Denison stronger despite 1987 earnings drop

Despite a drop in 1987 first half earnings, Denison Mines continues to strengthen its financial position. The company reported consolidated net earnings for the six months ended June 30, 1987 of $9,038,000 on revenue of $220,078,000 compared with $10,405,000 on revenue of $225,646,000 for the corresponding 1986 period. The loss per Class A and B participating share, after providing for preferred share dividends, was 12 cents for the first half of 1987, compared with 10 cents last year.

“Denison’s working capital position improved by $100,705,000 during the first half of 1987, due to the receipt of the first two instalments of the proceeds of the sale of an interest in the company’s Egyptian oil properties. This enabled Denison to reduce its debt to $385,920,000 from $480,656,000.” said Chairman Stephen Roman.

“The company and its partners have successfully negotiated amendments to the Denison-Potash Company of Canada (Potocan) project financing agreement with the lenders, enabling the New Brunswick mine to operate within the terms of the agreement.”

Although a Denison spokesman declined to reveal the extent of the company’s commitment to the project, a consortium of banks will grant a full completion certificate in return for certain financial commitments.

Mr Roman said potash production is now exceeding the established targets and although potash markets have been weak, the strategic location and the high grade of the Denison-Potacan deposit augur well for the future.

Last year Denison’s share of production was 392,000 tons. As reported (N.M., May 4/87) the project has a designed capacity of 1.3 million tonnes annually.

“The recovery in world oil prices continued during the first half of 1987 and sustained prices at these higher levels will have a positive effect on earnings and cash flow for the rest of the year,” said Mr Roman.

Production from the Prinos oil field in Greece remains on budget and at the same levels achieved in 1986, and cash flow from the operations in Greece is accruing to the company in the normal way, despite a recent law authorizing compulsory participation by the Greek State.

“We have raised concerns about the law with the Greek government and are attempting to reach a favorable resolution of the situation.”

In Italy, the development of the offshore Vega oil field remains essentially on target with first production expected this summer.

“Production and shipments from Denison’s Elliot Lake, Ont., uranium operations are proceeding according to plan and the conveyor installation, which will access the uranium deposits purchased from Canuc Resources will begin in the third quarter,” Mr Roman said.

Denison has entered into letters of intent to acquire jointly with a partner, a 60 per cent working interest in the Midwest Lake uranium property in northern Saskatchewan. It is proposed that the company will become the manager of the property, which has reported reserves of 2,200,000 tons grading 25 pounds of uranium per ton.