This
Management’s Discussion and Analysis (‘MD&A’)
of Denison Mines Corp. and its subsidiary companies and joint
arrangements (collectively, ‘Denison’ or the
‘Company’) provides a detailed analysis of the
Company’s business and compares its financial results with
those of the previous year. This MD&A is dated as of August 8,
2024 and should be read in conjunction with the Company’s
unaudited interim condensed consolidated financial statements and
related notes for the three and six months ended June 30, 2024. The
unaudited interim condensed consolidated financial statements are
prepared in accordance with International Financial Reporting
Standards (‘IFRS’) as issued by the International
Accounting Standards Board (‘IASB’), including IAS 34,
Interim Financial
Reporting. Readers are also encouraged to consult the
audited consolidated financial statements and MD&A for the year
ended December 31, 2023. All dollar amounts in this MD&A are
expressed in Canadian dollars, unless otherwise noted.
Additional
information about Denison, including the Company’s press
releases, quarterly and annual reports, Annual Information Form and
Form 40-F is available through the Company’s filings with the
securities regulatory authorities in Canada at www.sedarplus.ca
(‘SEDAR+’) and the United States at
www.sec.gov/edgar.shtml (‘EDGAR’).
MANAGEMENT’S
DISCUSSION & ANALYSIS
Q2 2024 PERFORMANCE
HIGHLIGHTS
■
Completion of Inaugural ISR Field Test Program at
Midwest
In June 2024,
Denison and Orano Canada Inc. (‘Orano Canada’)
announced the completion of an In-Situ Recovery (‘ISR’)
field test program at the Company’s 25.17% owned Midwest
Uranium Project (‘Midwest’). The program involved
drilling ten small diameter boreholes within the Midwest Main
deposit primarily undertaken to evaluate site-specific conditions
for ISR mining. A series of tests were successfully performed on
each borehole, creating an extensive database of geological,
hydrogeological, geotechnical, and metallurgical data and
validating certain key assumptions in the previously completed
internal conceptual mining study (the ‘Concept Study’)
evaluating the potential use of ISR mining at Midwest (see Press
Release dated April 12, 2023).
Denison carried
out the Program in collaboration with Orano Canada, as operator and
owner of 74.83% of the Midwest Joint Venture (‘MWJV’).
Highlights from the program include:
●
Confirmation of Hydraulic Conductivity:
Pump and injection tests validated hydraulic connectivity in the
test wells within the mineralized zone and achieved hydraulic
conductivity values (a measure of permeability) consistent with the
Concept Study. Sufficient permeability within the mineralized zone
is a key criterion for the successful deployment of the ISR mining
method.
●
Demonstrated the Effectiveness of Permeability
Enhancement: One method of permeability enhancement was
successfully deployed within two wells, demonstrating the
suitability of the method to the Midwest Main deposit. The
efficiency of permeability enhancement was verified by comparison
of pre- and post-permeability enhancement hydraulic
testing.
●
Metallurgical Samples Defined and Collected for
Leaching Characteristics: Core samples representative of the
Midwest Main deposit were collected during the program for use in
future metallurgical tests to assess leaching
characteristics.
■
Signing of Wheeler River Benefit Agreements with Kineepik
Métis Local #9 and the Village of Pinehouse Lake
In early July
2024, Denison announced the signing of a Mutual Benefits Agreement
(‘MBA’) with Kineepik Métis Local #9
(‘KML’), and a Community Benefit Agreement
(‘CBA’) with the northern Village of Pinehouse Lake
(the ‘Village’), in support of the development and
operation of Denison’s 95% owned Wheeler River
Project.
The MBA
acknowledges that the project is located within KML’s Land
and Occupancy Area in northern Saskatchewan and provides
KML’s consent and support to advance the project.
Additionally, the MBA recognizes that the development and operation
of the project can support KML in advancing its social and economic
development aspirations, while mitigating the impacts on the local
environment and KML members. The MBA provides KML and its
Métis members an important role in environmental monitoring
and commits to the sharing of benefits from the successful
operation of the project – including benefits from community
investment, business opportunities, employment and training
opportunities, and financial compensation.
The CBA
acknowledges that the Village is the closest residential community
to the project by road, which relies on much of the same regional
infrastructure that Denison will rely on as it advances the
project. The Village has provided its consent and support for the
project, while Denison, on behalf of the Wheeler River Joint
Venture, is committed to help the Village develop its own capacity
to take advantage of economic and other development opportunities
in connection with the advancement and operation of the
project.
■
Appointment of New Board Chair
In May 2024,
following the results of the Annual General Meeting of Shareholders
(‘AGM’) held in Toronto, Denison announced the
appointment of Ms. Jennifer Traub as the Company’s new Board
Chair. The former Board Chair, Mr. Ron Hochstein, did not stand for
re-election at the AGM. Ms. Traub, who joined the Denison Board in
2021, is a partner in the Securities Group, and Co-Chair of the
Mining Group, at Cassels Brock & Blackwell LLP, and has been
recognized as a legal leader in the Canadian resource
sector.
2
MANAGEMENT’S
DISCUSSION & ANALYSIS
ABOUT DENISON
Denison Mines
Corp. was formed under the laws of Ontario and is a reporting
issuer in all Canadian provinces and territories. Denison’s
common shares are listed on the Toronto Stock Exchange (the
‘TSX’) under the symbol ‘DML’ and on the
NYSE American exchange under the symbol
‘DNN’.
Denison is a
uranium mining, exploration and development company with interests
focused in the Athabasca Basin region of northern Saskatchewan,
Canada. The Company has an effective 95% interest in its flagship
Wheeler River Uranium Project, which is the largest undeveloped
uranium project in the infrastructure rich eastern portion of the
Athabasca Basin region of northern Saskatchewan. In mid-2023, a
Feasibility Study (‘FS’) was completed for the Phoenix
deposit as an ISR mining operation, and an update to the previously
prepared 2018 Pre-Feasibility Study (‘PFS’) was
completed for Wheeler River’s Gryphon deposit as a
conventional underground mining operation (the ‘Gryphon
Update’). Based on the respective studies, both deposits have
the potential to be competitive with the lowest cost uranium mining
operations in the world. Permitting efforts for the planned Phoenix
ISR operation commenced in 2019 and have advanced significantly,
with licensing in progress and a draft Environmental Impact
Statement (‘EIS’) submitted for regulatory and public
review in October 2022.
Denison’s
interests in Saskatchewan also include a 22.5% ownership interest
in the McClean Lake Joint Venture (‘MLJV’), which
includes unmined uranium deposits (planned for extraction via the
MLJV’s SABRE mining method starting in 2025) and the McClean
Lake uranium mill (currently utilizing a portion of its licensed
capacity to process the ore from the Cigar Lake mine under a toll
milling agreement), plus a 25.17% interest in the Midwest Main and
Midwest A deposits held by the Midwest Joint Venture
(‘MWJV’), and a 69.44% interest in the Tthe Heldeth
Túé (‘THT’) and Huskie deposits on the
Waterbury Lake Property (‘Waterbury’). The Midwest
Main, Midwest A, THT and Huskie deposits are located within 20
kilometres of the McClean Lake mill. Taken together, the Company
has direct ownership interests in properties covering ~384,000
hectares in the Athabasca Basin region.
Additionally,
through its 50%
ownership of JCU (Canada) Exploration Company, Limited
(‘JCU’), Denison holds further interests in various
uranium project joint ventures in Canada, including the Millennium
project (JCU, 30.099%), the Kiggavik project (JCU, 33.8118%) and
Christie Lake (JCU, 34.4508%).
In 2024, Denison
is celebrating its 70th year in uranium
mining, exploration, and development, which began in 1954 with
Denison’s first acquisition of mining claims in the Elliot
Lake region of northern Ontario.
SELECTED FINANCIAL INFORMATION
(in
thousands)
As at
June 30,
2024
As at
December 31,
2023
Financial Position:
Cash and cash
equivalents
$
121,067
$
131,054
Working
capital(1)
$
120,100
$
135,130
Investments in
uranium
$
257,460
$
276,815
Property, plant
and equipment
$
256,438
$
254,946
Total
assets
$
695,357
$
726,603
Total long-term
liabilities(2)
$
66,641
$
66,873
(1)
Working capital is a non-IFRS
financial measure and is calculated as the value of current assets
less the value of current liabilities, excluding non-cash current
liabilities. Working capital as at June 30, 2024 excludes
$4,501,000 from the current portion of deferred revenue (December
31, 2023 – $4,535,000).
(2)
Predominantly comprised of
the non-current portion of deferred revenue, non-current
reclamation obligations, and deferred income tax
liabilities.
