Denison Reports Net Earnings Of $6.6 Million
TORONTO, ONTARIO--Denison Mines Limited reported earnings of $6,640,000
($0.02 per share) for the three months ended June 30, 1999, compared with
earnings of $2,380,000 ($0.00 per share) in the corresponding period of 1998.
Earnings in the second quarter of 1999 include a reduction of $6,067,000 in the Company's provision for
decommissioning its Greek operations.
Revenue in the second quarter of 1999 was $1,841,000 (1998-$12,241,000). Revenue in 1999 does not include any
revenue from uranium sales, which will be recognized when the McClean Lake mine reaches commercial production
levels, or from the Prinos oil field where production ceased in November 1998.
For the six months ended June 30, 1999 earnings were $6,293,000 ($0.02 per share) compared with $4,119,000 ($0.01
per share) in the corresponding period of 1998.
Greece
All employees of the Consortium in Greece have been terminated and received their severance payments. The joint
venture's remaining liability is limited to abandoning non producing wells and funding one half of the cost of removing
the platforms and plant facilities. The Greek government is required to fund the balance.
Based on a study by an international consulting firm, which was commissioned by the official Abandonment Committee
mandated by the Greek State and Consortium, management has reduced by $6.1 million to $9.6 million its best estimate
of the remaining costs to complete its share of decommissioning activities. These costs are expected to be further
reduced because the Greek state intends to use the Kappa platform and South Kavala reservoir for gas storage and to use
portions of the onshore facilities for power generation. The Company's provision for decommissioning also does not
include future receipts from the salvage and sale of assets which will be significant. The Greek State has also announced
that the Prinos oil field will be reopened utilizing a local contractor. Before this occurs, a settlement with the Consortium
of its liabilities will be necessary.
McClean Lake
Production of uranium concentrates commenced June 23, 1999 at the 22.5 percent owned McClean Lake uranium mine,
following final approvals from the regulatory agencies. Production rates are increasing ahead of schedule. Shipments of
uranium are expected to commence in the third quarter. It is anticipated that the McClean facility will achieve
commercial production in October or November this year and be able to operate at above the 6 million pound design
capacity for the following 12 months.
Denison Environmental Services
The revenue generating activities of Denison Environmental Services recommenced in the second quarter. DES is active
on several mine decommissioning projects involving mine closure, site rehabilitation and mine waste containment. DES is
one of the most experienced and efficient contractors to complete these types of projects. Two new contracts in
northern Ontario have been obtained and several new projects are being pursued.
White Rose Oil Field
The second appraisal well, located three kilometres south of the successful L-08 well which encountered about one
hundred metres of net oil pay, is currently being tested.
Ecuador Royalty
Oil production has now commenced at the Villano field in Ecuador where Denison holds a royalty interest equal to 3
percent of cash flow up to a maximum of U.S.$7.8 million. Production levels are scheduled to increase to 40,000 barrels
per day by year end. Royalty payments are expected to commence in the third quarter of 1999.
Oceanic Appeal
The Ontario Court of Appeal heard in June the Company's appeal of a U.S.$8.5 million lower court award against it
arising from calculation of royalties from its Greek Oil field. A decision is pending.
