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Denison Mines
Corp.
1100
– 40 University Ave
Toronto,
ON M5J 1T1
www.denisonmines.com
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PRESS RELEASE
DENISON REPORTS Q2 2017 RESULTS INCLUDING HIGHLIGHTS FROM PROMISING
SUMMER 2017 EXPLORATION PROGRAM
Toronto, ON – August 3, 2017 Denison Mines Corp. (“Denison” or the
“Company”) (DML: TSX, DNN: NYSE MKT) today filed its
Consolidated Financial Statements and Management’s Discussion
& Analysis (“MD&A”) for the period ended June
30, 2017. Both documents are available on the Company’s
website at www.denisonmines.com
or on SEDAR (at www.sedar.com)
and EDGAR (at www.sec.gov/edgar.shtml).
The highlights provided below are derived from these documents and
should be read in conjunction with them. All amounts in this release are
in U.S. dollars unless otherwise stated.
David Cates, President and CEO of Denison commented,
“With the spot price of
uranium correcting back into the low US$20 per pound
U3O8
range through the end of the
second quarter, we are reminded of the importance of building
uranium projects in the future, that can both sustain tough times
and take advantage of good times, through the long uranium cycle.
Denison is very fortunate to be fully funded, with over CAD$50
million in cash and GIC’s on the balance sheet at the end of
the second quarter, and to have a controlling interest in the
largest undeveloped high-grade uranium project in the
infrastructure rich eastern portion of the Athabasca Basin. Wheeler
River has already evidenced its potential to be a top tier mine in
the future from our PEA in 2016, but also continues to deliver
further high-grade and thick intervals in new areas of
mineralization at the Gryphon deposit, which illustrate the
potential for meaningful resource growth.
We are looking forward to the completion of the summer 2017
exploration program at Wheeler, and the results of the resource
update that our exploration team is working on, as well as the
resulting impact on our outlook for the Wheeler River project going
forward. Work continues on the pre-feasibility study, in parallel
with the exploration program, and is providing us with an
opportunity to carefully assess the mining methods available for
the Phoenix deposit and all of the options available to us to
maximize the value of the Wheeler River
project.”
Q2 2017 PERFORMANCE HIGHLIGHTS
■
Assay results increase the winter 2017 probe grades by 45% at
Wheeler River’s Gryphon deposit
The assay results received from the
Company’s winter 2017 drilling program on the 60% owned
Wheeler River project showed a significant increase in grade
compared to the previously released preliminary radiometric probe
results. Assay grades greater than 0.5% U3O8
were on average 45% higher than their
corresponding radiometric equivalent eU3O8
grades. The winter 2017 exploration
program involved a combination of infill drilling at the Gryphon
deposit and resource expansion exploration drilling to the
northwest of the Gryphon deposit – targeting mineralization
amongst the D series of lenses.
■
Gryphon D series lenses continue to deliver thick and high-grade
intersections
Drill holes from the winter 2017 drilling program
testing for additional mineralization within the D series of
lenses, outside of the Gryphon resource area, returned results with
the potential to add meaningful resources to the Gryphon deposit -
ahead of a planned update to the resource estimate for the project.
The results were highlighted by drill hole WR-633D3 which
intersected 19 metres of cumulative high-grade mineralization,
including 3.3% U3O8 over
13.5 metres, 6.2% U3O8 over
2.5 metres and 1.3% U3O8 over
3.0 metres. Follow-up drilling of WR-633D3, during the summer 2017
program, has continued to deliver positive results. Preliminary
radiometric equivalent probe results have included 3.5%
eU3O8
over 3.2 metres (including 4.1%
eU3O8
over 2.7 metre) in drill hole
WR-621D2, 2.7% eU3O8 over
2.3 metres (including 4.5% eU3O8
over 1.3 metres) in drill hole WR-691
and 3.2% eU3O8 over
2.0 metres (including 6.1% eU3O8
over 1.0 metres) in drill hole
WR-621D1.
■
Ongoing infill and delineation drilling for indicated resources on
the Gryphon deposit continues to return confirmatory high-grade and
thick intersections, indicating the potential for further resource
growth
A total of 31 infill and delineation holes have
been completed to date, of the approximately 40 holes required to
upgrade the current inferred Gryphon resource to an indicated level
of confidence. The assay results received from the winter 2017
drilling program continued to confirm the continuity and
high-grades of the Gryphon deposit A, B and C mineralized lenses
and were largely consistent with the current inferred block model.
Highlight preliminary radiometric equivalent probe results to date,
from the summer 2017 drilling program include 1.3%
eU3O8
over 25.3 metres (including 3.3%
eU3O8 over
7.8 metres) in drill hole WR-604D1, 4.1% eU3O8
over 5.9 metres in drill hole WR-692,
2.3% eU3O8
over 9.3 metres in drill hole
WR-564D1, 3.0% eU3O8
over 7.0 metres (including 3.6%
eU3O8 over
5.7 metres) in drill hole WR-610D1, and 1.9% eU3O8
over 8.4 metres in drill hole
WR-570D1. The preliminary summer 2017 results also show good
consistency with the current inferred block model, with drill holes
WR-564D1 and WR-570D1 indicating potential for resource growth in
their respective areas of the deposit.
■
High-grade uranium discovered on the Waterbury Lake
property
The
first drill hole of the summer 2017 drilling program at the
Waterbury Lake property returned a new high-grade uranium
intersection in the basement rock. Drill hole WAT-17-443
intersected 1.1% eU3O8 over 0.8 metres
(from 296.9 to 297.7 metres) approximately 1.5 kilometres to the
northeast of the property's J Zone uranium deposit. The high-grade
mineralization occurs immediately below a broader 10.3 metre
mineralized interval (from 282.8 to 293.1 metres) with an average
grade of 0.15% eU3O8. The
mineralization is open in all directions and follow-up drilling is
presently underway.
■
Denison Environmental Services (“DES”) renews its
cornerstone environmental services contract
DES
has entered into a new two-year services agreement with Rio Algom
Limited, a subsidiary of BHP Billiton Limited ("BHP") for the
management and operation of nine decommissioned mine sites in
Ontario and Quebec.
ABOUT DENISON
Denison
was formed under the laws of Ontario and is a reporting issuer in
all Canadian provinces. Denison’s common shares are listed on
the Toronto Stock Exchange (the “TSX”) under the symbol
“DML” and on the NYSE American (the “NYSE
MKT”) exchange under the symbol
“DNN”.
Denison
is a uranium exploration and development company with interests
focused in the Athabasca Basin region of northern Saskatchewan,
Canada. In addition to its 60% owned Wheeler River project, which
hosts the high grade Phoenix and Gryphon uranium deposits,
Denison's exploration portfolio consists of numerous projects
covering approximately 359,000 hectares in the Athabasca Basin
region, including 340,000 hectares in the infrastructure rich
eastern portion of the Athabasca Basin. Denison's interests in
Saskatchewan also include a 22.5% ownership interest in the McClean
Lake joint venture (“MLJV”), which includes several
uranium deposits and the McClean Lake uranium mill, which is
currently processing ore from the Cigar Lake mine under a toll
milling agreement, plus a 25.17% interest in the Midwest deposit
and a 63.63% interest in the J Zone deposit on the Waterbury Lake
property. Both the Midwest and J Zone deposits are located within
20 kilometres of the McClean Lake mill.
Denison
is engaged in mine decommissioning and environmental services
through its Denison Environmental Services (“DES”)
division, which manages Denison’s Elliot Lake reclamation
projects and provides post-closure mine and maintenance services to
a variety of industry and government clients.
Denison
is also the manager of Uranium Participation Corporation
(“UPC”), a publicly traded company listed on the TSX
under the symbol “U”, which invests in uranium oxide in
concentrates (“U3O8”) and
uranium hexafluoride (“UF6”).