3
MANAGEMENT’S
DISCUSSION & ANALYSIS
SELECTED QUARTERLY FINANCIAL INFORMATION
2024
2024
2023
2023
(in
thousands, except for per share amounts)
Q2
Q1
Q4
Q3
Continuing Operations:
Total
revenues
$
1,326
$
832
$
1,092
$
777
Net earnings
(loss)
$
(16,441)
$
(19,880)
$
34,627
$
57,916
Basic and diluted
earnings (loss) per share
$
(0.02)
$
(0.02)
$
0.04
$
0.07
Discontinued Operations:
Net earnings
(loss)
$
471
$
-
$
(150)
$
321
Basic and diluted
earnings (loss) per share
$
0.00
$
-
$
(0.00)
$
0.00
2023
2023
2022
2022
(in
thousands, except for per share amounts)
Q2
Q1
Q4
Q3
Continuing Operations:
Total
revenues
$
968
$
(982)
$
1,015
$
996
Net
loss
$
(345)
$
(2,834)
$
(6,247)
$
(6,854)
Basic and diluted
loss per share
$
(0.00)
$
(0.00)
$
(0.01)
$
(0.01)
Discontinued Operations:
Net
earnings
$
406
$
434
$
506
$
471
Basic and diluted
earnings per share
$
0.00
$
0.00
$
0.00
$
0.00
Significant items causing variations in quarterly
results
●
The Company’s revenues
are based on a draw-down of deferred toll milling revenue, the rate
of which fluctuates due to the timing of uranium processing at the
McClean Lake mill, as well as changes to the estimated mineral
resources of the Cigar Lake mine. The rate of draw-down for the
toll milling deferred revenue was updated for changes to expected
future toll milling production rates at McClean Lake in the first
quarter of 2023. This update resulted in negative revenue, which is
uncommon. See RESULTS OF OPERATIONS below for further
details.
●
Exploration expenses are
generally largest in the first and third quarters due to the timing
of the winter and summer exploration seasons in northern
Saskatchewan.
●
Evaluation expenses have
generally increased over the past eight quarters as the Company
advances towards a Final Investment Decision (‘FID’)
for Phoenix, however, the highest evaluation expenses were incurred
in the third quarter of 2022 as the Company completed the
substantive stages of the Phoenix Feasibility Field Test
(‘FFT’).
●
Other income and expense
fluctuates due to changes in the fair value of the Company’s
portfolio investments, convertible debentures, and uranium
investments, all of which are recorded at fair value through profit
or loss and are subject to fluctuations in the underlying share and
commodity prices. The Company’s uranium investments are also
subject to fluctuations in the US dollar to Canadian dollar
exchange rate. The impact of fair value changes on the
Company’s net earnings / loss was particularly significant in
the second, third and fourth quarters of 2023. See OTHER INCOME
below for more details.
●
The Company’s results
are also impacted, from time to time, by other non-recurring events
arising from its ongoing activities, as discussed below, where
applicable.
RESULTS OF CONTINUING
OPERATIONS
REVENUES
McClean Lake Uranium Mill
McClean Lake is
located on the eastern edge of the Athabasca Basin in northern
Saskatchewan, approximately 750 kilometres north of Saskatoon.
Denison holds a 22.5% ownership interest in the MLJV and the
McClean Lake uranium mill, one of the world’s largest uranium
processing facilities, which is contracted to process ore from the
Cigar Lake mine under a toll milling agreement. The MLJV is a joint
venture between Orano Canada, with a 77.5% interest, and Denison,
with a 22.5% interest.
4
MANAGEMENT’S
DISCUSSION & ANALYSIS
In February 2017,
Denison closed an arrangement with Ecora Resources PLC
(‘Ecora’, then known as Anglo Pacific Group PLC) and
one of its wholly owned subsidiaries (the ‘Ecora
Arrangement’) under which Denison received an upfront payment
of $43,500,000 in exchange for its right to receive future toll
milling cash receipts from the MLJV under the then current toll
milling agreement with the Cigar Lake Joint Venture
(‘CLJV’) from July 1, 2016 onwards. The Ecora
Arrangement consists of certain contractual obligations of Denison
to forward to Ecora the cash proceeds of future toll milling
revenue earned by the Company related to the processing of the
specified Cigar Lake ore through the McClean Lake mill and, as
such, the upfront payment was accounted for as deferred
revenue.
During the three
and six months ended June 30, 2024, the McClean Lake mill processed
5.3 million and 9.5 million pounds U3O8, respectively,
for the CLJV (June 30, 2023 – 3.8 million and 7.6 million
pounds U3O8) and Denison
recorded toll milling revenue of $1,326,000 and $2,158,000,
respectively (June 30, 2023 – $968,000 and negative toll
milling revenue of $14,000). The increase in toll milling revenue
in the current quarter, as compared to the prior year, is due to
the mill processing more pounds of U3O8 for the CLJV. The
increase in toll milling revenue in the six months ended June 30,
2024, as compared to the prior year, is due to both the increase in
production in the current year-to-date period as well as a
$1,946,000 negative non-cash cumulative accounting adjustment that
was recorded in the prior year. In the first quarter of 2022, the
operators of the Cigar Lake mine announced a reduction in
forecasted mine production from 18 million pounds U3O3 per year to 15
million pounds U3O8 per year in 2022
and 2023, and then to 13.5 million pounds U3O3 per year
thereafter. In the first quarter of 2023, the operators of the
Cigar Lake mine announced that forecasted future mine production
was increased back to 18 million pounds U3O3 per year. Under
IFRS 15, Revenue from Contracts
with Customers, the change in the estimated timing of the
toll milling of the CLJV ores in 2022 resulted in an increase to
the implied financing component of the toll milling transaction,
thus increasing the total deferred revenue to be recognized over
the life of the toll milling contract as well as the deferred
revenue draw-down rate. The updated draw-down rate was applied
retrospectively to all pounds produced for the CLJV since the
inception of the Ecora Arrangement in July 2016, resulting in an
increase in revenue in the first quarter of 2022, which was
effectively reversed in the first quarter of 2023, resulting in the
reduction in revenue.
During the three
and six months ended June 30, 2024, the Company also recorded
accounting accretion expense of $749,000 and $1,561,000,
respectively, on the toll milling deferred revenue balance (June
30, 2023 – $780,000 and $2,001,000). While the annual
accretion expense will decrease over the life of the contract as
the deferred revenue liability decreases over time, the decrease in
accretion expense in the six months ended June 30, 2024, as
compared to the prior year, was predominantly due to a $483,000
true up recognized in the prior year to increase the life-to-date
accretion expense due to the change in the timing in the estimated
CLJV toll milling activities discussed above. During the six months
ended June 30, 2024, a true-up of only $63,000 was recorded as a
result of the update to the Cigar Lake mineral resource
estimate.
The impact of the
current and prior period true-ups to revenue and accretion are
non-cash.
OPERATING EXPENSES
Mining
Operating
expenses of the mining segment include depreciation and development
costs, costs relating to Denison’s legacy mine sites in
Elliot Lake, as well as cost of sales related to the sale of
uranium, when applicable. Operating expenses in the three and six
months ended June 30, 2024 were $1,367,000 and $2,587,000,
respectively (June 30, 2023 – $866,000 and
$1,770,000).
Included in
operating expenses is depreciation expense relating to the McClean
Lake mill of $826,000 and $1,493,000, respectively (June 30, 2023
– $614,000 and $1,268,000), as a result of processing
approximately 5.3 million and 9.5
million pounds U3O8 for the CLJV in
the applicable periods (June 30, 2023 – 3.8 million and 7.6
million pounds U3O8). Also included
in operating expenses are costs related to the Company’s
Elliot Lake legacy mine sites of $368,000 and $690,000,
respectively (June 30, 2023 – $141,000 and $291,000), and
development costs of the MLJV and other operating costs of $173,000
and $404,000, respectively (June 30, 2023 – $110,000 and
$212,000).
During the first
quarter of 2024, the MLJV began planning work for the 2024 SABRE
program, the goal of which is to prepare the McClean North site for
the commencement of SABRE mining activities in 2025. The site work
commenced during the second quarter of 2024.
MINERAL PROPERTY EVALUATION
During the three
and six months ended June 30, 2024, Denison’s share of
evaluation expenditures was $6,708,000 and $12,409,000,
respectively (June 30, 2023 – $4,662,000 and $7,384,000). The
increase in evaluation expenditures, compared to the prior period,
was primarily due to the continuation and acceleration of project
engineering activities associated with the Phoenix detailed design
engineering phase, as well as an increase staffing levels to
support the advancement of the Company’s various evaluation
projects.
5
MANAGEMENT’S
DISCUSSION & ANALYSIS
The following
table summarizes the evaluation activities completed during the six
months ended June 30, 2024.
PROJECT EVALUATION ACTIVITIES
Property
Denison’s ownership
Evaluation activities
Wheeler
River
95%(1)
Engineering,
detailed design, metallurgical testing, FFT decommissioning,
project planning for 2024 field program activities, environmental
and sustainability activities, and EIS regulatory
reviews.
Waterbury
Lake
69.44%(2)
Project planning
for 2024 field activities and progression of the PFS for the THT
deposit.
Midwest
25.17%
Project planning
and completion of the 2024 inaugural ISR field test, and
progression of the Preliminary Economic Assessment
(‘PEA’) report.
Kindersley
Lithium Project (‘KLP’)
Earn-in(3)
Project planning
for 2024 activities.
Notes
(1)
The Company’s effective
ownership interest as at June 30, 2024, including the indirect 5%
ownership interest held through JCU.
(2)
Represents Denison’s
ownership position as at June 30, 2024.
(3)
Pursuant to an earn-in
agreement executed in January 2024, Denison can earn up to a 75%
interest in the KLP through a series of options exercisable with
direct payments and work expenditures. As at June 30, 2024, Denison
has not yet vested an ownership interest in the
project.
Wheeler River Uranium
Project
On June 26, 2023,
Denison announced the results of (i) the Phoenix FS completed for
ISR mining of the high-grade Phoenix deposit and (ii) an updated
Gryphon PFS for conventional underground mining of the
basement-hosted Gryphon deposit.
The Phoenix FS
was completed by Wood, WSP USA Environment and Infrastructure Inc.,
SRK Consulting (Canada) Inc., and Newmans Geotechnique Inc. The
study confirms robust economics and the technical viability of an
ISR uranium mining operation with low initial capital costs and a
high rate of return.
