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DENISON MINES CORP. 6-K Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Denison Mines Corp
,

Filing date:

03/14/2025

TLDR:

Denison Mines Corp. files its annual report, including consolidated financial statements and management’s discussion and analysis, highlighting progress in regulatory approvals for the Phoenix ISR Project and other operational achievements.

ELI5:

Denison Mines, a uranium company, lost money last year because its investments didn’t do well, even though it made more money from its milling services. However, it’s making good progress on its main project, Wheeler River, which could help it produce uranium at a lower cost in the future.

Accession #:

0001104659-25-023907

Published on

Analyst Summary

  • Revenue increased to $4.023 million in 2024 from $1.855 million in 2023, primarily due to higher toll milling revenue.
  • Net loss of $91.119 million in 2024 compared to a net income of $90.375 million in 2023, largely due to fair value changes in investments.
  • Cash and cash equivalents decreased to $108.518 million from $131.054 million.
  • Significant progress in the regulatory approvals process for the Phoenix ISR project, with the CNSC setting the schedule for the public hearing.
  • Approximately 65% completion of total engineering for Phoenix.
  • Signing of benefit agreements with Kineepik Métis Local #9 and the Village of Pinehouse Lake.
  • Planned restart of uranium mining operations at McClean Lake in 2025.
  • Completion of an inaugural ISR field test program at Midwest.
  • Acquisition of MaxPERF Tool Systems.
  • Option of non-core exploration projects to Foremost Clean Energy Ltd.

Opportunities and Risks

  • Opportunity: Potential for low-cost uranium production through the Phoenix ISR project.
  • Opportunity: Continued toll milling revenue from the McClean Lake mill.
  • Opportunity: Increasing global demand for nuclear energy as a clean energy source.
  • Opportunity: Potential for new uranium discoveries in the Athabasca Basin region.
  • Risk: The company’s ability to secure sufficient financing for its operations and projects.
  • Risk: The volatility of uranium prices and its impact on the company’s financial performance.
  • Risk: The extensive regulations and permitting requirements associated with uranium mining.
  • Risk: Potential disagreements or disputes with joint venture partners.
  • Risk: Reliance on contractors and experts for various aspects of operations.
  • Risk: Vulnerability of information systems to cyberattacks.

Potential Implications

Company Performance

  • Advancement of the Phoenix ISR project could lead to lower-cost uranium production.
  • Restart of mining operations at McClean Lake could increase toll milling revenue.
  • Successful exploration activities could lead to new uranium discoveries and increased asset value.
  • Securing financing is crucial for the construction and development of the Phoenix project.

Stock Price

  • Progress in regulatory approvals for the Phoenix project could positively impact the stock price.
  • Volatility in uranium prices could lead to fluctuations in the stock price.
  • Successful financing efforts could boost investor confidence and increase the stock price.
  • Any setbacks in project development or regulatory approvals could negatively impact the stock price.

SEC Filing Report: Denison Mines Corp. – Form 6-K (March 14, 2025)

Executive Summary

This report analyzes Denison Mines Corp.’s Form 6-K filing, focusing on the consolidated financial statements and management’s discussion and analysis (MD&A) for the year ended December 31, 2024. The overall assessment is neutral, with a focus on understanding the company’s progress in regulatory approvals for the Phoenix ISR project, its financial position, and key risks and opportunities. While the company reported a net loss for the year, significant progress was made in advancing the Wheeler River project.

Company Overview

Denison Mines Corp. is a uranium exploration and development company with interests primarily in the Athabasca Basin region of northern Saskatchewan, Canada. The company’s flagship project is the Wheeler River Uranium Project. Denison also holds interests in the McClean Lake mill and other uranium projects.

Detailed Analysis

Financial Statement Analysis

Key Highlights:

  • Revenue: Increased to $4.023 million in 2024 from $1.855 million in 2023, primarily due to higher toll milling revenue.
  • Net Loss: Reported a net loss of $91.119 million in 2024 compared to a net income of $90.375 million in 2023. This was largely due to fair value changes in investments.
  • Cash and Cash Equivalents: Decreased to $108.518 million from $131.054 million.
  • Total Assets: Decreased to $663.613 million from $726.603 million.
  • Total Liabilities: Increased to $99.291 million from $84.819 million.

