Because uranium prices remain at low levels, due primarily to weak demand, Denison Mines’ (DNN) uranium mining business could continue to suffer. Furthermore, we think the company’s high operating costs and staggering losses resulting from a temporary suspension of production do not justify its lofty stock valuation. Read ahead to learn more.Headquartered in Toronto, Canada, Denison Mines Corp. (NYSE:DNN) is a uranium exploration and development company. It has a 90% ownership position in the flagship Wheeler River project, the largest undeveloped uranium project in the Athabasca Basin region. As a result of the temporary suspension of production at its Cigar Lake mine in response to the pandemic, the company suffered a substantial decline in its mining revenue in the first quarter of 2021. Closing yesterday’s trading session at $1.26, DNN’s stock is trading 30.4% below its $1.81 all-time high, which it hit on February 17.
The stock has gained 17.8% over the past month after DNN announced its offer to acquire JCU (Canada) Exploration Company. However, the company recorded significant losses in its last reported quarter. Furthermore, limited demand for uranium and investors’ concerns surrounding the nuclear-energy industry’s prospects could retard DNN’s growth going forward.
Here is what we think could influence DNN’s performance in the near term: