Denison realizes profit of $44.6 million in ’86

It was a tough year for Denison Mines in 1986, perhaps the toughest ever, but judging by the bottom line the company met adversity head on and came out a winner.

Drastically lower oil prices and ongoing concern over Quintette Coal, a $240.7-million investment the company wrote off in 1985, couldn’t prevent Denison from realizing net earnings of $44,632,000 or 28 cents per share in 1986 compared with a loss of $157,900,000 or $4.55 per share a year earlier.

The net profit includes an extraordinary gain of $27,131,000 from the sale of Lake Ontario Cement, a steadily profitable Denison subsidiary for 25 years.

Also included in the net results were a gain from a $14,500,000 tax reduction and a $24,017,000 writedown of oil and gas properties.

The company says the price for oil, a major product for Denison accounting for 42% of revenue in 1985, was cut in half during 1986. Quintette continues to struggle along, paying its bills but not turning a profit.

However, the company has not given up on its core businesses.

“Denison remains confident about the long-term profitability of the natural resources industry,” says Stephen Roman, chairman and chief executive officer.

“Indeed, the market situation is already showing welcome signs of stabilizing with oil prices rising from the low point they reached last July and potash prices appear to be poised for modest improvement in the coming year.”

Earnings from the company’s Elliot Lake uranium operations and a share issue in early 1986 that raised $115 million to pay off debt were the key to the company’s improved performance in 1986.

The year also marked the first time since 1959 that the company missed a quarterly dividend on its common shares. In 1986 it issued only one quarterly dividend of 25 cents per common share.