Key Ratios:

  • Operating Profit Margin (Phoenix FS): 90.9% (as per the Feasibility Study)

Trends:

  • Increasing evaluation expenses due to the advancement of the Phoenix project.
  • Fluctuations in other income/expense due to fair value changes in investments.

MD&A Insights

Key Highlights from MD&A:

  • Regulatory Approvals: Significant progress in the regulatory approvals process for the Phoenix ISR project, with the CNSC setting the schedule for the public hearing.
  • Engineering: Approximately 65% completion of total engineering for Phoenix.
  • Benefit Agreements: Signing of benefit agreements with Kineepik Métis Local #9 and the Village of Pinehouse Lake.
  • McClean Lake: Planned restart of uranium mining operations at McClean Lake in 2025.
  • Midwest: Completion of an inaugural ISR field test program at Midwest.
  • Acquisition: Acquisition of MaxPERF Tool Systems.
  • Option Agreement: Option of non-core exploration projects to Foremost Clean Energy Ltd.

Red Flags:

  • Net loss reported for the year, primarily due to fair value changes in investments.
  • JCU abstained from voting on the Phoenix FS and ADP, which means that Denison has funded 100% of the project expenditures from the date of the October 2024 WRJV Management Committee meeting.

Uncommon Metrics:

  • Operating Profit Margin (Phoenix FS): 90.9% (as per the Feasibility Study)

Risk and Opportunity Assessment

Risks:

  • Financing Risk: The company’s ability to secure sufficient financing for its operations and projects.
  • Commodity Price Risk: The volatility of uranium prices and its impact on the company’s financial performance.
  • Regulatory Risk: The extensive regulations and permitting requirements associated with uranium mining.
  • Joint Venture Risk: Potential disagreements or disputes with joint venture partners.
  • Reliance on Third Parties: Reliance on contractors and experts for various aspects of operations.
  • Cybersecurity Risk: Vulnerability of information systems to cyberattacks.

Opportunities:

  • Phoenix ISR Project: Potential for low-cost uranium production through the ISR mining method.
  • McClean Lake Mill: Continued toll milling revenue from the Cigar Lake mine.
  • Growing Demand for Nuclear Energy: Increasing global demand for nuclear energy as a clean energy source.
  • Exploration Potential: Potential for new uranium discoveries in the Athabasca Basin region.

Conclusion and Actionable Insights

Denison Mines Corp. is making significant progress in advancing its Wheeler River project, particularly the Phoenix ISR project, through the regulatory approval process. However, the company’s financial performance is subject to commodity price volatility and regulatory risks. Investors should monitor the progress of the Phoenix project, the company’s ability to secure financing, and developments in the uranium market.

Recommendations:

  • Monitor the progress of the Phoenix ISR project’s regulatory approvals and engineering activities.
  • Assess the company’s ability to secure financing for the construction of the Phoenix project.
  • Track uranium market prices and their impact on the company’s financial performance.
  • Evaluate the company’s risk management strategies for mitigating commodity price and regulatory risks.

1. Commentary

Denison Mines Corp. experienced a net loss of $91.12 million in 2024, a significant downturn compared to the $90.38 million net income in 2023. This decline is primarily attributed to a substantial increase in other losses, driven by fair value changes in investments, which offset increased revenue. Despite the net loss, the company continued to invest heavily in exploration and evaluation activities, particularly at the Wheeler River project, signaling a commitment to future growth. The company maintains a strong liquidity position, with significant cash and investments, but equity decreased due to the net loss.

2. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin

    • Metric: Not applicable. Denison Mines is primarily a project evaluation company, not a revenue-generating operation with a cost of goods sold.
  • Operating Profit Margin

    • Metric: (4,023 – 98,523) / 4,023 = -23.5% in 2024; (1,855 – 90,628) / 1,855 = -47.85% in 2023
    • Trend: The operating profit margin increased from -47.85% to -23.5%, indicating a smaller operating loss relative to revenue.
    • Industry: It’s difficult to compare this to a specific industry average, as Denison is primarily in the project evaluation phase. However, compared to other exploration and development companies, this ratio reflects the high upfront costs and lack of significant revenue during this phase.
  • Net Profit Margin

