Wednesday, September 20, 2006

Sep 20 Uranium Stocks Update: International Uranium Corporation (TSE:IUC)


A conference call was held today by Denison Mines (DEN.TO) + IUC, as well as appearances by both Denison CEO Peter Farmer and IUC CEO Ron Hochstein on RoBTV's Squeeze Play segment. Highlights are summarized for your convenience.

(1) commanding North American milling capacity

(2) stronger equity currency for strategic acquisitions

(3) asset base includes:
(a) McLean Lake Mine and Mill
(b) Midwest Mine,
(c) White Mesa Mill
(d) Colorado Plateau Mines
(e) Henry Mountain Mines
(f) Arizona Strip Mines
(g) Mae Exploration Project (Mae Zone + Wheeler River)
(h) Moore Lake Exploration Project

(4) multiple mines decrease operational risk

(5) JVs with Mongolian government + AREVA on various projects

(6) Equity investments totalling ~$35 million in Fortress Minerals (FST.V), Energy Metals Corp (EMC.TO), Energy Metals Ltd of Australia, JNR Resources (JNN.V, $5.6 million), Santoy Resources (SAN.V, $2.8 million), Erdene Gold (ERD.TO)

(7) Will continue to run Uranium Participation Corporation (U.TO)

(8) 174 million shares outstanding, repriced warrants will be all Denison warrants, 1/3 of which strike price $5.20 expiring Nov, 2009 , other 2/3 expiry 2011 @ $10.40

(9) Working capital $140 million, no debt

(10) 66.7% approval Denison shareholders, 50.1% approval IUC shareholders, lock-up agreement signed by board and management already

(11) 0.5-1.0% ownership by management NOT including the Lundins

(12) $30 million CapEx for McLean Lake expansion

(13) mined U3O8 will come out of White Mesa mill in 2007

(14) Lundins currently own ~20% of IUC, will want to own ~15-20% of combined Denison Mines Ltd.

(15) Topaz Mountain ore will be shipped to White Mesa mill sometime in November. Henry Mountain permitting expected to go through on schedule.

(16) reevaluating Mongolian property to see if they can covert from ISL to open-pit mining, potentially increasing uranium assets by 30 million lbs

(17) AREVA open to Denison-IUC merger, not threatened

(18) Exploration budget in Athabasca Basin for combined company will be around $20 million

(19) Colorado Plateau (Topaz) ~$2.5 million CapEx, small because of existing structures

(20) Tony M Mine + Bullfrog CapEx $35 million, Tony M about 110 miles away from White Mesa mill, not too much of concern

(21) synergy between Denison + IUC in Mongolian projects + Athabasca Basin, higher production IUC @ lower grades, lower production @ higher grades Denison

(22) uranium company stocks have corrected while uranium spot price continually increased partly attributed to technical difficulties bringing production on-line


 

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