Will the Low Uranium Prices Continue To Dent Denison Mines Corp (NYSEAMERICAN: DNN)?

At $1.44, Denison Mines Corp (NYSEAMERICAN: DNN) exited the market yesterday with a 5.11% hike. Yet, the investors remain apprehensive of DNN’s future as uranium prices remain low due to weakened demand. The uranium mining business of the firm is continuously draining down the hill, and high operating costs, staggering loss from COVID-related temporary shutdowns aren’t justifying the lofty valuation of its stock. So what lies ahead for the investors?

Substantial dip in mining revenue during Q1-2021

The company is headquartered in Toronto, Canada, and is a uranium development and exploration company. Undoubtedly, it hasn’t remained immune to the business losses created by the pandemic. Production at the mining sites has remained stalled, leading to losses. Its temporary work suspension in the Cigar Lake mine has caused a substantial dent in mining revenue in Q1-2021. There’s a 46.44% drop in revenues compared with the previous year, during the first quarter. DNN’s revenue totaled $2.50M in Q1-2021.

Slumping net profit margin and net income

Low prices of uranium are a result of lower demand. Investors continue to remain concerned about the prospects of the nuclear energy industry. Going forward, DNN’s growth seems to be retarded, just like its net profit and net income. In Q1-2021, the company has reported a -355.93% net profit margin, down -148.94% from the year before. As for net income, the figures are rolling out at -$8.88M, dipping -33.33% from the previous year. The company still has $172.76M cash on hand, but investors do not seem convinced with anything at -$6.47M operating income. 

What does industry headwind indicate?

There has been a rising affinity for clean and green energy sources in the global interest. According to a nuclear fuel market research firm, UxC, the global demand for uranium is most likely to condense to 178 million pounds in 2021 compared with 181 million pounds in 2020. This substantial decline in demand, weak production, and temporary production halt doesn’t go well for DNN in the times ahead. 

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