    • Metric: (Loss) $ (91,119) / $4,023 = -22.65 in 2024; (Profit) $90,375 / $1,855 = 48.72 in 2023
    • Trend: The net profit margin decreased significantly from 48.72% to -22.65%, reflecting the shift from net income to a net loss.
    • Industry: Negative net profit margins are common for companies in the exploration and development phase, especially those with significant fair value adjustments on investments.
  • Return on Assets (ROA)

    • Metric: (Loss) $ (91,119) / (($663,613 + $726,603)/2) = -13.05% in 2024; (Profit) $90,375 / (($726,603 + $515,796)/2) = 14.55% in 2023
    • Trend: ROA decreased significantly from 14.55% to -13.05%, indicating a less efficient use of assets to generate profit.
    • Industry: A negative ROA is not uncommon for exploration companies, as they invest heavily in assets that do not yet generate revenue.
  • Return on Equity (ROE)

    • Metric: (Loss) $ (91,119) / (($564,322 + $641,784)/2) = -15.18% in 2024; (Profit) $90,375 / (($641,784 + $436,016)/2) = 16.79% in 2023
    • Trend: ROE decreased significantly from 16.79% to -15.18%, indicating a less efficient return to shareholders.
    • Industry: A negative ROE is not uncommon for exploration companies.
  • Earnings Per Share (EPS) – Basic and Diluted

    • Metric: Basic EPS $(0.10) in 2024, $0.11 in 2023; Diluted EPS $(0.10) in 2024, $0.10 in 2023
    • Trend: EPS decreased from $0.11 to $(0.10) for basic EPS and from $0.10 to $(0.10) for diluted EPS.
    • Industry: Negative EPS is typical for companies investing heavily in exploration and development.

Liquidity

  • Current Ratio

    • Metric: $123,724 / $33,891 = 3.65 in 2024; $148,541 / $17,946 = 8.28 in 2023
    • Trend: The current ratio decreased from 8.28 to 3.65, indicating a decrease in the company’s ability to cover its short-term liabilities with its short-term assets.
    • Industry: A current ratio above 1 is generally considered healthy. The decrease could be due to increased short-term liabilities or a decrease in current assets.
  • Quick Ratio (Acid-Test Ratio)

    • Metric: ($123,724 – $3,746) / $33,891 = 3.54 in 2024; ($148,541 – $3,580) / $17,946 = 8.08 in 2023
    • Trend: The quick ratio decreased from 8.08 to 3.54, indicating a decrease in the company’s ability to cover its short-term liabilities with its most liquid assets.
    • Industry: A quick ratio above 1 is generally considered healthy.
  • Cash Ratio

    • Metric: $108,518 / $33,891 = 3.20 in 2024; $131,054 / $17,946 = 7.30 in 2023
    • Trend: The cash ratio decreased from 7.30 to 3.20, indicating a decrease in the company’s ability to cover its short-term liabilities with its cash and cash equivalents.
    • Industry: This indicates a strong, but decreased, immediate liquidity position.

Solvency/Leverage

  • Debt-to-Equity Ratio

    • Metric: $99,291 / $564,322 = 0.176 in 2024; $84,819 / $641,784 = 0.132 in 2023
    • Trend: The debt-to-equity ratio increased from 0.132 to 0.176, indicating a slightly higher proportion of debt financing relative to equity.
    • Industry: This is a relatively low debt-to-equity ratio, suggesting a conservative approach to leverage.
  • Debt-to-Assets Ratio

    • Metric: $99,291 / $663,613 = 0.149 in 2024; $84,819 / $726,603 = 0.117 in 2023
    • Trend: The debt-to-assets ratio increased from 0.117 to 0.149, indicating a slightly higher proportion of assets financed by debt.
    • Industry: This is a relatively low debt-to-assets ratio.
  • Interest Coverage Ratio (Times Interest Earned)

    • Metric: (Loss) $(94,500 + 2,658) / 5 = -18,368.4 in 2024; (Profit) $(92,483 – 1,062) / 4 = 22,855.25 in 2023
    • Trend: The interest coverage ratio decreased significantly, moving from a positive value to a negative value, reflecting the company’s shift to a loss position.
    • Industry: A negative interest coverage ratio is concerning, but not uncommon for companies in the exploration phase.

