An arbitration panel has ruled on the dispute between Denison Mines (TSE) and Ontario Hydro. The news is not good for Denison, which will receive a total of $30.9 million, a far cry from the $361 million it sought.
The 3-man panel’s decision includes a provision for contingent items such as interest, reduced costs awarded to Ontario Hydro and adjustments as required by the contract. When all is said and done, Hydro will owe Denison about $35 million on March 31, 1994. The actual amount to be paid will be determined in early April.
The amount to be paid is insufficient for Denison to repay its debt obligations, which total about $95 million; nor is it enough to decommission and reclaim the Denison uranium mine near Elliot Lake, Ont., which is estimated to cost about $100 million.
Denison says it has reached agreements in principle with its corporate lenders. The Toronto Dominion Bank and the Bank of America are reportedly owed $77 million while other institutions are owed about $18 million. The agreement will freeze action by the corporate lenders until April 19, 1994. Denison is contacting its other creditors and various government agencies with a view to formulating a plan acceptable to all interested parties. The dispute originated as a result of Ontario Hydro’s termination of a cost-plus uranium supply contract between the utility and Denison. The focus of the dispute is whether or not certain costs, such as the depreciation of capital assets, should be used in the price determinations of 1991 and 1992 deliveries.
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