Weak U.S. dollar continues to hit Denison bottom line

While Denison Mines (TSE) plans to increase its uranium output to meet demand in the 1990s the company continues to suffer the effects of a weak in the United States dollar and a further drop in world oil prices.

The Toronto-based resources giant has reported a third quarter loss of $1.9 million on revenues of $96.2 million compared to a gain of $846,000 on revenues of $110.3 million during the same period in 1987.

During the third quarter, the price of oil averaged $11.45(US) per barrel which was $2.12 below second quarter levels and 29% below the average $16.07 received throughout 1987.

However, Denison’s 9-month earnings were boosted by an after tax gain of $29.5 million from the sale of a 45% interest in Standard Trustco Ltd. to affiliate Roman Corp. (TSE).

The sale brought Denison’s earnings for the first nine months of 1988 up to $29.5 million (on revenues of $317.6 million) compared to $9.8 million (on revenues of $330.4 million) last year.

“Despite the third quarter loss, Denison maintained a positive cash flow largely as a result of low oil operating costs and improved performance in the potash division,” said Denison chairman Helen Roman-Barber.

The company is also moving ahead with programs to increase uranium production to meet its long-term contractual obligations and an anticipated increase in demand in the 1990s, she said.

Development to access the Canuc property, which is adjacent to Denison’s existing Elliot Lake, Ont., mine is ahead of schedule and it is expected to be up and running by early 1989.

With reserves standing at about eight million tons grading 1.86 lb uranium per ton, the Canuc property is expected to be a substantial contributor to Denison’s annual uranium output which last year totalled 4.7 million lb.

Denison said shareholders of record on Nov 30, are scheduled to receive the normal quarterly dividend on Class A and Class B preferred shares payable Dec 15.

After provision for the preferred share dividends, the company had a loss per participating share of 18 for the third quarter and 13 (after the Standard Trustco sale) for the first nine months of 1988. That compares to losses of 12 and 24 per share respectively in 1987.