(In U.S. dollars, unless noted)
TORONTO, March 19 Shares of Denison
Mines(DML.TO) plunged 20 percent on Thursday after the uranium
miner suspended some of its operations and said it may have to
sell assets to keep from violating a debt covenant.
The Canadian company will temporarily suspend production at
its Sunday and Rim mines in the western United States, and will
likely shut its White Mesa mill in May, once it produces the
500,000 pounds of uranium the company is under contract to
produce in 2009. The mill would be expected to restart next
The announcement came as Denison announced a steep loss of
$56.8 million, or 30 cents a share, due to non-cash write-downs
of $59 million brought on by falling commodity prices and
weakness in the company's shares.
Speaking on a conference call, Denison Chief Executive
Peter Farmer said the company was in danger of violating a debt
covenant tied to its profitability, and that the company was
reviewing "strategic opportunities" to keep that from
Options could include: "entering into offtake contracts
with utility companies... asset sales, purchases and joint
ventures, investments by private equity investors and potential
corporate transactions with other uranium producers," Farmer
The shares dropped 26 Canadian cents to C$1.05 on the
Toronto Stock Exchange, while the news prompted one analyst to
agree the company was in trouble.
"They're stuck between a rock and a hard place," said
Patrick Donnelly, an analyst at Salman Partners.
Denison remains bullish on uranium prices, despite recent
declines, Farmer said.
Uranium was at $42.50 a pound this week, after trading as
high as $136 a pound in 2007.
(Reporting by Cameron French; Editing by Frank McGurty)