The Phoenix FS
reflects several design changes and the results of a rigorous
technical de-risking program completed by Denison over the 4.5
years following the publication of the 2018 PFS, which was
highlighted by the then-novel selection of the ISR mining method
for Phoenix.
With the benefit
of extensive lab and field testing of all key elements of the
proposed ISR mining operation, and 2023 cost estimates reflecting
recent inflationary pressures, the Phoenix FS is expected to
provide an excellent basis to advance engineering designs in
support of an FID.
6
MANAGEMENT’S
DISCUSSION & ANALYSIS
See the following
tables for the highlights of the Phoenix FS.
Summary of Economic Results (100% Basis) – Base
Case
Uranium selling
price
UxC Spot Price(1)
(~US$66 to
US$70/lb U3O8)
Exchange Rate
(US$:CAD$)
1.35
Discount
Rate
8%
Operating profit
margin(2)
90.9%
Pre-tax
NPV8%(3) (Change from 2018 PFS)(4)
$2.34 billion
(+150%)
Pre-tax
IRR(3)
105.9%
Pre-tax payback
period(5)
~10
months
Post-tax
NPV8%(3)
$1.43
billion
Post-tax
IRR(3)
82.3%
Post-tax payback
period(5)
~11
months
Adjusted Post-tax
NPV8%(3)(6)
$1.56
billion
Adjusted Post-tax
IRR(3)(6)
90.0%
Adjusted Post-tax
payback period(3)(6)
~10
months
Notes
(1)
Spot price forecast is based
on “Composite Midpoint” scenario from UxC’s UMO
(defined below) and is stated in constant (not-inflated) dollars.
See Denison news releases dated June 26, 2023 and August 9, 2023
and the Wheeler Technical Report (defined below) for
details.
(2)
Operating profit margin is
calculated as aggregate uranium revenue less aggregate operating
costs, divided by aggregate uranium revenue. Operating costs
exclude all royalties, surcharges and income taxes.
(3)
NPV and IRR are calculated to
the start of construction activities for the Phoenix operation and
excludes $67.4 million in pre-FID expenditures.
(4)
Change from 2018 PFS is
computed by reference to the same scenario from the 2018 PFS,
adjusted to incorporate certain pre-FID costs for consistent
comparability.
(5)
Payback period is stated as
number of months to payback from the start of uranium
production.
(6)
The Adjusted Post-tax NPV,
IRR and payback period are based on the “adjusted
post-tax” scenario, which includes the benefit of certain
entity level tax attributes which are expected to be available and
used to reduce taxable income from the Phoenix operation. See
Denison news release dated June 26, 2023 and the Wheeler Technical
Report (defined below) for details.
Summary of Key Phoenix Operational Parameters (100%
basis)
Mine
life
10
years
Proven &
Probable reserves(1)
56.7 million lbs
U3O8 (219,000 tonnes
at 11.7% U3O8)
First 5 years of
reserves(2)
41.9 million lbs
U3O8 (Average 8.4
million lbs U3O8 /
year)
Remaining years
of reserves
14.8 million lbs
U3O8 (Average 3.0
million lbs U3O8 /
year)
Initial capital
costs(3)
$419.4
million
Average cash
operating costs
$8.51 (US$6.28)
per lb U3O8
All-in
cost(4)
$21.73 (US$16.04)
per lb U3O8
Notes
(1)
See Denison press release
dated June 26, 2023 for additional details regarding Proven &
Probable reserves.
(2)
The first five years is
determined by reference to the 60-month period that commences at
the start of operations.
(3)
Initial capital costs exclude
$67.4 million in estimated pre-FID expenditures expected to be
incurred before the project’s FID has been made.
(4)
All-in cost is estimated on a
pre-tax basis and includes all project operating costs, capital
costs post-FID, and decommissioning costs divided by the estimated
number of pounds U3O8 to be
produced.
The Gryphon
Update was prepared by Engcomp Engineering and Computing
Professionals Inc., SLR International Corporation, Stantec
Consulting Ltd., and Hatch Ltd., and is largely based on the 2018
PFS, with efforts targeted at the review and update of capital and
operating costs, as well as various minor scheduling and design
optimizations. The study remains at the PFS level of
confidence.
Overall, the
Gryphon Update demonstrates that the underground development of
Gryphon is a positive potential future use of cash flows generated
from Phoenix, as it can leverage existing infrastructure to provide
an additional source of low-cost production.
7
MANAGEMENT’S
DISCUSSION & ANALYSIS
See the following
tables for the highlights of the Gryphon Update.
Summary of Economic Results (100% Basis) – Base
Case
Uranium selling
price
US$75/lb U3O8(1)
(Fixed selling
price)
Exchange Rate
(US$:CAD$)
1.35
Discount
Rate
8%
Operating profit
margin(3)
83.0%
Pre-tax
NPV8%(3) (Change from 2018 PFS)(4)
$1.43 billion
(+148%)
Pre-tax
IRR(3)
41.4%
Pre-tax payback
period(5)
~ 20
months
Post-tax
NPV8%(3)(6)
$864.2
million
Post-tax
IRR(3)(6)
37.6%
Post-tax payback
period(5)(6)
~ 22
months
Notes
(1)
Fixed selling price is based
on the forecasted annual “Composite Midpoint” long-term
uranium price from UxC’s Q2’2023 UMO (defined below)
and is stated in constant (not-inflated) dollars. See Denison news
releases dated June 26, 2023 and August 9, 2023, and the Wheeler
Technical Report (defined below) for details.
(2)
Operating profit margin is
calculated as aggregate uranium revenue less aggregate operating
costs, divided by aggregate uranium revenue. Operating costs
exclude all royalties, surcharges and income taxes.
(3)
NPV and IRR are calculated to
the start of construction activities for the Gryphon operation, and
excludes $56.5 million in pre-FID expenditures.
(4)
Change from 2018 PFS is
computed by reference to the same scenario from the 2018 PFS,
adjusted to incorporate certain pre-FID costs for consistent
comparability.
(5)
Payback period is stated as
number of months to payback from the start of uranium
production.
(6)
There is no
“adjusted” post-tax case for Gryphon, given that the
entity level tax attributes of the Wheeler River Joint Venture
owners are assumed to have been fully depleted by the Phoenix
operation. See Denison news release dated June 26, 2023 and the
Wheeler Technical Report (defined below) for details.
Summary of Key Gryphon Operational Parameters (100%
basis)
Mine
life
6.5
years
Probable
reserves(1)
49.7 million lbs
U3O8 (1,257,000 tonnes
at 1.8% U3O8)
Average annual
production
7.6 million lbs
U3O8
Initial capital
costs(2)
$737.4
million
Average cash
operating costs
$17.27 (US$12.75)
per lb U3O8
All-in
cost(3)
$34.50 (US$25.47)
per lb U3O8
Notes
(1)
See Denison press release
dated June 26, 2023 for additional details regarding Probable
reserves.
(2)
Initial capital costs exclude
$56.5 million in estimated pre-FID expenditures expected to be
incurred before an FID has been made.
(3)
All-in cost is estimated on a
pre-tax basis and includes all project operating costs, capital
costs post-FID, and decommissioning costs divided by the estimated
number of pounds U3O8 to be
produced.
Further details
regarding Wheeler River, including the estimated mineral reserves
and resources for Phoenix and Gryphon, are provided in the
Technical Report for the Wheeler River project titled ‘NI
43-101 Technical Report on the Wheeler River Project, Athabasca
Basin, Saskatchewan, Canada’ with an effective date of June
23, 2023 (‘Wheeler Technical Report’). A copy of the
Wheeler Technical Report is available on Denison’s website
and under its profile on each of SEDAR+ and EDGAR.
8
MANAGEMENT’S
DISCUSSION & ANALYSIS
The
location of the Wheeler River
property, as well as the Phoenix and Gryphon deposits, and existing
and proposed infrastructure, is shown on the map provided
below.
Evaluation Program
Denison’s
2024 evaluation plans for Wheeler River include: (1) advancing
detailed design engineering and long-lead procurement, (2)
finalizing the EIS through both federal and provincial processes,
(3) completing the required program documents to support licensing
and permitting approval on the construction of the proposed Phoenix
ISR operation, (4) advancing negotiation of additional impact
benefit type agreements with interested parties, (5) planning and
executing field program optimization studies to finalize the
selection of permeability enhancement technologies and drilling
methodology; and (6) completing the final decommissioning
activities of the FFT.
During the three
and six months ended June 30, 2024, Denison’s share of
evaluation costs at Wheeler River was $6,420,000 and $11,278,000,
respectively (June 30, 2023 – $3,768,000 and
$6,308,000).
Engineering Activities
Feasibility Field Test
The
FFT was designed to use the commercial-scale ISR test pattern
installed at Phoenix in 2021 to facilitate a combined evaluation of
the Phoenix deposit's hydraulic flow properties with the leaching
characteristics that were previously assessed through the
metallurgical core-leach testing program.
9
MANAGEMENT’S
DISCUSSION & ANALYSIS
The
successful completion of the leaching and neutralization phases of
the FFT in the fourth quarter of 2022 provided further verification
of the permeability, leachability, reclamation, and containment
parameters needed for the successful application of the ISR mining
method at the Phoenix deposit.
