Enhanced Investments - Financial Portal

Published: 2023-03-09





			ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
				FOR THE YEAR ENDED DECEMBER 31, 2022

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
		Responsibility for Financial Statements The Company’s management is responsible for the integrity and fairness of presentation of these consolidated financial
		statements. The consolidated financial statements have been prepared by management, in accordance with
		International Financial Reporting Standards as issued by the International Accounting Standards Board, for review by
		the Audit Committee and approval by the Board of Directors.
		The preparation of financial statements requires the selection of appropriate accounting policies in accordance with
		International Financial Reporting Standards and the use of estimates and judgements by management to present fairly
		and consistently the consolidated financial position of the Company. Estimates are necessary when transactions
		affecting the current period cannot be finalized with certainty until future information becomes available. In making
		certain material estimates, the Company’s management has relied on the judgement of independent specialists.
		The Company’s management has developed and maintains a system of internal accounting controls to ensure, on a
		reasonable and cost-effective basis, that the financial information is timely reported and is accurate and reliable in all
		material respects and that the Company’s assets are appropriately accounted for and adequately safeguarded.
		The consolidated financial statements have been audited by KPMG LLP, our independent auditor. Its report outlines
		the scope of its examination and expresses its opinions on the consolidated financial statements and internal control
		over financial reporting.
			/s/ “Gabriel (Mac) McDonald”	/s/ “David D. Cates”
			Gabriel (Mac) McDonald	David D. Cates
			Executive Vice President and Chief Financial Officer	President and Chief Executive Officer
		March 9, 2022
		Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining an adequate system of internal control
		over financial reporting. Management conducted an evaluation of the effectiveness of internal control over financial
		reporting based on the Internal Control – Integrated Framework, 2013 issued by the Commit ee of Sponsoring
		Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s
		internal control over financial reporting was effective as of December 31, 2022.
		The effectiveness of the Company’s internal control over financial reporting as at December 31, 2022 has been audited
		by KPMG LLP, our independent auditor, as stated in its report which appears herein.
		Changes to Internal Control over Financial Reporting During the year ended December 31, 2022, the Company completed the implementation of an enterprise resource
		planning (‘ERP’) software. The process of implementing the ERP software represented a material change in the
		Company’s internal control over financial reporting. Pre-implementation testing and post-implementation reviews were
		conducted by management to ensure that internal controls surrounding the system implementation process, the
		applications and the closing process were properly designed and implemented, to ensure continuity in the Company’s
		system of internal controls. There were no other changes in the Company’s internal control over financial reporting
		during the twelve months ended December 31, 2022 that have materially affected, or are reasonably likely to materially
		affect, the Company’s internal control over financial reporting.
	2


	KPMG LLP
	Bay Adelaide Centre
	333 Bay Street, Suite 4600
	Toronto, ON M5H 2S5
	Canada
	Tel 416-777-8500
	Fax 416-777-8818

	Report of Independent Registered Public Accounting Firm
	To the Shareholders and Board of Directors of Denison Mines Corp.

	Opinion on the Consolidated Financial Statements
	We have audited the accompanying consolidated statements of financial position of Denison Mines Corp. (the
	Company), as of December 31, 2022 and 2021, the related consolidated statements of income (loss) and
	comprehensive income (loss), changes in equity and cash flow for each of the years in the two-year period
	ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our
	opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
	Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for each of the
	years in the two-year period ended December 31, 2022, in conformity with International Financial Reporting
	Standards as issued by the International Accounting Standards Board.
	We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
	(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022,
	based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
	Sponsoring Organizations of the Treadway Commission, and our report dated March 9, 2023 expressed an
	unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
	Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our
	responsibility is to express an opinion on these consolidated financial statements based on our audits. We are
	a public accounting firm registered with the PCAOB and are required to be independent with respect to the
	Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
	Securities and Exchange Commission and the PCAOB.
	© 2023 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a
	private English company limited by guarantee. Al rights reserved.

Denison Mines Corp.
	March 9, 2023


		We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
		plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
		are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
		assess the risks of material misstatement of the consolidated financial statements, whether due to error or
		fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
		basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
		also included evaluating the accounting principles used and significant estimates made by management, as
		well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits
		provide a reasonable basis for our opinion.
		Critical Audit Matter
		The critical audit matter communicated below is a matter arising from the current period audit of the
		consolidated financial statements that was communicated or required to be communicated to the audit
		committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial
		statements and (2) involved our especial y challenging, subjective, or complex judgments. The communication
		of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as
		a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
		critical audit matter or on the accounts or disclosures to which it relates. Indicators of impairment for mineral properties As discussed in note 2I. to the consolidated financial statements, property, plant and equipment assets are
		assessed at the end of each reporting period to determine if there is any indication that the asset may be
		impaired. Mineral property assets are assessed for impairment using the impairment indicators under IFRS 6 -
		Exploration for and evaluation of mineral resources up until the commercial viability and technical feasibility for
		the property is established. As discussed in Note 10 to the consolidated financial statements, the Company’s
		mineral properties balance as of December 31, 2022 was $180,219 thousand. We identified the evaluation of indicators of impairment for mineral properties as a critical audit matter.
		Assessing the Company’s evaluation of indicators of impairment involved the application of a higher degree of
		auditor judgment. Specifical y, judgment was required to evaluate the facts and circumstances related to the
		Company’s mineral properties, including assessing the Company’s future plans for each property and
		exploration results. The fol owing are the primary procedures we performed to address this critical audit matter. We evaluated the
		design and tested the operating effectiveness of certain internal controls related to the Company’s impairment
		indicator assessment process, including controls related to the Company’s impairment indicator review for
		mineral properties. We assessed the Company’s future plans by comparing them to the most recent exploration
		program and budget approved by the Board of Directors and evaluating the time period remaining for the
		Company’s right to explore them by inspecting governmental filings.
		/s/ KPMG LLP
		Chartered Professional Accountants, Licensed Public Accountants
		We have served as the Company’s auditor since 2020.
		Toronto, Canada
		March 9, 2023
			4



	KPMG LLP
	Bay Adelaide Centre
	333 Bay Street, Suite 4600
	Toronto, ON M5H 2S5
	Canada
	Tel 416-777-8500
	Fax 416-777-8818

	Report of Independent Registered Public Accounting Firm
	To the Shareholders and Board of Directors of Denison Mines Corp.
	Opinion on Internal Control Over Financial Reporting We have audited Denison Mines Corp.’s (the Company) internal control over financial reporting as of
	December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by
	the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
	maintained, in al material respects, effective internal control over financial reporting as of December 31, 2022,
	based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
	Sponsoring Organizations of the Treadway Commission.
	We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
	(United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31,
	2022 and 2021, the related consolidated statements of income (loss) and comprehensive income (loss),
	changes in equity, and cash flow for each of the years in the two-year period ended December 31, 2022 and
	the related notes (col ectively, the consolidated financial statements), and our report dated March 9, 2023
	expressed an unqualified opinion on those consolidated financial statements.
	Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting
	and for its assessment of the effectiveness of internal control over financial reporting, included in the
	accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
	express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
	public accounting firm registered with the PCAOB and are required to be independent with respect to the
	Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
	Securities and Exchange Commission and the PCAOB.
	We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
	and perform the audit to obtain reasonable assurance about whether effective internal control over financial
	reporting was maintained in all material respects. Our audit of internal control over financial reporting included
	obtaining an understanding of internal control over financial reporting, assessing the risk that a material
	weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
	the assessed risk. Our audit also included performing such other procedures as we considered necessary in
	the circumstances. We believe that our audit provides a reasonable basis for our opinion.
	© 2023 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International
	Limited, a private English company limited by guarantee. Al rights reserved.

Denison Mines Corp.
	March 9, 2023


		Definition and Limitations of Internal Control Over Financial Reporting A Company’s internal control over financial reporting is a process designed to provide reasonable assurance
		regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
		accordance with generally accepted accounting principles. A Company’s internal control over financial reporting
		includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
		accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide
		reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
		in accordance with generally accepted accounting principles, and that receipts and expenditures of the
		Company are being made only in accordance with authorizations of management and directors of the
		Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
		acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial
		statements.
		Because of its inherent limitations, internal control over financial reporting may not prevent or detect
		misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
		controls may become inadequate because of changes in conditions, or that the degree of compliance with the
		policies or procedures may deteriorate.
		/s/ KPMG LLP Chartered Professional Accountants, Licensed Public Accountants Toronto,Canada
		March 9, 2023
			6


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		(Expressed in thousands of Canadian dollars (“CAD”) except for share amounts)
								At December 31
					At December 31
						2022	2021

		ASSETS
		Current
		Cash and cash equivalents (note 4)					$	50,915 $	63,998
		Trade and other receivables (note 5)									4,143	3,656
		Inventories (note 6)									2,713	3,454
		Investments-equity instruments (note 7)									8,022	14,437
		Prepaid expenses and other									1,367	1,310
									67,160	86,855
		Non-Current
		Inventories-ore in stockpiles (note 6)									2,098	2,098
		Investments-equity instruments (note 7)								87	141
		Investments-uranium (note 7)							162,536	133,114
		Investments-joint venture (note 8)							19,305	21,392
		Prepaid expenses and other								-	221
		Restricted cash and investments (note 9)					11,105	12,001
		Property, plant and equipment (note 10)							253,505	254,462
		Total assets					$	515,796 $	510,284

		LIABILITIES
		Current
		Accounts payable and accrued liabilities (note 11)					$	10,299 $	8,590

		Warrants on investment (note 7)							-	1,625
		Current portion of long-term liabilities:
		Deferred revenue (note 12)									4,915	4,656
		Post-employment benefits (note 13)								120	120
		Reclamation obligations (note 14)									2,865	1,181
		Other liabilities (note 16)								216	179
									18,415	16,351
		Non-Current
		Deferred revenue (note 12)							28,380	31,852
		Post-employment benefits (note 13)									1,081	1,154
		Reclamation obligations (note 14)							26,594	36,351
		Share purchase warrants liability (note 15)								-	20,337
		Other liabilities (note 16)								360	329
		Deferred income tax liability (note 17)									4,950	7,219
		Total liabilities							79,780	113,593

		EQUITY
		Share capital (note 18)							1,539,209	1,517,029
		Contributed surplus (note 19)							70,281	67,496
		Deficit							(1,175,256)	(1,189,610)
		Accumulated other comprehensive income (note 20)									1,782	1,776
		Total equity							436,016	396,691
		Total liabilities and equity					$	515,796 $	510,284
		Issued and outstanding common shares (note 18)					826,325,592	812,429,995
		Commitments and contingencies (note 25)

				The accompanying notes are an integral part of the consolidated financial statements

			On behalf of the Board of Directors


		/s/ ‘Ron F. Hochstein’								/s/ ‘Patricia M. Volker’

		Ron F. Hochstein								Patricia M. Volker
		Chair of the Board								Director
	7


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
		COMPREHENSIVE INCOME (LOSS)

		(Expressed in thousands of CAD dollars except for share and per share amounts)
					Year Ended December 31
			2022		2021


		REVENUES (note 22)				$	16,945 $	20,000

		EXPENSES
		Operating expenses (note 21, 22)					(11,625)	(12,901)
		Exploration (note 22)					(8,097)	(4,477)
		Evaluation (note 22)					(22,181)	(15,521)
		General and administrative (note 22)					(12,538)	(9,691)
		Other income (note 21)					55,327	44,163
							886	1,573
		Income before net finance expense, equity accounting	17,831	21,573

		Finance expense, net (note 21)					(2,859)	(4,127)
		Equity share of loss of joint venture (note 8)					(2,887)	(464)
		Income before taxes								12,085	16,982
		Income tax recovery (note 17):
		Deferred					2,269	1,995
		Net income for the period				$	14,354 $	18,977

		Other comprehensive income (note 20):
		Items that are or may be subsequently reclassified to income (loss):
							Foreign currency translation change					6	1
		Comprehensive income for the period				$	14,360 $	18,978


		Basic and diluted net income per share:
		Basic					0.02 $	0.02
		Diluted				$	0.02 $	0.02


		Weighted-average number of shares outstanding (in thousands):
		Basic	818,891	783,684
		Diluted						828,735	793,668

									The accompanying notes are an integral part of the consolidated financial statements


	8


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

		(Expressed in thousands of CAD dol ars)
				Year Ended December 31
								2022	2021

		Share capital (note 18)
		Balance-beginning of period	$ 1,517,029 $				1,366,710
		Shares issued for cash, net of issue costs			19,601		141,278
		Other share issued, net of issue costs			169	-
		Share options exercised-cash			1,459		6,300
		Share options exercised-transfer from contributed surplus		550		2,157
		Share units exercised-transfer from contributed surplus		401	566
		Share purchase warrants exercised-cash				-	14
		Share purchase warrants exercised-warrant liability settled			-	4
		Balance-end of period		1,539,209				1,517,029

		Contributed surplus
		Balance-beginning of period			67,496		67,387
		Share-based compensation expense (note 19)			3,736		2,832
		Share options exercised-transfer to share capital			(550)		(2,157)
		Share units exercised-transfer to share capital			(401)		(566)
		Balance-end of period			70,281		67,496

		Deficit
		Balance-beginning of period	(1,189,610)			(1,208,587)
		Net income			14,354		18,977
		Balance-end of period	(1,175,256)			(1,189,610)

		Accumulated other comprehensive income (note 20)
		Balance-beginning of period			1,776		1,775
		Foreign currency translation				6	1
		Balance-end of period			1,782		1,776

		Total Equity
		Balance-beginning of period	$		396,691 $		227,285
		Balance-end of period	$		436,016 $		396,691

				The accompanying notes are an integral part of the consolidated financial statements


	9


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		CONSOLIDATED STATEMENTS OF CASH FLOW

		(Expressed in thousands of CAD dol ars)
						Year Ended December 31
								2022	2021
		CASH PROVIDED BY (USED IN):

