....old news, but good news
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DEN 2000-04-27 (provided courtesy of Canadian Corporate News.)
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Denison Reports First Quarter Earnings Of $1.2 Million
TORONTO, ONTARIO--Denison Mines Limited today reported earnings of
$1,212,000 ($0.00 per share) on revenue of $5,971,000 for the
three months ended March 31, 2000 compared with a loss of $347,000
on revenue of $345,000 in the first quarter of 1999. Revenues for
the first three months of 2000 include $2,625,000 from the
Company's mining operations that consist of McClean uranium and
Denison Environmental Services and $3,346,000 from oil operations
comprising of the Ecuador royalty ($2,193,000) and the final
proceeds from the sale of Greek oil in the tanks ($1,153,000).
EBITDA for the first quarter of 2000 was $5,221,000.
As a result of new accounting rules, commencing in 2000, Denison's
earnings are calculated using theoretical tax rates without being
allowed to take into account the utilization of the existing
excess tax pools that are in excess of $170 million. The net
effect is that Denison is required to deduct a tax expense in
computing net earnings, which in the first quarter was $835,000,
in spite of the fact that this amount is not payable. The benefit
arising from the use of existing tax pools is treated as an
addition to retained earnings.
The results for the first quarter represent approximately 7% of
the projected uranium sales volume in 2000. Uranium sales volumes
and prices will fluctuate depending on which contracts the Company
makes deliveries under in the quarter.
The McClean Lake uranium facility is running well. Production in
the first quarter is nearly 10% above the nominal capacity of 6
million pounds per year. The environmental targets are being met.
All efforts are now being directed to determining the optimal
production rate and reducing the operating costs to the extent
reasonably achievable. Mining is continuing at the Sue C pit.
This operation has proven to be relatively simple with none of the
water problems encountered in the JEB pit. The ore in the Sue pit
is well defined and is being removed with relatively little
dilution. Ore from this pit has provided the mill feed since mid
March. Nearly half of the JEB reserves or 2.5 million pounds U3O8
remain in the stockpile for future processing.
Except for limited work and asset sales, the revenue generating
activities of Denison Environmental Services were minimal during
the winter. DES has bid on or is in the process of bidding on
five significant new projects and several smaller ones.
Mr. E. Bruce McConkey has been appointed Chairman of the Company.
Mr. McConkey has been a Director of Denison for 25 years and has
been Chairman of its Audit Committee for the last 7 years.
/T/
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Consolidated Statement of Earnings (Loss) (Unaudited)
(In thousands except per share data)
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Three Months Ended
March 31
-------- ---------
2000 1999
-------- ---------
Revenue $ 5,971 $ 345
-------- ---------
Operating and exploration costs 2,028 177
Interest expense 1,277 -
General corporate expenses 619 813
Investment income (283) (320)
-------- ---------
3,641 670
-------- ---------
Earnings (loss) before income and resource taxes 2,330 (325)
Income and resource taxes (note 1) 1,118 22
-------- ---------
Net earnings (loss) for the period $ 1,212 $ (347)
-------- ---------
-------- ---------
Net earnings per common share $ 0.00 $ 0.00
-------- ---------
-------- ---------
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Consolidated Statement of Retained Earnings (Unaudited)
(In thousands)
---------------------------------------------------------------------------
Three Months Ended
March 31
-------- ---------
2000 1999
-------- ---------
Net earnings (loss) for the period $ 1,212 $ (347)
Benefit of utilizing previously unrecognized
future income tax assets (note 1) 835 -
-------- ---------
2,047 (347)
Retained Earnings - Beginning of Period 64,830 52,537
-------- ---------
Retained Earnings - End of Period $66,877 $52,190
-------- ---------
-------- ---------
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Segmented Information (Unaudited)
(In thousands)
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Three Months Ended
March 31
-------- ---------
2000 1999
-------- ---------
Revenue
Mining $ 2,625 $ 345
Oil and gas 3,346 -
-------- ---------
$ 5,971 $ 345
-------- ---------
-------- ---------
Net earnings (loss)
Mining $ 258 $ (122)
Oil and gas 3,499 290
Corporate and other (433) (515)
Interest expense (1,277) -
Federal and Saskatchewan income taxes (835) -
-------- ---------
$ 1,212 $ (347)
-------- ---------
-------- ---------
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Consolidated Statement of Cash Flow (Unaudited)
(In thousands)
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Three Months Ended
March 31
---------------------
2000 1999
-------- ---------
Operating Activities
Net earnings (loss) for the period $ 1,212 $ (347)
Adjustments for non-cash items:
Depreciation 1,614 9
Gain on sale of assets (141) (20)
