Denison Reports First Quarter Net Earnings Of $484,000
TORONTO, ONTARIO--Denison Mines Limited today reported earnings of
$484,000 ($0.00 per share) on revenue of $4,763,000 for the three
months ended March 31, 2002. This compares with earnings of
$895,000 ($0.00 per share) on revenue of $4,787,000 in the first
quarter of 2001. Revenue and earnings in the first quarter of
2001 included $1,521,000 from the final installment of the Ecuador
oil royalty.
Canadian oil and gas revenue in the first quarter of 2002
increased to $1,079,000 from $347,000 in the fourth quarter of
2001 and $39,000 in the first quarter of 2001. The two new
Countess wells that had commenced production in December 2001 were
shut in very early in January until mid February pending receipt
of the necessary regulatory approvals to transfer the wells and
facilities from Innovative to Denison. The Knappen gas well,
which had been tested in the fourth quarter of 2001, also remained
shut in until mid February following completion of the sour gas
processing facility, the tie-in to the pipeline and receipt of the
necessary licenses. As a result, sixty percent of our oil and gas
revenue for the quarter was generated in March.
Production from the Knappen gas field commenced at 500,000 cubic
feet per day and has been steadily increased to the current rate
of 1.5 million cubic feet per day. The plan is to gradually
increase Knappen production to 2.0 million cubic feet a day.
Denison's oil and gas production, at a gas to oil ratio of 6:1,
averaged over 750 barrels of oil equivalent per day in March.
On April 27, 2002, the first of two new wells was spudded at
Denison's 100% owned Countess field. The target depth of 1250
meters should be reached in the next few days.
Revenue from uranium sales in the first quarter of 2002 increased
to $3,041,000 from $2,698,000 in the first quarter of 2001.
Uranium sales in the first quarter of each of 2002 and 2001
represented 9% of actual and anticipated annual sales volumes,
respectively.
Denison's share of production from McClean Lake was 381,000 pounds
of U3O8 in the first quarter of 2002 compared with 430,000 pounds
in the first quarter of 2001. Scheduled production for the McClean
Lake facilities for 2002 has been set at 6.0 million pounds of
U3O8.
Mining operating and exploration costs in 2002 are net of
approximately $517,000 recovered in respect of prior period
expenses, the final settlement of which was recently concluded.
Mining of the Sue C ore body was completed on February 3, 2002
with about 33% more uranium than had been anticipated recovered
into surface stockpiles. All mining activities have ceased for
the next few years.
Exploration activities at McClean that discovered new unconformity
related uranium mineralization have been suspended until ground
conditions improve and drilling results assessed.
Revenue from the environmental services division in the first
quarter of 2002 increased to $643,000 from $529,000 in the first
quarter of 2001. The five-year contract to monitor the five Rio
Algom mine sites and the 30-month contract to supervise the Hope
Brook mine closeout in Newfoundland provide a significant base
load for DES to actively pursue additional contracts in 2002.
Discussions and negotiations on several new contracts and asset
sales are continuing.
Conference Call
Denison is hosting a conference call on Friday, May 3, 2002
starting at 9:00 am (Toronto time) to discuss the First Quarter
2002 results. The webcast conference call will be available live
through a link on Denison's website at www.denisonmines.com. A
recorded version of the conference call will be available on
Denison's website or by calling (416) 695 - 9728 approximately two
hours after the call until 5:00 pm on May 17, 2002.
/T/
First Quarter Report 2002
Denison Mines Limited
www.denisonmines.com
/T/
To Our Shareholders
DENISON REPORTS FIRST QUARTER NET EARNINGS OF $484,000
Denison Mines Limited reported earnings of $484,000 ($0.00 per
share) on revenue of $4,763,000 for the three months ended March
31, 2002. This compares with earnings of $895,000 ($0.00 per
share) on revenue of $4,787,000 in the first quarter of 2001.
Revenue and earnings in the first quarter of 2001 included
$1,521,000 from the final installment of the Ecuador oil royalty.
Oil and Gas
Canadian oil and gas revenue in the first quarter of 2002
increased to $1,079,000 from $347,000 in the fourth quarter of
2001 and $39,000 in the first quarter of 2001. The two new
Countess wells that had entered production in December 2001 had to
be shut in very early in January pending receipt of the necessary
regulatory approvals to transfer the wells and facilities from
Innovative to Denison. The Knappen gas well, which had been
tested in the fourth quarter of 2001, also remained shut in until
mid February following completion of the sour gas processing
facility, the tie-in to the pipeline and receipt of the necessary
licenses. As a result, sixty percent of our oil and gas revenue
for the quarter was generated in March.
