Problems at Elliot Lake mine reflected in Denison results

An increase in second-quarter net earnings was at least partially due to higher oil prices and reduced oil and gas depreciation and depletion charges during the first half of 1989, according to Chairman Helen Roman-Barber.

Denison’s net earnings for the three months ended June 30 increased to $7.96 million or 1 cents per share from $329,000 (representing a 13 cents per share loss) at the same time last year. Second-quarter revenues were down slightly to $98.4 million from $106.6 million in the second quarter of 1988. However, Roman-Barber also indicated that earnings may have been higher but for mechanical problems at Denison’s Elliot Lake, Ont., uranium operations.

“The operating performance in the mining division was generally disappointing, as anticipated recoveries of production lost in the first quarter at Elliot Lake did not take place,” she said.

According to Roman-Barber, mechanical problems in the surface grinding facility that affected first-quarter production rates continued into April before the cause was finally determined.

“We expect to recover a portion of the lost production and lost revenues,” said Roman-Barber.

Other factors contributing to Denison’s second-quarter results included an after-tax gain of $6.4 million from the sale of a 50% stake in Reiss Lime Co. of Canada Ltd.

Reiss Lime is a principal supplier of industrial lime and slag cement to northern Ontario and a major supplier of limestone to the province’s mining, pulp and paper and steel industries.

“A major consideration in our strategic planning is to retain assets in which we act as the operator or exercise control over the subsidiary’s finances. Reiss Lime met neither criterion,” Barber said.

Denison recently declared the regular quarterly dividends on the preferred shares Series A and Series B, payable Sept 15 to shareholders of record Aug 31.

As a result, net earnings for the first six months of 1989 increased to $9.3 million or a 10 cents per share loss from $5.4 million or a loss of 17 cents per share a year earlier. First half revenues decreased to $194.4 million from $221.3 million last year.

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