Denison Mines Corp T.DML

Reuters: Denison Mines may buy to grow, but open to sale

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https://www.ubs.wallst.com/ubs/mkt_story.asp?docKey=1329-L1N0VF1X3-1&first=0

INTERVIEW-Uranium explorer Denison Mines may buy to grow, but open to sale

2:07 pm -- By Rod Nickel

TORONTO, March 2 (Reuters) - Canadian uranium explorer Denison Mines Corp is willing to be either a buyer or seller once merger and acquisition activity in the sector accelerates, its top executive said on Monday.

"We could be on either side of the fence, quite frankly," Chief Executive Ron Hochstein told Reuters during the Prospectors & Developers Association of Canada mining convention in Toronto.

Denison, part of the Lundin group of companies, owns what analysts say are two particularly attractive assets in northern Saskatchewan's Athabasca Basin that could put it in play.

They include 22.5 percent of Areva SA's McClean Lake mill, which processes uranium from Cameco Corp's new Cigar Lake mine.

Denison is also developing the Wheeler River project, which includes the high-grade Phoenix deposit.

On the buyer side, Denison is one of several parties to sign nondisclosure agreements with junior miner Fission Uranium Corp , owner of one of the world's most promising pre-production uranium deposits, and is eyeing possible acquisition of other Athabasca projects.

A partial recovery in the spot uranium price has offered hope that the sector's four-year slump since Japan's Fukushima meltdown is nearing an end. The spot price of about $38.75 per pound is about 38 percent higher than last year's low.

Hochstein said the company will not sell its mill stake or Wheeler River project except as part of a takeover of the entire company, describing them as "crown jewels".

The eastern Athabasca Basin, one of the world's richest uranium sources, has two other mills that are owned by Cameco and Areva. Owning a piece of McClean Lake sets Denison apart from other explorers, Hochstein said.

The mill is undergoing an expansion to 24 million pounds annual capacity from 13 million, making it one of the largest facilities of its kind in the world. The more it processes, the more revenue Denison earns, but all of the expansion's costs are born by Cigar Lake's owners, mainly Cameco and Areva.

Denison is talking with four parties interested in buying its deposits in Africa and Mongolia, which could make it a company solely focused on the Athabasca Basin by the end of 2015, Hochstein said.

Denison sold its U.S. assets, including a mill and operating mines, to Energy Fuels in 2012, to focus on development.

Denison shares dipped 0.9 percent to C$1.11 in Toronto on Monday.