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Denison halts mines, eyes options; shares plunge
March 19, 2009 / 8:32 PM / 9 years ago

Denison halts mines, eyes options; shares plunge

(In U.S. dollars, unless noted)

TORONTO, March 19 (Reuters) - 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 year.

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 happening.

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 said.

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.

$1=$1.24 Canadian Reporting by Cameron French; Editing by Frank McGurty

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