Activity/Efficiency

  • Inventory Turnover

    • Metric: Not particularly relevant for Denison Mines, as inventory is not a primary driver of their business.
  • Days Sales Outstanding (DSO)

    • Metric: ($3,075 / $4,023) * 365 = 279 days in 2024; ($1,913 / $1,855) * 365 = 376 days in 2023
    • Trend: DSO decreased from 376 days to 279 days, indicating that the company is collecting receivables more quickly.
    • Industry: Given the limited revenue and nature of the business, this metric is not as meaningful as it would be for a typical operating company.
  • Days Payable Outstanding (DPO)

    • Metric: ($21,333 / $98,523) * 365 = 79 days in 2024; ($10,822 / $90,628) * 365 = 44 days in 2023
    • Trend: DPO increased from 44 days to 79 days, indicating that the company is taking longer to pay its suppliers.
    • Industry: This could be a sign of managing cash flow, but should be monitored.
  • Asset Turnover

    • Metric: $4,023 / (($663,613 + $726,603)/2) = 0.0058 in 2024; $1,855 / (($726,603 + $515,796)/2) = 0.0030 in 2023
    • Trend: The asset turnover ratio increased from 0.0030 to 0.0058, indicating a slightly more efficient use of assets to generate revenue.
    • Industry: This ratio is very low, reflecting the capital-intensive nature of the exploration and development business and the limited revenue generation.

Valuation

  • Price-to-Earnings Ratio (P/E)

    • Metric: Not meaningful due to negative earnings in 2024.
  • Price-to-Book Ratio (P/B)

    • Metric: Market Cap = 895,713,101 * $1.38 = $1,236,084,079.38 (CAD 1,688,280,000); Book Value = $564,322; P/B = 1,688,280 / 564,322 = 2.99 in 2024; Market Cap = 890,970,371 * $1.38 = $1,229,539,111.98 (CAD 1,680,764,000); Book Value = $641,784; P/B = 1,680,764 / 641,784 = 2.62 in 2023
    • Trend: The P/B ratio increased from 2.62 to 2.99.
    • Industry: A P/B ratio above 1 suggests that the market values the company’s assets at a premium.
  • Price-to-Sales Ratio (P/S)

    • Metric: 1,688,280 / 4,023 = 419.66 in 2024; 1,680,764 / 1,855 = 906.07 in 2023
    • Trend: The P/S ratio decreased from 906.07 to 419.66.
    • Industry: This is a very high P/S ratio, reflecting the low revenue relative to the company’s market capitalization.
  • Enterprise Value to EBITDA (EV/EBITDA)

    • Metric: EBITDA = Net Income + Interest + Taxes + Depreciation and Amortization = (91,119) – 236 – 2,658 – 9,929 = -103,942; EV = Market Cap + Total Debt – Cash = 1,688,280 + 99,291 – 108,518 = 1,679,053; EV/EBITDA = Not meaningful due to negative EBITDA.

Growth Rates

  • Revenue Growth

    • Metric: ($4,023 – $1,855) / $1,855 = 116.9%
    • Trend: Revenue increased by 116.9%.
    • Industry: This significant increase is due to the timing of uranium processing at the McClean Lake mill.
  • Net Income Growth

    • Metric: (Loss) $(-91,119 – $90,375) / $90,375 = -200.8%
    • Trend: Net income decreased by 200.8%, representing a shift from profit to loss.
    • Industry: This decrease is due to fair value changes in investments.
  • EPS Growth

    • Metric: (Loss) $(-0.10 – $0.11) / $0.11 = -190.9%
    • Trend: EPS decreased by 190.9%.
    • Industry: This decrease is due to the shift from profit to loss.

Other Relevant Metrics

  • Company-Specific KPIs

    • The Management’s Discussion and Analysis highlights several key performance indicators related to the company’s projects:
      • Wheeler River Project: Significant progress in regulatory approvals, approximately 65% completion of total engineering for Phoenix, and signing of benefit agreements. These indicate advancement towards project development.
      • McClean Lake: Announcement of planned restart of mining operations.
      • Midwest: Completion of inaugural ISR field test program, confirming hydraulic conductivity and effectiveness of permeability enhancement.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️