Denison Reports Third Quarter Earnings Of $1.6 Million
TORONTO, ONTARIO--Denison Mines Limited reported earnings of
$1,637,000 for the three months ended September 30, 2000. This
compares with earnings of $7,859,000 in the third quarter of 1999,
which included earnings of $7,600,000 from the sale of the
Company's interest in the White Rose oil field. Revenue in the
third quarter was $9,452,000, which included $6,200,000 from
uranium sales and $2,714,000 from the Ecuador oil royalty compared
with $2,497,000 in the same period in 1999. There were no uranium
sales or revenues from the Ecuadorian royalty in the third quarter
of 1999.
Earnings for the nine months ending September 30 were $3,237,000
($0.01 per share) compared with $14,152,000 ($0.04 per share) in
the corresponding period of 1999. Earnings for the nine months
ending September 30, 1999 included a $6,067,000 reduction in the
Company's provision for decommissioning its Greek operations and
the White Rose gain of $7,735,000. Earnings before interest,
taxes, depreciation and amortization for the nine months ended
September 30, 2000 were $16,537,000 compared with $14,526,000 for
the nine months ended September 30, 1999. Cash and marketable
securities exceeded $19 million or almost $0.06 per share at
September 30, 2000.
Operations at the McClean Lake uranium facility are steadily
improving. The production rate in the third quarter was 24% above
the nominal design capacity of six million pounds per year and
unit operating costs continued to decline. Ore from the first
phase of the Sue C pit has been mined and stockpiled. Stripping is
ongoing in preparation for mining the 18 million pound second
phase of the Sue C ore in the later part of 2001. Stockpiled Sue
C and JEB ore is sufficient to feed the mill at design capacity
for about two years.
Uranium sales volumes in the third quarter and year to date are
19% and 47% respectively of scheduled sales volumes for 2000. The
McClean loan balance has increased to $72.8 million at September
30 as a result of the cost of increasing uranium inventory levels
for sales in the fourth quarter, stripping costs, and timing of
third quarter sales receipts.
Denison Environmental Services has been active with several small
contracts which will be substantially completed before year end.
A new five-year contract to maintain and monitor five mine sites
is currently being finalized.
Royalty receipts from Ecuador continue to be received. Full
payment is expected before the end of the first quarter 2001.
Denison has entered into a joint venture agreement with a private
company whereby Denison can earn a 50% working interest in up to
8,500 acres in an oil exploration joint venture in Saskatchewan.
At least seven separate prospects have been identified and Denison
is committed to pay 70% of the cost to drill one well on at least
two of these prospects following completion and interpretation of
a 3D seismic program. The first well has been completed at a cost
to Denison of $300,000 and testing of the two oil-bearing zones is
currently underway. Drilling of a second exploration well has
commenced.
Corporate cost reduction measures have been implemented and are
expected to decrease those costs by about 15% next year.
Mr. Craig Bamford has been appointed Vice-President, Finance of
the Corporation, replacing Chris Jamieson. Craig is a chartered
accountant, joined Denison in 1982 and has most recently been the
Controller of the Company.
This News Release contains forward-looking information with
respect to Denison's operations and future financial results.
Actual results may differ from expected results for a variety of
reasons including the factors discussed in the Company's
Management Discussion and Analysis section of its 1999 Annual
Report.
/T/
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Consolidated Statement of Earnings (Unaudited)
(In thousands except per share data)
-------------------------------------------------------------------
Nine Months Ended
Third Quarter September 30
----------------- --------------------
2000 1999 2000 1999
----------------- --------------------
Revenue $9,452 $2,497 $22,045 $4,683
--------- ------- ------- --------
Operating and exploration costs 4,332 1,739 10,117 2,638
Interest expense 1,671 - 4,436 -
Gain on sale of White Rose oil
field - (7,735) - (7,735)
Decrease in provision for Greek oil
field decommissioning - - - (6,067)
General corporate expenses 512 507 1,739 2,035
Investment income (478) (183) (1,160) (714)
--------- ------- ------- --------
6,037 (5,672) 15,132 (9,843)
--------- ------- ------- --------
Earnings before income and resource
taxes 3,415 8,169 6,913 14,526
Income and resource taxes 1,778 310 3,676 374
--------- ------- ------- --------
Net earnings for the period $1,637 $7,859 $3,237 $14,152
--------- ------- ------- --------
--------- ------- ------- --------
Net earnings per Common Share $0.00 $0.02 $0.01 $0.04
--------- ------- ------- --------
--------- ------- ------- --------
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Consolidated Statement of Retained Earnings (Unaudited)
(In thousands)
-------------------------------------------------------------------
Nine Months Ended
Third Quarter September 30
----------------- ------------------
2000 1999 2000 1999
-------- -------- -------- ---------