		OPERATING ACTIVITIES
		Net income for the period		$		14,354 $		18,977
		Adjustments and items not affecting cash and cash equivalents:
		Depletion, depreciation, amortization and accretion				8,667		7,385
		Joint venture-equity share of loss (note 8)				2,887	464
		Recognition of deferred revenue (note 12)				(5,987)		(3,207)
		Post-employment benefit payments (note 13)				(95)		(110)
		Reclamation obligation income statement adjustment (note 14)				(4,126)		(585)
		Reclamation obligation expenditures (note 14)				(1,348)		(815)
		Gain on debt obligation adjustment (note 16)					-	(4)
		Deferred income tax recovery (note 17)				(2,269)		(1,995)
		Share purchase warrants liability issue costs expensed (note 18)		-	791
		Loss (gain) on property, plant and equipment disposals (note 21)		25	(135)
		Fair value change losses (gains):
		Investments-equity instruments (notes 7 and 21)				6,469		(10,454)
		Investments-uranium (notes 7 and 21)				(29,422)		(41,440)
		Warrants on investment (notes 7 and 21)				(1,625)		(1,149)
		Share purchase warrants liabilities (notes 15 and 21)				(20,337)		7,104
		Share-based compensation (note 19)				3,736		2,832
		Foreign exchange loss (gain) (note 21)				(816)		1,295
		Change in non-cash operating working capital items (note 21)				1,743		(199)
		Net cash used in operating activities				(28,144)		(21,245)

		INVESTING ACTIVITIES
		Sale of investments-equity instruments (note 7)					-	12,826
		Sale of warrants on investment (note 7)					-	2,774
		Purchase of investments-uranium (note 7)					-	(91,674)
		Issuance of Term loan and investment in joint venture (note 8)					-	(40,950)
		Repayment of term loan (note 8)					-	20,450
		Transaction costs-investment in joint venture (note 8)					-	(1,356)
		Purchase of investment in joint venture (note 8)				(800)	-
		Additions of property, plant and equipment (note 10)				(6,869)		(1,230)
		Proceeds on disposal of property, plant and equipment		12	139
		Decrease in restricted cash and investments (note 9)	896	17
		Net cash used in investing activities				(6,761)		(99,004)

		FINANCING ACTIVITIES
		Issuance of debt obligations (note 16)				158	34
		Repayment of debt obligations (note 16)				(209)		(252)
		Proceeds from unit issues, net of issue costs (note 18)					-	135,630
		Proceeds from share issues, net of issue costs (note 18)				19,551		18,091
		Proceeds from warrants exercised (note 18)					-	14
		Proceeds from share options exercised (note 18)				1,459		6,300
		Net cash provided by financing activities				20,959		159,817

		Increase (Decrease) in cash and cash equivalents				(13,946)		39,568
		Foreign exchange effect on cash and cash equivalents				863		(562)
		Cash and cash equivalents, beginning of period				63,998		24,992
		Cash and cash equivalents, end of period		$		50,915 $		63,998
		Supplemental cash flow disclosure (note 21)

						The accompanying notes are an integral part of the consolidated financial statements

	10


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE
		YEARS ENDED DECEMBER 31, 2022 AND 2021

		(Expressed in CAD dollars except for shares and per share amounts)


		1. NATURE OF OPERATIONS

		Denison Mines Corp. (“DMC”) and its subsidiary companies and joint arrangements (collectively, “Denison” or the
		“Company”) are engaged in uranium mining related activities, which can include acquisition, exploration, and
		development of uranium bearing properties, extraction, processing and selling of, and investing in uranium.

		The Company has an effective 95.0% interest in the Wheeler River Joint Venture (“WRJV”), a 67.41% interest in
		the Waterbury Lake Uranium Limited Partnership (“WLULP”), a 22.5% interest in the McClean Lake Joint Venture
		(“MLJV”) (which includes the McClean Lake mil ) and a 25.17% interest in the Midwest Joint Venture (“MWJV”),
		each of which are located in the eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada
		(see note 26). The McClean Lake mil is contracted to provide toll mil ing services to the Cigar Lake Joint Venture
		(“CLJV”) under the terms of a toll mil ing agreement between the parties (see note 12). In addition, the Company
		has varying ownership interests in several other development and exploration projects located in Saskatchewan,
		Canada.

		Through its 50% ownership of JCU (Canada) Exploration Company, Limited (“JCU”), Denison holds further indirect
		interests in various uranium project joint ventures in Canada, including the Mil ennium project (JCU 30.099%), the
		Kiggavik project (JCU 33.8118%) and the Christie Lake project (JCU 34.4508%). See note 8 for details.

		Denison is also engaged in post-closure mine care and maintenance services through its Closed Mines group,
		which manages Denison’s El iot Lake reclamation projects and provides related services to certain third-party
		projects.

		DMC is incorporated under the Business Corporations Act (Ontario) and domiciled in Canada. The address of its
		registered head office is 40 University Avenue, Suite 1100, Toronto, Ontario, Canada, M5J 1T1.

		References to “2022” and “2021” refer to the year ended December 31, 2022, and the year ended December 31,
		2021 respectively.


		2. STATEMENT OF COMPLIANCE AND ACCOUNTING POLICIES

		Statement of Compliance

		These consolidated financial statements have been prepared in accordance with International Financial Reporting
		Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

		These financial statements were approved by the board of directors for issue on March 9, 2023.

		Significant accounting policies

		These consolidated financial statements are presented in Canadian dol ars (“CAD”) and all financial information is
		presented in CAD, unless otherwise noted.

		The preparation of the consolidated financial statements in conformity with IFRS requires management to make
		judgements, estimates and assumptions that affect the application of accounting policies and the reported amount
		of assets, liabilities, revenues and expenses. Actual results may vary from these estimates.

		Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
		recognized in the period in which the estimates are revised and in any future periods affected. The areas involving
		a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
		consolidated financial statements are disclosed in note 3.

		The Company has considered the amendments to IAS 16, “Property Plant and Equipment”, IAS 37, “Provisions,
		Contingent Liabilities and Contingent Assets” and IFRS 3 “Business Combinations” which are effective for annual
		periods beginning on or after January 1, 2022 and has concluded that these amendments have no impact on the
		Company’s financial statements.
	11


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		The significant accounting policies used in the preparation of these consolidated financial statements are described
		below:

		A. Consolidation principles

		The financial statements of the Company include the accounts of DMC, its subsidiaries and its joint arrangements
		(see note 26).

		Subsidiaries

		Subsidiaries are all entities over which the DMC group of entities has control. The group controls an entity where
		the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
		affect those returns through its power to direct the activities of the entity. Subsidiaries are ful y consolidated from
		the date on which control is transferred to the group and are deconsolidated from the date that control ceases.
		Intercompany transactions, balances and unrealized gains and losses from intercompany transactions are
		eliminated.

		Joint arrangements

		A joint arrangement is a contractual arrangement of which the DMC group of entities and another independent
		party have joint control. Joint arrangements are either joint operations or joint ventures. The classification of a joint
		arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the
		arrangement. The Company determines the type of joint arrangement in which it is involved by considering the
		structure and form of the arrangement, the terms agreed by the parties in the contractual arrangement and other
		facts and circumstances such as the parties’ rights and obligations arising from the arrangement.

		Joint operations are contractual arrangements which involve joint control between the parties which have rights to
		the assets, and obligations for the liabilities, relating to the joint arrangement. The consolidated financial statements
		of the Company include its share of the assets in such joint operations, together with its share of the liabilities and
		the revenues and expenses arising jointly or otherwise from those operations. Al such amounts are measured in
		accordance with the terms of each arrangement.

		A joint venture is a joint arrangement over which the Company shares joint control and which provides the
		Company with the rights to the net assets of the joint arrangement. Joint ventures are accounted for using the
		equity method. Under the equity method, investments in joint ventures are initially recorded at cost and adjusted
		thereafter to record the Company’s share of post-acquisition earnings or loss of the joint venture as if the joint
		venture had been consolidated. The carrying value of investments in joint ventures is also increased or decreased
		to reflect the Company’s share of capital transactions, including amounts recognized in “Other comprehensive
		income or loss”, and for accounting changes that relate to periods subsequent to the date of acquisition.

		B. Foreign currency translation

		Functional and presentation currency

		Items included in the financial statements of each entity in the DMC group are measured using the currency of the
		primary economic environment in which the entity operates (“the functional currency”). Primary and secondary
		indicators are used to determine the functional currency. Primary indicators include the currency that mainly
		influences sales prices, labour, material and other costs. Secondary indicators include the currency in which funds
		from financing activities are generated and in which receipts from operating activities are usually retained.
		Typical y, the local currency has been determined to be the functional currency of Denison’s entities.

		The financial statements of entities that have a functional currency different from the presentation currency of DMC
		(“foreign operations”) are translated into Canadian dollars as follows: assets and liabilities at the closing rate at the
		date of the statement of financial position, and income and expenses at the average rate of the period (as this is
		considered a reasonable approximation to actual rates). Al resulting changes are recognized in “Other
		comprehensive income or loss” as cumulative foreign currency translation adjustments.

		When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant
		influence over a foreign operation, the foreign currency gains or losses accumulated in “Other comprehensive
		income or loss” related to the foreign operation are recognized in the statement of income or loss as translational
		foreign exchange gains or losses.
	12


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		Transactions and balances

		Foreign currency transactions are translated into an entity’s functional currency using the exchange rates prevailing
		at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign
		currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities
		denominated in currencies other than an operation’s functional currency are recognized in the statement of income
		or loss as transactional foreign exchange gains or losses.

		C. Cash and cash equivalents

		Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid
		investments with original maturities of three months or less, which are subject to an insignificant risk of changes in
		value.

		D. Financial instruments

		Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
		provisions of a financial instrument. Financial assets are derecognized when the rights to receive cash flows from
		the assets have expired or have been transferred and the Company has transferred substantial y all risks and
		rewards of ownership. Financial liabilities are derecognized when the obligations specified in the contract are
		discharged, cancel ed or expire.

		At initial recognition, the Company classifies its financial instruments in the fol owing categories:

		Financial assets and liabilities at fair value through profit or loss (“FVTPL”)

		A financial asset is classified in this category if it is a derivative instrument, an equity instrument for which the
		Company has not made the irrevocable election to classify as fair value through Other comprehensive income
		(“FVTOCI”), or a debt instrument that is not held within a business model whose objective includes holding the
		financial assets in order to collect contractual cash flows that are solely payments of principal and interest.
		Derivative financial liabilities and contingent consideration liabilities related to business combinations are also
		classified in this category. Financial instruments in this category are recognized initially and subsequently at fair
		value. Transaction costs are expensed in the statement of income or loss. Gains and losses arising from changes
		in fair value are presented in the statement of income or loss – within “Other income (expense)” in the period in
		which they arise.

		Financial assets at amortized cost

		A financial asset is classified in this category if it is a debt instrument and / or other similar asset that is held within
		a business model whose objective is to hold the asset in order to col ect the contractual cash flows (i.e. principal
		and interest). Financial assets in this category are initially recognized at fair value plus transaction costs and
		subsequently measured at amortized cost using the effective interest method less a provision for impairment.
		Interest income is recorded in the statement of income or loss through “Finance income”.

		Financial liabilities at amortized cost

		Al financial liabilities that are not recorded as FVTPL are classified in this category and are initial y recognized less
		a discount (when material) to reduce the financial liabilities to fair value and less any directly attributable transaction
		costs. Subsequently, financial liabilities are measured at amortized cost using the effective interest method. Interest
		expense is recorded in the statement of income or loss through “Finance expense”.

		Refer to the “Fair Value of Financial Instruments” section of note 24 for the Company’s classification of its financial
		assets and liabilities within the fair value hierarchy.

		E. Impairment of financial assets

		At each reporting date, the Company assesses the expected credit losses (“ECLS”) associated with its financial
		assets that are not carried at FVTPL. ECLS are calculated based on the difference between the contractual cash
		flows and the cash flows that the Company expects to receive, discounted, where applicable, based on the asset’s
		original effective interest rate.

		For “Trade receivables”, the Company calculates ECLS based on historical credit loss experience, adjusted for
		forward-looking factors specific to debtors and the economic environment. In recording an impairment loss, the
	13


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		carrying amount of the asset is reduced by this ECL either directly or indirectly through the use of an allowance
		account.

		F. Inventories

		Expenditures, including depreciation, depletion and amortization of production assets, incurred in the mining and
		processing activities that will result in future uranium concentrate production, are deferred and accumulated as ore
		in stockpiles, in-process inventories and concentrate inventories. These amounts are carried at the lower of
		weighted average cost or net realizable value (“NRV”). NRV is calculated as the estimated future uranium
		concentrate selling price in the ordinary course of business (net of selling costs) less the estimated costs to
		complete production of the inventory into a saleable form.

		Stockpiles are comprised of coarse ore that has been extracted from the mine and is available for further
		processing. Mining production costs are added to the stockpile as incurred and removed from the stockpile based
		upon the weighted average cost per ton of ore produced from mines considered to be in commercial production.
		The current portion of ore in stockpiles represents the amount expected to be processed in the next twelve months.

		In-process and concentrate inventories include the cost of the ore removed from the stockpile, a pro-rata share of
		the amortization of the associated mineral property, as well as production costs incurred to process the ore into a
		saleable product. Processing costs typically include labor, chemical reagents and directly attributable mil overhead
		expenditures. Items are valued at weighted average cost.

		Materials and other supplies held for use in the production of inventories are carried at weighted average cost and
		are not written down below that cost if the finished products in which they wil be incorporated are expected to be
		sold at or above cost. However, when a decline in the price of concentrates indicates that the cost of the finished
		products exceeds NRV, the materials are written down to NRV. In such circumstances, the replacement cost of
		the materials may be the best available measure of their NRV.

		G. Investments-uranium

		The Company’s uranium investments are held for long-term capital appreciation. Investments in uranium are
		initially recorded at cost, on the date that control of the uranium passes to the Company.

		Cost includes the purchase price and any directly attributable transaction costs. Subsequent to initial recognition,
		investments in uranium are measured at fair value at each reporting period end. Fair value is determined based
		on the most recent month-end spot price for uranium published by UxC LLC (“UxC”) and converted to Canadian
		dollars using the foreign exchange rate at the date of the consolidated statement of financial position. Related fair
		value gains and losses recognized subsequent to initial recognition are recorded in the consolidated statement of
		income (loss) as a component of “Other income (expense)” in the period in which they arise.

		H. Property, plant and equipment

		Plant and equipment

		Plant and equipment are recorded at acquisition or production cost and carried net of depreciation and
		impairments. Cost includes expenditures incurred by the Company that are directly attributable to the acquisition
		of the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
		appropriate, only when it is probable that future economic benefits associated with the item wil flow to the Company
		and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced.
		Repairs and maintenance costs are charged to the statement of income and loss during the period in which they
		are incurred.

