Denison Mines Corp. Reports First Quarter 2014 Results

Denison Mines Corp. Reports First Quarter 2014 Results 
TORONTO, ONTARIO -- (Marketwired) -- 05/08/14 --   Denison Mines
Corp. ("Denison" or the "Company") (TSX: DML)(NYSE MKT: DNN) today
reported its results for the three months ended March 31, 2014. All
amounts in this release are in U.S. dollars unless otherwise stated. 
Highlights 


 
 
--  Discovered a new zone of high grade mineralization, named the Gryphon
    zone, on the Wheeler River property. During the winter drill program,
    drill hole WR-556 intersected basement hosted uranium mineralization
    averaging 9.7% eU3O8 over 4.6 metres. The first follow-up hole, drill
    hole WR-560, also intersected high grade basement hosted uranium
    mineralization averaging 17.3% e U3O8 over 4.2 metres. The
    mineralization at the Gryphon zone is approximately 200 metres beneath
    the sub-Athabasca unconformity and is open in both strike directions and
    at depth. The Gryphon zone is located 3.0 kilometres northwest of the
    Phoenix deposit. 
 
--  Reported several high grade intersections at Phoenix Zone A, on the
    Wheeler River property, including drill hole WR-548 which returned an
    assay of 36.83% U3O8 over 6.5 metres. These intersections have expanded
    the zone of higher grade mineralization at Phoenix Zone A. 
 
--  Received the first truckload of ore from Cigar Lake at the McClean Lake
    mill. Processing of the ore is scheduled to begin in the second half of
    2014. 
 
--  Signed a definitive arrangement agreement with International Enexco
    Limited ("IEC"), on April 14, 2014, to acquire all of the issued and
    outstanding common shares of IEC by way of a plan of arrangement ("IEC
    Arrangement"). The IEC Arrangement provides that IEC shareholders will
    exchange each IEC share for 0.26 of a Denison common share and a share
    in a company indirectly holding 100% of IEC's Contact Copper Project and
    all other U.S. mineral properties currently owned by IEC. IEC's uranium
    assets consist of a 30% interest in the Mann Lake uranium exploration
    project and a 20% interest in the Bachman Lake Joint Venture. The Mann
    Lake exploration project is operated by Cameco Corp. (52.5% interest).
    It is located 25 kilometres southwest of the McArthur River mine and is
    on trend between Cameco Corp.'s Read Lake project and Denison's 60%
    owned Wheeler River project in the eastern Athabasca Basin. Upon
    completion of the IEC Arrangement, it is anticipated that IEC
    shareholders, other than Denison, will own approximately 2.1% of
    Denison. 
 
--  Acquired the remaining 10.38% non-controlling interest in Rockgate
    Capital Corp. ("Rockgate"), on January 17, 2014, pursuant to a plan of
    arrangement ("Rockgate Arrangement"). Under the Rockgate Arrangement,
    Denison acquired the outstanding shares of Rockgate that were not
    already owned by Denison in exchange for 0.192 of a Denison common share
    for each Rockgate common share, resulting in the issuance of an
    additional 2.3 million shares of Denison. Denison now owns 100% Rockgate
    and the Falea uranium project in Mali. 

Financial Results 
The Company recorded a net loss of $12,667,000 ($0.03 per share) for
the three months ended March 31, 2014, compared with a net loss of
$5,469,000 ($0.01 per share) for the three months ended March 31,
2013. The net loss for the first quarter of 2014 includes mineral
property exploration expenses of $6,597,000, foreign exchange losses
of $4,115,000, and an impairment charge against the company's
carrying value of mineral property of $1,658,000. 