The final stage of the FFT, the recovered solution
management phase, was completed in 2023 and involved treating the
solutions recovered in 2022 during the leaching and neutralization
phases. A total of 560 cubic metres of recovered solution was
successfully processed into (i) treated effluent and (ii) a
mineralized precipitate, which contains an estimated 99.99% of the
14,400 pounds U3O8
previously estimated to be dissolved
in the recovered solution. The treated effluent was tested to
ensure compliance with permit conditions and was then injected into
the mineralized zone. The mineralized precipitate will be stored on
surface at site and will be monitored in further care and
maintenance activities. The results of this phase of the FFT
validate the Company’s processing designs and assumptions for
the future Phoenix processing plant.
Following
the completion of the recovered solution management phase in late
2023, Denison initiated the decommissioning of the FFT facilities
in accordance with its permit conditions. Decommissioning involves
the cleaning, deconstruction, and shipment off-site of equipment
used during the leaching, neutralization, and solution management
phases.
During
the second quarter of 2024, project planning and procurement for
the decommissioning phase was completed, and the execution of key
decommissioning activities and scopes was carried out. Full
completion of decommissioning activities is expected to occur in
the third quarter of 2024.
Metallurgical Testing
During the second quarter of 2024, the
metallurgical test program continued at Saskatchewan Research
Council Laboratories (‘SRC’) in Saskatoon.
The remediation of an existing core
leach test was completed, with the core now undergoing final
analysis and characterization. Further effluent treatment test work
was also completed in the quarter, along with leaching and settling
testing of process precipitate solids. The results of the test work
will inform final process design optimization decisions and further
validate the process design criteria. Updates to the thermodynamic
process model were completed during the same period to reflect key
process design improvements.
Test
work planned for the second half of 2024 includes an evaluation of
technologies to concentrate low-grade uranium-bearing solution, a
test program focused on optimizing thickener underflow solids
concentration, as well as testing the integrity of the
metallurgical process.
Front End Engineering Design (‘FEED’)
The FEED phase
was initiated for Phoenix in early 2023 and was concluded upon the
initiation of the detailed design engineering phase in January
2024. The detailed design engineering phase includes work related
to the process plant, freeze plant, electrical substation &
distribution, integration of wellfield surface facilities,
ponds/pads, site earthworks including access road to site, air
strip and road design, civil piping (including firewater), overall
site layout with modular building design and
integration.
The detailed
design engineering phase of the project is progressing on schedule
with equipment and technical specifications supporting
procurement-related activities.
The planning and
procurement for a field drilling program at Phoenix was completed
in the second quarter of 2024 with execution anticipated in the
third quarter of 2024. Program efforts are intended to optimize the
deployment of certain permeability enhancement techniques, confirm
installation methodology of subsurface freeze drilling equipment
and materials, as well as confirm monitoring well design and
sampling methodology.
Long Lead Procurement
By the end of
2023, two long lead items were procured by Denison: (1) the site
power transformer, and (2) the control system, to ensure overall
control system integration with subsequent vendor
packages.
During the first
half of 2024, procurement activities ramped up with the initiation
of the procurement process for the finished goods packing system,
thickeners and clarifiers, sand filters, centrifuges, product dryer
and scrubber, freeze plant, and medium voltage back-up diesel
generators.
10
MANAGEMENT’S
DISCUSSION & ANALYSIS
Construction Planning
Denison has
advanced early construction planning with key northern business
partners to develop execution schedules and detailed construction
methodologies for key scopes.
Environmental and Sustainability Activities
Environmental Assessment (‘EA’) Activities
In May 2024,
Denison received a draft of the remaining information requests
(‘IRs’) from the Federal Indigenous Review Team
(‘FIRT’) to be resolved by Denison and the Canadian
Nuclear Safety Commission (‘CSNC’) staff prior to the
submission of the Final EIS. Denison is diligently working with the
CNSC staff and FIRT team members to conclude the remaining IRs and
is optimistic that it will be able to finalize the EIS in
accordance with the Company’s previous guidance.
In October 2023,
the Saskatchewan Ministry of Environment (‘MOE’)
confirmed its satisfaction with Denison’s comment responses
and proposed EIS updates. The confirmation allows Denison to
finalize the EIS for the purpose of obtaining a Provincial EA
approval; however, doing this in 2023 would have delinked the
coordinated Provincial – Federal EA process, which was not
expected to provide a meaningful schedule advantage for the
project. Denison continues to plan to submit substantially the same
version of the final EIS to both authorities.
Licensing Activities
The Company has
now submitted substantially all of the program and design documents
required to obtain a site preparation and construction license from
the CNSC. The CNSC has indicated that substantially all of the
documents have met the technical application requirements allowing
the project to advance through to a hearing and subsequent license
issuance by the CNSC Commission. A Commission hearing for the
project will be scheduled once the final EIS is filed with the
CSNC.
Community Engagement Activities
As part of
ongoing engagement activities, Denison carried out community
meetings with Indigenous and non-Indigenous interested parties in
March, May, and June of 2024. Notably, Denison undertook an
in-person community tour in the Athabasca Basin of northern
Saskatchewan in collaboration with the Ya’thi Nene Lands and
Resources Office (‘YNLRO’), who represent the seven
Athabasca Basin communities of Hatchet Lake Denesułiné
First Nation, Black Lake Denesułiné First Nation, Fond
du Lac Denesułiné First Nation and the municipalities of
Stony Rapids, Uranium City, Wollaston Lake, and Camsell
Portage.
In early July
2024, Denison announced that it had signed an MBA with KML and a
CBA with the Village, each in support of the development and
operation of Denison’s 95% owned Wheeler River Project in
northern Saskatchewan.
The MBA
acknowledges that the project is located within KML’s Land
and Occupancy Area and provides KML’s consent and support to
advance the project. Additionally, the MBA outlines a shared
recognition that the successful advancement of the project can
support KML in advancing its aspirations for the successful social
and economic development of KML while mitigating the risk of
impacts on the local environment and KML members.
The CBA
acknowledges that the Village is the closest residential community
to the project by road, which relies on much of the same regional
infrastructure that Denison will use as it advances the project.
Pursuant to the terms of the CBA, the Village has provided its
consent and support for the project. Denison’s commitments in
the CBA are intended to help the Village develop its own capacity
to take advantage of economic and other development opportunities
in connection with the advancement and operation of the project.
The commitments in the CBA aim to create a long-lasting positive
legacy that continues beyond the project’s
lifespan.
Additionally, in
March 2024, Denison signed a Sustainable Communities Investment
Agreement with the municipalities of the Northern Village of
Beauval, the Northern Village of Île-à-la Crosse, the
Northern Hamlet of Jans Bay, and the Northern Hamlet
of Cole Bay. This agreement acknowledges that the
municipalities have a desire to work together to develop a regional
approach that enables social, economic, and cultural
revitalization, in which Denison can play a supporting role. An
important outcome of this agreement is the support and consent of
these four municipalities for the Wheeler River
project.
11
MANAGEMENT’S
DISCUSSION & ANALYSIS
Evaluation Pipeline Properties
Waterbury Lake
In
2020, an independent PEA was completed for Waterbury, which
evaluated the potential use of the ISR mining method at the THT
deposit. Further details regarding Waterbury, including the
estimated mineral resources, are provided in the Technical Report
for Waterbury titled ‘Preliminary Economic Assessment for the
Tthe Heldeth Túé (J Zone) Deposit, Waterbury Lake
Property, Northern Saskatchewan, Canada’ with an effective
date of October 30, 2020, a copy of which is available on
Denison’s website and under its profile on each of SEDAR+ and
EDGAR.
Denison’s
2023 evaluation activities at Waterbury were designed to build upon
the 2020 PEA and were highlighted by an ISR field program
consisting of the installation of the first ISR test wells at THT,
the completion of pump testing, injection testing, permeameter data
collection, hydrogeological logging, metallurgical sampling,
geological logging, as well as an ion tracer test.
The 2023 THT ISR field program successfully
achieved each of its planned objectives: (i) validation of
hydraulic conductivity in 100% of the test well within the ore zone
and achieving hydraulic conductivity values consistent with the
2020 PEA; (ii) the establishment of a 10-hour breakthrough
time with an ion tracer test, demonstrating the ability to maintain
hydraulic control of injected solutions and achieve breakthrough
times consistent with expectations; and, (iii) demonstration of the
effectiveness of permeability enhancement.
Denison’s
2024 evaluation plans for Waterbury include: metallurgical test
work on core retrieved during the 2023 field program, additional
pump and injection tests on the installed ISR test wells to
validate year-over-year hydrogeological test results, and
advancement of key components of environmental baseline data
collection. The results are expected to be used to further advance
the evaluation of the ISR mining method for the property through
the potential preparation of a PFS and a Technical Proposal /
Project Description, which, if completed, would initiate the
regulatory approval / permitting process for the THT
deposit.
During
the first half of 2024, work included planning activities and the
procurement of long-lead time materials for the 2024 field program,
updates to engineering design activities and assessments,
evaluating the THT resource model from the 2020 PEA, and
continuation of the metallurgical test program.
Midwest
The
MWJV is operated by Orano Canada and is host to the high-grade
Midwest Main and Midwest A uranium deposits, which lie along strike
and within six kilometres of the THT and Huskie deposits on
Denison’s 69.44% owned Waterbury Lake project. The Midwest
and Waterbury deposits are all located in close proximity to
existing uranium mining and milling infrastructure including
provincial highways, powerlines, and Denison’s 22.5% owned
McClean Lake mill.
