12.16
RBC CM Underperform, Speculative Risk
On December 15, 2009, Denison announced that the McClean Lake uranium mill in northern Saskatchewan is being placed on care and maintenance in mid-2010 by the McClean Lake Joint Venture partners. Denison has a 22.5% interest in the joint venture. Processing of stockpiled ore will at the mill will continue until July 2010, producing an estimated 1,860,000 pounds of U3O8, 418,500 pounds of which is attributable to Denison. This is slightly ahead of RBC CM’ 2010 attributable production forecast of 720,000 pounds of U3O8, as it had expected the mill to cease production at the end of 2010. In RBC CM’ view, the elimination of Denison’s Canadian production post-July 2010 significantly increases Denison’s risk profile as its contract obligations will now need to be served by its U.S. production alone. RBC CM expects the McClean Lake mill to remain on care and maintenance until the start of Midwest (earliest 2018).
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