May 26, 2009 / 12:32 PM / 9 years ago

UPDATE 2-Denison Mines sets C$82 mln discount equity sale

* To sell 40 mln shares at C$2.05/shr

* Financing to raise gross proceeds of C$82 mln

* Shares fall 29 Canadian cents in early trade (Recasts, adds details on financing. In U.S. dollars unless noted)

By Euan Rocha

TORONTO, May 26 (Reuters) - Denison Mines (DML.TO) said on Tuesday it plans to sell shares, priced at a discount, to a group of underwriters to raise capital for debt reduction purposes.

The Canadian uranium producer is selling 40 million of its common shares at C$2.05 a share — a 14.2 percent discount to Monday’s close of C$2.39 on the Toronto Stock Exchange.

The deal, which is being structured as a “bought deal”, will raise gross proceeds of C$82 million ($73 million). In a bought deal an underwriter or syndicate buys shares from an issuer before selling them on to the public.

The deal is being co-led by GMP Securities and Cormark Securities. It also includes support from Canaccord Capital Corp, Scotia Capital, CIBC World Markets and Raymond James Ltd.

The proceeds from the offering will be used primarily to lower the company’s debtload, and any remaining cash may later be used for project development needs, Chief Financial Officer James Anderson, told Reuters.

The company has about $100 million in outstanding long-term debt, at this time.

Denison is the latest among a series of Canadian mining companies that have taken the discount-equity offering approach to bolstering their balance sheets.

Last month, Lundin Mining (LUN.TO) and Moto Goldmines MGL.TO also announced bought deal financings. Quadra Mining QUA.TO and Capstone Mining (CS.TO) have also raised capital through similar deals recently.

Denison has granted the underwriters an option to buy up to an additional 6 million common shares at the offering price, within 30 days after the closing of the offering.

If the option is exercised, the gross proceeds from the financing will be about C$94.3 million. The offering is scheduled to close on, or about, June 22 and is subject to certain conditions, Denison said in a statement.

Shares of Denison fell 29 Canadian cents to C$2.10 in early trade on Tuesday on the Toronto Stock Exchange.

$1=$1.12 Canadian Reporting by Euan Rocha, editing by Peter Galloway

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