		Depreciation is calculated on a straight line or unit of production basis as appropriate. Where a straight-line
		methodology is used, the assets are depreciated to their estimated residual value over an estimated useful life
		which ranges from three to twenty years depending upon the asset type. Where a unit of production methodology
		is used, the assets are depreciated to their estimated residual value over the useful life defined by management’s
		best estimate of recoverable reserves and resources in the current estimated mine plan. When assets are retired
		or sold, the resulting gains or losses are reflected in the statement of income or loss as a component of “Other
		income (expense)”. The Company allocates the amount initially recognized in respect of an item of plant and
		equipment to its significant parts and depreciates separately each such part over its useful life. Residual values,
		methods of depreciation and useful lives of the assets are reviewed at least annual y and adjusted if appropriate.

	14

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

Where straight-line depreciation is utilized, the range of useful lives for various asset classes is generally as follows:

Buildings

15 - 20 years;

Production machinery and equipment

5 - 7 years;

Other assets

3 - 5 years.

Mineral property acquisition, exploration, evaluation and development costs

Costs relating to mineral and / or exploration rights acquired through a business combination or asset acquisition

are capitalized and reported as part of “Property, plant and equipment”.

Exploration and Evaluation expenditures are expensed as incurred.

Once commercial viability and technical feasibility for a project has been established, the project is classified as a

“Development Stage” mineral property, an impairment test is performed on the transition, and all further

development costs are capitalized to the asset.

Once a development stage mineral property goes into commercial production, the project is classified as

“Producing” and the accumulated costs are amortized over the estimated recoverable reserves and resources in

the current mine plan using a unit of production basis.

Proceeds received from the sale of an interest in a property are credited against the carrying value of the property,

with any difference recorded in the statement of income or loss as a gain or loss on sale within “Other income

(expense)”.

Lease assets (and lease obligations)

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or

contains, a lease, if the contract conveys the right to control the use of an identified asset for a period of time in

exchange for consideration. To assess whether a contract conveys the right to control the use of an identified

asset, the Company assesses whether:

•

the contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be

physically distinct or represent substantially al of the capacity of a physically distinct asset. If the supplier has

a substantive substitution right, then the asset is not identified;

•

the Company has the right to obtain substantially all of the economic benefits from the use of the asset

throughout the period of use; and

•

the Company has the right to direct the use of the asset. The Company has this right when it has the decision-

making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases

where the decision about how and for what purpose the asset is used is predetermined, the Company has the

right to direct the use of the asset if either (a) the Company has the right to operate the asset; or (b) the

Company designed the asset in a way that predetermines how and for what purpose it wil be used.

If the contract contains a lease, the Company accounts for the lease and non-lease components separately. For

the lease component, a right-of-use asset and a corresponding lease liability are set-up at the date at which the

leased asset is available for use by the Company. The right-of-use asset is depreciated over the shorter of the

asset’s useful life and the lease term on a straight-line basis.

The lease payments associated with the lease liability are discounted using either the interest rate implicit in the

lease, if available, or the Company’s incremental borrowing rate. Each lease payment is al ocated between the

liability and the finance cost (i.e. accretion) so as to produce a constant rate of interest on the remaining lease

liability balance.

I. Impairment of non-financial assets

After application of the equity method to joint ventures, at each reporting date the Company determines whether

there is objective evidence that the investment in the joint venture is impaired. If there is such evidence, the

Company calculates the amount of impairment as the dif erence between the recoverable amount of the associate

or joint venture and it’s carrying value, and then recognizes the loss within “Equity share of loss” in the statement

of profit or loss.

Property, plant and equipment assets are assessed at the end of each reporting period to determine if there is any

indication that the asset may be impaired. If any such indication exists, an estimate of the recoverable amount of


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		the asset is made. For the purpose of measuring recoverable amounts, assets are grouped at the lowest level, or
		cash generating unit (“CGU”), for which there are separately identifiable cash inflows. The recoverable amount is
		the higher of an asset’s fair value less costs of disposal and value in use (being the present value of the expected
		future cash flows of the relevant asset or CGU, as determined by management). An impairment loss is recognized
		for the amount by which the CGU’s carrying amount exceeds its recoverable amount.

		Mineral property assets are assessed for impairment using the impairment indicators under IFRS 6 “Exploration
		for and Evaluation of Mineral Resources” up until the commercial viability and technical feasibility for the property
		is established. From that point onwards, mineral property assets are tested for impairment using the impairment
		indicators of IAS 36 “Impairment of Assets”.

		J. Employee benefits

		Post-employment benefit obligations

		The Company assumed the obligation of a predecessor company to provide life insurance, supplemental health
		care and dental benefits, excluding pensions, to its former Canadian employees who retired from active service
		prior to 1997. The estimated cost of providing these benefits is actuarially determined using the projected benefits
		method and is recorded on the balance sheet at its estimated present value. The interest cost on this unfunded
		liability is being accreted over the remaining lives of this retiree group. Experience gains and losses are being
		deferred as a component of “Accumulated other comprehensive income or loss” and are adjusted, as required, on
		the obligation’s re-measurement date.

		Share-based compensation

		The Company uses a fair value-based method of accounting for share options to employees and to non-
		employees. The fair value is determined using the Black-Scholes option pricing model on the date of the grant.
		The cost is recognized on a graded method basis, adjusted for expected forfeitures, over the applicable vesting
		period as an increase in share-based compensation expense and the contributed surplus account. When such
		share options are exercised, the proceeds received by the Company, together with the respective amount from
		contributed surplus, are credited to share capital.

		The Company also has a share unit plan pursuant to which it may grant share units to employees – the share units
		are equity-settled awards. The Company determines the fair value of the awards on the date of grant. The cost is
		recognized on a graded method basis, adjusted for expected forfeitures, over the applicable vesting period, as an
		increase in share-based compensation expense and the contributed surplus account. When such share units are
		settled for common shares, the applicable amounts of contributed surplus are credited to share capital.

		Termination benefits

		The Company recognizes termination benefits when it is demonstrably committed to either terminating the
		employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing
		benefits as a result of an offer made to encourage voluntary termination. Benefits falling due more than twelve
		months after the end of the reporting period are discounted to their present value.

		K. Reclamation provisions

		Reclamation provisions, which are legal and constructive obligations related to the retirement of tangible long-lived
		assets, are recognized when such obligations are incurred, and a reasonable estimate of the value can be
		determined. These obligations are measured initially at the present value of expected cash flows using a pre-tax
		discount rate reflecting risks specific to the liability and the resulting costs are capitalized and added to the carrying
		value of the related assets. In subsequent periods, the liability is adjusted for the accretion of the discount and the
		expense is recorded in the statement of income or loss. Changes in the amount or timing of the underlying future
		cash flows or changes in the discount rate are immediately recognized as an increase or decrease in the carrying
		amounts of the related asset, if one exists, and liability. These costs are amortized to the results of operations over
		the life of the asset. Reductions in the amount of the liability are first applied against the amount of the net
		reclamation asset with any excess value being recorded in the statement of income or loss.

		The Company’s activities are subject to numerous governmental laws and regulations. Estimates of future
		reclamation liabilities for asset decommissioning and site restoration are recognized in the period when such
		liabilities are incurred. These estimates are updated on a periodic basis and are subject to changing laws,
		regulatory requirements, changing technology and other factors which wil be recognized when appropriate.
		Liabilities related to site restoration include long-term treatment and monitoring costs and incorporate total
	16


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		expected costs net of recoveries. Expenditures incurred to dismantle facilities, restore, and monitor closed resource
		properties are charged against the related reclamation liability.

		L. Provisions

		Provisions for restructuring costs and legal claims, where applicable, are recognized in liabilities when the
		Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of
		resources wil be required to settle the obligation, and the amount can be reliably estimated. Provisions are
		measured at management’s best estimate of the expenditure required to settle the obligation at the end of the
		reporting period and are discounted to present value where the impact of the discount is material. The Company
		performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts.

		M. Current and deferred income tax

		Current income tax payable is based on taxable income for the period. Taxable income differs from income as
		reported in the statement of income or loss because it excludes items of income or expense that are taxable or
		deductible in other periods and it further excludes items that are never taxable or deductible. The Company’s
		liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance
		sheet date.

		Deferred income taxes are accounted for using the balance sheet liability method. Deferred income tax assets and
		liabilities are computed based on temporary differences between the financial statement carrying values of the
		existing assets and liabilities and their respective income tax bases used in the computation of taxable income.
		Computed deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax
		assets are recognized to the extent that it is probable that taxable income wil be available against which deductible
		temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference
		arises from goodwil or from the initial recognition (other than in a business combination) of other assets and
		liabilities in a transaction that affects neither the taxable income nor the accounting income. Deferred tax liabilities
		are recognized for taxable temporary differences arising on investments in subsidiaries and investments, and
		interests in joint ventures, except where the Company is able to control the reversal of the temporary differences
		and it is probable that the temporary dif erences wil not reverse in the foreseeable future. The carrying amount of
		deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
		that sufficient taxable earnings wil be available to allow all or part of the asset to be recovered.

		Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
		asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the balance
		sheet date. Deferred tax is charged or credited to the statement of income or loss (or comprehensive income or
		loss in some specific cases), except when it relates to items charged or credited directly to equity, in which case
		the deferred tax is also recorded within equity.

		Income tax assets and liabilities are offset when there is a legally enforceable right to offset the assets and liabilities
		and when they relate to income taxes levied by the same tax authority on either the same taxable entity or different
		taxable entities where there is an intention to settle the balance on a net basis.

		N. Flow-through common shares

		The Company’s Canadian exploration activities have been financed in part through the issuance of flow-through
		common shares, whereby the Canadian income tax deductions relating to these expenditures are claimable by the
		subscribers and not by the Company. The proceeds from issuing flow-through shares are allocated between the
		offering of shares and the sale of tax benefits. The al ocation is based on the difference (“premium”) between the
		quoted price of the Company’s existing shares and the amount the investor pays for the actual flow-through shares.
		A liability is recognized for the premium when the shares are issued and is extinguished when the tax effect of the
		temporary differences, resulting from the renunciation of the tax deduction to the flow-through shareholders, is
		recorded - with the difference between the liability and the value of the tax assets renounced being recorded as a
		deferred tax expense. The tax effect of the renunciation is recorded at the time the Company makes the
		renunciation to its subscribers – which may differ from the effective date of renunciation. If the flow-through shares
		are not issued at a premium, a liability is not established, and on renunciation the ful value of the tax assets
		renounced is recorded as a deferred tax expense.





	17


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		O. Revenue recognition

		Revenue from pre-sold toll milling services

		Revenue from the pre-sale of toll mil ing arrangement cash flows is recognized as the toll milling services are
		provided. At contract inception, the Company estimates the expected transaction price of the toll milling services
		being sold based on available information and calculates an average per unit transaction price that applies over
		the life of the contract. This unit price is used to draw-down the deferred revenue balance as the toll mil ing services
		occur. When changes occur to the expected timing, or volume of toll mil ing services, the per unit transaction price
		is adjusted to reflect the change (such review to be done annually, at a minimum), and a cumulative catch-up
		adjustment is made to reflect the updated rate. The amount of the upfront payment received from the toll milling
		pre-sale arrangements includes a significant financing component due to the longer-term nature of such
		agreements. As such, the Company also recognizes accretion expense on the deferred revenue balance which is
		recorded in the statement of income or loss through “Finance expense, net”.

		Revenue from environmental services (i.e. Closed Mines group)

		Environmental service contracts represent a series of distinct performance obligations that are substantially the
		same and have the same pattern of transfer of control to the customer. The transaction price is estimated at
		contract inception and is recognized over the life of the contract as control is transferred to the customer. Variable
		consideration, where applicable, is estimated at contract inception using either the expected value method or the
		most likely amount method. If it is highly probable that a subsequent reversal of revenue wil not occur when the
		uncertainty has been resolved, the Company wil recognize as revenue the estimated transaction price, including
		the estimate of the variable portion, upon transfer of control to the customer, otherwise the variable portion of the
		transaction price wil be constrained, and wil not be recognized as revenue until the uncertainty has been resolved.

		Revenue from management services (i.e. Uranium Participation Corporation (“UPC”)

		The management services arrangement with UPC represented a series of distinct performance obligations that
		are substantially the same and have the same pattern of transfer of control to the customer. The transaction price
		for the contract is estimated at contract inception and is recognized over the life of the contract as control is
		transferred to the customer as the services are provided. The variable consideration related to the net asset value
		(“NAV”) based management fee was estimated at contract inception using the expected value method. It was
		determined that it is highly probable that a subsequent reversal of revenue would occur if the variable consideration
		was included in the transaction price, and as such, the variable portion of the transaction price was measured and
		recognized when the uncertainty has been resolved (i.e. when the actual NAV has been calculated).

		Commission revenue earned on acquisition or sale of uranium oxide concentrates (“U3O8”) and uranium
		hexafluoride (“UF6”) on behalf of UPC (or other parties where Denison acts as an agent) was recognized when
		control of the related U3O8 or UF6 passes to the customer, which was the date when title of the U3O8 and UF6
		passes to the customer.

		On July 19, 2021, UPC and Sprott Asset Management LP (“Sprott”) completed a plan of arrangement whereby
		UPC shareholders became unitholders of the Sprott Physical Uranium Trust, a newly formed entity managed by
		Sprott (the “UPC Transaction”). In conjunction with the completion of the UPC Transaction, the management
		services arrangement between Denison and UPC was terminated in accordance with the termination provisions
		therein and Denison received a termination payment from UPC of $5,848,000 which was recognized in revenue.

		Revenue from spot sales of uranium

		In a uranium supply arrangement, the Company is contractually obligated to provide uranium concentrates to the
		customer. Each delivery is considered a separate performance obligation under the contract – revenue is
		measured based on the transaction price specified in the contract and the Company recognizes revenue when
		control of the uranium has been transferred to the customer.

		Uranium can be delivered either to the customer directly (physical deliveries) or notional y under title within a
		uranium storage facility (notional deliveries). For physical deliveries to customers, the terms in the supply
		arrangement specify the location of delivery and revenue is recognized when control transfers to the customer
		which is general y when the uranium has been delivered and accepted by the customer at that location. For notional
		deliveries at a uranium storage facility, revenue is recognized on the date that the Company specifies the storage
		facility to transfer title of a contractually specified quantity of uranium to a customer’s account at the storage facility.

	18

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

P. Earnings (loss) per share

Basic earnings (loss) per share (“EPS”) is calculated by dividing the net income or loss for the period attributable

to equity owners of DMC by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive

instruments. The number of shares included with respect to options, warrants and similar instruments is computed

using the treasury stock method.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical

accounting estimates and judgements that affect the amounts reported. It also requires management to exercise

judgement in applying the Company’s accounting policies. These judgements and estimates are based on

management’s best knowledge of the relevant facts and circumstances taking into account previous experience.

