Denison To Pay Down Debt With $41M Financing

VANCOUVER — Intermediate uranium producer Denison Mines (DML-T, DNN-X) will use “basically all” of a recently announced $41- million bought-deal financing to pay down debt on a $125-million revolving line of credit, says the company’s executive vice-president and chief financial officer James Anderson.

Anderson could not say how much it had so far drawn the Bank of Nova Scotia credit line down — the number is not yet public — but as of Sept. 30, 2008, Denison reported that it stood at $102 million. At that time, it had about $15 million in cash and equivalents.

A rule governing the credit line stipulates that Denison must pay back any outstanding balance over $80 million if its production is less than 1.7 million lbs. U₃O₈ in 2008. However, the company announced on Jan. 9 that it has met the covenant. Between its share of production from the Mc- Clean Lake joint venture in Saskatchewan (731,000 lbs.) and its White Mesa mill in Utah (904,000 lbs.), production for the year totalled 1.64 million lbs. U₃O₈. Another 1.2 million lbs. of vanadium produced at White Mesa — equivalent to 243,700 lbs. of uranium oxide under the credit agreement — put Denison over the top.

Denison has five active uranium mines in the U. S. and one in Canada. It also has a 100% interest in the White Mesa uranium mill and a 22.5% interest in the Mc- Clean Lake mill.

Cormark Securities and GMP Securities led the syndicate of underwriters on the $41-million bought-deal financing, which closes Jan. 27.

As part of the deal, Denison will issue 25 million common shares at $1.65 and could raise an additional $6.2 million if the nearly 4 million warrants it is offering are fully exercised.

In addition to the January financing, last month Denison brought in $8 million from a flowthrough private placement. The company had initially announced a nearly $12-million private placement but later reduced the number by $4 million.

Anderson says the bulk of flowthrough proceeds will go towards exploration in Saskatchewan where, in its latest quarterly report, Denison says it participates in 35 exploration projects within the Athabasca basin.

It also has leases in the U. S., Mongolia and Zambia.

On news of the financing, Denison’s share price slid 25¢ to $1.85. It has about 190 million shares outstanding.