Gold is down the road, Denison chairman says

Gold might help the share price of Denison Mines, but it’s not likely the company will be into the gold business for some time yet.

Following the annual meeting, Chairman Stephen Roman said that the company will be producing gold “as soon as we find a good mine,” a possibility, he said “within the next 18 months to two years.”

Denison and partner Sikaman Gold Resources are involved in a gold project in Ghana, West Africa, for which a full feasibility study has been recommended.

At the meeting, Denison’s pres ent Class A share price of around $5.50, down from the $15.75 level over the past few years, drew some fire from attending shareholders who wanted to know what’s ahead.

Roman declined to guess what value the shares really have, saying “I’m just human, I guess, when it comes to figuring out what’s ahead.”

One thing that is available for shareholders, though, he said, is a 25 cents participating share dividend, payable in the form of one Class B share for every 20 shares held. Regular preferred share dividends were also declared.

To a shareholder who said this was just a token dividend, a “mean” dividend unrelated to profits, Roman indicated that the company prefers not to pay out everything it earns, but rather to build for the future.

The company had a profit in 1987, before extraordinary items, of $27,259,000, on revenue of $442 million, compared with profit of $18.8 million on revenues of $412 million, in 1986.

The Denison chairman dealt at some length with the problems of Quintette Coal. The Japanese steel industry is attempting to renege on long-term contracts it signed with Quintette and has exercised a contractual right to have price demands decided by an arbitration panel.

Quintette supplies Japan with about five million tonnes of coal annually under long-term contracts in effect until March 31, 1998.

“There is no doubt,” Roman said, “that Quintette could not operate under the prices proposed by the Japanese. Quintette did not ask for the arbitration and does not believe this process alone can resolve all the problems of the overall enterprise.”

He called instead for a resumption of negotiations, necessary if a “lasting, fair, and reasonable settlement is to be reached.”

“I don’t blame the Japanese for trying to move back a little bit on their commitments,” he said, “but I believe that in the end they will stick by them. I don’t think it’s fair for them to walk away.” Stephen Roman S. Roman