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Denison executive shake-up seen with positive bias by Dundee Capital

Published: 14:27 24 Mar 2015 GMT

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Denison Mines (TSE:DML) had its “buy” rating and $2.10 price target reiterated at Dundee Capital Markets after the Canada-based exploration company announced some major changes to its executive team.

“Overall, we see it as a neutral impact with a positive bias--most importantly Ron Hochstein and Lukas Lundin remain in the fold as two newer faces are taking more prominent roles moving forward,” analyst David Talbot wrote in a research note to investors late yesterday.

Ron Hochstein moved to the position of executive chairman, dropping his CEO position. Dundee believes this move was expected due to his time constraints as CEO at Lundin Gold, and as president and CEO of Uranium Participation (TSE:U).

“His continued involvement is important as he has been the face of the company for so long, and has intimate knowledge of its workings,” Talbot advised.

Lukas Lundin stepped down as chairman, but maintained a director role. “This likely reflects his relative involvement in the company, and perhaps takes away a certain amount of conflict of interest in event that the company desires to sell itself,” Talbot said.

David Cates assumed the CEO role, on top of his recent appointment as president, dropping the CFO position. Dundee believes Cates was the obvious candidate to take over as CEO, coming just mere months after he was appointed president.

“This suggests the strong faith that Ron Hochstein has in his abilities, and that the two always seem be on the same page,” Talbot said.

Dundee cited the positive response by peers and investors following his recent showing at PDAC, speaking in the public eye for the first time as senior management.

“Denison has a very deep technical team to keep its discovery momentum moving forward but Mr. Cates certainly brings a business sense to the helm,” Talbot said.

The Toronto-based company also hired Mac McDonald as CFO. He was formerly with PWC, and he was director of financial reporting for Iamgold (TSE:IMG).

“While we may be reading between the lines, Mac McDonald’s joining of Denison, also perennial active as both buyer and seller on the M&A front (similar to IMG), would provide DML with the capability to continue to improve its Athabasca Basin-leading uranium property base; bundle its African assets for sale (Zambia, Mali, Namibia); and seek value from its (nonvalued) Mongolian projects,” Talbot wrote.

Denison shares were flat at C$1.01 at 10:01 a.m. in Toronto. The stock has dropped 10.6 percent this year, leaving the company with a market value of C$511 million.

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