 
 
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                                               Three Months    Three Months 
                                                      Ended           Ended 
                                                  March 31,       March 31, 
(in thousands, except per share amounts)               2014            2013 
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Results of Operations:                                                      
 Total revenues                                  $    2,174      $    2,291 
 Net income (loss) for the period                   (12,667)         (5,469)
 Basic and diluted earnings (loss) per share          (0.03)          (0.01)
 
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                                                      As at           As at 
                                                  March 31,    December 31, 
(in thousands)                                         2014            2013 
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Financial Position:                                                         
 Cash and cash equivalents                       $   20,151      $   21,786 
 Short term investments                               5,536          10,040 
 Long term investments                                1,869           5,901 
                                             --------------- ---------------
 Cash, equivalents and investments                   27,556          37,727 
 
 Working capital                                     24,581          29,391 
 Property, plant and equipment                      266,755         281,010 
 Total assets                                       312,552         330,969 
 Total long-term liabilities                     $   39,232      $   41,283 
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Revenue 
Revenue from Denison Environmental Services ("DES") for the three
months ended March 31, 2014 was $1,625,000 compared to $1,907,000 in
the same period in 2013. Revenue decreased in 2014, due to a
reduction in activity at certain care and maintenance sites, and the
change in foreign exchange rates applicable on the translation of
Canadian dollar denominated revenues. 
Revenue from the Company's management contract with Uranium
Participation Corporation ("UPC"), for the three months ended March
31, 2014, was $549,000, compared to $384,000 in the same period in
2013. The revenue increase in 2014 is due to additional fees earned
from UPC in connection with UPC's purchase of additional uranium
holdings. 
Operating Expenses 
In Canada, commissioning of the McClean Lake mill continued during
the first quarter of 2014 with the Cigar Lake joint venture ("CLJV")
continuing to pay nearly all of the expenses under the terms of a
toll milling agreement. The first shipment of ore to the McClean Lake
mill from Cigar Lake was received during the first quarter, and
together with further ore shipments, will be stockpiled until the
mill restarts operations during the second half of 2014. 
Denison's share of operating costs in Canada, for the three months
ended March 31, 2014, totaled $141,000 compared to $283,000 for the
three months ended March 31, 2013. Operating costs decreased in 2014
primarily due to reductions in expenditures on the Surface Access
Borehole Resource Extraction ("SABRE") program, which is not part of
the stand-by costs paid by the CLJV.  
In Africa, the Company completed a site visit and detailed review of
the recently acquired Falea project in Mali. During the quarter,
engineering studies, a metallurgical test work program and
environmental programs originally initiated by Rockgate were also
completed. Operating expenses in Africa for the three months ended
March 31, 2014 totaled $695,000, and were primarily attributable to
the Falea project. Operating expenses in Africa for the three months
ended March 31, 2013, by comparison, totaled $45,000.  
Operating expenses also include costs relating to DES of $1,583,000
for the three months ended March 31, 2014, as compared to $1,937,000
for the same period in 2013. DES costs decreased in 2014, due to a