Although the Company regularly reviews the estimates and judgements made that affect these financial

statements, actual results may be materially different.

Significant estimates and judgements made by management relate to:

A. Mineral property impairment reviews and impairment adjustments

At each reporting date, the Company assesses whether there is an indicator that its mineral properties may be

impaired. Judgement is applied in identifying whether or not an indicator exists. Impairment indicators exists when

facts and circumstances suggest that the carrying amount of a mineral property may exceed its recoverable

amount. When an indicator is identified, the Company determines the recoverable amount of the property, which

is the higher of an asset’s fair value less costs of disposal or value in use. An impairment loss is recognized if the

carrying value exceeds the recoverable amount. The recoverable amount of a mineral property may be determined

by reference to estimated future operating results and discounted net cash flows, current market valuations of

similar properties or a combination of the above. In undertaking this review, management of the Company is

required to make significant estimates of, amongst other things: reserve and resource amounts, future production

and sale volumes, forecast commodity prices, future operating, capital and reclamation costs to the end of the

mine’s life and current market valuations from observable market data which may not be directly comparable.

These estimates are subject to various risks and uncertainties, which may ultimately have an effect on the expected

recoverable amount of a specific mineral property asset. Changes in these estimates could have a material impact

on the carrying value of the mineral property amounts and the impairment losses recognized.

B. Reclamation obligations

Asset retirement obligations are recorded as a liability when the asset is initially constructed, or a constructive or

legal obligation exists. The valuation of the liability typically involves identifying costs to be incurred in the future

and discounting them to the present using an appropriate discount rate for the liability. The determination of future

costs involves a number of estimates relating to timing, type of costs, mine closure plans, and review of potential

methods and technical advancements. Furthermore, due to uncertainties concerning environmental remediation,

the ultimate cost of the Company’s decommissioning liability could differ materially from amounts provided. The

estimate of the Company’s obligation is subject to change due to amendments to applicable laws and regulations

and as new information concerning the Company’s operations becomes available. The Company is not able to

determine the impact on its financial position, if any, of environmental laws and regulations that may be enacted in

the future.

4. CASH AND CASH EQUIVALENTS

The cash and cash equivalent balance consists of:

At December 31 At December 31

(in thousands)

2022

2021

Cash

1,801 $

2,002

Cash in MLJV and MWJV

1,263

1,275

Cash equivalents

47,851

60,721

50,915 $

63,998


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		Cash equivalents consist of various investment savings account instruments and money market funds, all of which
		are short term in nature, highly liquid and readily convertible into cash.


		5. TRADE AND OTHER RECEIVABLES

		The trade and other receivables balance consists of:

					At December 31 At December 31
			(in thousands)			2022		2021

			Trade receivables		$	3,184 $			2,866
			Receivables in MLJV and MWJV							508	533
			Sales tax receivables							428	255
			Sundry receivables				23	2
					$	4,143 $			3,656


		6. INVENTORIES

		The inventories balance consists of:

					At December 31 At December 31
			(in thousands)			2022		2021

			Uranium concentrates		$		- $	451
			Inventory of ore in stockpiles			2,098			2,098
			Mine and mil supplies in MLJV			2,713			3,003
					$	4,811 $			5,552

			Inventories-by balance sheet presentation:
			Current		$	2,713 $			3,454
			Long term-ore in stockpiles			2,098			2,098
					$	4,811 $			5,552

		Long-term ore in stockpile inventory represents an estimate of the amount of ore on the stockpile in excess of the
		next twelve months of planned mil production.


		7. INVESTMENTS

		The investments balance consists of:

					At December 31 At December 31
			(in thousands)			2022		2021

			Investments:
			Equity instruments
			Shares	$		8,022 $		14,349
			Warrants				87	229
			Uranium			162,536		133,114
				$		170,645 $		147,692

			Investments-by balance sheet presentation:
			Current	$		8,022 $		14,437
			Long-term			162,623		133,255
				$		170,645 $		147,692



	20

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

The investments continuity summary is as fol ows:

Equity

Physical

(in thousands)

Instruments

Uranium

Total

Balance-January 1, 2021

16,950 $

- $

16,950

Purchase of investments

91,674

Sale of investments

(12,826)

Fair value gain to profit and (loss) (note 21)

10,454

41,440

51,894

Balance-December 31, 2021

14,578 $ 133,114 $

147,692

Change in fair value gain to profit and (loss) (note 21)

(6,469)

29,422

22,953

Balance-December 31, 2022

8,109 $

162,536 $

170,645

At December 31, 2022, the Company holds equity instruments consisting of shares and warrants in publicly traded

companies and no debt instruments. Non-current equity instruments consist of warrants in publicly traded

companies exercisable for a period more than one year after the balance sheet date.

Investment in uranium

During the year ended December 31, 2021, the Company acquired a total of 2,500,000 pounds of physical uranium

as U3O8 at a cost of $91,674,000 (USD$74,140,000), including purchase commissions. The uranium is being held

as a long-term investment.

Sale of investment and issuance of warrants on investment

During the year ended December 31, 2021, the Company sold by private agreement (1) 32,500,000 common

shares of GoviEx Uranium Inc. (“GoviEx”) and (2) 32,500,000 common share purchase warrants, entitling the

holder to acquire one additional common share of GoviEx owned by Denison (“GoviEx Warrants”), for combined

gross proceeds of $15,600,000. The proceeds from this transaction were al ocated between the GoviEx common

shares sold and the GoviEx Warrants issued on a relative fair value basis, resulting in net proceeds from the

disposal of GoviEx common shares of $12,826,000 and proceeds from the issuance of the GoviEx Warrants of

$2,774,000. The GoviEx shares sold had an initial cost of $2,698,000. The GoviEx Warrants entitle the holder to

acquire one additional common share of GoviEx owned by the Company at an exercise price of $0.80, for 18

months after issuance (expires April 2023).

The Company continues to hold 32,644,000 common shares of GoviEx. If the GoviEx Warrants are exercised in

full, Denison wil receive $26,000,000 and wil transfer a further 32,500,000 GoviEx common shares to the warrant

holders.

The fair value of the GoviEx Warrants on the date of issuance was estimated to be $2,774,000 ($0.085 per warrant)

and was determined using the following assumptions in the Black-Scholes option pricing model – expected volatility

76%, risk-free interest rate of 0.69%, dividend yield of 0% and an expected term of 18 months.

At December 31, 2021, the fair value of the GoviEX Warrants was estimated to be $1,625,000 ($0.05 per warrant),

based on the following assumptions in the Black-Scholes option pricing model – expected volatility of 82%, risk

free interest rate of 0.91%, dividend yield of 0% and an expected term of 16 months.

At December 31, 2022, the fair value of the GoviEx Warrants is estimated to be $nil based on the following

assumptions in the Black-Scholes option pricing model – expected volatility of 48%, risk-free interest rate of 4.07%,

dividend yield of 0% and an expected term of 4 months.

Number of

Warrant

(in thousands except warrant amounts)

Warrants

Liability

Balance-December 31, 2021

32,500,000 $

1,625

Change in fair value to (profit) and loss (note 21)

(1,625)

Balance-December 31, 2022

32,500,000 $


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		8. INVESTMENT IN JOINT VENTURE

		The investment in joint venture balance consists of:

				At December 31 At December 31
			(in thousands)		2022	2021

			Investment in joint venture:
			JCU	$	19,305 $	21,392
				$	19,305 $	21,392

		A summary of the investment in JCU is as follows:

			(in thousands)

			Balance-December 31, 2021					$	21,392
			Investment at cost:
			Equity share of loss						(2,887)
			Incremental investment in JCU						800
			Balance-December 31, 2022					$	19,305

		On August 3, 2021, Denison completed the acquisition of 50% of JCU from UEX Corporation (“UEX”), for cash
		consideration of $20,500,000 plus transaction costs of $1,356,000. Denison’s acquisition of its 50% interest in JCU
		occurred immediately fol owing UEX’s acquisition of all the outstanding shares of JCU from Overseas Uranium
		Resources Development Co., Limited (“OURD”) for cash consideration of $41,000,000.

		Pursuant to Denison's agreement with UEX, Denison provided UEX with an interest-free 90-day term loan of
		$40,950,000 million (the "Term Loan") to facilitate UEX's purchase of JCU from OURD. On the transfer of 50% of
		the shares in JCU from UEX to Denison, $20,450,000 of the amount drawn under the Term Loan was deemed
		repaid by UEX. UEX repaid the remainder of the Term Loan in September 2021.

		JCU is a private company that holds a portfolio of twelve uranium project joint venture interests in Canada, including
		a 10% interest in the WRJV, a 30.099% interest in the Mil ennium project (Cameco Corporation 69.901%), a
		33.8118% interest in the Kiggavik project (Orano Canada Inc. 66.1882%), and a 34.4508% interest in the Christie
		Lake project (UEX 65.5492%).

		In 2022, each shareholder of JCU funded operations with an investment in JCU of $800,000. The investment was
		made by share subscription, where each shareholder acquired additional common shares in JCU in accordance
		with each shareholder’s pro-rata ownership interest in JCU. As a result, the Company’s ownership interest in JCU
		remained unchanged at 50%.

		The fol owing tables summarize the consolidated financial information of JCU on a 100% basis, taking into account
		adjustments made by Denison for equity accounting purposes (including fair value adjustments and differences in
		accounting policies). Denison records its equity share of earnings (loss) in JCU one month in arrears (due to the
		information not yet being available), adjusted for any known material transactions that have occurred up to the
		period end date on which Denison is reporting.

				At December 31 At December 31
			(in thousands)		2022	2021

			Total current assets(1)	$	2,273 $			4,851
			Total non-current assets		38,371	38,067
			Total current liabilities		(1,949)			(134)
			Total non-current liabilities				(86)	-
			Total net assets	$	38,609 $	42,784

	22


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

									Twelve Months
				Ended
									November 30
				2022(2)

			Revenue					$	-
			Net loss							(5,775)
			Other comprehensive income (loss)					$	-


			Reconciliation of JCU net assets to Denison investment carrying value:

		Adjusted net assets of JCU–at December 31, 2021		$	42,784
			Net loss							(5,775)
			Investment from Owners							1,600
			Net assets of JCU-at December 31, 2022					$		38,609
			Denison ownership interest							50.00%
			Investment in JCU					$		19,305

		(1) Included in current assets are $1,473,000 in cash and cash equivalents (December 31, 2021 - $2,525,000).
		(2) Represents JCU net loss for the twelve months ended November 30, 2022 (recorded one month in arrears), adjusted for differences in fair
			value allocations and accounting policies.


		9. RESTRICTED CASH AND INVESTMENTS

		The Company has certain restricted cash and investments deposited to collateralize a portion of its reclamation
		obligations. The restricted cash and investments balance consists of:

						At December 31 At December 31
			(in thousands)								2022	2021

			Cash and cash equivalents			$	3,133 $		2,866
			Investments				7,972		9,135
						$	11,105 $		12,001

			Restricted cash and investments-by item:
			El iot Lake reclamation trust fund			$	3,133 $		2,866
			Letters of credit facility pledged assets				7,972		9,000
			Letters of credit additional collateral				-	135
						$	11,105 $		12,001

		At December 31, 2022 and December 31, 2021, investments consist of guaranteed investment certificates with
		maturities of less than 90 days.

		Elliot Lake reclamation trust fund

		The Company has the obligation to maintain its decommissioned El iot Lake uranium mine pursuant to a
		Reclamation Funding Agreement effective December 21, 1995 (“Reclamation Agreement”) with the Governments
		of Canada and Ontario. The Reclamation Agreement, as further amended in February 1999, requires the Company
		to maintain funds in the reclamation trust fund equal to estimated reclamation spending for the succeeding six
		calendar years, less interest expected to accrue on the funds during the period. Withdrawals from this reclamation
		trust fund can only be made with the approval of the Governments of Canada and Ontario to fund El iot Lake
		monitoring and site restoration costs.

		In 2022, the Company deposited an additional $1,199,000 into the El iot Lake reclamation trust fund and withdrew
		$974,000. In 2021, the Company deposited an additional $793,000 into the Elliot Lake reclamation trust fund and
		withdrew $815,000.

		Letters of credit facility pledged assets

		In April 2022, the Company entered into an amendment with respect to the letters of credit facility. The amendment
	23


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		was related to the reduction in financial assurances required for the McClean Lake and Midwest operations as a
		result of the latest approved Preliminary Decommissioning Plan (“PDP”) for the projects. Under the amended
		terms, the maximum letters of credit available was reduced to $22,972,000. Concurrently, the pledged assets on
		deposit with the Bank of Nova Scotia (“BNS”) required to maintain the facility, was reduced from $9,000,000 to
		$7,972,000, and the additional collateral for the portion of its issued reclamation letters of credit in excess of the
		amount available under its let ers of credit facility of $135,000 was released. In total, $1,163,000 in previously
		restricted cash has been released back to the Company. Al other terms of the credit facility (tangible net worth
		covenant, and security for the facility) remain unchanged by this further amendment.

		At December 31, 2022, the Company had $7,972,000 on deposit with BNS as pledged restricted cash and
		investments pursuant to its obligations under the letters of credit facility (see notes 14 and 16).


		10. PROPERTY, PLANT AND EQUIPMENT

		The property, plant and equipment (“PP&E”) continuity summary is as follows:

					Plant and Equipment		Mineral	Total
			(in thousands)			Owned	Right-of-Use				Properties	PP&E

			Cost:
			Balance-January 1, 2021	$	106,087 $					891 $	179,743 $	286,721
			Additions								1,173	83			46	1,302
			Disposals								(466)	(21)	-	(487)
			Recoveries		-		-			(1)	(1)
			Reclamation adjustment (note 14)		(1,111)	-			-	(1,111)
			Balance-December 31, 2021	$	105,683 $					953 $	179,788 $	286,424

			Additions								6,731	103	431	7,265
			Disposals								(187)	(293)	-	(480)
			Reclamation adjustment (note 14)		(4,159)	-			-	(4,159)
			Balance-December 31, 2022	$	108,068 $					763 $	180,219 $	289,050

			Accumulated amortization, depreciation:
			Balance-January 1, 2021	$	(29,495) $					(356) $	- $	(29,851)
			Amortization								(280)	-			-	(280)
			Depreciation		(2,391)					(203)	-	(2,594)
			Disposals		466		17			-	483
			Reclamation adjustment (note 14)		280		-			-	280
			Balance-December 31, 2021	$	(31,420) $					(542) $	- $	(31,962)

			Amortization								(199)	-			-	(199)
			Depreciation		(3,797)					(146)	-	(3,943)
			Disposals		150						293	-	443
			Reclamation adjustment (note 14)		116		-			-	116
			Balance-December 31, 2022	$	(35,150) $					(395) $	- $	(35,545)

			Carrying value:
			Balance-December 31, 2021	$	74,263 $					411 $	179,788 $	254,462
			Balance-December 31, 2022	$	72,918 $					368 $	180,219 $	253,505

		Plant and Equipment - Owned

		The Company has a 22.5% interest in the McClean Lake mil through its ownership interest in the MLJV. The
		carrying value of the mil , comprised of various infrastructure, building and machinery assets, represents
		$58,378,000, or 78.2%, of the December 2022 total carrying value amount of owned PP&E assets.

