Expect uranium spot price of US$60 or $70 a pound in the next year:

TORONTO — The spot price of uranium will climb its way back up to US$60 or $70 a pound over the next year as increasing demand and dwindling supply overcome the effects of the global financial crisis, says Denison Mines Corp. (TSX:DML) CEO Peter Farmer.

Like most commodities, the price of uranium - and the shares of many uranium producers - took a beating as stock markets crashed and the global economy slowed sharply in late 2008 and early 2009.

The spot price for the radioactive metal used to produce nuclear power started 2008 at about $90 per pound and fell as low as $40 per pound before rebounding slightly to $44 today.

Farmer said the price will increase through 2009 and could even "spike" as the market for uranium expands, with 44 reactors under construction, another 110 at the planning stage and 272 more proposed globally. UX Consulting estimates that the demand for uranium in 2009 will be between 171 million and 184 million pounds and only 125 million pounds will be produced.

"The favourable economics of nuclear power, security of supply concerns and the increasing urgency to reduce greenhouse gases are all driving the growth in nuclear power," Farmer said at Denison's annual shareholder meeting Thursday, marking his last official function before he steps down as CEO.

"At the same time as the demand for nuclear power increases, the incremental supply ... is simply not keeping up."

Farmer said any spike in price won't be seen for at least a couple years, but could be big when it comes.

"(Utilities) have inventories and it's maybe not next year that they need it, but they need it in '11 and '12, and they may start to get aggressive in the market," he said in an interview after the meeting.

"The other thing is the hedge funds, will they come back into the market, and if that happens then for sure you're going to see a big spike, because there's not that much out there."

The mid-sized uranium producer, labouring under debts of about US$100 million, closed many of its higher-cost U.S. mines in response to the slump in uranium prices, but the company can easily ramp up production as demand warrants, Farmer said.

"We can get it in the U.S. for example up to 1.7 million pounds, but we're holding back and we won't sell on the spot," he said. "We're not going to sell below cost, so we want to lock in long-term contracts to do that, and I think it'll be a huge benefit."

Farmer said the company has already secured three major long-term contracts covering 57 per cent of its production and is well positioned to take advantage of increasing demand and a higher price.

"We are continuing to pursue additional long-term contracts for our future Canadian and U.S. production primarily based upon a fair price, given our costs and risks," he added.

On Monday, Denison announced that it has signed a new long-term uranium supply contract with an unidentified customer for the delivery of one million pounds of uranium over five years starting in 2011.

And earlier this month, Denison struck a deal for Korea Electric Power Corp. to take a 19.9 per cent stake in the mid-sized uranium producer.

KEPCO, 51 per cent owned by the South Korean government, will also buy one-fifth of Denison's production of uranium oxide under what the companies say will be commercial terms. South Korea depends on nuclear power for almost half of its electricity.

The company had a 2008 net loss of US$80.6 million or 42 cents per share after $60 million in non-cash writedowns including a $36.5-million impairment of goodwill.

Revenue for the year was US$123.2 million, up from $76.8 million in 2007, but the fourth-quarter report included a note that the appropriateness of going-concern accounting was uncertain.

Denison has five mines in the United States but its key asset is 22.5 per cent of the McClean Lake joint venture in the Athabasca Basin of Saskatchewan, majority owned and operated by the French-based Areva group.

The company, formed in the late-2006 takeover of Denison Mines Inc. by International Uranium Corp., also has exploration properties in Canada, the U.S., Mongolia and Zambia.

Denison shares were up 20 cents or almost 10 per cent to $2.21 in afternoon trading on the Toronto Stock Exchange. They fell as low as 69 cents in December from a 52-week high of $9.10 last July.

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