EDITORIAL PAGE — Strapped for cash

As if Denison Mines werent up to its eyeballs in alligators already, the provincial governments in Ontario and Saskatchewan have unleashed a few more of the critters on the hapless company.

The Ontario government wants Denison to hand over $100 million (which it doesnt have) to cover reclamation costs. In Saskatchewan, the news could have been worse. The Midwest Joint Venture project was, as an environmental panel had earlier recommended, shelved, but McClean Lake will not be delayed. And from what we understand, a revised proposal on Midwest could yet see the project be given the go-ahead. (Denison has a minority interest in both projects. Cogema Resources is the main stakeholder. Uranerz is involved in the Midwest joint venture.)

As for the dust-up in Ontario, the Ministry of the Environment and Energy ordered the company, together with all its officers and directors, to post security in the form of cash or an irrevocable letter of credit in the amount of $100 million. The money would go to cover the costs of reclaiming Denisons Elliot Lake, Ont., property.

The province gave Denison two days to cough up the cash or to present some acceptable facsimile of same. This Denison did not do. Instead, we were told, the company planned to take the matter to court.

And no wonder. The last time we perused the financial statements of the company, there was precious little in the way of liquid assets. The reality is that Denison couldnt possibly come up with that much cash in so short a time. It has perhaps a few million dollars in cash, a few million in accounts receivable and some loose change here and there.

CEO Bill James likely wouldnt have a warm reception at any bank were he to seek a letter of credit. Last year, Denison hadnt paid a penny of interest on its outstanding bank loans. Its only asset to speak of is an arbitration case against Ontario Hydro in the amount of roughly $350 million. (The decision on that case should come early this year.)

Presumably, Environment Ministry officials are aware of Denisons straitened financial condition. So the question is, why would the ministry issue an order with which, it knows, Denison cant possibly comply?

Denison already reports its doings, with regard to the cleanup at Elliot Lake, to the Atomic Energy Control Board (AECB), the federal agency whose mandate is to see uranium mine reclamation projects are done according to regulations.

We would imagine that AECB, in turn, keeps the various provincial ministries posted on the Denison cleanup. In fact, the company is in the midst of the process of public hearings as required by the Federal Environmental Review Office. In the past two years, Denison spent about $12 million on reclamation. According to a ministry press release, the provinces main concern is with the far-reaching effect these tailings sites may have on the environment outside of Denisons property. This gives grounds for the province to use its environmental legislation to help ensure that sufficient funds are set aside. .

All this order would do, though, is force Denison into bankruptcy. On the other hand, it could be that the Ontario government is manoeuvring to get its hands on a piece of that $350-million Hydro settlement, should it fall in Denisons favor. Who knows?