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« SK Option Trader Continues to Bank Profits | Main | Cameco Corporation Close to a Bottom »
Wednesday
Oct102012

Denison Mines Corporation: A Long Term Investment

Denison Mines Corp. is a uranium exploration and development company with interests in exploration and development projects in Saskatchewan, Zambia and Mongolia. As well, Denison has a 22.5% ownership interest in the McClean Lake uranium mill, located in northern Saskatchewan, which is one of the world’s largest uranium processing facilities. Denison’s exploration project portfolio includes the world class Phoenix deposit located on its 60% owned Wheeler River project also in the Athabasca Basin region of Saskatchewan.

 It also produces vanadium as a co-product from its mines located in Colorado and Utah; and recycles uranium-bearing waste materials.

 

 After recovering from its very momentary post Fukushima low of $0.80, Denison has found a range in 2012 between $1.25 and $2.00. The stock awaits movements in the price of Uranium before shifting out of this zone.

 

With long term prospects for uranium looking positive, buying this stock not far from its yearly and historical lows could be a profitable play.

Denison is a relatively small mining company, with a market cap of $542 million. Having said that, with average volume greater than 700,000 shares liquidity is good.

2012 hasn’t been the best year for Denison, with financial stats across the board making for average reading. However, with how leveraged it is to the price of uranium, this stock has considerable upside. As Buffett famously said, be fearful when everyone is greedy and greedy when everyone is fearful.

When uranium almost doubled in a matter of months towards the end of 2010, DNN rose nearly 300%. Expect a similar sort of return if and when uranium picks up again.

Compare that to the most well-known uranium stock, Cameco which returned just over 100% over the same time-frame and the speculative value of Denison is clear to see. Speaking of Cameco, that company owns 30% of the Wheeler River property of which Denison owns a further 60%. So DNN certainly shares interests with the some of the best.

DNN has various exploration projects underway and hence big potential for growth.
On the 8th of October Denison announced the offer of over 4 million flow through shares on a private placement basis.

Denison lists on both the NYSEAMEX: DNN and on the TSE:DML
For disclosure purposes we are long Denison.

As a long term investment it could be worth bagging a few shares at these depressed levels with the view that the nuclear industry will stage a comeback in the not too distant future.

 Have a good one.

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