reduction in activity at certain care and maintenance sites, and the
change in foreign exchange rates applicable on the translation of
Canadian dollar expenses. 
Mineral Property Exploration 
Denison is engaged in uranium exploration and/or development in
Canada, Zambia, Mali, Namibia, Niger and Mongolia. While the Company
has material interests in uranium projects in Asia and Africa, the
Company is focused primarily on the eastern Athabasca Basin in
Saskatchewan, Canada, with 43 projects covering 582,000 hectares.  
Global exploration expenditures for the three months ended March 31,
2014 were $6,597,000 compared to $4,709,000 for the three months
ended March 31, 2013 with nearly 95% of exploration expenditures
being incurred in Canada during the first three months of 2014 as
compared to roughly 89% of expenditures during the same period in
2013. The increase in global exploration expenditures in 2014 is due
to an increase in exploration activity in Canada, offset somewhat by
a reduction in exploration expenditures in other jurisdictions. 
In Canada, Denison's share of exploration spending on its Canadian
properties totaled $6,254,000 for the three months ended March 31,
2014 as compared to $4,173,000 for the three months ended March 31,
2013. The winter exploration program commenced in January 2014 and
was completed in April 2014.  
In Zambia, exploration expenditures of $47,000 were incurred during
the three months ended March 31, 2014, as the Company prepares for
geological mapping, geochemical and trenching programs expected to be
carried out later in the year on the Company's Mutanga project.
During the same three months in 2013, exploration expenditures
totaled $195,000.  
In Mali, exploration activities were minimal during the first quarter
of 2014. As a result, exploration expenditures of only $29,000 have
been incurred on the Falea project during the first three months of
2014. Geological field programs and geophysics are planned for the
second quarter in Mali. 
In Namibia, Rio Tinto Mining and Exploration Limited ("Rio")
terminated its option to earn an interest in the Dome project under
the provisions of an earn-in agreement between the parties. Rio
discontinued activities at the site at the end of February 2014. The
Company is evaluating options for moving forward with the Dome
project. 
In Mongolia, exploration expenditures on the Company's Gurvan Saihan
joint venture ("GSJV") properties totaled $247,000 for the three
months ended March 31, 2014, compared to $341,000 for the three
months ended March 31, 2013. Expenditures in Mongolia during the
first quarter of 2014 and 2013 relate primarily to annual license
payments required to maintain the GSJV properties in good standing
while the Company continues to explore strategic alternatives
regarding its ownership interest in the GSJV. The Company currently
has an 85% interest in the GSJV, with Mon-Atom LLC holding the
remaining 15% interest. 
General and Administrative 
General and administrative expenses totaled $2,403,000 for the three
months ended March 31, 2014 compared with $1,903,000 for the three
months ended March 31, 2013. These expenses consist primarily of
payroll and related expenses for personnel, contract and professional
services, stock option expense and other public company expenditures.
General and administrative expenditures were higher in 2014 primarily
due to special project costs, as well as an increase over 2013 in the
performance bonuses paid in the first quarter. 
Other Income and Expenses  
Other income (expense) totaled ($3,402,000) for the three months
ended March 31, 2014 compared with ($929,000) for the three months
ended March 31, 2013. The Company realized foreign exchange losses of
($4,115,000) during the three months ended March 31, 2014, as
compared to foreign exchange losses of only ($80,000) during the
three months ended March 31, 2013. The Company also recognized
$664,000 in gains on investments carried at fair market value during
the three months ended March 31, 2014, as compared to a loss of
($697,000) on investments during the three months ended March 31,
2013.  
Liquidity & Capital Resources 
