Denison achieves positive earnings in 2000
Denison Mines Ltd
DEN
Shares issued 317,871,201
2001-03-06 close $0.1
Tuesday Mar 6 2001
News Release
Mr. E. Peter Farmer reports
Denison Mines Limited achieved earnings of $9.1-million or three cents per share for the year
ended Dec. 31, 2000, on revenue of $39.8-million. This compares with earnings of
$12.3-million or four cents per share in 1999 on revenue of $20.5-million. Earnings in 1999
included a $7.7-million gain on the sale of the White Rose oil field, a $13.9-million decrease in
the provision for Greek oil field decommissioning, and expenses of $12.8-million arising from
the settlement of the Oceanic lawsuit.
In 2000, Denison took significant steps to secure its financial future. The Cogema loan was
renegotiated, accounts payable and receivable were reduced by over $33-million and
$10-million respectively, operating costs at McClean were reduced significantly during the
year, and revenue increased by over $19-million to almost $40-million with earnings of three
cents per share. Shareholders' equity increased by almost 14 per cent to over $73-million. The
company returned to oil and gas exploration and production and Denison Environmental
Services contracted to operate and maintain all of the closed uranium mine sites in the Elliot
Lake area.
McClean Lake mill and mine operating costs were consistently reduced through the year.
Over six million pounds were produced in 2000 and production ceased early in November,
2000, in order to modify the mill to further improve mill operations. Although a portion of the
shutdown costs were capitalized, the almost two-month shutdown with no product being
produced adversely affected the year's results. The mill is capable of producing in excess of
600,000 pounds of U308 per month and, with the large fixed cost component of the
operations, the more production in a year, the lower the costs are per pound. In excess of
672,000 pounds were produced in January, 2001.
Although the results of Denison Environmental Services (DES) were a disappointment, DES
was active in bidding upon several significant contracts, two of which remain to be awarded.
The five-year contract to maintain and operate the decommissioned Rio Algom mine sites at
Elliot Lake provides a significant base load of work for DES. As a result of a slowdown in
mine development, the anticipated profit from the sale of used mining equipment that DES
has acquired has not yet been realized.
Denison entered into a joint venture with a private company to explore for oil and gas in
Saskatchewan. The first well encountered two oil-bearing zones and is currently producing
small quantities of oil from a vertical section in the uppermost zone. Horizontal development
of this zone is under consideration. The current focus of Denison's activities is on a prospect
in which the initial vertical well was completed and the interpretation of the geological
structure together with the oil production are very encouraging. Although this area is still
prospective, further exploration drilling will be under way as soon as the appropriate rig and
crew are available. The company is optimistic about this prospect.
A $1-million exploration program is under way at McClean to further delineate uranium
reserves. Exploration is also continuing at the Wheeler River, Waterfound River and Talbot
Lake properties.
Last year Denison benefited significantly from the Ecuador oil royalty payments that will end
in the first quarter of 2001. During 2000, numerous mining and mineral prospects were
reviewed with a view to completing an acquisition and accelerating the usage of Denison's
federal tax losses and pools that exceed $200-million. For a variety of reasons no transaction
was consummated except for the Saskatchewan oil and gas joint venture. The company is
now increasing the focus of its acquisition review on oil and gas companies that are taxable.
Denison's objective is to acquire oil and gas assets which will replace the cash flow and
earnings from these royalty payments.
In 2000, general corporate expenses were reduced by 25 per cent and significant reductions
will occur again in 2001. The company's objective is a further reduction of at least 15 per
cent. Denison will continue to further reduce costs and urge its joint venture partners at
McClean and at the oil operations in Saskatchewan to do the same. The company's target is
to have McClean produce at least 7.2 million pounds of uranium in 2001 with its share of oil
production at 300 barrels per day by year-end. The company will continue to prudently seek
relationships that will benefit Denison and its shareholders.
Denison is hosting a conference call on March 7, 2001, starting at 9 a.m. (Toronto time) to
discuss the year-end results. The conference call will be Webcast at www.ir-live.com and a
recorded version will be available approximately two hours after the call, through a link on
Denison's Web site, www.denisonmines.com, until 5 p.m. on March 16, 2001.
WARNING: The company relies upon litigation protection for "forward-looking" statements.
STATEMENT OF EARNINGS
Three months ended Dec. 31
(thousands of dollars)
2000 1999
Revenue $ 17,768 $ 15,852
-------- --------
Operating and
exploration
costs 11,327 9,995
Decrease in
provision for
Greek oil field
decommissioning - (7,872)
Settlement
of Oceanic
royalty dispute - 12,853
Interest
expense 1,545 842
General
corporate
expenses 523 975
Investment
income (261) 47
-------- --------
13,134 16,840
-------- --------
Earnings (loss)
before income
and resource
taxes 4,634 (988)
Income and
resource taxes (1,160) 871
-------- --------
Net earnings
(loss) for the
period $ 5,794 $ (1,859)
======== ========
Net earnings
per common
share
Basic $0.02 $0.00
Fully diluted $0.02 $0.00
STATEMENT OF EARNINGS
Year ended Dec. 31
(thousands of dollars)
2000 1999
Revenue $ 39,813 $ 20,535
-------- --------
Operating and
exploration
costs 21,444 12,633
Gain on sale
of White Rose
oil field - (7,735)
Decrease in
provision for
Greek oil field
decommissioning - (13,939)
Settlement
of Oceanic
royalty dispute - 12,853
Interest
expense 5,981 842
General
corporate
expenses 2,262 3,010
Investment
income (1,421) (667)
-------- --------
28,266 6,997
-------- --------
Earnings
before income
and resource
taxes 11,547 13,538
Income and
resource taxes 2,516 1,245
-------- --------
Net earnings
for the
period $ 9,031 $ 12,293
======== ========
Net earnings
per common
share
Basic $0.03 $0.04
Fully diluted $0.03 $0.04
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