The
Concept Study evaluating the potential application of the ISR
mining method at Midwest was prepared by Denison during 2022 and
was formally issued to the MWJV in early 2023. Based on the
positive results of the Concept Study, the MWJV provided Denison
with approval to complete additional ISR-related evaluation work
for Midwest.
During
2023, work at Midwest included an inaugural ISR field program
designed to assess site-specific technical elements of the Midwest
deposit, as well as a metallurgical test program which used
historic drill core samples to provide initial site-specific,
ISR-focused, metallurgical results.
In
2024, evaluation plans for Midwest are highlighted by an inaugural
ISR field test program, designed to validate various
characteristics of the Midwest Main deposit, and to collect a
database of geotechnical, hydrogeological, and metallurgical data
to further evaluate the ISR mining conditions present at the
deposit.
The
ISR field test program was completed in the second quarter of 2024.
Ten small-diameter test wells were installed within the Midwest
Main deposit – including a four-well test pattern and six
individual wells to test specific areas of the deposit for various
characteristics. The test pattern included one injection well, one
extraction well, a recharge well, and a monitoring well outfitted
with a multi-channel vibrating wire piezometer. The six additional
wells were drilled to their target depths and, as applicable,
outfitted with well screens and/or pressure monitoring devices to
facilitate hydrogeological testing. All wells were decommissioned
at the conclusion of the program consistent with regulatory
commitments.
Core
collected from the test wells within the mineralized zone is also
expected to be used to verify and update the current mineral
resource estimate for the deposit and support future wellfield
design and mineral processing assessments.
12
MANAGEMENT’S
DISCUSSION & ANALYSIS
Highlights
from the program include the following:
●
Confirmed Hydraulic
Conductivity: Pump and
injection tests validated hydraulic connectivity in the test wells
within the mineralized zone and achieved hydraulic conductivity
values (a measure of permeability) consistent with the Concept
Study. Sufficient permeability within the mineralized zone is a key
criterion for the successful deployment of the ISR mining
method.
●
Demonstrated the Effectiveness
of Permeability Enhancement: One method of permeability enhancement was
successfully deployed within two wells, demonstrating the
suitability of the method to the Midwest Main deposit. The
efficiency of permeability enhancement was verified by comparison
of pre- and post-permeability enhancement hydraulic
testing.
●
Metallurgical Samples Defined
and Collected for Leaching Characteristics: Core samples representative of the Midwest deposit
were collected during the program for use in future metallurgical
tests to determine the leaching
characteristics.
The
field program results, along with further technical studies, are
expected to be used to advance the de-risking of the ISR mining
requirements to further the evaluation of the ISR mining method for
the property, the results of which are anticipated to be summarized
through the preparation of a PEA.
Kindersley Lithium Project
In
January 2024, Denison entered into an agreement with Grounded
Lithium with respect to the KLP in Saskatchewan. The agreement
includes a series of earn-in options, with the exercise of each
earn-in option completed by way of a cash payment to Grounded
Lithium as well as required work expenditures to advance the
KLP.
The
Company has developed a plan to advance evaluation work at KLP in
2024, which will include a field program, desktop and lab studies,
along with further technical evaluations. The program is expected
to be initiated in the third quarter of 2024 and the results may be
used in the completion of a future PFS.
MINERAL PROPERTY EXPLORATION
During the three
and six months ended June 30, 2024, Denison’s share of
exploration expenditures was $1,755,000 and $7,168,000,
respectively (June 30, 2023 – $1,834,000 and $5,781,000). The
increase in exploration expenditures compared to the prior year was
due to an increase in winter exploration activities.
Exploration
spending in the Athabasca Basin is generally seasonal in nature,
with spending typically higher during the winter exploration season
(January to mid-April) and summer exploration season (June to
mid-October).
The following
table summarizes the 2024 exploration activities, some of which
were completed in early July 2024. For exploration expenditures
reported in this MD&A, all amounts are reported for the three
and six months ended June 30, 2024.
EXPLORATION ACTIVITIES
Property
Denison’s ownership
Drilling in metres
(m)(1)
Other activities
Crawford
Lake
100.00%
-
Geophysical
Survey
Johnston
Lake
100.00%
2,359 (3
holes)
Geophysical
Survey
Moon Lake
South
75.00%
5,634 (8
holes)
Geophysical
Survey
Wheeler
River
95.00%(3)
6,666 (12
holes)
-
Waterfound
24.68%(2)
8,652 (14
holes)
Geophysical
Survey
Total
23,311 (37 holes)
(1)
The Company reports total
exploration metres drilled and the number of holes that were
successfully completed to their target depth.
(2)
Denison’s effective
ownership interest as at June 30, 2024, including an indirect
12.90% ownership interest held through Denison’s 50%
ownership of JCU.
(3)
Denison’s effective
ownership interest as at June 30, 2024, including an indirect 5.0%
ownership interest held through the JCU.
13
MANAGEMENT’S
DISCUSSION & ANALYSIS
The
Company’s land position in the Athabasca Basin, as of June
30, 2024, is illustrated in the figure below. The Company’s
Athabasca land package remains unchanged during the second quarter
of 2024, consisting of 383,861 hectares (227 claims). The land
position reported by the Company excludes the land positions held
by JCU.
Wheeler River Exploration
Denison’s
share of exploration costs at Wheeler River during the three and
six months ended June 30, 2024 was $394,000 and $1,946,000 (June
30, 2023 – $67,000 and $1,295,000).
The 2024 Wheeler
River winter exploration drilling program was initiated in
mid-January and was completed in early April. A total of 6,666
metres were drilled in 12 holes. The focus of the 2024 winter drill
program was to identify an ISR-amenable unconformity-associated
uranium deposit proximal to the proposed Phoenix infrastructure.
The drill program was focused on two key areas: (1) the N Zone,
located approximately four kilometres northeast of Phoenix, and (2)
the RE/RW area, an underexplored, northeast-striking conductive
trend that runs between the Phoenix and Gryphon deposits.
Additionally, one drill hole was completed at M Zone to test the
up-dip extension of a graphitic semi-brittle fault intersected
during the 2020 drill program. Results are reported using
preliminary radiometric equivalent grades (‘eU3O8’), which
are assessed by downhole probing during active drill programs (see
‘ASSAY PROCEDURES AND DATA VERIFICATION’ for additional
details).
During the first
quarter of 2024, 1,602 metres were drilled at N Zone in three
diamond drill holes. The drill holes were designed to test
conductive anomalies identified from the 2023 N Zone Stepwise
Moving Loop Electromagnetic (‘SWML EM’) survey.
Elevated radioactivity measuring three to four times background was
observed in each hole; however, no mineralization above a minimum
cutoff of 0.05% eU3O8 was observed.
Assay and geochemical results are pending.
Eight holes
totalling 4,554 metres were drilled in the RE/RW area between
Phoenix and Gryphon. Drilling in this area targeted conductive
anomalies coincident with resistivity low anomalies identified from
previous geophysical surveys, and also tested areas where previous
drilling was determined to have identified anomalous structure,
alteration, or geochemical enrichment that remained open when
projected to the unconformity contact.
14
MANAGEMENT’S
DISCUSSION & ANALYSIS
One hole was
drilled at M Zone to test the unconformity subcrop of a graphitic
semi-brittle fault intersected at depth in 2020 drill hole WR-777.
The follow-up hole did not intersect significant structure,
alteration, or elevated radioactivity associated with the
unconformity contact.
No additional
exploration field work took place in the second quarter of
2024.
Exploration Pipeline Properties
During the first
half of 2024, exploration field programs were carried out at four
of Denison’s pipeline properties (three operated by Denison).
Denison’s share of exploration costs for these properties was
$1,361,000 and $5,222,000, respectively, for the three and six
months ended June 30, 2024 (June 30, 2023 – $1,591,000 and
$4,360,000).
The Company
continues to review, prioritize, and rationalize its Athabasca
Basin exploration portfolio to continue exploring its highest
priority-projects, with the potential to deliver significant and
meaningful new discoveries.
Crawford Lake
The Crawford Lake
property is located adjacent to the southwestern portion of the
Wheeler River project, and borders the Moon Lake South project.
Winter access to the property can be gained from the north via the
Fox Lake road and from the south via the Cree Lake road. The
property is underlain by Athabasca Group sandstones, which in turn
overlie metamorphic rocks of the Wollaston and Mudjatik Domains.
The depth to the unconformity is between 415 and 515
metres.
During the first
quarter of 2024, a SWML EM survey was completed on the property to
better define basement conductivity associated with the CR3
conductive trend near the adjacent Moon Lake South property and
generate targets for future drill testing on the
project.
Johnston Lake
During the first
quarter of 2024, a Small Moving Loop Electromagnetic (‘SML
EM’) survey was completed on the Company’s 100%-owned
Johnston Lake property to better define basement conductivity
associated with the MJ1 conductive trend and generate targets for
future drill testing on the project. The final processed data set
was received early in the second quarter of 2024, and the
conductivity anomalies identified from the survey are expected to
be tested as part of the 2024 Johnston Lake exploration drilling
program, which began in June.
A total of 2,359
metres were drilled in three completed holes along the MJ1 trend
during the second quarter of 2024. Although significant structural
disruption and alteration indicative of a potentially mineralizing
system were identified in each hole, no significant elevated
radioactivity was observed.
The Johnston Lake
exploration drilling program is anticipated to be completed by the
end of August 2024.
Moon Lake South
The Moon Lake
South property is located adjacent, to the west, of the Wheeler
River project and north of Denison’s 100% owned Crawford Lake
project, approximately 30 kilometres northwest of Cameco’s
Key Lake Operation. The Moon Lake South project is a joint venture
between Denison, which holds a 75% interest in the property, and
CanAlaska Uranium Ltd., which holds the remaining 25% interest.