SELECTED QUARTERLY FINANCIAL INFORMATION
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(in thousands)
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As at
June 30,
2017
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As at
December 31,
2016
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Financial Position:
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Cash
and cash equivalents
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$
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9,775
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$
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11,838
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Investment
in debt instruments (GIC’s)
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$
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30,884
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$
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-
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Cash,
cash equivalents and GIC’s
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$
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40,659
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$
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11,838
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Working
capital
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$
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35,649
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$
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9,853
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Property,
plant and equipment
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$
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193,031
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$
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187,982
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Total
assets
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$
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258,865
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$
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217,423
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Total
long-term liabilities
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$
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64,410
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$
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37,452
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2017
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2016
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(in
thousands, except for per share amounts)
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Q2
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Q2
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Continuing Operations:
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Total
revenues
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$
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2,611
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$
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3,663
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Net
loss
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$
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(6,423)
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$
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(3,832)
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Basic
and diluted loss per share
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$
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(0.01)
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$
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(0.01)
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RESULTS OF CONTINUING OPERATIONS
Revenues
On
February 13, 2017, Denison closed an arrangement under which
Denison received an upfront payment of $32,860,000
(CAD$43,500,000), in exchange for its right to receive future toll
milling cash receipts from the MLJV under the current toll milling
agreement with the Cigar Lake Joint Venture (“CLJV”)
from July 1, 2016 onwards. Following the closing of the APG
Transaction, CAD$1,947,000 in toll milling cash receipts were
received from the MLJV, and for the three months ended June 30,
2017, the Company recognized toll milling revenue from the
draw-down of deferred revenue of $638,000 and $992,000,
respectively.
Revenue
from DES during Q2 2017 was $1,713,000, while revenue from the
Company’s management contract with UPC was
$260,000.
Operating expenses
Operating
expenses in the Canadian mining segment include depreciation,
mining and other development costs. Operating expenses during Q2
2017 were $896,000, including $745,000 of depreciation from the
McClean Lake mill, associated with the processing of U3O8 for the
CLJV.
Operating
expenses at DES during Q2 2017 totaled $1,484,000 and relate
primarily to care and maintenance as well as environmental
consulting services provided to clients, and includes labour and
other costs.
Exploration and Evaluation
During
2017, the Company has remained active on its portfolio of projects
in the Athabasca Basin region in Saskatchewan. The Company’s
Athabasca land package increased during the second quarter from
356,597 hectares (248 claims) to 359,313 hectares (249 claims)
owing to the 51% interest earned in the Moon Lake South claim.
Denison’s share of exploration and evaluation expenditures
was $2,537,000 during Q2 2017.
Wheeler River Project
Denison’s
exploration and evaluation expenses on the Wheeler River Project,
represents 75% of the Joint Venture’s expenses, as part of a
previously announced agreement (see press release Dated January 10,
2017) to fund a greater share (ordinarily 60%) of the Joint
Venture’s expenses in 2017 and 2018 in order to increase its
interest in the project to up to approximately 66%.
Denison’s
share of exploration costs at Wheeler River amounted to $1,223,000
during Q2 2017.
Field
activities during Q2 2017 included conclusion of the winter 2017
drilling program in early April 2017 and commencement of the summer
2017 drilling program in late May 2017.
Winter 2017 Highlights from Assay Results
During
the winter 2017 drilling program, nine holes totalling 6,330 metres
were completed outside of the current inferred resources estimated
for the Gryphon deposit, including four holes targeting the Gryphon
D series lenses, and five holes down-dip of the A and B series
lenses. The assay results illustrate the potential for meaningful
resource expansion at Gryphon (See Denison’s press release dated May 26,
2017).
In
addition to exploration drilling to expand mineralization outside
of the current Gryphon resource, the 2017 winter drilling program
continued with infill and delineation drilling of the Gryphon
deposit, with the objective of increasing the level of confidence
of the current inferred resources to an indicated level. A total of
17 infill and delineation drill holes, totaling 8,402 metres, were
completed during the winter program. In comparison to the
previously reported radiometric equivalent grade results, the assay
results represented an overall increase in grade and thicknesses of
mineralization. The assay results also confirm the continuity and
high-grades of the Gryphon A, B and C series lenses that are
included in the current resource estimate for the
deposit.
Summer 2017 Highlight Results
A total
of 9,446 metres in 17 holes were completed as part of the summer
2017 drilling program through mid-July 2017. Preliminary
radiometric equivalent results were reported in our press release
dated July 24, 2017. The summer drilling program is expected to
include approximately 18,000 metres in 40 holes, and includes
infill and expansion drilling to potentially add indicated or
inferred resources to the Gryphon deposit, and infill and
delineation drilling to bring the current inferred resources to an
indicated level of confidence.
