Oil woes cut into Denison profit — Construction decision imminent for McClean Lake plant

Denison Mines (DEN-T) attributes a drop in first-quarter revenue to a 33% reduction in the price of crude oil produced at the company’s Prinos offshore oil fields in Greece.

Compounding the price drop was a 30% decrease in production volume, though the company points out that lower operating costs partially offset these setbacks.

The Toronto-based major earned $1.7 million (or 1cents per share) on revenue of $13.9 million during the recent 3-month period, compared with $7.6 million (2cents per share) profit on $20.4 million in the first quarter of 1997.

On the yellowcake front, both Ottawa and the Saskatchewan government recently approved development of the Midwest uranium project in northern Saskatchewan, which is 19.5%-owned by Denison (T.N.M., Nov. 24/98).

Meanwhile, Midwest operator Cogema Resources continues to hold discussions with Denison and the Atomic Energy Control Board (AECB) regarding licensing and operation of the McClean Lake tailings facility, also in northern Saskatchewan. Construction of the Cogema-operated plant will be addressed, and possibly determined, at an AECB hearing on June 25. Denison hopes construction, which would likely last 12 weeks, will get under way by the fourth quarter.

On the exploration front, Denison continues to explore its 40%-owned Wheeler River uranium property in northern Saskatchewan. Recent work focused on evaluating and testing some of the 130 km of graphitic conductors that have been identified to date. Geophysical work, as well as a 7-hole drill program, was carried out, results of which are pending.

In the Ungava region of northern Quebec, a major drilling campaign is scheduled to begin at the Sagar gold-uranium copper project.

In 1996, Denison and Inmet Mining (IMN-T) entered into an agreement with Virginia Gold Mines (VIA-M) whereby each can earn a quarter-interest in Sagar by investing $2 million apiece in exploration expenditures over a 5-year period.

The project hosts several gold-uranium-copper showings and covers a field of boulders rich in gold and uranium. A bedrock source of the mineralized boulders has yet to be found. However, the property covers a major horst structure, and the possibility that the mineralized boulders come from this nearby structure has not been adequately tested, Denison reports.

In addition, Sagar is said to contain significant copper and copper-gold showings. An airborne survey has defined a large magnetic anomaly and at least two radiometric anomalies that may be reflective of major hydrothermal systems. Drill-testing is planned.