Toronto-based Denison Mines (TSE) is being sued by Ontario Hydro.
The dispute centres around a long-term uranium purchase and sale agreement signed by Denison and the huge provincial utility in 1977. Hydro contends it is not responsible for capital costs associated with development of the Elliot Lake, Ont., uranium mine of Denison.
Hydro ended the agreement with Denison last year, with the final uranium shipment scheduled for the second quarter of this year. Denison will close the mine in May.
According to Denison, the relief sought by Hydro would exclude the cost of production of a pound of uranium under the agreement, any costs related to or connected with the closing of the Elliot Lake mine, any gains or losses on disposal of capital assets, or certain other costs.
“The agreement clearly provides for the inclusion of the disputed items of the cost of production and was always intended to do so,” Denison said in a press release.
The mine had to be expanded to provide the quantity of uranium stipulated by the agreement. Hydro says it did agree to pay for a mine expansion and advanced (interest free) $280 million to Denison. Denison was to repay the advance through uranium shipments.
According to Hydro, Denison’s only compensation in the event of an agreement termination would be a release of the miner’s obligations in respect of the outstanding balance of the above advance.
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