes the mineralized intersections in the
489 Zone:
489 Zone Drilling Results
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Radiometric Probe Chemical Assay
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From To Length eU3O8(1) From To Length U3O8
Hole-ID (m) (m) (m) (%) (m) (m) (m) (%)
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WR-489 387.8 392.4 4.6 0.14 387.3 392.8 5.5 0.13
WR-511A 375.5 377.0 1.5 0.46 Pending
and 378.3 379.3 1.0 0.17 Pending
and 387.8 388.9 1.1 0.24 Pending
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(1) eU3O8 is radiometric equivalent uranium from a total gamma down-hole
probe.
On the other four exploration target areas, encouraging
geochemistry and alteration was observed at Phoenix North, and the
K Zone. Further work is required to follow up on these results,
some of which is expected to be a part of this summer's activities.
No significant mineralization, alteration or geochemistry was
observed at the 232 and REA areas. Another five drill holes
explored for basement mineralization proximal to the north end of
the Phoenix A deposit. Although no significant mineralization was
intersected, this area remains open for further testing.
The remainder of the winter program included four infill drill
holes completed in the Phoenix A deposit where high-grade uranium
mineralization was intersected in all four drill holes:
Phoenix A Deposit Infill Drilling Results
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From To Length eU3O8(1)
Hole-ID (m) (m) (m) (%)
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WR-496(2) 410.4 413.9 3.5 36.3
WR-498(2) 405.4 408.5 3.1 24.1
WR-499(2) 407.5 410.1 2.6 14.8
WR-501(2) 406.0 409.0 3.0 13.5
and 411.0 412.0 1.0 3.0
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(1) eU3O8 is radiometric equivalent uranium from a total gamma down-hole
probe.
(2) Intersection intervals are comprised above a cut-off grade of 1.0%
eU3O8.
At the Hatchet Lake project (50% Denison, 50% Anthem Resources
Inc.), a total of 2,370 metres of exploration drilling was
completed in 13 drill holes during the three months ended March 31,
2013. Uranium mineralization was intersected at the unconformity in
two drill holes on the Crooked-Richardson Lakes trend. The best
result was in drill hole RL-13-16, which intersected 0.45% U3O8
over 2.3 metres beginning at 124.0 metres down the drill hole.
Further drilling is required to follow up on these results.
In Zambia, exploration expenditures of $195,000 were incurred
during the three months ended March 31, 2013 on the Company's
Mutanga project, compared to $119,000 for the three months ended
March 31, 2012. Soil geochemical surveying and radon sampling
programs started at Mutanga during the three months ended March 31,
2013.
In Mongolia, exploration expenditures on the Company's GSJV
properties totaled $341,000 for the three months ended March 31,
2013, compared to $306,000 for the three months ended March 31,
2012. Expenditures during the three months ended March 31, 2013
were primarily annual license payments.
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. In the meantime, activities continue in support of converting
the GSJV exploration licenses to mining licenses.
General and Administrative
General and administrative expenses totaled $1,903,000 for the
three months ended March 31, 2013 compared with $2,605,000 for the
three months ended March 31, 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. General and administrative
expenditures declined in 2013 largely as a result of a decrease in
share-based compensation and personnel costs from the
implementation of various staff reduction plans in late 2012 and
early 2013.
Liquidity & Capital Resources
Cash and cash equivalents were $26,907,000 at March 31, 2013
compared with $38,188,000 at December 31, 2012. The decrease of
$11,281,000 was primarily due to cash used in operations of
$9,098,000 and cash used in investing activities of $1,598,000.
Net cash used in operating activities of $9,098,000 in the three
months ended March 31, 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 $1,433,000 in trade and other receivables
and a decrease of $1,047,000 in accounts payable and accrued
liabilities.
Net cash used in investing activities of $1,598,000 consists
primarily of $715,000 spent on the JNR Arrangement and $703,000
deposited in the Elliot Lake reclamation trust fund.