Production from the Knappen gas field commenced at 500,000 cubic
feet a day and has been increased to the current rate of 1.5
million cubic feet per day. The plan is to gradually increase
production to 2.0 million a day.
On April 27, 2002, a new well was spudded at Denison's 100% owned
Countess field. This is the first of a scheduled two well
program.
Mining
Denison's share of production from McClean Lake was 381,000 pounds
of U3O8 in the first quarter of 2002 compared with 430,000 pounds
in the first quarter of 2001. Scheduled production for the
McClean Lake facilities for 2002 has been set at 6.0 million
pounds of U3O8.
Mining of the Sue C ore body was completed on February 3, 2002.
About 33% more uranium than had been anticipated from the results
of the surface drilling was recovered into surface stockpiles. As
a result of the extra uranium recovered, the stockpiled ore is
sufficient to feed the McClean Lake mill, at nominal design rates,
into 2006. All mining activities have ceased for the next few
years. This will result in increased cash flow as the company's
$18.2 million year-end inventory of stockpiled ore is fed to the
mill with no further cash mining costs. Profitability has
improved since the total mining cost is being divided among the
increased number of pounds recovered thus lowering the unit cost
per pound of amortizing stockpiled ore.
The low-grade special waste, from the mining of the JEB and Sue C
deposits, has been disposed of in the mined out Sue C pit.
Exploration has now stopped near the McClean mine-site due to
surface ground conditions. Plans are now being made for a summer
exploration program.
Denison Environmental Services
The five-year contract to monitor the five Rio Algom mine sites
and the 30-month contract to supervise the Hope Brook mine
closeout in Newfoundland provide a significant base load for DES
to actively pursue additional contracts in 2002. Discussions are
continuing on several other potential new contracts.
Results of Operation
Revenue in the first three months of 2002 includes $3,041,000
(2001 - $2,698,000) from uranium sales, $1,079,000 (2001 -
$39,000) from Canadian oil and gas and $643,000 (2001- $529,000)
from environmental services. In 2001, $1,521,000 was also
received from the Ecuador royalty.
Uranium sales in the first quarter of 2002 represented 9% of 2002
sales volume compared with 9% in the first quarter of 2001.
Readers are cautioned that sales volumes will vary from quarter to
quarter depending on timing of deliveries requested by customers
under the various contracts. Preliminary indications are that
remaining 2002 deliveries will be 32% in the second quarter, 9% in
the third quarter and 50% in the fourth quarter.
Mining operating and exploration costs in 2002 are net of
approximately $517,000 recovered in respect of prior period
expenses, the final settlement of which was recently concluded.
Liquidity and Cash Resources
During the first quarter of 2002, operations generated cash flow
of $2.9 million and long-term debt was reduced by $3.5 million.
Repayments of $10.4 million (2001 - $11.1 million) were made on
long-term debt from the collection of year-end uranium
receivables. During the quarter, the Company increased its bank
indebtedness by $890,000 to finance its oil and gas operations and
increased its long-term debt by $4.9 million to finance uranium
operating, capital and interest expenses and by $2.0 million to
fund other operations.
Currently budgeted capital expenditures in 2002 of $2.0 million
include $1.3 million for investments in Canadian oil and gas
assets, with the balance at the McClean uranium mine and the
Midwest uranium project. It is anticipated that up to $8.0
million could be spent on oil and gas projects in 2002. As of
March 31, 2002, the Company has the ability to redraw $8.9 million
on the Cogema facility for any purpose.
Except as discussed herein, risk factors, which may affect the
Company, are identified in the Company's annual Management's
Discussion and Analysis section included in the Company's 2001
annual report, and remain substantially unchanged.
Consolidation of Shares and Change of Name
On March 13, 2002, the Company announced that its Board of
Directors would seek the approval of the shareholders, at the
Annual and Special Meeting of Shareholders on May 8, 2002, to
change the name of the Corporation to Denison Energy Inc. and to
consolidate the Corporation's shares in the ratio of 20 to 1.
Details of these proposals are contained in the Corporation's
Management Information Circular. Denison's Annual and Special
Meeting of Shareholders will be held at the TSE Conference Centre,
130 King Street West, Toronto on May 8, 2002 at 10:30 a.m.
/T/
E. Peter Farmer
President and Chief Executive Officer
May 2, 2002 |