Denison is the project operator.
The 2024 winter
exploration program consisted of eight completed diamond drill
holes totalling 5,634 metres, designed to evaluate the potential to
expand the footprint of high-grade uranium mineralization
discovered in 2023 drill hole MS-23-10A, and to test conductivity
anomalies identified from SWML EM surveys completed in the area to
identify additional mineralization along strike of known
mineralized occurrences identified in 2021.
Low-grade uranium
mineralization was encountered in three of the eight holes
completed during the winter program. MS-23-23 tested the
unconformity 32 metres due west of the mineralization discovered in
2023 drill hole MS-23-10A (2.46% U3O8 over 8.0 metres),
intersecting uranium mineralization at the sub-Athabasca
unconformity grading 0.12% eU3O8 over 0.6 metres.
Drill hole MS-24-25, drilled to target the unconformity 115 metres
due west of MS-23-10A, and intersected uranium mineralization
grading 0.12% eU3O8 over 0.4 metres,
hosted at the contact between a fault zone and a graphitic
pelite.
The third
mineralized intersection was returned from hole MS-24-27, which was
drilled to target the unconformity approximately 915 metres
northeast of MS-23-10A, and 250 metres along strike to the
southwest of low-grade mineralization intersected in 2021 drill
hole MS-21-06. MS-24-27 intersected mineralization grading 0.08%
eU3O8 over 0.2 metres,
associated with the contact between a graphitic pelite and an
underlying granitic unit, lying approximately 45 metres below the
unconformity.
15
MANAGEMENT’S
DISCUSSION & ANALYSIS
Additionally, the
SWML EM survey that was initiated in the fourth quarter of 2023 was
completed in February 2024. The preliminary data is of good quality
and appears to have successfully resolved the position of the CR-3
conductor in the survey area. The 2023/2024 SWML EM survey results
will be integrated with other geophysical, geological, and
geochemical data in the area to guide future exploration activities
on the property.
No additional
field work was completed during the second quarter of
2024.
Waterfound River
Waterfound is
operated by Orano Canada. Denison has an effective 24.68% ownership
interest in the project, including its 11.78% direct interest and a
12.90% indirect interest from its 50% ownership of
JCU.
The 2024
exploration diamond drill program was designed to focus on the D-1
North conductor, host to the Crocodile and Alligator Zones, as the
conductor takes a significant bend from an E-W orientation to
NNE-SSW. Ten drill holes were completed during the 2024 winter
drilling program for a total of 6,136 metres. Elevated
radioactivity was encountered in each hole completed during the
winter drilling program.
The summer
exploration drilling program began in early June and was completed
in early July, during which an additional 2,516 metres were drilled
in four completed holes, bringing the total for the year to 8,652
metres drilled in 14 completed holes. Low-grade, basement-hosted
mineralization was encountered in three of the four holes completed
during the 2024 summer drilling program. Assay results from drill
core samples collected during the summer exploration program are
pending.
A small
geophysical program was also initiated at Waterfound to collect
Direct Current Resistivity data over the eastern portion of the D-1
North trend to identify resistivity low anomalies that may be
indicative of enhanced hydrothermal alteration related to a
potentially mineralizing system. The survey was suspended in early
April due to deteriorating conditions related to the spring thaw
and resumed in July.
Hatchet Lake
Hatchet Lake is a
joint venture between Denison Mines Corp. (70.15%) and Eros
Resources Corp (29.85%), with Denison acting as the project
operator.
The Hatchet Lake
Project consists of nine mineral dispositions totalling 10,212
hectares. The property is split into two non-contiguous claim
blocks: the Richardson grid, which consists of four claims
totalling 5,328 hectares; and the Hatchet South claim block, which
consists of five Claims totalling 4,884 hectares. The Richardson
block hosts multiple mineralized drill holes, with grades of up to
1.52% U3O8, and covers the
strike extension of Cameco’s Richardson grid, where
historical drilling has identified multiple high-grade
unconformity-associated uranium intercepts. The Hatchet South claim
block borders the Wolly JV, and contains the Tuning Fork Grids,
where previous drilling has identified low-grade uranium
mineralization grading up to 0.1% U3O8, along with
significant copper, arsenic, and boron enrichment.
A small diamond
drilling program is planned at Hatchet Lake to test the extent of
previously identified geochemical anomalies that are associated
with significant structure and alteration. All permits have been
received, and drilling is scheduled to begin in early
August.
Murphy Lake
The Murphy Lake
project, located in the northeastern portion of the Athabasca
Basin, is wholly-owned and operated by Denison. The project
consists of eight mineral dispositions totalling 8,686 hectares.
The property is split into two non-contiguous claim blocks: Murphy
North, which consists of two claims totalling 1,532 hectares; and
the Murphy South claim block, which consists of six claims
totalling 7,154 hectares.
The Murphy North
block borders IsoEnergy’s LaRocque East project, which hosts
the Hurricane deposit (Indicated mineral resource of 48.61 million
pounds U3O8 at 34.5%
U3O8). Previous
drilling by Cogema (predecessor to Orano) on claim S-11636 has
identified elevated uranium values in the basal sandstone, proximal
to the unconformity sub-crop of a graphitic shear.
A small diamond
drilling program is planned at Murphy north to test conductivity
anomalies identified from the 2020 SML EM survey. All permits have
been received, and drilling is scheduled to begin in
mid-August.
16
MANAGEMENT’S
DISCUSSION & ANALYSIS
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and
administrative expenses were $3,741,000 and $7,325,000,
respectively, during the three and six months ended June 30, 2024
(June 30, 2023 – $3,209,000 and $6,463,000). These costs are
mainly comprised of head office salaries and benefits, share based
compensation, audit and regulatory costs, legal fees, investor
relations expenses, and all other costs related to operating a
public company with listings in Canada and the United States. The
increase in general and administrative expenses during the three
and six months ended June 30, 2024, was predominantly driven by an
increase in share based compensation and head office salaries and
benefits due to increases in headcount.
OTHER INCOME AND EXPENSE
During the three
and six months ended June 30, 2024, the Company recognized a net
other expense of $4,596,000 and $9,678,000, respectively (June 30,
2023 – net other income of $11,976,000 and
$22,198,000).
The main drivers
of the other income/expense are as follows:
Fair value losses on uranium investments
During 2021, the
Company acquired 2,500,000 pounds of U3O8 at a weighted
average cost of $36.67 (US$29.66) per pound U3O8 (including
purchase commissions of $0.05 (US$0.04) per pound U3O8) to be held as a
long-term investment to strengthen the Company’s balance
sheet and potentially enhance its ability to access project
financing in support of the future advancement and/or construction
of Wheeler River. Given that this material is held for long-term
capital appreciation, the Company’s holdings are measured at
fair value, with changes in fair value between reporting dates
recorded through profit and loss. In 2023, the Company sold 200,000
pounds of U3O8 at a weighted
average price of $99.50 (US$73.38) per pound U3O8. During the
second quarter of 2024, the Company sold an additional 100,000
pounds of U3O8 at a weighted
average price of $135.98 (US$100.00) per pound U3O8. As at June 30,
2024, the Company held 2,200,000 pounds of U3O8.
During the three
months ended June 30, 2024, the spot price of U3O8 decreased from
$117.89 (US$87.00) per pound U3O8 as at March 31,
2024, to $117.03 (US$85.50) per pound U3O8, at June 30,
2024, resulting in a fair value of the Company’s uranium
investments of $257,460,000 and mark-to-market loss for the three
months ended June 30, 2024 of $80,000 on the Company’s
uranium holdings (June 30, 2023 – mark to market gain of
$13,995,000), including a realized gain on sale of $9,950,000
(US$7,050,000) from the second quarter uranium sales. During the
six months ended June 30, 2024, the spot price of U3O8 decreased from
$120.35 (US$91.00) per pound U3O8 as at December
31, 2023, to $117.03 (US$85.50) per pound U3O8, at June 30,
2024, resulting in mark-to-market loss for the six months ended
June 30, 2024 of $5,757,000 on the Company’s uranium holdings
(June 30, 2023 – gains of $22,821,000) including a realized
gain on sale of $9,950,000 (US$7,050,000) from the second quarter
uranium sales.
Fair value losses on portfolio investments
During the three
and six months ended June 30, 2024, the Company recognized losses
of $2,628,000 and $3,424,000, respectively, on portfolio
investments carried at fair value (June 30, 2023 – losses of
$3,051,000 and $1,885,000). Gains and losses on investments carried
at fair value are determined by reference to the closing share
price of the related investee at the end of the period, or, as
applicable, immediately prior to disposal.
Fair value losses on F3 Debentures
During the year
ended December 31, 2023, the Company completed a $15 million
strategic investment in F3 Uranium Corp. (‘F3’) in the
form of unsecured convertible debentures, which carry a 9% coupon
and will be convertible at Denison’s option into common
shares of F3 at a conversion price of $0.56 per share. F3 has the
right to pay up to one third of the quarterly interest payable by
issuing common shares. F3 will also have certain redemption rights
on or after the third anniversary of the date of issuance of the
Debentures and/or in the event of an F3 change of control. As a
result of the Debentures’ conversion and redemption features,
the contractual cash flow characteristics of these instruments do
not solely consist of the payment of principal and interest and
therefore the debentures are accounted for as a financial asset at
fair value through profit and loss.