		Additions to PP&E in 2022 mainly comprised of purchase and renovation of an office building in Saskatoon as well
		as equipment related to the Feasibility Field Test (“FFT”) activities at Wheeler River.

	24

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

A toll mil ing agreement amongst the participants of the MLJV and the CLJV provides for the processing of certain

future output of the Cigar Lake mine at the McClean Lake mil , for which the owners of the McClean Lake mil

receive a toll mil ing fee and other benefits. Denison further has an agreement with Ecora Resources PLC (“Ecora”)

(formerly named Anglo Pacific Group PLC “APG”) regarding the receipt of certain toll milling fees it receives from

this toll mil ing agreement – see note 12. In determining the units of production amortization rate for the McClean

Lake mil , the amount of production attributable to the mil assets includes Denison’s expected share of mill feed

related to MLJV ores, MWJV ores and the CLJV toll mil ing contract. Milling activities in 2022 at the McClean Lake

mill were dedicated exclusively to processing and packaging ore from the Cigar Lake mine. Milling activity in 2021

included processing and packaging ore for the Cigar Lake mine as wel as from the test mining activities that

occurred at the MLJV during the year. Mil production in 2021 was impacted by the COVID-19 pandemic. See note

12 for the current operating status of the McClean Lake mil .

Plant and Equipment – Right-of-Use

The Company has included the cost of various right-of-use (“ROU”) assets within its plant and equipment ROU

carrying value amount. These assets consist of building, vehicle and office equipment leases. The majority of the

asset value is attributable to the building lease assets for the Company’s office in Toronto and warehousing space

in Saskatoon.

Mineral Properties

The Company has various interests in development, evaluation and exploration projects located in Saskatchewan,

Canada, which are either held directly or through option or various contractual agreements. The following projects,

all located in Saskatchewan, represent $163,119,000, or 90.5%, of the carrying value amount of mineral property

assets as at December 31, 2022:

a) Wheeler River – the Company has a 90.0% direct interest in the project, and an additional 5.0% indirect

interest through its investment in JCU (includes the Phoenix and Gryphon deposits);

b) Waterbury Lake – the Company has a 67.41% interest in the project (includes the THT and Huskie deposits)

and also has a 2.0% net smelter return royalty on the portion of the project it does not own;

c) Midwest – the Company has a 25.17% interest in the project (includes the Midwest Main and Midwest A

deposits);

d) Mann Lake – the Company has a 30.0% interest in the project;

e) Wolly – the Company has a 20.77% interest in the project;

f) Johnston Lake – the Company has a 100% interest in the project; and

g) McClean Lake – the Company has a 22.5% interest in the project (includes the Sue D, Sue E, Caribou,

McClean North and McClean South deposits).

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The accounts payable and accrued liabilities balance consists of:

At December 31 At December 31

(in thousands)

2022

2021

Trade payables

5,434 $

3,452

Payables in MLJV and MWJV

4,036

4,316

Other payables

829

822

10,299 $

8,590

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

12. DEFERRED REVENUE

The deferred revenue balance consists of:

At December 31 At December 31

(in thousands)

2022

2021

Deferred revenue-pre-sold toll milling:

CLJV Toll Milling-Ecora

33,295 $

36,508

33,295 $

36,508

Deferred revenue-by balance sheet presentation:

Current

4,915 $

4,656

Non-current

28,380

31,852

33,295 $

36,508

The deferred revenue liability continuity summary is as fol ows:

(in thousands)

2022

2021

Balance-January 1

36,508 $

36,617

Revenue earned during the period (note 22)

(5,987)

(3,207)

Accretion (note 21)

2,774

3,098

Balance-December 31

33,295 $

36,508

Arrangement with Ecora Resources PLC (“Ecora”) formerly named Anglo Pacific Group PLC (“APG”)

In February 2017, Denison closed an arrangement with Ecora, formerly APG, under which Denison received an

upfront payment of $43,500,000 in exchange for its right to receive future toll mil ing cash receipts from the MLJV

under the current toll mil ing agreement with the CLJV from July 1, 2016 onwards. The up-front payment was based

upon an estimate of the gross toll mil ing cash receipts to be received by Denison discounted at a rate of 8.50%.

The Ecora Arrangement represents a contractual obligation of Denison to pay onward to Ecora any cash proceeds

of future toll mil ing revenue earned by the Company related to the processing of the specified Cigar Lake ore

through the McClean Lake mil . At closing, the Company made payments to Ecora of $3,520,000, representing the

Cigar Lake toll mil ing cash receipts received by Denison in respect of toll mil ing activity for the period from July 1,

2016 through January 31, 2017, and reflected those amounts as a reduction of the initial upfront amount received,

thereby reducing the initial deferred revenue balance to $39,980,000 at the transaction date.

In connection with the closing of the Ecora Arrangement, the terms of the BNS Letters of Credit Facility between

BNS and Denison were amended to reflect certain changes required to facilitate an Intercreditor Agreement

between Ecora, BNS and Denison (see note 16).

In 2022, the Company recognized $5,987,000 of toll mil ing revenue from the draw-down of deferred revenue,

based on Cigar Lake toll mil ing production of 18,010,000 pounds U3O8 (100% basis). The drawdown in 2022

includes a cumulative increase in revenue for prior periods of $1,070,000 resulting from changes in estimates to

the tol mil ing drawdown rate during 2022.

In 2021, the Company recognized $3,207,000 of toll mil ing revenue from the draw-down of deferred revenue,

based on Cigar Lake toll mil ing production of 12,159,000 pounds U3O8 (100% basis). The drawdown in 2021

includes a cumulative increase in revenue for prior periods of $61,000 resulting from changes in estimates to the

toll mil ing drawdown rate during 2021.

During the year ended December 31, 2021, in response to the COVID-19 pandemic, the CLJV temporarily

suspended production at the Cigar Lake mine from January 2021 until April 2021. The MLJV temporarily

suspended operations at the mil for the duration of the CLJV shutdowns.

The current portion of the deferred revenue liability reflects Denison’s estimate of Cigar Lake tol mil ing over the

next 12 months. This assumption is based on current mil packaged production expectations and is reassessed on

a quarterly basis.

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
		13. POST-EMPLOYMENT BENEFITS
		The Company provides post-employment benefits for former Canadian employees who retired on immediate
		pension prior to 1997. The post-employment benefits provided include life insurance and medical and dental
		benefits as set out in the applicable group policies. No post-employment benefits are provided to employees
		outside the employee group referenced above. The post-employment benefit plan is not funded.
		The effective date of the most recent actuarial valuation of the accrued benefit obligation is October 1, 2020. The
		amount accrued is based on estimates provided by the plan administrator which are based on past experience,
		limits on coverage as set out in the applicable group policies and assumptions about future cost trends. The
		significant assumptions used in the most recent valuation are listed below:
		•	Discount rate of 1.75%;
		•	Medical cost increase trend rate of 4.09% in 2020, grading up to 5.30% per year by 2026, staying flat at 5.30%
			per year from 2026 to 2030 and then grading down to 4.05% per year from 2031 through to 2041; and
		•	Dental cost increase trend rate of 4.50% in 2020, grading up to 5.30% per year by 2026, staying flat at 5.30%
			per year from 2026 to 2030 and then grading down to 4.05% per year from 2031 through to 2041.

		The post-employment benefits balance consists of:
				At December 31	At December 31
			(in thousands)	2022	2021
			Accrued benefit obligation	$		1,201 $	1,274
				$		1,201 $	1,274
			Post-employment benefits-by balance sheet presentation:
			Current	$		120 $	120
			Non-current			1,081	1,154
				$		1,201 $	1,274
		The post-employment benefits continuity summary is as follows:
			(in thousands)			2022	2021
			Balance-January 1	$		1,274 $	1,361
			Accretion (note 21)			22	23
			Benefits paid			(95)	(110)
			Experience gain adjustment			-	-
			Balance-December 31	$		1,201 $	1,274
		14. RECLAMATION OBLIGATIONS
		The reclamation obligations balance consists of:
				At December 31	At December 31
			(in thousands)	2022				2021
			Reclamation obligations-by item:
			Elliot Lake	$		16,634 $	20,877
			MLJV and MWJV			10,069	15,405
			Wheeler River and other			2,756	1,250
				$		29,459 $	37,532
			Reclamation obligations-by balance sheet presentation:
			Current	$		2,865 $	1,181
			Non-current			26,594	36,351
				$		29,459 $	37,532
	27

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

The reclamation obligations continuity summary is as follows:

(in thousands)

2022

2021

Balance-January 1

37,532 $

38,420

Accretion (note 21)

1,444

1,343

Expenditures incurred

(1,348)

(815)

Liability adjustments-balance sheet (note 10)

(4,043)

(831)

Liability adjustments-Income statement (note 21)

(4,126)

(585)

Balance-December 31

29,459 $

37,532

Site Restoration: Elliot Lake

The Elliot Lake uranium mine was closed in 1992 and capital works to decommission this site were completed in

1997. The remaining provision is for the estimated cost of monitoring the Tailings Management Areas at the

Denison and Stanrock sites and for treatment of water discharged from these areas. The Company conducts its

activities at both sites pursuant to licenses issued by the Canadian Nuclear Safety Commission (“CNSC”). The

above accrual represents the Company’s best estimate of the present value of the total future reclamation cost,

based on assumptions as to what levels of treatment wil be required in the future, discounted at 5.71% per annum

(December 31, 2021 – 4.06%). As at December 31, 2022, the undiscounted amount of estimated future reclamation

costs, in current year dollars, is $40,166,000 (December 31, 2021 - $35,837,000). Revisions to the reclamation

liability for El iot Lake are recognized in the income statement as the site is closed and there is no asset recognized

for this site.

Spending on restoration activities at the El iot Lake site is funded by the El iot Lake Reclamation Trust fund (see

note 9).

Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture

The MLJV and MWJV operations are subject to environmental regulations as set out by the Saskatchewan

government and the CNSC. Cost estimates of the expected future decommissioning and reclamation activities are

prepared periodically and filed with the applicable regulatory authorities for approval. The above accrual represents

the Company’s best estimate of the present value of future reclamation costs discounted at 5.71% per annum

(December 31, 2021 – 4.06%). As at December 31, 2022, the Company’s estimate of the undiscounted amount of

future reclamation costs, in current year dollars, is $23,601,000 (December 31, 2021 - $24,617,000). The majority

of the reclamation costs are expected to be incurred between 2040 and 2058. Revisions to the reclamation

liabilities for the MLJV and MWJV are recognized on the balance sheet as adjustments to the assets associated

with the sites.

Under the Saskatchewan Mineral Industry Environmental Protection Regulations (1996), the Company is required

to provide its pro-rata share of financial assurances to the province of Saskatchewan relating to future

decommissioning and reclamation plans that have been filed and approved by the applicable regulatory authorities.

Accordingly as at December 31, 2022, the Company has provided irrevocable standby letters of credit, from a

chartered bank, in favour of the Saskatchewan Ministry of Environment, total ing $22,972,000, which relate to the

most recently filed reclamation plan dated November 2021.

Refer to note 9 and note 16 for details regarding further amendments to the letters of credit facility that occurred in

April 2022 and December 2022, respectively.

Site Restoration: Wheeler River and other

The Company’s exploration and evaluation activities, including those related to Wheeler River, are subject to

environmental regulations as set out by the government of Saskatchewan. Cost estimates of the estimated future

decommissioning and reclamation activities are recognized when the liability is incurred. The accrual represents

the Company’s best estimate of the present value of the future reclamation cost contemplated in these cost

estimates discounted at 5.71% per annum (December 31, 2021 - 4.06%). As at December 31, 2022, the

undiscounted amount of estimated future reclamation costs, in current year dollars, is estimated at $3,601,000

(December 31, 2021 - $1,562,000). Revisions to the reclamation liabilities for exploration and evaluation activities

are recognized on the balance sheet as adjustments to the net reclamation assets associated with the respective

properties.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		15. SHARE PURCHASE WARRANTS

		In connection with the public offerings of units in February 2021 and March 2021 (see note 18), the Company
		issued 15,796,975 and 39,215,000 share purchase warrants to unit holders, respectively. The February 2021
		warrants entitle the holder to acquire one common share of the Company at an exercise price of USD$2.00 for 24
		months after issuance (expires February 2023). The March 2021 warrants entitle the holder to acquire one common
		share of the Company at an exercise price of USD$2.25 for 24 months after issuance (expires March 2023).

		Since these warrants are exercisable in U.S. dollars (“USD”), which differs from the Company’s CAD functional
		currency, they are classified as derivative liabilities and are required to be carried as liabilities at FVTPL. When the
		fair value of the warrants is revalued at each reporting period, the change in the liability is recorded through net
		profit or loss in “Other income (expense)”.

		February 2021 Warrants

		The fair value of the February 2021 warrants was estimated to be $0.2215 on the date of issue, based on a relative
		fair value basis approach, using a USD to CAD foreign exchange rate of 0.7928 and incorporating the following
		assumptions in the Black-Scholes option pricing model – expected volatility of 67%, risk-free interest rate of 0.22%,
		dividend yield of 0% and an expected term of 2 years.

		At December 31, 2021, the fair value of the February 2021 warrants was estimated to be $0.4032, using a USD to
		CAD foreign exchange rate of 0.7888 and incorporating the following assumptions in the Black-Scholes option
		pricing model – expected volatility of 84%, risk-free interest rate of 0.91%, dividend yield of 0% and an expected
		term of 1.13 years.

		At December 31, 2022, the fair value of each February 2021 warrant is estimated to be $nil, using a USD to CAD
		foreign exchange rate of 0.7383 based on the following assumptions in the Black-Scholes option pricing model –
		expected volatility of 28%, risk-free interest rate of 4.07%, dividend yield of 0% and an expected term of 0.13 years.

