Denison To Acquire Innovative Energy Ltd.
TORONTO, ONTARIO--Denison Mines Limited announced today that it has agreed to purchase Innovative Energy Ltd. The purchase price is $4.9 million consisting of the assumption of $2 million in debt, $1.9 million in cash and the balance of $1 million by the issuance of Denison common shares. The value of the Denison common shares will be an amount equal to the average closing price at which the common shares have traded on The Toronto Stock Exchange during the 20 trading days following this announcement, subject to a floor price of $0.125 per share.
Innovative is a privately held company operating out of Calgary. There are no employees as all work is performed by the owners under consulting contracts.
The purchase has an effective date of August 1, 2001 and closing is scheduled for November 12, 2001. The closing is subject to all necessary regulatory approvals, completion of due diligence and the execution and delivery of definitive agreements.
Based upon an independent engineering report prepared as of July 1, 2001 and converting gas to oil equivalent at 6:1, Innovative's reserves totaled 670,000 barrels of oil equivalent (boe) consisting of two-thirds oil and one-third gas. This report did not take into account a further 275,000 boe from the well recently drilled in the Knappen area in southern Alberta by Innovative and Denison which tested at over 2 million cubic feet of gas per day with a preliminary reserve estimate of 3.7 billion cubic feet. Innovative holds a 50% interest in this well after payout.
Innovative's current production is about 215 boe/day of which 45% is oil. This will increase substantially when Innovative's share of the Knappen production is added. In addition, at least one new well will be drilled this year in the Countess field, currently owned equally by Innovative and Denison.
Innovative also holds nearly 15,000 acres of prospective undeveloped land in Alberta and Saskatchewan and holds various royalty interests in another 19,000 acres being explored and developed by others.
Upon completion of the acquisition of Innovative, Denison will hold 100% of the Countess field, where new processing and water disposal facilities are scheduled to be completed in October and the drilling of additional wells is planned, 100% of the recently announced Knappen gas field, other interests in various producing oil and gas properties in Alberta and Saskatchewan and an inventory of undeveloped land for future evaluation and exploration. Denison's production, after the closing of the Innovative acquisition and after the tie-in of the Knappen well, is projected to exceed 650 boe/day.
This acquisition will give Denison a financially and technically sound base from which it will be able to further develop Canadian oil and gas interests. The value of these interests to Denison is enhanced by its ability to utilize its extensive tax pools.
The 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 factors discussed in the Company's Management Discussion and Analysis section of its 2000 Annual Report.
Contact:
Denison Mines Limited
E. Peter Farmer
President and Chief Executive Officer
Phone: (416) 979-1991 Extension 231
www.denisonmines.com |
