Denison Mines Limited (Q2/98 earnings)
E. Peter Farmer
President and CEO
(416) 979-1991 Ext. 231
(416) 979-5893 (FAX)
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: DENISON MINES LIMITED
TSE, ME SYMBOL: DEN
JULY 29, 1998
Denison Reports Net Earnings of $2.4 Million
TORONTO, ONTARIO--Denison Mines Limited reported earnings of $2.4
million ($0.00 per share) on revenues of $12.2 million for the
three months ended June 30, 1998, compared with earnings of $12.8
million ($0.04 per share) on revenues of $16.4 million in the
corresponding period of 1997. Earnings for the second quarter of
1997 included a gain of $8.5 million from the purchase of
long-term debt. For the six months ended June 30, 1998, earnings
were $4.1 million ($0.01 per share) compared to earnings of $20.4
million ($0.06 per share) in the corresponding period of 1997.
Substantially all of the decrease in revenue is attributable to a
36 percent drop in the Prinos oil price and a 24 percent decrease
in production volume in the first six months of 1998 compared with
the first half of 1997. These decreases were partially offset by
lower operating costs in 1998, enabling the field to operate at
close to break even in the second quarter.
Greece
A number of new prospects south and west of our existing producing
oil fields in the northern Aegean Sea offshore Greece have been
identified. A drill rig has been contracted to drill up to three
wells, the first of which will be located on the "Southeast
Prospect" approximately 10 kilometres south of the Prinos oil
field and 3 kilometres from the South Kavala gas field in
approximately 38 metres of water. The seismic data indicates that
this prospect comprises at least two separate stratigraphic
structures layered over each other with a reef structure in the
middle. The prospect is as large as 410 hectares with a potential
pay thickness of from 55 to 200 metres. The drilling rig is now
enroute to Greece and the South Prinos 1 Well is scheduled to be
spudded early in August. Drilling to 2600 metres and testing of
this first well is expected to take up to 60 days.
Saskatchewan Uranium Properties
Discussions continue between Cogema, Denison and the Atomic Energy
Control Board ("AECB") with respect to licensing of the
construction and operation of the JEB Tailings Management Facility
at McClean, which is scheduled for initial consideration by the
AECB on August 13th. Approval to commence some pit construction
could occur prior to that date. Construction is expected to take
twelve weeks. Denison believes that McClean production will
commence in the fourth quarter.
Denison Environmental Services
Denison Environmental Services has now been awarded its third
contract in 1998, the most significant of which is to decommission
the Algoma Steel mine and mill complex near Wawa, Ontario. The
reclamation work and the sale of the assets and equipment
associated with the Algoma operation will be completed by the end
of 1999.
Sagar Mineral Exploration
Helicopter supported diamond drilling is currently underway on the
Sagar project in northern Quebec, where the Company is earning a
25 percent interest. Drilling is anticipated to continue until mid
September. The drilling program is being carried out to locate
the source of the very high grade uranium-gold boulders.
/T/
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Consolidated Statement of Earnings (Unaudited)
(In thousands except per share data)
---------------------------------------------------------------
Six Months Ended
Second Quarter June 30
----------------------------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Revenue $ 12,241 $ 16,445 $ 26,168 $ 36,882
--------- --------- --------- ---------
Operating and
exploration costs 9,221 11,389 21,406 22,669
General corporate
expenses 894 870 1,900 1,906
Amortization of
debt discount -- -- -- 345
Gain on Purchase
of long term debt -- (8,495) -- (8,495)
Other income (471) (609) (1,740) (1,108)
--------- --------- --------- ---------
9,644 3,155 21,566 15,317
--------- --------- --------- ---------
Earnings before income
and mining taxes 2,597 13,290 4,602 21,565
Income and
mining taxes 217 462 483 1,155
--------- --------- --------- ---------
Net earnings
for the period $ 2,380 $ 12,828 $ 4,119 $ 20,410
--------- --------- --------- ---------
Net earnings
per common share $ 0.00 $ 0.04 $ 0.01 $ 0.06
--------- --------- --------- ---------
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Denison Mines Limited
--------------------------------------------------------------
Consolidated Balance Sheet (Unaudited)
(In thousands)
--------------------------------------------------------------
June 30 December 31
1998 1997
--------- ---------
ASSETS
Cash and short-term deposits $ 35,872 $ 36,327
Restricted cash 3,241 3,831
Marketable securities 6,266 8,633
Accounts receivable 34,176 31,304
Product inventory 1,221 11,463
Raw materials, supplies and
prepaid expenses 1,943 1,588
Net fixed assets 123,578 112,755
--------- ---------
$ 206,297 $ 205,901
--------- ---------
--------- ---------
LIABILITIES
Accounts payable and
accrued liabilities $ 31,855 $ 40,440
Income taxes due within one year 640 1,912
Income and mining taxes
due after one year 4,768 4,689
Long-term debt 52,588 45,973
Provision for post-employment
benefits 12,777 13,000
Provision for Elliot Lake mine
decommissioning and
reclamation costs 9,367 9,704
Provision for Greek
decommissioning costs 33,000 33,000
Deferred income and mining taxes 423 423
--------- ---------
145,418 149,141
SHAREHOLDERS' EQUITY 60,879 56,760
--------- ---------
$ 206,297 $ 205,901
--------- ---------
--------- ---------
Consolidated Statement of Cash Flow (Unaudited)
(In thousands)
Six Months Ended
Second Quarter June 30
1998 1997 1998 1997
--------- --------- --------- ---------
Operating Activities
Net earnings
for the period $ 2,380 $ 12,828 $ 4,119 $ 20,410
Items not requiring an outlay of cash
Depreciation,
depletion and
amortization -- 760 -- 1,743
Gain on purchase of
long-term debt -- (8,495) -- (8,495)
Amortization of
debt discount -- -- -- 345
Increase (decrease)
in provision for
Greek oil field
decommissioning
costs -- 32 -- (246)
Gain on sale
of assets -- (368) (20) (764)
Increase in taxes
payable after one year
and deferred income
and mining taxes 14 22 80 169
--------- --------- --------- ---------
2,394 4,779 4,179 13,162
Decrease (increase)
in operating
working capital 6,617 1,507 (3,403) (6,403)
Funding of Elliot
Lake decommissioning
and reclamation
costs -- (5,584) -- (5,584)
--------- --------- --------- ---------
Net cash generated
by operating
activities 9,011 702 776 1,175
--------- --------- --------- ---------
Financing Activities
Borrowings on
loan facility 2,668 7,231 6,615 19,860
Purchase of
long-term debt -- (9,150) -- (9,150)
--------- --------- --------- ---------
2,668 (1,919) 6,615 10,710
--------- --------- --------- ---------
Investing Activities
Proceeds on
sale of assets -- 365 20 846
Additions to
fixed assets (5,282) (10,248) (10,823) (21,148)
Sale of marketable
securities 1,593 -- 2,367 --
Decrease (increase)
in restricted cash (220) (673) 590 2,499
--------- --------- --------- ---------
(3,909) (10,556) (7,846) (17,803)
--------- --------- --------- ---------
Increase (decrease)
in Cash and
Short-term Deposits 7,770 (11,773) (455) ($5,918)
Cash and Short-term
Deposits
- Beginning
of Period 28,102 56,307 36,327 50,452
--------- --------- --------- ---------
Cash and Short-term Deposits
- End of Period $ 35,872 $ 44,534 $ 35,872 $ 44,534
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