Tuesday, April 03, 2007

Denison Mining

Staying with the energy theme, today’s focus is the mid-tier uranium miner – Denison Mining. It trades in Toronto but is also accessible via pink sheets (Yahoo symbol: DML.TO/DMLCF.PK). I wrote Uranium: The Big Picture a while back when uranium oxide (U3O8, aka “yellow cake”) was priced at $42 a pound. Its price has since mushroomed to $95 a pound with almost no pull back along the way.

Cameco (CCJ) is the 800lb gorilla in this space. As mention briefly here, the flooding in its Cigar Lake mine opened doors for many smaller competitors. The current Denison Mines is the product of a merger between the old Denison (DEN.TO) and International Uranium (IUC.TO) which operates a uranium tailings (recycling) facility in Utah in addition to exploration properties in Canada and Mongolia. Denison’s star asset is its 22.5% stake in the McLean Lake production joint venture but it also has other mines at the construction stage, as well as equity stakes in several junior uranium companies. There is a lot more info in their Jan 2007 company presentation (Power Point).

Technically Denison seems to have just broken out of a consolidation triangle which is normally a good entry point.

For more on buying Canadian stocks via pink sheets, read here. The company is said to be preparing for an AMEX listing which should gather it many more fans.

Disclosure: I own this stock. As always, do your own due diligence before making any financial decisions.