Vancouver – The executive vice president and chief financial officer James Anderson of intermediate uranium producer Denison Mines (DML-T, DNN-X) says “basically all” of a recently announced $41 million bought-deal financing will go towards paying down Denison’s debt on a $125 million revolving line of credit.
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 cash equivalents.
A rule governing the credit line stipulates that Denison must pay back any outstanding balance over $80 million if its U3O8 production is less than 1.7 million lbs. in 2008. However Anderson does not expect to invoke the rule.
He says Denison will probably reach the stipulated production level.
In its last quarterly report ending Sept. 30 Denison reported that in the nine months leading up to Sept. 30 it had produced nearly 1 million lbs. U3O8 and, in total, it expected to produce just over 700,000 lbs. U3O8 from its Canadian operations and 1 million lbs. from its American ones.
On its website Denison says it 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 in Utah and a 22.5% interest in the McClean Lake mill in Saskatchewan.
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 nearly 4 million warrants it is offering are fully exercised.
In addition to raising the $41 million in January, last month Denison brought in $8 million from a flow-through 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 flow-through 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.
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