Cash and cash equivalents were $20,151,000 at March 31, 2014 compared
with $21,786,000 at December 31, 2013. The decrease of $1,635,000 was
primarily due to cash used in operations of $9,195,000 and an
unfavourable movement in foreign exchange rates, offset by cash
provided by investing activities of $7,913,000. 
Net cash used in operating activities of $9,195,000 in the three
months ended March 31, 2014 is comprised of net loss for the period
adjusted for non-cash items and changes in working capital items.
Significant changes in working capital items during the period
include an increase of $4,887,000 in trade and other receivables and
an increase of $1,452,000 in prepaid expenses and other assets,
offset by an increase of $4,936,000 in accounts payable and accrued
liabilities. The increase in trade and other receivables and accounts
payable is due to the increase in activity at the McClean Lake mill. 
Net cash provided by investing activities of $7,913,000 consists
primarily of cash provided by the sale or maturity of debt
instruments accounting for $8,608,000, offset by $336,000 in cash
spent on property, plant and equipment, and $320,000 used to fund the
Elliot Lake reclamation trust fund.  
On January 31, 2014, the Company entered into a revolving term credit
facility (the "Credit Facility") for CAD$15,000,000. The use of the
Credit Facility is restricted to the issuance of non-financial
letters of credit and contains a covenant to maintain a certain level
of tangible net worth, which must be greater than or equal to
$150,000,000. The Credit Facility terminates on January 31, 2015. At
March 31, 2014, the Company is in compliance with the covenants of
the Credit Facility, and CAD$9,698,000 of the Credit Facility was
being used as collateral for certain letters of credit. As part of
the Credit Facility, the Company has provided an unlimited full
recourse guarantee and a pledge of all of the shares of Denison Mines
Inc.  
Subsequent Events 
On April 14, 2014, Denison announced the signing of an agreement to
acquire all of the issued and outstanding shares, options and
warrants of IEC by way of the IEC Arrangement. IEC's uranium assets
consist of a 30% interest in the Mann Lake exploration project and a
20% interest in the Bachman Lake Joint Venture, both located in
Saskatchewan, Canada. IEC also owns a subsidiary indirectly holding
100% of IEC's Contact Copper project and its other US properties
("Spinco"). Denison currently owns 3,600,000 shares and 1,800,000
share purchase warrants of IEC and expects to complete the IEC
Arrangement before June 30, 2014. 
Under the terms of the IEC Arrangement, Denison will acquire all of
the issued and outstanding IEC shares on the basis of 0.26 of a
Denison share for each IEC share. Any outstanding warrants and
options of IEC as of the completion of the IEC Arrangement will be
exchanged for options and warrants of Denison adjusted with reference
to the exchange ratio of 0.26. The Denison options received as a
result of this exchange will expire 90 days after the completion of
the IEC Arrangement while the new Denison warrants will expire in
accordance with the expiry dates of the existing IEC warrants. Upon
completion of the IEC Arrangement, it is anticipated that IEC
shareholders, other than Denison, will own approximately 2.1% of
Denison. 
As part of the Arrangement, IEC's shareholders will also receive a
pro rata distribution of Spinco shares on a one-for-one basis and
one-half of a warrant to acquire an additional Spinco share,
exercisable for 6 months, at a price of CAD$5.00 for each whole share
to be acquired. Each holder of IEC options and warrants will also
receive replacement options and warrants, as the case may be, from
Spinco with the same terms and conditions as the IEC options and
warrants being replaced. 
Outlook for 2014  
The Company's exploration, development and operation plans for 2014
remain largely unchanged at the end of the first three months of the
year. The Company has completed a significant winter exploration
program in Canada and plans to follow up with a summer exploration
program on certain high priority projects.  


