Denison Mines Corp.’s Innovative Management Makes It A Buy

Summary:

• Denison Mines Corp. is a Canadian uranium miner with a focus on the Athabasca Basin area of north Saskatchewan.
• The company has seen steady progress in its stock price over the past year, doubling in value.
• Denison Mines Corp. has made a profitable decision to store uranium rather than sell it at a low price.

Introduction

The Green Dream is alive and well with the mission for clean energy from a sustainable source still high on the priority list of many countries. For instance, targets have been set for the internal combustion engines, both petrol and diesel powered to go out of production by 2030. These will be replaced by vehicles that are powered by hydrogen, electricity, and some form of hybrid engines. These are all noble endeavors, but I would add that I am skeptical that all concerned will not achieve these targets for a myriad of reasons. However, the green energy basket includes nuclear power, and so we have seen a resurgence of interest in this form of energy generation with a subsequent improvement in the fortunes of the uranium mining industry.

Today we will take a look at one such enterprise, namely Denison Mines Corp. (NYSE:DNN) which I last covered on 11 May 2021. Back then I gave it a ‘Buy’ rating and according to Seeking Alpha, it has gained 82.61% versus the S&P 500 which has gained 28.78% over the same period. However, one of the giants in this space, Cameco Corp (CCJ) gained a magnificent 182% over a similar period. Although I gave it a ‘Hold’ rating I didn’t own it as my preference was for Dennison Mines Corp. and a selection of juniors that were too small to meet the criteria for publication.

Fundamentals

Denison is a Canadian Uranium miner possessing a number of development and exploration assets in the Athabasca Basin area of north Saskatchewan. The jewel in the crown is the Wheeler River Uranium Project, which is the largest undeveloped uranium project in this area of Saskatchewan. Other interests include a 22.5% ownership in a number of uranium deposits via the McClean Lake joint venture, which includes the McClean Lake uranium mill, which is processing ore from the Cigar Lake mine. They also have exposure to a myriad of uranium mining opportunities via their investments in with other operators in this area as per following the summary table in their recent Investor update

Also I would draw your attention to the 2.5Million lbs U3O8 of uranium they purchased at an average cost of US$29.66/lb. for future funding purposes for the Wheeler River project. Given that uranium costs around $87.40/lb today they have generated a handsome profit for what now looks to be a visionary acquisition. In an update released on the 8th May 2024 we can see that 100,000lbs of uranium was sold in April 2024, at a price of US$100.00/lb. This sale was expected as it forms part of Denison’s plans to dispose of approximately 300,000lbs from its physical uranium store this year.

I would remind you to do your own due diligence and seek out the metrics that you consider important when assessing an investment opportunity, as I tend to focus on those metrics that interest me, rightly or wrongly.

From the chart below, we can glean that Denison is one of the lowest all-in cost producers of uranium, which bodes well for the future.

Please note that when I covered Denison two years ago it generated over 200 diverse comments much of which centered around the proposed In-Situ Recovery (“ISR”) field test program. If we fast forward to today, Denison announced on the 3rd of June 2024 that it has completed the inaugural In-Situ Recovery (“ISR”) field test program at Denison’s 25.17% owned Midwest Uranium Project as follows:

“The Program involved drilling 10 small diameter boreholes within the Midwest Main deposit primarily undertaken to evaluate site-specific conditions for ISR mining. A series of tests were successfully performed on each borehole, creating an extensive database of geological, hydrogeological, geotechnical, and metallurgical data, and validating certain key assumptions in the previously completed internal conceptual mining study”

These results would appear to validate the proposed In-Situ Recovery (“ISR”); however, I must point out that I am not a qualified person in this area to corroborate their findings and shall leave that to the experts in this field. However, on face value, it does appear to be a step in the right direction.

Financials

The following graphic gives us a snapshot of the capital structure and the management team. The market capitalization is US$891 with 902.3 million fully diluted shares with an average trading volume of around 15 million shares traded each day, so the liquidity is good for those traders who are nimble enough to trade on a frequent basis.

The 52-week trading price ranges from $1.15 to $2.47, it has a P/E Ratio (TTM) of 35 and an EPS (TTM) of 0.06.

If we now take a quick look at the Seeking Alpha Quant section, this stock is Ranked in Sector at 114 out of 238 and Ranked in Industry at 3 out of 16 which is pretty good, and it has been ranked as a Hold.

Denison Mines Corp. can be found trading on the NYSE American under the symbol DNN and on the TSX under the symbol DML

A Quick Look At The Chart Of Denison Mines Progress

DNN has made steady progress over the last 12 months as its stock price has almost doubled. Note that the 50dma and the 200dma are tracking almost in parallel, which I view as a positive sign.

Denison is in and out of the overbought zone so sharp pullbacks should be expected. This sort of volatility offers nimble traders the opportunity to trade this stock on a frequent basis or apply some well thought out options trades. However, timing the market requires considerable skill, years of experience and a strong stomach, if that’s not, you then tread very carefully as losses can soon mount up.

Denison Compared to Other Uranium Stocks

The following chart shows the progress for one year for Denison Mines Corp. (DNN) compared with Cameco Corp (CCJ) a much bigger stock, and Mega Uranium Limited (MGA:CA) and Laramide Resources Limited (LAM:CA) two very much smaller uranium miners. There is an old adage that “all boats rise when the tide comes in” and the chart below suggests that some of the smaller enterprises in this space are also doing quite well.

Of course, it goes without saying that when we can change the time period we will get a different result, on this occasion I have chosen the one-year period

Conclusion

I am Long Denison Mines Corp. and happy to continue holding it for now.

Progress so far has been steady with the stock price heading north and overcoming corrections along the way.

The management’s vision to store uranium rather sell it at a low price has proved to be a profitable decision on their part.

My readers are aware that I am Long both physical silver and gold and that I own a portfolio of gold, silver and uranium mining stocks in the precious metals space, including but not limited:

Mega Uranium Limited (MGA:CA)

Laramide Resources (LAM:CA)

Denison Mines Corp (DNN)

Avino Silver & Gold Mines Ltd (ASM)

Wheaton Precious Metals Corp. (WPM)

Agnico Eagle Mines Limited (AEM)

SSR Mining Inc. (SSRM)

Endeavour Silver Corp. (EXK)

Fortuna Silver Mines Inc. (FSM)

First Majestic Silver Corp. (AG)

IMPACT Silver Corp. (IPT:CA)

Pan American Silver Corp. (PAAS)

Sandstorm Gold Ltd. (SAND)

Silvercorp Metals Inc. (SVM)

Now, whether you are a fan of Denison Mines Corp. or not, please feel free to fire in your comments and I will attempt to reply to every one of them.

As always, do your own due diligence as this is going to be a bumpy ride.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of EXK, IPT:CA, SVM, AG, AEM, SAND, WPM SSRM, DNN,MGA,LAM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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