Drilling
continued within the Gryphon D series lenses to potentially add indicated or
inferred resources to the Gryphon deposit. A drill spacing of
approximately 25 x 25 metres is being implemented around
previous high-grade results which included 3.3% U3O8 over
13.5 metres, 6.2% U3O8 over
2.5 metres and 1.3% U3O8 over
3.0 metres in drill hole WR-633D3, and 5.3% U3O8 over
11.0 metres in drill hole WR-641. Five drill holes, of approximately 10
holes planned, have been completed within the D series lenses, all
of which intersected high-grade mineralization.
Approximately
10 infill and expansion drill holes located outside of the Gryphon
inferred resource area are planned for the summer 2017 program. The
objective of these drill holes is to add indicated resources to the
areas surrounding and within the Gryphon deposit’s A and B
series lenses. Three holes have been completed, all of which
intersected mineralization including a highlight result of 5.3%
eU3O8 over
2.5 metres in drill hole WR-582D3.
Infill
and delineation drilling on the Gryphon deposit’s A, B and C
series lenses also continues as part of the summer 2017 program,
with nine holes completed to mid-July 2017. In total, 31 infill and
delineation holes were completed, of the approximately 40 holes
required to upgrade the current inferred resources of the Gryphon
deposit to an indicated level of confidence.
Evaluation Program / PFS Activities
Denison’s
share of evaluation costs at Wheeler River amounted to $437,000 for
Q2 2017, and mainly related to the work on the pre-feasibility
study, which included engineering data collection activities,
geotechnical and hydrogeological work, and engineering
investigations into alternate mining methods at Phoenix and options
for shaft and vent raise excavation at both Gryphon and Phoenix.
The Company also advanced its environmental baseline programs, and
continued with the community consultation and engagement
process.
General and administrative expenses
Total
general and administrative expenses were $1,197,000 during Q2 2017.
These costs are mainly comprised of head office salaries and
benefits, office costs in multiple regions, audit and regulatory
costs, legal fees, investor relations expenses, project costs, and
all other costs related to operating a public company with listings
in Canada and the United States.
Other Income and expenses
During
Q2 2017, the Company recognized a loss of $2,173,000 in other
expenses, mainly due to a net loss of $2,080,000 on the mark to
market of investments carried at fair value.
LIQUIDITY AND CAPITAL RESOURCES
Cash
and cash equivalents were $9,775,000 at June 30, 2017 compared with
$11,838,000 at December 31, 2016. At June 30, 2017, the Company
also held investments in GICs of $30,884,000, which are categorized
as short term investments on the balance sheet. The Company holds
the large majority of its cash, cash equivalents, and GIC’s
in Canadian dollars, amounting to CAD$52.8 million.
At June
20, 2017, Denison has restricted cash of $9,646,000, largely due to
the terms of the Company’s revolving term credit facility
with the Bank of Nova Scotia (“BNS”), which is
restricted to non-financial letters of credit in support of
reclamation obligations. The facility requires the Company maintain
CAD$9,000,000 pledged restricted cash on deposit at
BNS.
OUTLOOK FOR 2017
During
Q2 2017, the Company increased its 2017 outlook for mineral
property exploration expense by $1,050,000, primarily because of
higher than budgeted cost at the Hook-Carter project, as well as a
summer exploration drilling program at the Waterbury Lake project.
The Company has also decreased its 2017 outlook for DES
contribution by $320,000, in order to reflect decreased care and
maintenance activities at certain sites, as well as a reduction in
consulting projects. The remainder of the 2017 outlook remains
unchanged from the previously disclosed 2017 outlook.
For more information, please contact
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David
Cates
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(416) 979 –
1991 ext 362
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President and Chief
Executive Officer
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Sophia
Shane
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(604) 689 -
7842
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Investor
Relations
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Follow Denison on
Twitter
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@DenisonMinesCo
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QUALIFIED PERSON, ASSAY PROCEDURES AND FURTHER DETAILS
The
disclosure of scientific or technical information regarding
Denison’s properties in this press release and the MD&A
was prepared by, or reviewed and approved by, Dale Verran, P.Geo,
MSc, Pr.Sci.Nat., the Company’s Vice President, Exploration,
a Qualified Person in accordance with the requirements of NI
43-101.
