Denison unable to redeem its shares

Toronto-based uranium producer Denison Mines (TSE) has announced that it doesn’t have enough cash to redeem any of its 7-million series B preferred shares on March 15. Bill James, appointed president of the financially troubled company last month, confirmed that Denison does not expect to be in a position to redeem any of its series B shares in March.

“We have attempted and are continuing our efforts to generate cash through the sale of assets and have recently commenced preliminary merger discussions,” he said.

Potential candidates for a merger with Denison include Saskatoon- based Cameco and Toronto-based Rio Algom (TSE) because they are currently producing uranium, Denison’s core business.

“The directors and management of Denison are working diligently to restore the financial health of Denison,” he added.

Analysts had predicted that Denison would be unable to afford the $175-million share redemption unless it succeeded in finding a buyer for its overseas oil and gas assets which were placed on the auction block two years ago. As well, the company is still hoping to sell its 60% owned Dension-Potacan Potash division which produces potash in New Brunswick.

Denison remains in arrears on its past two quarterly dividend payments for its preferred series A and B shares. The Canadian Bond Rating Service has suspended the rating for Denison’s preferred shares and earlier this month, the company was dropped from the TSE 300 composite index when The Toronto Stock Exchange completed its annual review of trading activity.

Denison’s preferred B shares have fallen to a low of $4.95 within a 52-week range of $4.90-23, while the common A shares have dropped to a low of 58 cents.