Net earnings for the period $1,637 $7,859 $3,237 $14,152
Benefit of utilizing previously
unrecognized future
income tax assets (note 1) 1,158 - 2,337 -
------- ------ ------ -------
2,795 7,859 5,574 14,152
Retained Earnings
- Beginning of Period 67,609 58,830 64,830 52,537
------- ------ ------ -------
Retained Earnings
- End of Period $70,404 $66,689 $70,404 $66,689
------- ------ ------ -------
------- ------ ------ -------
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Segmented Information (Unaudited)
(In thousands)
-------------------------------------------------------------------
Nine Months Ended
Third Quarter September 30
--------------- ---------------------
2000 1999 2000 1999
------ ------- ----------- ---------
Revenue
Mining $6,738 $2,497 $14,494 $4,683
Oil and gas 2,714 - 7,551 -
------- ------- --------- --------
$9,452 $2,497 $22,045 $4,683
------- ------- --------- --------
------- ------- --------- --------
Net earnings (loss)
Mining $1,931 $773 $3,226 $1,703
Oil and gas 2,718 7,723 7,705 14,122
Corporate and other (183) (637) (921) (1,673)
Interest expense (1,671) - (4,436) -
Federal and Saskatchewan
income taxes (1,158) - (2,337) -
------- ------- --------- --------
$1,637 $7,859 $3,237 $14,152
------- ------- --------- --------
------- ------- --------- --------
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Consolidated Statement of Cash Flow (Unaudited)
(In thousands)
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Nine Months Ended
Third Quarter September 30
---------------- -------------------
2000 1999 2000 1999
-------- ------- -------- ----------
Operating Activities
Net earnings for the period $1,637 $7,859 $3,237 $14,152
Adjustments for non-cash items:
Depreciation, depletion and
amortization 1,669 11 5,188 31
Gain on sale of White Rose
oil field - (7,735) - (7,735)
Gain on sale of other assets - (92) (141) (178)
Benefit of utilizing previously
unrecognized future income
tax assets (note 1) 1,158 - 2,337 -
Decrease in provision for
Greek oil field
decommissioning - - - (6,067)
Increase in future income
and resource taxes 195 1,075 202 1,044
-------- -------- -------- ----------
4,659 1,118 10,823 1,247
Increase in operating working
capital (4,003) (4,633) (22,868) (5,214)
Spending on Greek oil field
decommissioning - - - (8,957)
Funding of Elliot Lake
reclamation (16) (118) (121) (1,018)
-------- -------- -------- ----------
Net cash generated by (used in)
operating activities 640 (3,633) (12,166) (13,942)
-------- -------- -------- ----------
Financing Activities
Borrowings on loan facility 862 5,026 4,725 12,997
-------- -------- -------- ----------
Investing Activities
Proceeds on sale of assets 58 13,229 221 13,315
Additions to property, plant and
equipment (533) (2,090) (1,383) (12,719)
Sale (purchase) of marketable
securities (336) (3,141) 1,774 (4,614)
Decrease in restricted cash - - - 3,045
-------- -------- -------- ----------
(811) 7,998 612 (973)
-------- -------- -------- ----------
Increase (Decrease) in Cash and
Cash Equivalents 691 9,391 (6,829) (1,918)
Cash and Short-term Deposits
- Beginning of Period 15,614 12,506 23,134 23,815
-------- -------- -------- ----------
Cash and Short-term Deposits
- End of Period $16,305 $21,897 $16,305 $21,897
-------- -------- -------- ----------
-------- -------- -------- ----------
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Consolidated Balance Sheet (Unaudited)
(In thousands)
-------------------------------------------------------------------
September 30 December 31
2000 1999
-------------- ------------
ASSETS
Cash and short-term deposits $16,305 $23,134
Marketable securities 3,162 4,936
Accounts receivable 5,945 24,586
Product inventory 8,487 261
Raw materials, supplies and prepaid
expenses 2,405 1,984
Net property, plant and equipment 139,842 145,289
--------- -----------
$176,146 $200,190
--------- -----------
--------- -----------
LIABILITIES
Accounts payable and accrued liabilities $6,272 $39,703
Current taxes payable 555 768
Income and resource taxes due after
July 1, 2000 3,476 3,941
Long-term debt 72,842 68,117
Provision for post-employment benefits 11,585 11,900
Provision for Elliot Lake mine decommissioning
and reclamation cost 7,423 7,544
Future income and resource taxes 2,660 2,458
--------- -----------
104,813 134,431
SHAREHOLDERS' EQUITY 71,333 65,759
--------- -----------
$176,146 $200,190
--------- -----------
--------- -----------
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Notes to Consolidated Financial Statements (Unaudited
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/T/
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. As
a result, year-to-date net earnings have been reduced by
$2,337,000. 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 $2,337,000
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 non capital
losses and 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. An appeal has been filed and a
hearing is now scheduled for January 30, 2001. 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 $1.6
million at September 30, 2000 to cover any remaining liabilities
in Greece.
3. As of October 24, 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:
Denison Mines Limited
E. Peter Farmer
President and Chief Executive Officer
(416) 979-1991 Ext. 231
www.denisonmines.com |
