Ontario orders Denison to post $100 million bond

Already teetering on the verge of bankruptcy, Denison Mines (TSE) has been pushed even closer to the edge after being served two orders by the Ontario government to clean up its former uranium mining operations in Elliot Lake, Ont.

Under the provincial Environmental Protection Act, Denison has been ordered to decommission its Elliot Lake properties, according to the requirements of a federal Environmental Assessment Review of the companys current decommissioning plan. Now under way, the federal review is expected to be completed over the next 18 months. As well, Denison has been ordered to post $100 million in cash or in some other acceptable form to ensure it bears the full cost of cleaning up its properties.

What gets me on this is that the Ontario government says were not in compliance, but weve done everything we can, said Denison President Bill James.

Denison also received an order under the Mining Act of Ontario to rehabilitate the Elliot Lake facilities.

The Ontario government said that, because of Denisons financial uncertainty, it was acting to protect the northern Ontario environment and to ensure that taxpayers do not have to pay for future cleanups.

James said the company is appealing the orders in court.

Were contesting this on jurisdictional grounds, James told The Northern Miner. He said the Atomic Energy Control Board (AECB), not the province of Ontario, has the jurisdiction to determine what decommissioning program is acceptable.

Since announcing the closure of its facilities, Denison has been working closely with the AECB to develop a decommissioning plan. To date, Denison and its Elliot Lake facilities have been in compliance with all applicable environmental laws and regulations, the company said.

Over the past two years, Denison has spent more than $12 million on reclamation. During this period, the Stanrock mine site has been leveled, the Denison site 60% demolished, and almost all of the 60 million tonnes of tailings covered by water.

Total reclamation costs for the Elliot Lake sites are estimated at $75 million.

With $380 million in liabilities, including $70 million in bank debt, compliance with the order to post the $100-million bond could signal the end for Denison. One possible source of cash is the companys $350-million claim against Ontario Hydro pertaining to the canceling of a long-term contract for the sale of uranium. The dispute is before an arbitration committee and a decision is not expected for at least three months.