The Company has in place a revolving credit facility for up to
$15,000,000. The facility expires on June 28, 2013. Bank
indebtedness under the facility at March 31, 2013 was nil; however,
$9,546,000 of the line is 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 1, 2013, a new management services agreement was signed
with UPC after the expiry of the original management services
agreement. Under the terms of the new agreement, UPC will pay the
following fees to Denison: (a) a commission of 1.5% of the gross
value of any purchases or sales of uranium completed at the request
of the Board of Directors of UPC; (b) a minimum annual management
fee of CAD$400,000 (plus reasonable out-of-pocket expenses) plus an
additional fee of 0.3% per annum based upon UPC's net asset value
in excess of CAD$100,000,000; and (c) a fee, at the discretion of
UPC's Board, for on-going monitoring or work associated with a
transaction or arrangement (other than a financing, or the purchase
or sale of uranium). The new management services agreement has a
three-year term and may be terminated by either party upon the
provision of 120 days written notice.
On April 26, 2013, the Company completed the Fission
Arrangement, pursuant to which it acquired Fission's Eastern
Athabasca property interests, including its 60% interest in the
Waterbury Lake uranium project, and its property interests in
Quebec Nunavut, and Namibia. Fission shareholders received 0.355 of
a common share of Denison, a cash payment of CAD$0.0001, and one
common share of a newly-formed publicly traded company, Fission
Uranium Corp., for each Fission share held. On closing, Denison
issued 53,053,284 common shares with a value of approximately
CAD$67,378,000 based on Denison's closing share price of CAD$1.27
per share on April 26, 2013. All of the outstanding options and
common share purchase warrants of Fission were exchanged for
options and warrants to purchase 3,485,889 common shares of Denison
with a fair value of approximately CAD$2,184,000 as determined by
the Black-Scholes option pricing model. Prior to closing, cash of
CAD$2,437,000 was advanced to Fission, in respect of the
expenditures incurred and paid by Fission between January 16, 2013
and April 25, 2013 on properties that were ultimately acquired by
Denison. Further additional consideration may be required under the
Fission Arrangement.
Outlook for 2013
Canada
Exploration
Given the recently completed Fission Arrangement, the Company is
in the process of reviewing its Canadian exploration programs for
the remainder of the year. The Company is still planning to spend
approximately CAD$9,900,000. At this time, Denison plans to carry
out four exploration programs during the remainder of 2013, of
which Wheeler River will continue to be the primary focus. At
Wheeler River, a 13,000 metre summer drill program is planned at a
total estimated cost of CAD$3,400,000 (Denison's share
CAD$2,040,000). The summer drill program at Wheeler River will
focus on the newly discovered 489 Zone of mineralization and the
Phoenix North areas as well as some additional drilling in the
Phoenix A deposit in an attempt to increase the mineral
resources.
Summer drill programs are also planned for Crawford Lake (2,600
metres) and Bachman Lake (650 metres). Geophysical surveys are
currently ongoing or are planned to be carried out on the Bell
Lake, Wheeler River and Stevenson River properties.
On the newly acquired Waterbury Lake project, Denison plans to
work with its partner to evaluate previous exploration results on
the entire property and develop a future work plan.
Development / Operations
Approximately CAD$3,500,000 (Denison's share CAD$814,000) is
budgeted for the Midwest and McClean Underground development stage
projects and the SABRE program in 2013. The majority of the
expenditures are planned for the evaluation of the results of the
SABRE two hole test program completed in 2012 and the preliminary
evaluation of the 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 2013. Very little work is currently planned on
the Midwest project.
The McClean Lake mill continues to be on stand-by, but activity
at the mill has ramped up in preparation for processing of Cigar
Lake ore anticipated to begin later in 2013. Denison's share of
operating and capital expenditures in 2013 is estimated at
CAD$1,800,000. Denison expenditures are expected to be offset by
revenue projected at CAD$1,500,000 from toll milling revenues and
the proceeds from the sale of approximately 25,000 pounds U3O8
recovered from McClean Lake ores processed as part of the Cigar
Lake commissioning efforts. 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 will
total an estimated $3,500,000.
On the newly acquired Dome project in Namibia, where Denison
currently holds a 75% interest, Denison has been advised that Rio
Tinto plans to spend $1,400,000 on a 2,000 metre drill program as
part of that company's earn in obligations. Rio Tinto must spend
$5,000,000 by the end of 2016 to earn a 49% 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. In 2013, the Mongolian program is estimated at
$1,700,000. The focus in 2013 will be on the ongoing restructuring
efforts and the work necessary to obtain the mining licenses.
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 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 three month
period ended March 31, 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 50 projects and totals
approximately 658,000 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, a 75% 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 Denison Environmental Services ("DES")
division and is the manager of Uranium Participation Corporation
("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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