		March 2021 Warrants

		The fair value of the March 2021 warrants was estimated to be $0.2482 on the date of issue, based on a relative
		fair value basis approach, using a USD to CAD foreign exchange rate of 0.7992 and incorporating the following
		assumptions in the Black-Scholes option pricing model – expected volatility of 72%, risk-free interest rate of 0.27%,
		dividend yield of 0% and an expected term of 2 years.

		At December 31, 2021, the fair value of the March 2021 warrants was estimated to be $0.3563, using a USD to
		CAD foreign exchange rate of 0.7888 and incorporating the following assumptions in the Black-Scholes option
		pricing model – expected volatility of 82%, risk-free interest rate of 0.91%, dividend yield of 0% and an expected
		term of 1.22 years.

		At December 31, 2022, the fair value of each March 2021 warrant is estimated to be $nil, using a USD to CAD
		foreign exchange rate of 0.7383 based on the following assumptions in the Black-Scholes option pricing model –
		expected volatility of 29%, risk-free interest rate of 4.07%, dividend yield of 0% and an expected term of 0.22 years.

		The share purchase warrants liability continuity is as fol ows:

				Number of		Warrant
		(in thousands except warrant amounts)		Warrants		Liability

			Balance-December 31, 2021	55,006,475 $		20,337
			Change in fair value to (profit) and loss (note 21)		-		(20,337)
			Balance-December 31, 2022	55,006,475 $	-










	29


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		16. OTHER LIABILITIES

		The other liabilities balance consists of:

					At December 31	At December 31
			(in thousands)				2022		2021

			Other liabilities:
			Lease obligations		$			396 $	452
			Loan obligations					180	56
					$			576 $	508

			Other liabilities-by balance sheet presentation:
			Current		$			216 $	179
			Non-current					360	329
					$			576 $	508

		Debt Obligations

		At December 31, 2022, the Company’s debt obligations are comprised of lease and loan liabilities. The debt
		obligations continuity summary is as follows:

								Lease			Loan	Total Debt
			(in thousands)								Liabilities		Liabilities	Obligations

			Balance-January 1, 2021	$	582 $	33 $	615
			Accretion (note 21)		44	-	44
			Additions		71	34	105
			Repayments		(241)			(11)		(252)
			Liability adjustment gain (note 21)		(4)	-	(4)
			Balance-December 31, 2021	$	452 $	56 $	508

			Accretion (note 21)	$	32 $	- $	32
			Additions		87	158	245
			Repayments		(175)			(34)		(209)
			Balance-December 31, 2022	$	396 $	180 $	576

		Debt Obligations – Scheduled Maturities

		The fol owing table outlines the Company’s scheduled maturities of its debt obligations at December 31, 2022:

								Lease			Loan	Total Debt
			(in thousands)								Liabilities		Liabilities	Obligations

			Maturity analysis-contractual undiscounted cash flows:
			Next 12 months	$	161 $	55 $	216
			One to five years		279	135	414
			More than five years				-	-	-
			Total obligation-end of period-undiscounted		440	190	630
			Present value discount adjustment		(44)			(10)	(54)
			Total obligation-end of period-discounted	$	396 $	180 $	576

		Letters of Credit Facility

		In January 2022, the Company entered into an agreement with BNS to extend the maturity date of the Company’s
		credit facility to January 31, 2023 (“2022 Credit Facility”). At that time, under the 2022 Credit Facility, the Company
		continued to have access to letters of credit of up to $24,000,000, which was fully utilized for non-financial letters
		of credit in support of reclamation obligations. Al other terms of the credit facility (tangible net worth covenant,
		pledged cash, investments amount and security for the facility) remained unchanged by the amendment.

	30

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

In April 2022 , as a result of the decrease in the financial assurances required for the MLJV and MWJV reclamation

obligation, the Company entered into a further amendment with respect to the 2022 Credit Facility. This

amendment reduced the maximum letters of credit available under the 2022 Credit Facility to $22,972,000, which

is fully utilized for non-financial letters of credit in support of reclamation obligations. Concurrently, the cash

collateral on deposit with BNS to maintain the 2022 Credit Facility was reduced from $9,135,000 to $7,972,000,

which resulted in the release of $1,163,000 in previously restricted cash back to the Company. Al other terms of

the credit facility (tangible net worth covenant and security for the facility) remain unchanged by this further

amendment.

The 2022 Credit Facility contains a covenant to maintain a level of tangible net worth greater than or equal to the

sum of $131,000,000 and a pledge of $7,972,000 in restricted cash and investments as collateral for the facility

(see note 9). As additional security for the 2022 Credity Facility, DMC has provided an unlimited ful recourse

guarantee and a pledge of all of the shares of Denison Mines Inc. (“DMI”). DMI has provided a first-priority security

interest in all present and future personal property and an assignment of its rights and interests under all material

agreements relative to the MLJV and MWJV projects.

The 2022 Credit Facility is subject to letter of credit fees of 2.40% (0.40% on the $7,972,000 covered by pledged

cash collateral) and standby fees of 0.75%. During the year ended December 31, 2022, the Company incurred

letter of credit fees of $383,000 (December 31, 2021 - $397,000).

In December 2022, the Company entered into an agreement with BNS to amend the terms of the 2022 Credit

Facility to extend the maturity date to January 31, 2024 (“2023 Credit Facility”) and to increase the credit available

under the facility by $992,000 to cover additional standby letters of credit with respect to environmental obligations

associated with the FFT activities at Wheeler River. Al other terms of the 2023 Credit Facility (tangible net worth

covenant, investment amounts, pledged assets and security for the facility) remain unchanged by the amendment

and the 2023 Facility remains subject to letter of credit and standby fees of 2.40% (0.40% on the $7,972,000

covered by pledged cash collateral) and 0.75% respectively.

At December 31, 2022, the Company is in compliance with its facility covenants and has access to letters of credit

of up to $23,964,000 (December 31, 2021 - $24,000,000). The facility is ful y utilized as collateral for non-financial

letters of credit issued in support of reclamation obligations for the MLJV, MWJV and Wheeler River (see note 14).

17. INCOME TAXES

The income tax recovery balance from continuing operations consists of:

(in thousands)

2022

2021

Deferred income tax:

Origination of temporary dif erences

149 $

1,795

Tax benefit-previously unrecognized tax assets

2,128

247

Prior year under provision

(8)

(47)

2,269

1,995

Income tax recovery

2,269 $

1,995


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		The Company operates in multiple industries and jurisdictions, and the related income is subject to varying rates
		of taxation. The combined Canadian tax rate reflects the federal and provincial tax rates in effect in Ontario, Canada
		for each applicable year. A reconciliation of the combined Canadian tax rate to the Company’s effective rate of
		income tax is as follows:

			(in thousands)	2022		2021

			Income before taxes		$	12,085 $		16,982
			Combined Canadian tax rate			26.50%		26.50%
			Income tax expense at combined rate			(3,202)		(4,500)

			Difference in tax rates			(3,394)		(1,704)
			Non-deductible amounts			(3,018)		(4,637)
			Non-taxable amounts			17,334		13,518
			Change in deferred tax assets not recognized (1)			(5,257)				(409)
			Change in tax rates, legislation						(151)	(29)
			Prior year under provision				(8)	(47)
			Other						(35)	(197)
			Income tax recovery		$	2,269 $				1,995

		(1) The Company has recognized certain previously unrecognized Canadian tax assets in 2022 and 2021 as a result of the renunciation of certain
			tax benefits to subscribers pursuant to its December 2021 $8,000,000 and December 2020 $930,000 flow-through share offerings.

		The deferred income tax assets (liabilities) balance reported on the balance sheet is comprised of the temporary
		differences as presented below:

					At December 31 At December 31
			(in thousands)			2022		2021

			Deferred income tax assets:
			Property, plant and equipment, net		$				387 $	387
			Post-employment benefits						314	331
			Reclamation obligations			8,990		11,420
			Non-capital tax loss carry forwards			20,070		16,910
			Capital loss carry forward			9,483				6,862
			Other			8,077				7,942
			Deferred income tax assets-gross			47,321		43,852
			Set-off against deferred income tax liabilities			(47,321)		(43,852)
			Deferred income tax assets-per balance sheet		$		- $	-

			Deferred income tax liabilities:
			Inventory		$				(759) $	(755)
			Property, plant and equipment, net			(40,757)		(42,322)
			Investments-equity instruments and uranium			(9,483)		(6,862)
			Other			(1,272)		(1,132)
			Deferred income tax liabilities-gross			(52,271)		(51,071)
			Set-off of deferred income tax assets			47,321		43,852
			Deferred income tax liabilities-per balance sheet	$	(4,950) $		(7,219)

		The deferred income tax liability continuity summary is as follows:

			(in thousands)			2022		2021

			Balance-January 1		$	(7,219) $		(9,192)
			Recognized in income			2,269				1,995
			Recognized in other liabilities (flow-through shares)			-	(22)
			Recognized in other comprehensive income				-	-
			Balance-December 31		$	(4,950) $		(7,219)

	32


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		Management believes that it is not probable that sufficient taxable profit wil be available in future years to al ow
		the benefit of the following deferred tax assets to be utilized:

						At December 31 At December 31
			(in thousands)				2022		2021

			Deferred income tax assets not recognized
			Property, plant and equipment			$				5,372 $	4,022
			Tax losses-capital				55,704		58,312
			Tax losses-operating				57,580		51,353
			Tax credits							1,126	1,126
			Other deductible temporary dif erences							2,653	5,023
			Deferred income tax assets not recognized			$	122,435 $		119,836

			The expiry dates of the Company’s Canadian operating tax losses and tax credits are as fol ows:

				Expiry		At December 31 At December 31
			(in thousands)	Date			2022		2021

			Tax losses-gross	2025-2042	$	287,754 $		251,967

			Tax benefit at tax rate of 26% - 27%				77,650		68,263
			Set-off against deferred tax liabilities				(20,070)		(16,910)
			Total tax loss assets not recognized			$	57,580 $		51,353

			Tax credits	2025-2035					1,126	1,126
			Total tax credit assets not recognized			$				1,126 $	1,126
	33


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		18. SHARE CAPITAL

		Denison is authorized to issue an unlimited number of common shares without par value. A continuity summary of
		the issued and outstanding common shares and the associated dol ar amounts is presented below:

				Number of
				Common
		(in thousands except share amounts)		Shares

			Balance-January 1, 2021	678,981,882 $		1,366,710
			Issued for cash:
			Unit issue proceeds-total	110,023,950		144,214
			Less: al ocation to share purchase warrants liability (note 15)		-	(13,234)
			Unit issue costs-total		-	(8,584)
			Less: al ocation to share purchase warrants issue expense		-	791
			Other share issue proceeds-total	13,996,486		19,889
			Less: other share issue costs		-	(1,798)
			Share option exercises	8,451,848		6,300
			Share purchase warrant exercises				5,500	14
			Share option exercises-transfer from contributed surplus		-	2,157
			Share unit exercises-transfer from contributed surplus	970,329	566
			Share purchase warrant exercises-warrant liability set led		-	4
				133,448,113		150,319
			Balance-December 31, 2021	812,429,995 $		1,517,029

			Issued for cash:
			Shares issued for cash-total	11,042,862		20,200
			Less: share issue costs		-	(599)
			Other share issue-total	128,052	219
			Less: other share issue costs		-	(50)
			Share option exercises	2,169,681	1,459
			Share option exercises-transfer from contributed surplus		-	550
			Share unit exercises-transfer from contributed surplus	555,002	401
				13,895,597		22,180
			Balance-December 31, 2022	826,325,592 $		1,539,209

		Unit and Other Share Issues

		In January and February 2021, Denison, through its agents, issued 4,230,186 common shares under its at-the-
		market (“ATM”) program that was established pursuant to the equity distribution agreement dated November 13,
		2020 (“2020 ATM Program”) and qualified by a prospectus supplement to its short form base shelf prospectus
		dated June 2, 2020 (“2020 Shelf Prospectus”). The common shares were issued at an average price of $0.93 per
		share for aggregate gross proceeds of $3,914,000. The Company also recognized issue costs of $466,000 related
		to its ATM share issuances, which includes $78,000 of commissions and $384,000 associated with the set-up of
		the 2020 ATM Program, which were previously deferred on the balance sheet and included in Prepaid expenses
		and other at December 31, 2020. In connection with the public offering completed on March 22, 2021 (see below),
		the Company terminated its 2020 ATM Program.

		On February 19, 2021, the Company completed a public offering by way of a prospectus supplement to the 2020
		Shelf Prospectus of 31,593,950 units of the Company at USD$0.91 per unit for gross proceeds of $36,265,000
		(USD$28,750,000), including the ful exercise of the underwriters’ over-allotment option of 4,120,950 units. Each
		unit consisted of one common share and one-half of one transferable common share purchase warrant of the
		Company. Each full warrant is exercisable to acquire one common share of the Company at an exercise price of
		USD$2.00 for 24 months after issuance. A portion of the gross proceeds was al ocated to share warrant liabilities
		on a relative fair value basis (see note 15) and the pro-rata share of the issue costs associated with the offering
		was expensed within Other expense (see note 21).

		On March 3, 2021, the Company completed a private placement of 5,926,000 flow-through common shares at a
		price of $1.35 per share for gross proceeds of approximately $8,000,000. The income tax benefits of this issue
		were renounced to subscribers with an effective date of December 31, 2021. The related flow-through share
		premium liability was valued at $nil as the issue price was less than the Company’s observed share price on the
		date of issue.
	34


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		On March 22, 2021, the Company completed a public offering by way of a prospectus supplement to the 2020
		Shelf Prospectus of 78,430,000 units of the Company at USD$1.10 per unit for gross proceeds of $107,949,000
		(USD$86,273,000), including the full exercise of the underwriters’ over-al otment option of 10,230,000 units. Each
		unit consisted of one common share and one-half of one transferable common share purchase warrant of the
		Company. Each full warrant is exercisable to acquire one common share of the Company at an exercise price of
		USD$2.25 for 24 months after issuance. A portion of the gross proceeds was al ocated to share warrant liabilities
		on a relative fair value basis (see note 15) and the pro-rata share of the issue costs associated with the offering
		was expensed within Other expense (see note 21).

		On September 16, 2021, the Company filed a short form base shelf prospectus with the securities’ regulatory
		authorities in each of the provinces and territories in Canada a registration statement on Form F-10 and in the
		United States (“2021 Shelf Prospectus”). Under the 2021 Shelf Prospectus, the Company is qualified to issue
		securities, in amounts, at prices, and on terms to be determined based on market conditions at the time of sale
		and as set forth in the 2021 Shelf Prospectus, for an aggregate offering amount of up to $250,000,000 during the
		25-month period ending on October 16, 2023.