 
 
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                                                                  Actual to 
                                                    Current       March 31, 
(in thousands)                                   Budget (1)        2014 (3) 
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Canada (2)                                                                  
 Mineral sales                                   $    1,155               - 
 Toll milling fees                                      850               - 
 Exploration                                        (14,276)         (6,222)
 Development/operations                              (1,564)           (141)
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                                                    (13,835)         (6,363)
Africa                                                                      
 Mali                                                (2,000)           (858)
 Zambia                                              (1,830)           (365)
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                                                     (3,830)         (1,223)
Asia                                                                        
 Mongolia                                              (962)           (467)
 
Services and Other (2)                                                      
 Management fees and commissions                      1,996             549 
 Environmental services                                 604               5 
 Corporate general and administration                (4,433)         (1,269)
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                                                     (1,833)           (715)
 
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Total                                            $  (20,460)     $   (8,768)
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(1) Only Denison's material operations are shown in the above table.        
(2) Budget figures have been converted using a US$ to CAD$ exchange rate of 
    0.95.                                                                   
(3) The Company budgets on a cash basis. As a result, the actual figure     
    represents a non-GAAP measure and excludes non-cash depreciation and    
    amortization amounts of $205,000.                                       

Canada 
Mineral Property Exploration 
The Company is planning to spend approximately CAD$15,000,000 on
exploration activities in Canada during 2014. At this time, the
winter portion of the 2014 exploration program has been completed.
Denison is planning to carry out additional geophysical surveying on
several properties and is also planning to carry out further drilling
on five projects, of which Wheeler River will continue to be the
primary focus. Drilling at Wheeler River will continue to be focused
on the K trend, including follow-up at the Gryphon zone discovery.
Approximately 15,000 metres of drilling is planned at Wheeler River
during the summer program.  
In addition to the Wheeler River program, summer drill programs are
also planned at Crawford Lake, Bachman Lake, Packrat and McClean
Lake. At Crawford Lake, 3,550 metres of drilling is planned for six
drill holes to evaluate geophysical targets and follow up on drilling
results in 2013. Drilling at Bachman Lake will consist of 3,050
metres in five drill holes to evaluate geophysical targets there. At
Packrat, a four hole, 800 metre drilling program is planned to
follow-up on weak uranium mineralization intersected in 2013. McClean
Lake is also planning a five hole, 1,500 metre, drilling program. 
Development/Operations 
At McClean Lake, the expansion of the mill from 13 to 24 million
pounds annual U3O8 capacity is being fully funded by the CLJV and is
well underway. First ore from the Cigar Lake mine was received during
the first quarter and processing of ores from the McClean Lake SABRE
program and from Sue B, blended with Cigar Lake ore, is scheduled to
begin during the second half of 2014. Denison's share of operating
and capital expenditures at the mill in 2014 is estimated at CAD$1.1
million. Denison's expenditures are expected to be offset by revenue
from the sale of approximately 30,000 pounds U3O8, recovered from
McClean Lake ores processed at the mill, and from toll milling fees.
Total revenue from operations is projected at CAD$1.9 to 2.4 million. 
Due to low uranium prices, the Midwest and McClean underground
projects will continue to remain on stand-by in 2014. Total
expenditures on these projects is budgeted at CAD$0.9 million
(Denison's share, CAD$212,000). While significant milestones were
achieved by the McClean joint venture in the development of the SABRE
mining technology in 2012 and 2013, a decision was made by the joint
venture to put this program on stand-by. As a result, SABRE
expenditures are expected to be reduced in 2014 to CAD$650,000
(Denison's share, CAD$146,000).  
International 
On its wholly owned Mutanga project in Zambia, the Company plans to
carry out further geological mapping, geochemical and trenching
programs to follow up on the results of the work completed in 2013.
The Zambian program is estimated to total $1.8 million. 
On its wholly owned Falea project in Mali, the Company is planning to
carry out geological field programs and metallurgical test work. The
Mali program is estimated to total $2.0 million.  
In Mongolia, the 2014 expenditures are estimated to total $1.0
million. 
Other Activities 
Revenue from operations at DES is budgeted at CAD$7.0 million and
operating expenses are forecast to be CAD$6.3 million for 2014.
Capital expenditures and reclamation funding are projected to be
CAD$0.7 million. 
Management fees from Denison's contract with UPC are budgeted at
CAD$2.1 million in 2014. 
Corporate administration expenses are forecast to be CAD$4.6 million
in 2014 and include all head office wages, benefits, office costs,
public company expenses, legal, audit and investor relations
expenses. 
Qualified Person 
The disclosure of scientific and technical information regarding
Denison's properties in this press release was prepared by or
reviewed by Steve Blower, P. Geo., the Company's Vice President,
Exploration, and Terry Wetz, P.E., the Executive Director of the
GSJV, who are Qualified Persons in accordance with the requirements