During the three
and six months ended June 30, 2024, the Company recognized
mark-to-market losses of $2,074,000 and $1,435,000, respectively
(June 30, 2023 – $nil and $nil) on its investments in the
debentures mainly due to a decrease in the F3 share price between
December 31, 2023 and June 30, 2024, which reduced the value of the
debenture’s embedded conversion option.
17
MANAGEMENT’S
DISCUSSION & ANALYSIS
Gain on receipt of proceeds from Uranium Industry a.s.
In January 2022,
the Company executed a Repayment Agreement (‘RA’)
pursuant to which the parties negotiated the repayment of the debt
owing from Uranium Industry a.s. (‘UI’) to Denison in
connection with the Company’s sale of its mining assets and
operations located in Mongolia to UI in 2015 for upfront cash
consideration as well as the rights to receive additional
contingent consideration. Under the terms of the RA, UI has agreed
to make scheduled payments of the amounts owing from the sale of
the Mongolia operations through a series of quarterly installments
and annual milestone payments, until December 31, 2025. The total
amount due to Denison under the RA, including amounts received to
date, is approximately US$16,000,000, inclusive of additional
interest to be earned over the term of the agreement at a rate of
6.5% per annum. To date, the Company has collected US$8,200,000 of
the amounts due under the RA. The RA includes customary covenants
and conditions in favour of Denison, including certain restrictions
on UI’s ability to take on additional debt, in consideration
for Denison’s deferral of enforcement of the arbitration
award while UI is in compliance with its obligations under the
RA.
During the three
and six months ended June 30, 2024, the Company received US$nil and
US$300,000, respectively, from UI (June 30, 2023 – US$200,000
and US$400,000), of which a portion relates to reimbursement of
legal and other expenses incurred by Denison. During the three and
six months ended June 30, 2024, as a result of the payments
received, the Company recorded gains related to the Mongolia sale
receivable of $nil and $396,000, respectively (June 30, 2023
– $266,000 and $535,000). This receivable is recorded at fair
value at each period end (June 30, 2024 and December 31, 2023
– $nil).
Foreign exchange gains
During the three
and six months ended June 30, 2024, the Company recognized a
foreign exchange gain of $477,000 and $1,111,000, respectively
(June 30, 2023 – losses of $354,000 and $191,000). The
foreign exchange gain is predominantly due to the impact of the
increase in the US dollar to Canadian dollar exchange rate during
the first half of 2024 on US dollar cash and accounts receivable
balances.
EQUITY SHARE OF INCOME FROM JOINT VENTURES
During the three
and six months ended June 30, 2024, the Company recorded its equity
share of loss from JCU of $547,000 and $1,128,000, respectively
(June 30, 2023 – $2,461,000 and $3,355,000). The Company
records its share of income or loss from JCU one month in arrears,
based on the most available financial information, adjusted for any
subsequent material transactions that have occurred.
LIQUIDITY AND CAPITAL
RESOURCES
Cash and cash
equivalents were $121,067,000 at June 30, 2024 (December 31, 2023
– $131,054,000).
The decrease in
cash and cash equivalents of $9,987,000 was due to net cash used in
operations of $19,978,000, partially offset by net cash provided by
investing activities of $7,980,000 and cash provided by financing
activities of $963,000, as well as a foreign exchange effect on
cash and cash equivalents of $1,048,000.
Net cash used in
operating activities of $19,978,000 was primarily due to net loss
for the period, and adjustments for non-cash items, including fair
value adjustments.
Net cash provided
by investing activities of $7,980,000 was primarily due to proceeds
on disposal of investments in uranium, partially offset by the
Company’s incremental investment in JCU, an increase in
property, plant & equipment relating to long lead items for the
Wheeler River project, and a decrease in restricted cash due to the
Company’s funding the Elliot Lake reclamation trust
fund.
Net cash provided
by financing activities of $963,000 was mainly due to the proceeds
related to the issuance of 871,834 shares upon the exercise of
employee stock options.
Use of Proceeds
2021 ATM Program Financing
As disclosed in
the Company’s prospectus supplement to the 2021 Base Shelf
Prospectus dated September 28, 2021 (‘September 2021
Prospectus Supplement’), the net proceeds raised under the
2021 ATM Program were expected to be utilized to potentially fund
Wheeler River evaluation and detailed project engineering, long
lead project construction items, as well as general, corporate and
administrative expenses, subject to the actual amount
raised.
18
MANAGEMENT’S
DISCUSSION & ANALYSIS
During the period
from the closing of the financing in September 2021 to June 30,
2024, the Company’s use of proceeds from this offering was in
line with that disclosed in the September 2021 Prospectus
Supplement. The 2021 ATM Program was terminated on October 11,
2023.
October 2023 Financing
As disclosed in
the Company’s prospectus supplement to the 2021 Base Shelf
Prospectus dated October 11, 2023 (‘October 2023 Prospectus
Supplement’), the net proceeds of the October 2023 equity
financing are expected to be utilized to fund the advancement of
the Phoenix project through the procurement of long lead items
(including associated engineering, testing, and design),
exploration and evaluation expenses, as well as general, corporate
and administrative expenses. During the period from the closing of
the financing in October 2023 to June 30, 2024, the Company’s
use of proceeds from this offering was in line with that disclosed
in the October 2023 Prospectus Supplement.
Revolving Term Credit Facility
On December 21,
2023, the Company entered into an agreement with the Bank of Nova
Scotia (‘BNS’) to extend the maturity date of the
Company’s credit facility to January 31, 2025 (the
‘Credit Facility’). Under the Credit Facility, the
Company has access to letters of credit of up to $23,964,000, which
is fully utilized for non-financial letters of credit in support of
reclamation obligations. All other terms of the Credit Facility
(tangible net worth covenant, pledged cash, investments amount and
security for the facility) remain unchanged by the amendment
– including a requirement to provide $7,972,000 in cash
collateral on deposit with BNS to maintain the current letters of
credit issued under the Credit Facility.
TRANSACTIONS WITH RELATED PARTIES
Korea Electric Power Corporation (‘KEPCO’)
Denison and KHNP
Canada Energy Ltd. (‘KHNP Canada’) (which is an
indirect subsidiary of KEPCO) are parties to a Strategic
Relationship Agreement, which provides for a long-term
collaborative business relationship between the parties and
includes a right of KHNP Canada to nominate one representative to
Denison’s Board of Directors provided that its shareholding
percentage is at least 5%.
KHNP Canada is
also the majority member of the Korea Waterbury Uranium Limited
Partnership (‘KWULP’). KWULP is a consortium of
investors that holds the non-Denison owned interests in Waterbury
Lake Uranium Corporation and Waterbury Lake Uranium Limited
Partnership, entities whose key asset is Waterbury.
COMPENSATION OF KEY MANAGEMENT PERSONNEL
Key management
personnel are those persons having authority and responsibility for
planning, directing and controlling the activities of the Company,
directly or indirectly. Key management personnel include the
Company’s executive officers, vice-presidents, and members of
its Board of Directors.
The following
compensation was awarded to key management personnel:
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
(in
thousands)
2024
2023
2024
2023
Salaries and
short-term employee benefits
$
(913)
$
(546)
$
(2,608)
$
(1,644)
Share-based
compensation
(900)
(659)
(1,653)
(1,473)
$
(1,813)
$
(1,205)
$
(4,261)
$
(3,117)
The increase in
salaries and short-term employee benefits awarded to key management
is predominantly driven by an increase in headcount. The group of
key management employees expanded from five in 2023 to nine in 2024
following internal promotions to fill the following roles: Vice
President Technical Services and Project Evaluation, Vice President
Environment, Sustainability & Regulatory, Vice President
Exploration, and Vice President Human Resources.
19
MANAGEMENT’S
DISCUSSION & ANALYSIS
OFF-BALANCE SHEET ARRANGEMENTS
The Company does
not have any off-balance sheet arrangements.
OUTSTANDING SHARE DATA
Common Shares
At August 8,
2024, there were 892,369,933 common shares issued and outstanding
and a total of 905,547,019 common shares on a fully-diluted
basis.
Stock Options and Share Units
At August 9,
2024, there were 5,859,000 stock options, and 7,318,086 share units
outstanding.
DISCONTINUED
OPERATIONS
Closed Mine Services
At the end of
August 2023, the Company’s long-term third-party closed mines
services contract came to an end. With the termination of this
contract, the Company determined that it would cease providing
third-party care and maintenance services and will no longer earn
revenue from Closed Mine services. The Company is now solely
focused on care and maintenance of its own legacy mine
sites.
OUTLOOK FOR
2024
During the second
quarter of 2024, the Company increased its outlook for evaluation
expenditures by $4.3 million, reflecting costs associated with
Wheeler River agreement negotiation and finalization with
interested parties as well as the addition of field and lab-based
programs at KLP. All other Company plans for the year are
unchanged. Refer to the Company’s annual MD&A for the
year ended December 31, 2023 for a detailed discussion of the
previously disclosed 2024 budget.
(in
thousands)
2024 BUDGET
2024 OUTLOOK
Actual to
June 30, 2024(2)
Mining Segment
Development &
Operations
(4,986)
(4,986)
(2,788)
Exploration
(10,159)
(10,159)
(6,833)
Evaluation
(49,250)
(53,550)
(14,602)
JCU Cash
Contributions
(3,768)
(3,768)
(1,949)
(68,163)
(72,463)
(26,172)
Corporate and Other Segment
Corporate
Administration & Other
405
405
(475)
405
405
(475)
Total(1)
$ (67,758)
$ (72,058)
$ (26,647)
Notes
1.