		On September 28, 2021, Denison entered into an equity distribution agreement providing for an ATM equity offering
		program qualified by a prospectus supplement to the 2021 Shelf Prospectus (“2021 ATM Program"). The 2021
		ATM Program wil allow Denison, through its agents, to, from time to time, offer and sel , in Canada and the United
		States, such number of common shares as would have an aggregate offering price of up to USD$50,000,000.

		During the year ended December 31, 2021, the Company issued 3,840,000 shares under the 2021 ATM Program.
		The common shares were issued at an average price of $2.08 per share for aggregate gross proceeds of
		$7,975,000. The Company also recognized issue costs of $748,000 related to its ATM share issuances which
		includes $160,000 of commissions and $588,000 associated with the set-up and maintenance of the 2021 Shelf
		Prospetus and 2021 ATM Program.

		During the year ended December 31, 2022, the Company issued 11,042,862 shares under the 2021 ATM Program.
		The common shares were issued at an average price of $1.83 per share for aggregate gross proceeds of
		$20,200,000. The Company also recognized issue costs of $599,000 related to these ATM share issuances, which
		includes $404,000 of commissions and $195,000 associated with the maintenance of the 2021 Shelf Prospectus
		and 2021 ATM Program.

		In total, as at December 31, 2022, the Company has issued 14,883,162 shares under the 2021 ATM Program for
		aggregate gross proceeds of $28,175,000. The common shares were issued at an average price of $1.88. The
		Company also recognized total issue costs of $1,347,000 related to its ATM share issuances which includes
		$564,000 of commissions and $783,000 associated with the set-up and maintenance of the 2021 Shelf Prospectus
		and 2021 ATM Program.

		Flow-Through Share Issues

		During the years ended December 31, 2022 and December 31, 2021 the Company financed a portion of its
		exploration programs through the use of flow-through share issuances. Canadian income tax deductions relating
		to these expenditures are claimable by the investors and not by the Company.

		As at December 31, 2021, the Company estimates that it has satisfied its obligation to spend $930,000 on eligible
		exploration expenditures in fiscal 2021 in connection with the issuance of flow-through shares in December 2020.
		The Company renounced the income tax benefits of this issue in February 2021, with an effective date of
		renunciation to its subscribers of December 31, 2020. In conjunction with the renunciation, the flow-through share
		premium liability at December 31, 2020 has been extinguished and a deferred tax recovery has been recognized
		in the first quarter of 2021 (see note 17).

		As at December 31, 2022, the Company estimates that it has satisfied its obligation to spend $8,000,000 on eligible
		exploration expenditures by the end of fiscal 2022 due to the issuance of flow-through shares in March 2021. The
		Company renounced the income tax benefits of this issue in February 2022, with an effective date of renunciation
		to its subscribers of December 31, 2021.





	35


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		19. SHARE-BASED COMPENSATION

		The Company’s share-based compensation arrangements include share options, restricted share units (“RSUs”)
		and performance share units (“PSUs”).

		Share-based compensation is recorded over the vesting period, and a summary of share-based compensation
		expense recognized in the statement of income (loss) is as fol ows:

			(in thousands)													2022		2021

			Share-based compensation expense for:
			Share options						$		(1,416) $		(1,383)
			RSUs								(2,076)		(1,435)
			PSUs								(244)	(14)
			Share based compensation expense						$		(3,736) $		(2,832)

		An additional $2,401,000 in share-based compensation expense remains to be recognized, up until November
		2025, on outstanding share options and share units at December 31, 2022.

		Share Options

		The Company’s Share Option Plan provides for the granting of share options up to 10% of the issued and
		outstanding common shares at the time of grant, subject to a maximum of 39,670,000 common shares. As of
		December 31, 2022, an aggregate of 27,485,093 options (December 31, 2021 - 26,226,093) have been granted
		(less cancellations) since the Plan’s inception in 1997.

			Under the Share Option Plan, all share options are granted at the discretion of the Company’s board of directors,
		including any vesting provisions if applicable. The term of any share option granted may not exceed ten years and
		the exercise price may not be lower than the closing price of the Company’s shares on the last trading day
		immediately preceding the date of grant. In general, share options granted under the Share Option Plan have five-
		year terms and vesting period of two or three years. Share options issued during the twelve months ended
		December 31, 2022 had a vesting period of three years.

			A continuity summary of the share options of the Company granted under the Share Option Plan for 2022 and
		2021 is presented below:

				2022								2021
							Weighted										Weighted
							Average										Average
							Exercise										Exercise
				Number of	Price per							Number of			Price per
	Common				Share	Common		Share
				Shares						(CAD)		Shares		(CAD)

			Share options outstanding-January 1	9,449,895 $				0.86	15,077,243 $	0.67
			Grants	1,687,000				1.82		4,171,000	1.30
			Exercises (1)	(2,169,681)				0.67	(8,451,848)	0.75
			Expiries	(26,000)				0.85		(31,000)	0.66
			Forfeitures	(402,000)				1.14	(1,315,500)	0.79
			Share options outstanding-December 31	8,539,214 $				1.09		9,449,895 $	0.86
			Share options exercisable-December 31	5,178,714 $				0.78		4,370,895 $	0.61

			(1) The weighted average share price at the date of exercise was CAD$1.75 (December 31, 2021 - CAD$1.49).

	36

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Company’s share options outstanding at December 31, 2022 is presented below:

Weighted

Weighted-

Average

Remaining

Exercise

Range of Exercise

Contractual

Number of

Price per

Prices per Share

Life

Common

(CAD)

(Years)

(CAD)

Share options outstanding

$ 0.25 to $ 0.49

2.21

1,822,000 $

0.46

$ 0.50 to $ 0.74

0.97

1,841,714

0.66

$ 0.75 to $ 0.99

$ 1.00 to $ 1.49

3.22

3,125,500

1.28

$ 1.50 to $ 1.99

4.22

1,634,000

1.82

$ 2.00 to $ 2.49

3.91

116,000

2.27

Share options outstanding-December 31, 2022

2.72

8,539,214 $

1.09

Share options outstanding at December 31, 2022 expire between March 2023 and November 2027.

The fair value of each share option granted is estimated on the date of grant using the Black-Scholes option pricing

model. The fol owing table outlines the assumptions used in the model to determine the fair value of share options

granted:

2022

2021

Risk-free interest rate

1.44% - 4.07%

0.70% - 1.29%

Expected share price volatility

73.8% - 76.78%

66.11% - 73.37%

Expected life

3.37 years - 3.42 years

3.4 years

Expected dividend yield

–

Fair value per option granted

CAD$0.82 - CAD$1.10

CAD$0.59 - CAD$1.22

The fair values of share options with vesting provisions are amortized on a graded method basis as share-based

compensation expense over the applicable vesting periods.

Share Units

The Company has a share unit plan which provides for the granting of share unit awards to directors, officers and

employees of the Company, in the form of RSUs or PSUs. The maximum number of share units that are issuable

under the share unit plan is 15,000,000. Each share unit represents the right to receive one common share from

treasury, subject to the satisfaction of various time and / or performance conditions.

Under the plan, all share unit grants, vesting periods and performance conditions therein are approved by the

Company’s board of directors. RSUs granted under the plan in 2022, to date, vest ratably over a period of three

years. PSUs granted under the plan in 2022, vest over one year based upon the achievement of certain non-

market performance vesting conditions. PSUs granted in 2018 vest ratably over a period of five years, PSUs

granted in 2019 vest ratably over a period of four years and PSUs granted in 2020 vest ratably over a period of

three years.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		A continuity summary of the RSUs of the Company granted under the share unit plan for 2022 and 2021 is
		presented below:

				2022			2021
							Weighted								Weighted
							Average								Average
				Number of	Fair Value		Number of			Fair Value
				Common	Per RSU		Common			Per RSU
				Shares							(CAD)			Shares		(CAD)

			RSUs outstanding-January 1	5,801,841 $					0.80	5,691,899 $	0.52
			Grants	1,251,000					2.08	1,958,000	1.44
			Exercises (1)	(435,002)					0.82	(760,329)	0.56
			Forfeitures	(201,750)					1.04	(1,087,729)			0.63
			RSUs outstanding-December 31	6,416,089 $					1.04	5,801,841 $	0.80
			RSUs vested-December 31	3,307,840 $					0.67	1,997,677 $	0.59

			(1) The weighted average share price at the date of exercise was CAD$1.79 (December 31, 2021 - CAD$1.54).

		A continuity summary of the PSUs of the Company granted under the share unit plan for 2022 and 2021 is
		presented below:

				2022			2021
							Weighted								Weighted
							Average								Average
				Number of	Fair Value		Number of			Fair Value
				Common	Per PSU		Common			Per PSU
				Shares							(CAD)			Shares		(CAD)

			PSUs outstanding-January 1	1,530,000 $					0.62	2,020,000 $	0.63
			Grants			120,000		2.08	-	-
			Exercises (1)	(120,000)					0.38	(210,000)	0.66
			Forfeitures	(60,000)					0.38	(280,000)	0.68
			PSUs outstanding-December 31	1,470,000 $					0.77	1,530,000 $	0.62
			PSUs vested-December 31	1,080,000 $					0.65	870,000 $	0.63

			(1) The weighted average share price at the date of exercise was CAD$1.58 (December 31, 2021 - CAD$1.41).

		The fair value of each RSU and PSU granted is estimated on the date of grant using the Company’s closing share
		price on the day before the grant date.


		20. ACCUMULATED OTHER COMPREHENSIVE INCOME

		The accumulated other comprehensive income balance consists of:

										At December 31	At December 31
			(in thousands)								2022			2021

			Cumulative foreign currency translation							$	420 $	414
			Experience gains-post employment liability
			Gross								1,847	1,847
			Tax effect								(485)	(485)
										$	1,782 $	1,776







	38


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		21. SUPPLEMENTAL FINANCIAL INFORMATION

		The components of operating expenses are as fol ows:

			(in thousands)												2022	2021

			Cost of goods and services sold:
			Cost of goods sold-mineral concentrates						$		(444) $	-
			Operating Overheads:
									Mining, other development expense								(660)	(2,630)
									Mil ing, conversion expense								(3,104)	(2,697)
									Less absorption:
				- Mineral properties									68	46
				- Milling									-	451
			Cost of services-Closed Mines Services								(7,022)		(7,791)
			Cost of goods and services sold								(11,162)		(12,621)
			Reclamation asset amortization								(199)		(280)
			Selling expenses								(48)	-
			Sales royalties and non-income taxes								(216)	-
			Operating expenses						$		(11,625) $		(12,901)

		The components of Other income (expense) are as follows:

			(in thousands)				2022		2021

			Gains (losses) on:
			Foreign exchange		$		816 $	(1,295)
			Disposal of property, plant and equipment				(25)	135
			Fair value changes:
			Investments-equity instruments (note 7)			(6,469)	10,454
			Investments-uranium (note 7)			29,422	41,440
			Warrants on investment (note 7)				1,625	1,149
			Share purchase warrants (note 15)			20,337	(7,104)
			Reclamation obligation adjustments (note 14)				4,126	585
			Debt obligation adjustments (note 16)				-	4
			Share purchase warrants issue expense (note 18)				-	(791)
			Recognition of proceeds-U.I Repayment Agreement (note 25)				6,142	-
			Uranium investment carrying charges				(374)	(223)
			Other				(273)	(191)
			Other income		$	55,327 $	44,163
		The components of finance income (expense) are as fol ows:

			(in thousands)												2022	2021

			Interest income						$		1,419 $	383
			Interest expense									(6)	(2)
			Accretion expense:
			Deferred revenue (note 12)								(2,774)		(3,098)
			Post-employment benefits (note 13)								(22)	(23)
			Reclamation obligations (note 14)							(1,444)		(1,343)
			Debt obligations (note 16)							(32)	(44)
			Finance expense, net						$		(2,859) $		(4,127)

	39


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		A summary of depreciation expense recognized in the statement of income (loss) is as follows:

			(in thousands)						2022	2021

			Operating expenses:
			Mining, other development expense	$			(2) $	(2)
			Mil ing, conversion expense			(3,076)		(2,053)
			Cost of services			(185)		(179)
			Exploration			(266)		(180)
			Evaluation			(270)	(36)
			General and administrative			(144)		(114)
			Depreciation expense-gross	$		(3,943) $		(2,564)

		A summary of employee benefits expense recognized in the statement of income (loss) is as follows:

			(in thousands)						2022	2021

			Salaries and short-term employee benefits	$		(12,416) $		(9,358)
			Share-based compensation (note 19)			(3,736)		(2,832)
			Termination benefits				(2)	(125)
			Employee benefits expense-gross	$		(16,154) $		(12,315)

		A summary of lease related amounts recognized in the statement of income (loss) is as follows:

			(in thousands)						2022	2021

			Accretion expense on lease liabilities	$		(32) $	(44)
			Expenses relating to short-term leases			(6,095)		(3,920)
			Expenses relating to non-short term low-value leases		(1)	(6)
			Lease related expense-gross	$		(6,128) $		(3,970)

		The change in non-cash operating working capital items in the consolidated statements of cash flows is as fol ows:

			(in thousands)						2022	2021

			Change in non-cash working capital items:
			Trade and other receivables		$	(512) $		(282)
			Inventories			741		(410)
			Prepaid expenses and other assets			129		(183)
			Accounts payable and accrued liabilities			1,385	676
			Change in non-cash working capital items		$	1,743 $		(199)

		The supplemental cash flow disclosure required for the consolidated statements of cash flows is as follows:

			(in thousands)						2022	2021

			Supplemental cash flow disclosure:
			Interest paid		$	(6) $	(2)
			Income taxes paid				-	-



		22. SEGMENTED INFORMATION

		Business Segments

			The Company operates in three primary segments – the Mining segment, the Closed Mine Services segment and
		the Corporate and Other segment. The Mining segment includes activities related to exploration, evaluation and
		development, mining, milling (including toll milling) and the sale of mineral concentrates. The Closed Mine Services
		segment includes the results of the Company’s environmental services business which provides mine
	40


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		decommissioning and other services to third parties. The Corporate and Other segment includes management fee
		income earned from UPC and general corporate expenses not allocated to the other segments. Management fee
		income has been included in the same segment as general corporate expenses due to the shared infrastructure
		between the two activities.