Benefit of utilizing previously unrecognized future
income tax assets (note 1) 835 -
Increase (decrease) in taxes payable after
July 1, 2000 and future income and resource taxes 30 (60)
-------- ---------
3,550 (418)
Increase in operating working capital (12,088) (1,620)
Spending on Greek oil field decommissioning - (4,632)
-------- ---------
Net cash used in operating activities (8,538) (6,670)
-------- ---------
Financing Activities
Borrowings (repayments) on loan facility (1,581) 2,441
-------- ---------
Investing Activities
Proceeds on sale of assets 141 20
Additions to property, plant and equipment (383) (3,901)
Sale of marketable securities 1,651 -
Decrease in restricted cash - 251
-------- ---------
1,409 (3,630)
-------- ---------
Decrease in Cash and Cash Equivalents (8,710) (7,859)
Cash and Cash Equivalents - Beginning of Period 23,134 23,815
-------- ---------
Cash and Cash Equivalents - End of Period $ 14,424 $ 15,956
-------- ---------
-------- ---------
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Consolidated Balance Sheet (Unaudited)
(In thousands)
---------------------------------------------------------------------------
March 31 December 31
2000 1999
-------- ---------
ASSETS
Cash and short-term deposits $ 14,424 $ 23,134
Marketable securities 3,285 4,936
Accounts receivable 16,798 24,586
Product inventory 10,323 261
Raw materials, supplies and prepaid expense 2,002 1,984
Net property, plant and equipment 143,635 145,289
-------- ---------
$190,467 $ 200,190
-------- ---------
-------- ---------
LIABILITIES
Accounts payable and accrued liabilities $ 29,756 $ 39,703
Income taxes due within one year 587 768
Income and resource taxes due after July 1, 2000 4,006 3,941
Long-term debt 66,536 68,117
Provision for post-employment benefits 11,805 11,900
Provision for Elliot Lake mine decommissioning
and reclamation cost 7,483 7,544
Future income and resource taxes 2,488 2,458
-------- ---------
122,661 134,431
SHAREHOLDERS' EQUITY 67,806 65,759
-------- ---------
$190,467 $ 200,190
-------- ---------
-------- ---------
Contingent liability (note 2)
/T/
Notes to Consolidated Financial Statements (Unaudited)
Denison Mines Limited for the three months ended March 31, 2000
1. As required by the new rules of the Canadian Institute of
Chartered Accountants ("CICA"), the Company has adopted the
liability method of accounting for income taxes effective January
1, 2000. The new CICA rules require computation of the Federal
and Saskatchewan income tax provision using theoretical tax rates
which currently apply without being allowed to record and take
advantage of the offsetting reduction to taxable income as a
result of utilizing previously unrecognized tax deductions
arising prior to the Company's restructuring in 1995. As a
result, first quarter 2000 net earnings have been reduced by
$835,000 and earnings per share have been reduced from $0.01 to
$0.00. This additional expense, included in income and resource
taxes on the Consolidated Statement of Earnings, does not
increase liabilities, since the benefit of utilizing these tax
deductions is considered to be an adjustment to asset values
assigned at the time of the restructuring and therefore $835,000
has been credited to Retained Earnings. Prior year results have
not been restated.
The net impact of the new CICA rules is that Denison has deducted
a tax expense in computing net earnings and earnings per share
under the new method when no actual tax liability exists
corresponding to this increased expense.
The Company now has in excess of $170 million of unused capital
cost allowances, together with substantial earned depletion and
net capital losses which can be carried forward to shelter its
future earnings from federal and provincial income taxes, except
in Ontario. The resulting benefit of these deductions will be
recognized in the future as an increase in Retained Earnings to
offset the tax expenses shown in earnings.
2. A Greek court has determined that further payments should be
made to 227 of the former unionized employees of the Company's
Prinos oil operations where production ceased in November 1998.
As many of the employees were employed or received other
compensation during 1999 that reduces the amount awarded to them,
it is difficult to assess the magnitude of the judgement, which
could range up to $11 million. Appeals are being filed disputing
both the interim award of approximately $1,160,000 and balance of
the judgement. The closing of Greek operations was accepted as
valid by the Greek State in an agreement dated November 16, 1999
which was subsequently ratified by the Greek Parliament. The
results of an appeal cannot be determined at this time. The
Company has an accrual of $1.9 million at March 31, 2000 to cover
any remaining liabilities in Greece.
3. As of April 28, 2000 the Company has 317,871,201 Common Shares
issued and outstanding. On a fully diluted basis, after giving
effect to the exercise of Common Share Purchase Warrants and stock
options, the Company would have 345,856,201 Common Shares issued.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
E. Peter Farmer
President and Chief Executive Officer
416-979-1991 Ext. 231 |