Grade
results reported herein as “eU3O8” refer to
radiometric equivalent U3O8 derived from a
calibrated total gamma down-hole probe. Radiometric equivalent
U3O8 results are
preliminary in nature and all mineralized intervals have been
sampled and submitted for chemical U3O8 assay in
accordance with Denison’s technical procedures. All Gryphon
drill holes reported herein were drilled at a high angle to
mineralization to allow for better evaluation of true thicknesses
which are expected to be approximately 75% of the intersection
lengths. For further details regarding the description of the assay
procedures, data verification, and the quality assurance program
and quality control measures applied by Denison, please see
Denison’s Annual Information Form dated March 23, 2017
available under Denison's profile on SEDAR at www.sedar.com, and
its Form 40-F available on EDGAR at www.sec.gov/edgar.shtml.
Further
details regarding the Gryphon deposit and the current mineral
resource estimates are provided in the NI 43-101 Technical Report
for the Wheeler River project titled "Preliminary Economic
Assessment for the Wheeler River Uranium Project, Saskatchewan,
Canada" dated April 8, 2016 with an effective date of March 31,
2016. A copy of this report is available on Denison's website and
under its profile on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov/edgar.shtml.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
Certain
information contained in this press release constitutes
“forward-looking information", within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
similar Canadian legislation concerning the business, operations
and financial performance and condition of Denison.
Generally,
these forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects", "budget",
"scheduled", "estimates", “forecasts", "intends",
"anticipates", or "believes", or the negatives and/or variations of
such words and phrases, or state that certain actions, events or
results "may", "could", "would", "might" or "will be taken",
"occur", "be achieved" or “has the potential to”. In
particular, this press release contains forward-looking information
pertaining to the following: the likelihood of completing and
benefits to be derived from corporate transactions; use of proceeds
from financing activities; expectations regarding further studies
on material properties, including the PFS; expectations regarding
the toll milling of Cigar Lake ores; expectations regarding
revenues and expenditure from operations at DES; expectations
regarding Denison’s ownership interests and continuity of
agreements with its partners; expectations regarding the provision
of management services to UPC; capital expenditure programs,
estimated exploration and development expenditures and reclamation
costs and Denison's share of same; and exploration, development and
expansion plans and objectives and statements regarding anticipated
budgets. Statements relating to "mineral reserves" or "mineral
resources" are deemed to be forward-looking information, as they
involve the implied assessment, based on certain estimates and
assumptions that the mineral reserves and mineral resources
described can be profitably produced in the future.
Forward
looking statements are based on the opinions and estimates of
management as of the date such statements are made, and they are
subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance
or achievements of Denison to be materially different from those
expressed or implied by forward-looking statements. Denison
believes that the expectations reflected in this forward-looking
information are reasonable but no assurance can be given that these
expectations will prove to be accurate and may differ materially
from those anticipated in this forward looking information. For a
discussion in respect of risks and other factors that could
influence forward-looking events, please refer to the factors
discussed in Denison's Annual Information Form dated March 23, 2017
under the heading "Risk Factors". These factors are not, and should
not be construed as being exhaustive. Accordingly, readers should
not place undue reliance on forward-looking
statements.
The
forward-looking information contained in this press release is
expressly qualified by this cautionary statement. Any
forward-looking information and the assumptions made with respect
thereto speaks only as of the date of this press release. Denison
does not undertake any obligation to publicly update or revise any
forward-looking information after the date of this press release to
conform such information to actual results or to changes in
Denison's expectations except as otherwise required by applicable
legislation.
Cautionary Note to United States Investors Concerning Estimates of
Measured, Indicated and Inferred Mineral Resources: This
press release may use the terms “measured”,
“indicated” and “inferred” mineral
resources. United States investors are advised that while such
terms are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does not recognize
them. “Inferred mineral resources” have a great amount
of uncertainty as to their existence, and as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or other economic
studies. United States investors
are cautioned not to assume that all or any part of measured or
indicated mineral resources will ever be converted into mineral
reserves. United States investors are also cautioned not to assume
that all or any part of an inferred mineral resource exists, or is
economically or legally mineable.