Only material operations
shown.
2.
The budget is prepared on a
cash basis. As a result, actual amounts represent a non-GAAP
measure. Compared to segment loss as presented in the
Company’s unaudited interim consolidated financial statements
for the six months ended June 30, 2024, actual amounts reported
above includes capital additions of $1,347,000, JCU contributions
of $1,949,000, $407,000 in repayments from UI, and excludes
$3,573,000 net impact of non-cash items and other
adjustments.
20
MANAGEMENT’S
DISCUSSION & ANALYSIS
ADDITIONAL INFORMATION
QUALIFIED PERSON
Chad Sorba,
P.Geo., Denison’s Vice President Technical Services &
Project Evaluation, who is a ‘Qualified Person’ within
the meaning of this term in National Instrument 43-101 —
Standards of Disclosure for Mineral Projects (‘NI
43-101’), has prepared and/or reviewed and confirmed the
scientific and technical disclosure pertaining to the
Company’s evaluation programs.
Andy Yackulic,
P.Geo., Denison’s Vice President Exploration, who is a
‘Qualified Person’ within the meaning of this term in
NI 43-101, has prepared and/or reviewed and confirmed the
scientific and technical disclosure pertaining to the
Company’s exploration programs.
For more
information regarding each of Denison’s material projects
discussed herein, you are encouraged to refer to the applicable
technical reports available on the Company’s website and
under the Company’s profile on SEDAR+ (www.sedarplus.ca)
and EDGAR (www.sec.gov/edgar.shtml):
●
For the Wheeler River
project, the ‘Technical Report for the Wheeler River project
titled ‘NI 43-101 Technical Report on the Wheeler River
Project, Athabasca Basin, Saskatchewan, Canada’ with an
effective date of June 23, 2023;
●
For the Waterbury Lake
project, ‘Preliminary Economic Assessment for the Tthe
Heldeth Túé (J Zone) Deposit, Waterbury Lake Property,
Northern Saskatchewan, Canada’ with an effective date of
October 30, 2020;
●
For the Midwest project,
‘Technical Report with an Updated Mineral Resource Estimate
for the Midwest Property, Northern Saskatchewan, Canada’
dated March 26, 2018; and
●
For the McClean Lake project,
(A) the ‘Technical Report on the Denison Mines Inc. Uranium
Properties, Saskatchewan, Canada’ dated November 21, 2005, as
revised February 16, 2006, (B) the ‘Technical Report on the
Sue D Uranium Deposit Mineral Resource Estimate, Saskatchewan,
Canada’ dated March 31, 2006, and (C) the ‘Technical
Report on the Mineral Resource Estimate for the McClean North
Uranium Deposits, Saskatchewan’ dated January 31,
2007.
ASSAY PROCEDURES AND DATA VERIFICATION
The Company
reports preliminary radiometric equivalent grades, derived from a
calibrated down-hole total gamma probe, during or upon completion
of its exploration programs and subsequently reports definitive
U3O8 assay grades
following sampling and chemical analysis of the mineralized drill
core. Uranium assays are performed on split core samples by the
Saskatchewan Research Council Geoanalytical Laboratories using an
ISO/IEC 17025:2005 accredited method for the determination of
U3O8 weight %. Sample
preparation involves crushing and pulverizing core samples to 90%
passing -106 microns. The resultant pulp is digested using
aqua-regia and the solution analyzed for U3O8 weight % using
ICP-OES. Geochemical results from composite core samples are
reported as parts per million (‘ppm’) obtained from a
partial HNO3:HCl digest with
an ICP-MS finish. Boron values are obtained through NaO2/NaCO3 fusion followed
by an ICP-OES finish. All data are subject to verification
procedures by qualified persons employed by Denison prior to
disclosure. For further details on Denison’s sampling,
analysis, quality assurance program and quality control measures
and data verification procedures, please see Denison's Annual
Information Form dated March 28, 2024, available on the
Company’s website and filed under the Company's profile on
SEDAR+ (www.sedarplus.ca)
and in its Form 40-F available on EDGAR at www.sec.gov/edgar.shtml.
Certain
information contained in this MD&A constitutes
‘forward-looking information’, within the meaning of
the applicable United States and 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’, ‘budget’,
‘scheduled’, ‘estimates’,
‘forecasts’, ‘intends’,
‘anticipates’, or ‘believes’, or the
negatives and/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’.
21
MANAGEMENT’S
DISCUSSION & ANALYSIS
In particular,
this MD&A contains forward-looking information pertaining to
the following: the results of, and estimates and assumptions
within, the Phoenix FS and the Gryphon PFS Update, including the
estimates of Denison's mineral reserves and mineral resources, and
statements regarding anticipated budgets, fees, expenditures and
timelines; Denison’s outlook, plans and objectives for 2024
and beyond; exploration, development and expansion programs, plans
and objectives, including FEED, detailed design engineering, long
lead procurement, field program optimization studies, and other
project planning programs; statements regarding Denison’s EA
and EIS status, plans and objectives and expectations with respect
to Denison’s required licensing and permitting; expectations
regarding Denison’s community engagement activities and
related agreements with interested parties; expectations with
respect to the FFT; Denison’s land position; expectations
regarding Denison’s joint venture ownership interests and the
continuity of its agreements with its partners; expectations
regarding uranium mining on the McClean Lake property, including
anticipated timing and budgets; results of the ISR field test
program at Midwest and the Concept Study, the interpretations
thereof and expectations therefor; expectations regarding the toll
milling of Cigar Lake ores, including projected annual production
volumes; expectations regarding agreements with third parties,
including the MBA, CBA, Sustainable Communities Investment
Agreement, the KLP earn-in agreement with Grounded Lithium, the F3
debentures, and the RA with UI and payments thereunder;
Denison’s plans with respect to its physical uranium
holdings; and the annual operating budget and capital expenditure
programs, estimated exploration and development expenditures and
reclamation costs and Denison's share of same. 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.
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. For example, the
results of the Denison’s studies, including the Phoenix FS,
and field work, may not be maintained after further testing or be
representative of actual mining plans for the Phoenix deposit after
further design and studies are completed. In addition, Denison may
decide or otherwise be required to discontinue testing, evaluation
and development work at Wheeler River or other projects or its
exploration plans if it is unable to maintain or otherwise secure
the necessary resources (such as testing facilities, capital
funding, regulatory approvals, etc.) or operations are otherwise
affected by regulatory or public health restrictions or
requirements.
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 accurate and results may differ
materially from those anticipated in this forward-looking
information. For a discussion in respect of risks and other factors
that could influence forward-looking events, please refer to the
factors discussed under the heading ‘Risk Factors’ in
Denison’s Annual Information Form available on SEDAR+ and
EDGAR. These factors are not, and should not be construed as being,
exhaustive.
Accordingly,
readers should not place undue reliance on forward-looking
statements. The forward-looking information contained in this
MD&A is expressly qualified by this cautionary statement. Any
forward-looking information and the assumptions made with respect
thereto speaks only as of the date of this MD&A. Denison does
not undertake any obligation to publicly update or revise any
forward-looking information after the date of this MD&A 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 and Proven and Probable Mineral Reserves: As a
foreign private issuer reporting under the multijurisdictional
disclosure system adopted by the United States, the Company has
prepared this MD&A in accordance with Canadian securities laws
and standards for reporting of mineral resource estimates, which
differ in some respects from United States standards. In
particular, and without limiting the generality of the foregoing,
the terms “measured mineral resources,”
“indicated mineral resources,” “inferred mineral
resources,” and “mineral resources” used or
referenced in this MD&A are Canadian mineral disclosure terms
as defined in accordance with NI 43-101 under the guidelines set
out in the Canadian Institute of Mining, Metallurgy and Petroleum
Standards for Mineral Resources and Mineral Reserves, Definitions
and Guidelines, May 2014 (the ‘CIM Standards’). The
Securities and Exchange Commission (the “SEC”)
recognizes estimates of “measured mineral resources”,
“indicated mineral resources” and “inferred
mineral resources” and its definitions of “proven
mineral reserves” and “probable mineral reserves”
are “substantially similar” to the corresponding
definitions under the CIM Standards. However, investors are
cautioned that there are differences between the definitions under
the United States Securities Exchange Act of 1934, as amended (the
‘U.S. Exchange Act’) and the CIM Standards definition.
Accordingly, there is no assurance any mineral reserves or mineral
resources that Denison may report as “proven mineral
reserves”, “probable mineral reserves”,
“measured mineral resources”, “indicated mineral
resources” and “inferred mineral resources” under
NI 43-101 would be the same had Denison prepared the mineral
reserve or mineral resource estimates under the standards adopted
under the U.S. Exchange Act. For the above reasons, information
contained in the MD&A may not be comparable to similar
information made public by U.S. companies subject to the reporting
and disclosure requirements under the United States federal
securities laws and the rules and regulations thereunder.
Additionally, investors are cautioned that “inferred mineral
resources” have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic feasibility.
Under Canadian rules, estimates of inferred mineral resources may
not form the basis of feasibility or other economic studies, except
in limited circumstances. It cannot be assumed that all or any part
of an inferred mineral resource will ever be upgraded to a higher
category. The term “resource” does not equate to the
term “reserves”. Investors should not assume that all
or any part of measured or indicated mineral resources will ever be
converted into mineral reserves. Investors are also cautioned not
to assume that all or any part of an inferred mineral resource
exists or is economically mineable.
