Revenue
There were no uranium sales in 2012 from the Company's continuing operations. In 2011, the Company sold 117,000 pounds of U3O8 for total sales revenue of $7,693,000 in the Canadian mining segment. There were no uranium sales in the fourth quarter of 2012 or 2011.
Revenue from the environmental services division ("DES") for the three months and year ended December 31, 2012 was $2,211,000 and $9,456,000 compared to $3,995,000 and $16,190,000 in the same periods in 2011. Revenue decreased in 2012 due to the expiry of the care and maintenance agreement for the Faro mine complex in March 2012.
Revenue from the management contract with Uranium Participation Corporation ("UPC") for the three months and year ended December 31, 2012 was $385,000 and $1,671,000 compared to $437,000 and $1,913,000 in the same periods in 2011.
Operating Expenses
Since there were no uranium sales in 2012, mineral concentrates cost of goods sold was nil for 2012 compared with $6,659,000 for 2011. The McClean Lake mill remained on stand-by for the entire year in 2012. The Cigar Lake Joint Venture continues to pay nearly all of the stand-by expenses under the terms of the toll milling agreement. Operating costs for the three months and year ended December 31, 2012 totaled $1,194,000 and $3,359,000 compared to $290,000 and $804,000 for the three months and year ended December 31, 2011. Operating costs increased in 2012 due to increased funding of the Surface Access Borehole Resource Extraction ("SABRE") program, which is not part of stand-by costs.
Operating expenses also include costs relating to DES amounting to $2,165,000 for the three months and $9,243,000 for the year ended December 31, 2012 compared to $3,682,000 and $15,342,000 respectively for the same periods in 2011. DES costs decreased in 2012 due to the expiry of the Faro contract in March 2012.
Mineral Property Exploration
Denison is engaged in uranium exploration, as both operator and non-operator of joint ventures and as operator of its own properties in Canada, Mongolia and Zambia. Exploration expenditures for the three months ended and year ended December 31, 2012 were $1,823,000 and $12,508,000 compared to $1,164,000 and $13,150,000 for the three months and year ended December 31, 2011.
In the Athabasca Basin region of northern Saskatchewan, Denison is engaged in uranium exploration as part of the AREVA Resources Canada Inc. ("ARC") operated McClean and Midwest joint ventures, as well as on 24 other exploration projects including the Company's 60% owned Wheeler River project, for the year ended December 31, 2012. Denison's share of exploration spending on its Canadian properties totaled $701,000 and $5,725,000 for the three months and year ended December 31, 2012. A total of 34,900 metres of diamond drilling was completed on four properties in 2012. By comparison, Canadian exploration spending totaled $519,000 and $6,783,000 for the three months and year ended December 31, 2011.
The 2012 drill program on the Wheeler River project involved mainly definition drilling at the Phoenix A and B deposits. A total of 27,263 metres was drilled in 58 holes, which expanded the Phoenix deposits and resulted in the following mineral resource estimate:
2012 Phoenix Mineral Resource Estimate Summary(Effective Date December 31, 2012) Tonnes Grade Million lbs U3O8 Million lbs U3O8Category Deposit (100% Basis) (%U3O8) (100% Basis) (Denison Share)----------------------------------------------------------------------------Indicated A Deposit 133,500 15.8 46.5 27.9Indicated B Deposit 19,000 14.1 5.9 3.5----------------------------------------------------------------------------Total Indicated 152,400 15.6 52.3 31.4Inferred A Deposit 6,300 51.7 7.2 4.3Inferred B Deposit 5,300 3.5 0.4 0.3----------------------------------------------------------------------------Total Inferred 11,600 29.8 7.6 4.6Mineral resources are not mineral reserves and do not have demonstratedeconomic viability. Mineral resources are reported above a cut-off grade of0.8% U3O8.