of NI 43-101. For a description of the quality assurance program and
quality control measures applied by Denison, please see Denison's
Annual Information Form dated March 14, 2014 available at
http://www.sedar.com, and its Form 40-F available at
http://www.sec.gov/edgar.shtml. 
Additional Information 
Denison's consolidated financial statements for the three month
period ended March 31, 2014 and related management's discussion and
analysis are available on Denison's website at www.denisonmines.com
or under its profile on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml. 
About Denison 
Denison is a uranium exploration and development company with
interests in exploration and development projects in Canada, Zambia,
Mali, Namibia, Niger and Mongolia. Including the high grade Phoenix
deposit, located on its 60% owned Wheeler project, Denison's
exploration project portfolio consists of 43 projects and totals
approximately 582,000 hectares in the Eastern Athabasca Basin region
of Saskatchewan. Denison's interests in Saskatchewan also include a
22.5% ownership interest in the McClean Lake joint venture, which
includes several uranium deposits and the McClean Lake uranium mill,
one of the world's largest uranium processing facilities, plus a
25.17% interest in the Midwest deposit and a 60% interest in the J
Zone deposit on the Waterbury property. Both the Midwest and J Zone
deposits are located within 20 kilometres of the McClean Lake mill.
Internationally, Denison owns 100% of the conventional heap leach
Mutanga project in Zambia, 100% of the uranium/copper/silver Falea
project in Mali, a 90% interest in the Dome project in Namibia, and
an 85% interest in the in-situ recovery projects held by the GSJV in
Mongolia. 
Denison is engaged in mine decommissioning and environmental services
through its DES division and is the manager of UPC, a publicly traded
company which invests in uranium oxide and uranium hexafluoride. 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS  
Certain information contained in this press release constitutes
"forward-looking information", within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and similar
Canadian legislation concerning the business, operations and
financial performance and condition of Denison. 
Generally, these forward-looking statements can be identified by the
use of forward-looking terminology such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will be taken", "occur", "be achieved" or "has the potential to". 
Forward looking statements are based on the opinions and estimates of
management as of the date such statements are made, and they are
subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance or
achievements of Denison to be materially different from those
expressed or implied by such forward-looking statements. Denison
believes that the expectations reflected in this forward-looking
information are reasonable but no assurance can be given that these
expectations will prove to be correct and such forward-looking
information included in this press release should not be unduly
relied upon. This information speaks only as of the date of this
press release. In particular, this press release may contain
forward-looking information pertaining to the following: the
likelihood of completing and benefits to be derived from corporate
transactions; the estimates of Denison's mineral reserves and mineral
resources; expectations regarding the toll milling of Cigar Lake
ores; capital expenditure programs, estimated exploration and
development expenditures and reclamation costs; expectations of
market prices and costs; supply and demand for uranium ("U3O8");
possible impacts of litigation and regulatory actions on Denison;
exploration, development and expansion plans and objectives;
expectations regarding adding to its mineral reserves and resources
through acquisitions and exploration; and receipt of regulatory
approvals, permits and licences under governmental regulatory
regimes. 
There can be no assurance that such statements will prove to be
accurate, as Denison's actual results and future events could differ
materially from those anticipated in this forward-looking information
as a result of the factors discussed under the heading "Risk Factors"
in Denison's Annual Information Form dated March 14, 2014 available
at http://www.sedar.com, and in its Form 40-F available at
http://www.sec.gov/edgar.shtml. 
Accordingly, readers should not place undue reliance on
forward-looking statements. These factors are not, and should not be
construed as being, exhaustive. Statements relating to "mineral
reserves" or "mineral resources" are deemed to be forward-looking
information, as they involve the implied assessment, based on certain
estimates and assumptions that the mineral reserves and mineral
resources described can be profitably produced in the future. The
forward-looking information contained in this press release is
expressly qualified by this cautionary statement. Denison does not
undertake any obligation to publicly update or revise any
forward-looking information after the date of this press release to
conform such information to actual results or to changes in Denison's
expectations except as otherwise required by applicable legislation. 
Cautionary Note to United States Investors Concerning Estimates of
Measured, Indicated and Inferred Mineral Resources: This press
release may use the terms "measured", "indicated" and "inferred"
mineral resources. United States investors are advised that while
such terms are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does not recognize
them. "Inferred mineral resources" have a great amount of uncertainty
as to their existence, and as to their economic and legal
feasibility. It cannot be assumed that all or any part of an inferred
mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of inferred mineral resources may not form
the basis of feasibility or other economic studies. United States
investors are cautioned not to assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. United States investors are also cautioned not to
assume that all or any part of an inferred mineral resource exists,
or is economically or legally mineable. 
Contacts:
Denison Mines Corp.
Ron Hochstein
President and Chief Executive Officer
(416) 979-1991 ext 232 
Denison Mines Corp.
Sophia Shane
Investor Relations
(604) 689-7842
www.denisonmines.com
 
 
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