Denison Mines Corp.

Denison reported total revenue from continuing operations of $2.4 million in Q2 2012, including $2.0 million from environmental services and $435,000 from the Uranium Participation Corporation management contract. Continuing-operations net loss was $1.7 million, or $0.01 per share, versus a net loss of $10.0 million, or $0.03 per share, in Q2 2011; for the first half, continuing-operations net loss was $11.2 million, or $0.03 per share, versus $16.4 million, or $0.04 per share, a year ago. Discontinued operations reflected a Q2 net loss of $50.4 million, or $0.13 per share, driven by a $97.9 million impairment charge tied to the U.S. mining division sale. Cash and cash equivalents were $46 million at June 30, 2012, down from $53.5 million at year-end 2011; the decrease was primarily due to $10.8 million of property, plant and equipment spending offset by $4.2 million of cash from operations. Management said the McClean Lake mill remains on standby, there will be no production or sales for the rest of 2012, and 2012 exploration/development spending excluding the U.S. is expected to total $22.3 million.

Ron Hochstein framed Q2 as a strategic reset, saying the Energy Fuels transaction unlocked value that the market had not been recognizing in Denison’s separate U.S. production and global exploration businesses. He emphasized that Denison is now focused on what he sees as the highest-value opportunities: Wheeler River first, then Zambia, with Mongolia a lower priority because of political and restructuring issues. His tone was constructive and confident, particularly around Denison’s stronger balance sheet and the company’s ability to pursue exploration aggressively without debt.

Jim Anderson focused on the accounting and financial impact of the Energy Fuels deal, noting that IFRS required fair valuing the distributed EFR shares at $79.4 million, based on 425 million EFR shares, CAD 0.19 per share, and a 0.9822 CAD/USD exchange rate. He said Denison recognized a $97.9 million impairment charge on the U.S. mining division, with $44.1 million booked in Q1 and $53.8 million in Q2. On the operating side, he cited Q2 environmental services revenue of $2.0 million, total Q2 revenue of $2.4 million, cash of $46 million, and a new $15 million revolving term credit facility with no debt outstanding, though $9.5 million was pledged as collateral for letters of credit.

Analysts pressed management on SABRE’s commercialization timeline and where the technology might fit best. Hochstein said the 3-hole test program this year is meant to generate data, with a study on Midwest planned for next year and visibility on SABRE’s potential expected early next year; he highlighted Midwest, Caribou, and other basin deposits as possible candidates, while saying Wheeler may be too deep. Questions also focused on whether spending is too diffuse now that Denison has no production; management replied that Canada is the top priority, Zambia is next, and Mongolia is third because of political uncertainty, with investors broadly echoing that focus.