Denison Reports Third Quarter 1998 Results
TORONTO, ONTARIO--Denison Mines Limited reported a loss of $10.4
million ($0.03 per share) on revenues of $14.2 million for the
three months ended September 30, 1998, compared with earnings of
$4.3 million ($0.02 per share) on revenues of $19.6 million in the
corresponding period of 1997. The loss of $10.4 million in the
third quarter was a result of the write off of the $11.5 million
cost of the unsuccessful exploration drilling program offshore
Greece. For the nine months ended September 30, 1998, a loss of
$6.2 million ($0.02 per share) was reported compared to earnings
of $24.7 million ($0.08 per share) in the corresponding period of
1997.
Substantially all of the decrease in revenue from the first nine
months of 1997 is attributable to a 36 percent drop in the Prinos
oil price and a 26 percent decrease in production volume. These
decreases were partially offset by lower operating costs in 1998.
Greece
At current oil prices, production volumes and operating cost
levels, the Prinos field is operating at below the break even
level. In an effort to make this operation economic, discussions
with the Greek State and the union are occurring. Unless
significant reductions in operating costs can be achieved, it is
our intention to cease operations and commence closure of the
field. Further exploration for new oil fields may occur in the
remaining exploration areas at a later date.
Saskatchewan Uranium Properties
The Atomic Energy Control Board gave initial consideration to the
licensing of the construction of the JEB Tailings Management
Facility to the operator, Cogema Resources Inc. As a result,
construction commenced in August and will need a further 3-4 weeks
to complete. Construction was suspended in mid October pending
review by the Atomic Energy Control Board which is ongoing.
Denison believes that McClean production will commence in the
first quarter of 1999.
Elliot Lake
The remaining capital works are now substantially completed,
including the last dam at Stanrock. Future reclamation activity
is expected to consist primarily of ongoing monitoring and water
treatment.
Denison Environmental Services
In joint venture with Lakefield Research, Denison Environmental
Services is conducting a pilot project involving hydraulic
placement of mine tailings and mixing them with biosolids. With
the success of the current projects the reputation of and demand
for our Environmental Services is rapidly growing.
/T/
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Denison Mines Limited
Consolidated Statement of Earnings (Unaudited)
(In thousands except per share data)
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Third Quarter Nine Months Ended
September 30
----------------- ------------------
1998 1997 1998 1997
------- ------- ------- --------
Revenue $14,159 $19,648 $40,327 $56,530
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Operating and
exploration costs 12,597 14,400 34,003 37,069
Writedown of Greek
oil property 11,500 - 11,500 -
General corporate
expenses 697 850 2,597 2,756
Amortization of debt
discount - - - 345
Gain on purchase
of long-term debt - - - (8,495)
Other income (534) (396) (2,274) (1,504)
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24,260 14,854 45,826 30,171
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Earnings (loss)
before income and
mining taxes (10,101) 4,794 (5,499) 26,359
Income and mining
taxes 260 521 743 1,676
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Net earnings (loss)
for the period $(10,361) $4,273 $(6,242) $24,683
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Net earnings (loss)
per common share $ (0.03) $0.02 $ (0.02) $ 0.08
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Denison Mines Limited
Consolidated Balance Sheet (Unaudited)
(In thousands)
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September 30 December 31
1998 1997
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ASSETS
Cash and short-term deposits $32,515 $36,327
Restricted cash 3,284 3,831
Marketable securities 6,266 8,633
Accounts receivable 35,540 31,304
Product inventory 3,654 11,463
Raw materials supplies and
prepaid expenses 1,514 1,588
Net fixed assets 126,092 112,755
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$208,865 $205,901
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LIABILITIES
Accounts payable and
accrued liabilities $42,859 $40,440
Income taxes due within one year 890 1,912
Income and mining taxes due
after one year 4,801 4,689
Long-term debt 54,502 45,973
Provision for post-employment
benefits 12,664 13,000
Provision for Elliot Lake
mine reclamation costs 9,208 9,704
Provision for Greek
decommissioning costs 33,000 33,000
Deferred income and mining taxes 423 423
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158,347 149,141
SHAREHOLDERS' EQUITY 50,518 56,760
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$208,865 $205,901
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Denison Mines Limited
Consolidated Statement of Cash Flow (Unaudited)
(In thousands)
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Nine Months Ended
Third Quarter September 30
-------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
Operating Activities
Net earnings (loss)
for the period $(10,361) $4,273 $(6,242) $24,683
Items not requiring
an outlay of cash
Depreciation,
depletion and
amortization - 836 - 2,579
Writedown of Greek
oil property 11,500 - 11,500 -
Gain on purchase of
long-term debt, - - - (8,495)
Amortization of debt
discount, - - - 345
Increase (decrease)
in provision for
Greek, oil field
decommissioning
costs, - 103 - (143)
Gain on sale of assets, - (58) (20) (822)
Increase in taxes
payable after one year
and deferred income
and mining taxes, 32 100 112 269
--- --- --- ---
1,171 5,254 5,350 18,416
Decrease (increase) in
operating working
capital, 7,615 (124) 4,212 (6,511)
Funding of Elliot Lake
mine reclamation costs, - - - (5,600)
---- --- ---- ------
Net cash generated by
operating activities, 8,786 5,130 9,562 6,305
----- ----- ----- -----
Financing Activities
Borrowings on loan
facility 1,914 3,667 8,529 23,527
Purchase of long-term
debt, - (4,770) - (13,920)
Issue of common share
purchase warrants, - 793 - 793
--- ---- ---- -----
1,914 (310) 8,529 10,400
----- --- ----- ------
Investing Activities
Proceeds on sale of
assets, - 58 20 904
Additions to fixed
assets, (14,014) (6,892) (24,837) (28,040)
Sale (purchase) of
marketable securities, - (9,596) 2,367 (9,596)
Decrease (increase) in
restricted cash, (43) 2,815 547 5,314
---- ----- ---- -----
(14,057) (13,615) (21,903) (31,418)
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Decrease in Cash and
Short-term Deposits (3,357) (8,795) (3,812) ($14,713)
Cash and Short-term
Deposits
- Beginning of
Period, 35,872 44,534 36,327 50,452
------ ------ ------ ------
Cash and Short-term
Deposits
- End of Period, $32,515 $35,739 $32,515 $35,739
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