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Consolidated Balance Sheet (Unaudited)
(In thousands)
----------------------------------------------------------
June 30 December 31
1999 1998
--------- -----------
ASSETS
Cash and short-term deposits $ 12,506 $ 23,815
Restricted cash - 3,045
Marketable securities 1,473 -
Accounts receivable 21,658 38,375
Product inventory 19 4,964
Raw materials, supplies and
prepaid expense 1,723 1,652
Net property, plant and
equipment 146,570 135,961
--------- -----------
$ 183,949 $ 207,812
--------- -----------
--------- -----------
LIABILITIES
Accounts payable and accrued
liabilities $ 24,509 $ 46,343
Income taxes due within one year 57 120
Income and mining taxes due after
one year 4,727 4,758
Long-term debt 64,325 56,354
Provision for post-employment
benefits 12,191 12,475
Provision for Elliot Lake mine decommissioning
and reclamation cost 8,246 9,137
Provision for Greek oil field
decommissioning costs 9,600 24,624
Deferred income and mining taxes 563 563
--------- -----------
124,218 154,374
SHAREHOLDERS' EQUITY 59,731 53,438
--------- -----------
$ 183,949 $ 207,812
--------- -----------
--------- -----------
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Consolidated Statement of Earnings (Unaudited)
(In thousands expect per share data)
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Six Months Ended
Second Quarter June 30
------------------ ------------------
1999 1998 1999 1998
-------- --------- -------- ---------
Revenue $ 1,841 $ 12,241 $ 2,186 $ 26,168
-------- --------- -------- ---------
Operating and exploration
costs 722 9,221 899 21,406
Decrease in provision for Greek oil field
decommissioning (6,067) - (6,067) -
General corporate expenses 715 894 1,528 1,900
Investment income (211) (471) (531) (1,740)
-------- --------- -------- ---------
(4,841) 9,644 (4,171) 21,566
-------- --------- -------- ---------
Earnings before income and
mining taxes 6,682 2,597 6,357 4,602
Income and mining taxes 42 217 64 483
-------- --------- -------- ---------
Net earnings for the
period $ 6,640 $ 2,380 $ 6,293 $ 4,119
-------- --------- -------- ---------
-------- --------- -------- ---------
Net earnings per common
share $ 0.02 $ 0.00 $ 0.02 $ 0.01
-------- --------- -------- ---------
-------- --------- -------- ---------
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Segmented Information (Unaudited)
(In thousands)
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Six Months Ended
Second Quarter June 30
------------------ ------------------
1999 1998 1999 1998
-------- --------- -------- ---------
Revenue
Mining $ 1,841 $ 6,464 $ 2,186 $ 13,281
Oil and gas - 5,777 - 12,887
-------- --------- -------- ---------
$ 1,841 $ 12,241 $ 2,186 $ 26,168
-------- --------- -------- ---------
-------- --------- -------- ---------
Net earnings
Mining $ 1,052 $ 2,265 $ 930 $ 4,076
Oil and gas 6,109 568 6,399 210
Corporate and other (521) (453) (1,036) (167)
-------- --------- -------- ---------
$ 6,640 $ 2,380 $ 6,293 $ 4,119
-------- --------- -------- ---------
-------- --------- -------- ---------
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Consolidated Statement of Cash Flow (Unaudited)
(In thousands)
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Six Months Ended
Second Quarter June 30
------------------ ------------------
1999 1998 1999 1998
-------- --------- -------- ---------
Operating Activities
Net earnings for the
period $ 6,640 $ 2,380 $ 6,293 $ 4,119
Adjustments for:
Depreciation 11 - 20 -
Decrease in provision for Greek oil
field decommissioning (6,067) (6,067)
Gain on sale of assets (66) - (86) (20)
Increase (decrease) in taxes payable
after one year and deferred income
and mining taxes 29 14 (31) 80
-------- --------- -------- ---------
547 2,394 129 4,179
Decrease (increase) in operating
working capital 1,039 6,617 (581) (3,403)
Spending on Greek oil field
decommissioning costs (4,325) - (8,957) -
Spending on Elliot Lake decommissioning
and reclamation costs (900) - (900) -
-------- --------- -------- ---------
Net cash used in operating
activities (3,639) 9,011 (10,309) 776
-------- --------- -------- ---------
Financing Activities
Borrowings on loan
facility 5,530 2,668 7,971 6,615
-------- --------- -------- ---------
Investing Activities
Proceeds on sale of
assets 66 - 86 20
Additions to property, plant
and equipment (6,728) (5,282) (10,629) (10,823)
Sale (purchase) of marketable
securities (1,473) 1,593 (1,473) 2,367
Decrease (increase) in
restricted cash 2,794 (220) 3,045 590
-------- --------- -------- ---------
(5,341) (3,909) (8,971) (7,846)
-------- --------- -------- ---------
Increase (decrease) in Cash and
Cash Equivalents (3,450) 7,770 (11,309) (455)
Cash and Short-term Deposits
- Beginning of Period 15,956 28,102 23,815 36,327
-------- --------- -------- ---------
Cash and Short-term Deposits
- End of Period $ 12,506 $ 35,872 $ 12,506 $ 35,872
-------- --------- -------- ---------
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Contact:
Denison Mines Limited
E. Peter Farmer
President and Chief Executive Officer
(416) 979-1991 Extension 231 |