		For the year ended December 31, 2022, reportable segment results were as fol ows:

										Closed
									Mines	Corporate
			(in thousands)	Mining				Services	and Other	Total

			Statement of Operations:
			Revenues			8,973							7,972	-	16,945

			Expenses:
			Operating expenses			(4,603)							(7,022)	-	(11,625)
			Exploration			(8,097)											-	-	(8,097)
			Evaluation			(22,181)											-	-	(22,181)
			General and administrative			(22)											-	(12,516)	(12,538)
					(34,903)					(7,022)	(12,516)	(54,441)
			Segment income (loss)			(25,930)											950	(12,516)	(37,496)

			Revenues-supplemental:
			Environmental services			-	7,972	-	7,972
			Toll milling services-deferred revenue (note 12)		5,987									-	-	5,987
			Uranium concentrate sales		2,986									-	-	2,986
						8,973							7,972	-	16,945

			Capital additions:
			Property, plant and equipment (note 10)			2,321											313	4,631	7,265

			Long-lived assets:
			Plant and equipment
			Cost			98,953							4,385	5,493	108,831
			Accumulated depreciation			(31,820)							(2,983)	(742)	(35,545)
			Mineral properties			180,219											-	-	180,219
						247,352							1,402	4,751	253,505
	41


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

			For the year ended December 31, 2021, reportable segment results were as fol ows:

												Closed
											Mines	Corporate
			(in thousands)	Mining						Services	and Other	Total

			Statement of Operations:
			Revenues					3,207							8,829	7,964	20,000

			Expenses:
			Operating expenses					(5,110)							(7,791)	-	(12,901)
			Exploration					(4,477)											-	-	(4,477)
			Evaluation					(15,521)											-	-	(15,521)
			General and administrative					(19)											-	(9,672)	(9,691)
						(25,127)						(7,791)	(9,672)	(42,590)
			Segment income (loss)					(21,920)							1,038	(1,708)	(22,590)

			Revenues-supplemental:
			Environmental services					-	8,829	-	8,829
			Management fees					-				-	7,964	7,964
			Toll milling services-deferred revenue (note 12)			3,207										-	-	3,207
								3,207							8,829	7,964	20,000

			Capital additions:
			Property, plant and equipment (note 10)					1,009											102	191	1,302

			Long-lived assets:
			Plant and equipment
			Cost					101,392							4,182	1,062	106,636
			Accumulated depreciation					(28,542)							(2,907)	(513)	(31,962)
			Mineral properties					179,788											-	-	179,788
								252,638							1,275	549	254,462

		Revenue Concentration

		The Company’s business is such that, at any given time, it sells its environmental and other services to a relatively
		smal number of customers. During 2022, one customer from the Closed Mines group segment and two customers
		from the Mining segment accounted for approximately 100% of total revenues consisting of 47%, and 53%
		respectively. During 2021, one customer from the Corporate and Other segment, two customers from the Closed
		Mine group segment and one customer from the Mining segment accounted for approximately 100% of total
		revenues consisting of 40%, 44% and 16% respectively.

		Revenue Commitments

		The fol owing table summarizes the expected future revenue, by segment, based on the customer contract
		commitments and information that exists as at December 31, 2022:

																	There-
			(in thousands)		2023	2024						2025				2026	after	Total

			Revenues-by Segment:
			Closed Mines Services
			Environmental services				4,448						467	-	-		-	4,915
			Total Revenue Commitments				4,448						467	-	-		-	4,915

		The amounts in the table above represent the estimated consideration that Denison wil be entitled to receive when
		it satisfies the remaining performance obligations in its customer contracts. Various assumptions, consistent with
		past experience, have been made where the quantity of the performance obligation may vary.

		In addition to the amounts disclosed above, the Company is also contracted to pay onward to Ecora all toll milling
	42

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

cash proceeds received from the MLJV related to the processing of specified Cigar Lake ore through the McClean

Lake mil (see note 12). The timing and amount of such future toll mil ing cash proceeds are outside the control of

the Company.

23. RELATED PARTY TRANSACTIONS

Uranium Participation Corporation (“UPC”)

UPC was a publicly-listed company which invested substantially all of its assets in uranium oxide concentrates

(“U3O8”) and uranium hexafluoride (“UF6”). The Company had no ownership interest in UPC but received fees for

management services it provided and commissions from the purchase and sale of U3O8 and UF6 by UPC.

The Company entered into a management services agreement (“MSA”) with UPC effective on April 1, 2019 with a

term of five years (the “Term”). Under the MSA, Denison received the fol owing management fees from UPC: a)

a base fee of $400,000 per annum, payable in equal quarterly installments; b) a variable fee equal to (i) 0.3% per

annum of UPC’s total assets in excess of $100 mil ion and up to and including $500 mil ion, and (i ) 0.2% per

annum of UPC’s total assets in excess of $500 mil ion; c) a fee, at the discretion of the Board, for on-going

monitoring or work associated with a transaction or arrangement (other than a financing, or the acquisition of or

sale of U3O8 or UF6); and d) a commission of 1.0% of the gross value of any purchases or sales of U3O8 or UF6 or

gross interest fees payable to UPC in connection with any uranium loan arrangements.

In April 2021, UPC and Sprott Asset Management LP (“Sprott”) reached an agreement to convert UPC into the

Sprott Physical Uranium Trust (“the UPC Transaction”).

In July 2021, UPC and Sprott completed the UPC Transaction and the MSA between Denison and UPC was

terminated in accordance with the termination provisions therein. As a result, Denison received a termination

payment from UPC of $5,848,000 in July 2021. Fol owing the completion of the UPC Transaction, UPC was no

longer considered a related party of Denison.

The fol owing transactions were incurred with UPC for the periods noted:

(in thousands)

2022

2021

Management fees:

Base and variable fees

- $

1,069

Discretionary fees

350

Commission fees

697

Termination fee

5,848

- $

7,964

Korea Electric Power Corporation (“KEPCO”) and Korea Hydro & Nuclear Power (“KHNP”)

In connection with KEPCO’s investment in Denison in June 2009, KEPCO and Denison became parties to a

strategic relationship agreement. In December 2016, Denison was notified that KEPCO’s indirect ownership of

Denison’s shares had been transferred from an affiliate of KEPCO to an affiliate of KEPCO’s wholly-owned

subsidiary, KHNP. In September 2017, Denison and KHNP’s affiliate entered into an amended and restated

strategic relationship agreement (“KHNP SRA”), in large part providing KHNP’s affiliate with the same rights as

those previously given to KEPCO under the prior agreement, including entitling KHNP’s affiliate to: (a) subscribe

for additional common shares in Denison’s future public equity offerings; (b) a right of first opportunity if Denison

intends to sell any of its substantial assets; (c) a right to participate in certain purchases of substantial assets which

Denison proposes to acquire; and (d) a right to nominate one director to Denison’s board so long as its share

interest in Denison is above 5.0%.

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 (“WLUC”) and the WLULP, entities whose key asset is the Waterbury Lake property. At December 31,

2022, WLUC is owned by Denison Waterbury Corp (60%) and KWULP (40%) while the WLULP is owned by

Denison Waterbury Corp (67.41% - limited partner), KWULP (32.57% - limited partner) and WLUC (0.02% - general

partner). When a spending program is approved, each participant is required to fund these entities based upon its

respective ownership interest or be diluted accordingly. Spending program approval requires 75% of the limited

partners’ voting interest.

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

In January 2014, Denison agreed to allow KWULP to defer a decision regarding its funding obligation to WLUC

and WLULP until September 30, 2015 and to not be immediately diluted as per the dilution provisions in the relevant

agreements (“Dilution Agreement”). Instead, under the Dilution Agreement, dilution would be delayed until

September 30, 2015 and then applied in each subsequent period, if applicable, in accordance with the original

agreements. In exchange, Denison received authorization to approve spending programs on the property, up to

an aggregate $10,000,000, until September 30, 2016 without obtaining approval from 75% of the voting interest.

Under subsequent amendments, Denison and KWULP have agreed to extend Denison’s authorization under the

Dilution Agreement to approve program spending up to an aggregate $15,000,000 until December 31, 2022.

In 2021, there was no active exploration program for Waterbury Lake, and therefore the Company’s ownership

interest in WLULP did not change.

In 2022, Denison funded 100% of the approved fiscal 2022 program for Waterbury Lake and KWULP continued to

dilute its interest in the WLULP. As a result, Denison increased its interest in the WLULP from 66.90% to 67.41%,

in two steps, which was accounted for using effective dates of May 31, 2022 and November 30, 2022. The

increased ownership interest resulted in Denison recording its increased pro-rata share of the assets and liabilities

of Waterbury Lake, the majority of which relates to an addition to mineral property assets of $363,000.

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 includes the Company’s

executive officers, vice-presidents and members of its Board of Directors.

The fol owing compensation was awarded to key management personnel:

(in thousands)

2022

2021

Salaries and short-term employee benefits

(3,251) $

(2,546)

Share-based compensation

(3,083)

(2,277)

Key management personnel compensation

(6,334) $

(4,823)

24. CAPITAL MANAGEMENT AND FINANCIAL RISK

Capital Management

The Company’s capital includes cash, cash equivalents, investments in debt instruments, investments in equity

instruments and the current portion of debt obligations. The Company’s primary objective with respect to its capital

management is to ensure that it has sufficient capital to maintain its ongoing operations, to provide returns to

shareholders and benefits for other stakeholders, and to pursue growth opportunities.

Long-term planning, annual budgeting and controls over major investment decisions are the primary tools used to

manage the Company’s capital. The Company’s cash is managed centrally and disbursed to the various business

units based on a system of internal controls that require review and approval of significant expenditures by the

Company’s key decision makers. Under the Company’s delegation of authority guidelines, significant debt

obligations require the approval of the Board of Directors.

The Company monitors and reviews the composition of its net cash and investment position on an ongoing basis

and adjusts its holdings as necessary to achieve the desired level of risk and/or to accommodate operating plans

for the current and future periods.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		The Company’s net cash and investment position is summarized below:

							At December 31 At December 31
			(in thousands)					2022		2021

			Net cash and investments:
			Cash and cash equivalents (note 4)				$	50,915 $		63,998
			Equity instrument investments (note 7)					8,109		14,578
			Investments-uranium (note 7)					162,536		133,114
			Debt obligations-current (note 16)								(216)	(179)
			Net cash and investments				$	221,344 $		211,511

		Financial Risk

		The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood
		of those risks. These risks may include credit risk, liquidity risk, currency risk, interest rate risk commodity price
		and equity price risk.

		(a) Credit Risk

		Credit risk is the risk of loss due to a counterparty’s inability to meet its obligations under a financial instrument
		that wil result in a financial loss to the Company. The Company believes that the carrying amount of its cash and
		cash equivalents, trade and other receivables and restricted cash and investments represents its maximum credit
		exposure.

		The maximum exposure to credit risk at the reporting dates is as follows:

													At December 31		At December 31
			(in thousands)										2022		2021

			Cash and cash equivalents		$							50,915 $	63,998
			Trade and other receivables						4,143			3,656
			Restricted cash and investments								11,105	12,001
					$							66,163 $	79,655

		The Company limits cash and cash equivalents and restricted cash and investment risk by dealing with credit
		worthy financial institutions. The majority of the Company’s normal course trade receivables balance relates to a
		smal number of customers who have established credit worthiness with the Company through past dealings.
		Based on its historical credit loss experience, the Company has recorded an allowance for credit loss of $nil on its
		normal course trade receivables as at December 31, 2022 and December 31, 2021.

		(b) Liquidity Risk

		Liquidity risk is the risk that the Company wil encounter difficulties in meeting obligations associated with its
		financial liabilities as they become due. The Company has in place a planning and budgeting process to help
		determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The
		Company ensures that there is sufficient commit ed capital to meet its short-term business requirements, taking
		into account its anticipated cash flows from operations, its holdings of cash and cash equivalents and equity
		investments, its financial covenants, and its access to credit and capital markets, if required.

		The maturities of the Company’s financial liabilities at December 31, 2022 are as follows:

														Within 1		1 to 5
			(in thousands)	Year		Years

			Accounts payable and accrued liabilities (note 11)							$				10,299 $	-
			Debt obligations (note 16)									216	360
										$				10,515 $	360

		(c) Currency Risk

		Foreign exchange risk is the risk that the fair value of future cash flows of a financial instrument wil fluctuate
	45

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

because of changes in foreign exchange rates. The Company predominantly operates in Canada and incurs the

majority of its operating and capital costs in Canadian dollars.

As the prices of uranium are quoted in U.S. currency, fluctuations in the Canadian dol ar relative to the U.S. dol ar

can significantly impact the valuation of the Company’s holdings of physical uranium from a Canadian dol ar

perspective.

The Company is also exposed to some foreign exchange risk on its net U.S dollar financial asset position, including

cash and cash equivalents held in U.S. dollars.

At December 31, 2022, the Company’s net U.S dollar financial assets and uranium investments were $11,248,000,

and $162,536,000, respectively in CAD dollars. The impact of the U.S dollar strengthening or weakening (by 10%)

on the value of the Company’s net U.S dollar-denominated assets is as fol ows:

Dec.31’2022

Sensitivity

Foreign

Change in

Exchange

net income

(in thousands except foreign exchange rates)

Rate

(loss)

Currency risk

CAD weakens

1.3544

1.4898 $

17,330

CAD strengthens

1.3544

1.2190 $

(17,330)

Currently, the Company does not have any programs or instruments in place to hedge this possible currency risk.

(d) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument wil fluctuate because of

changes in market interest rates. The Company is exposed to interest rate risk on its liabilities through its

outstanding borrowings and on its assets through its investments in debt instruments. The Company monitors its

exposure to interest rates and has not entered into any derivative contracts to manage this risk.

(e) Commodity Price Risk

The Company’s uranium holdings are directly tied to the spot price of uranium. At December 31, 2022, a 10%

increase in the uranium spot price would have increased the value of the Company’s holdings of physical uranium

by $16,253,600, while a 10% decrease would have decreased the value of the Company’s holdings of physical

uranium by $16,253,600.

(f) Equity Price Risk

The Company is exposed to equity price risk on its investments in equity instruments of other publicly traded

companies as wel as on the GoviEx Warrants. The sensitivity analysis below illustrates the impact of equity price

risk on the equity investments held by the Company and the GoviEx Warrants at December 31, 2022:

Change in

net income

(in thousands)

(loss)

Equity price risk

10% increase in equity prices

811

10% decrease in equity prices

(811)

Fair Value of Investments and Financial Instruments

IFRS requires disclosures about the inputs to fair value measurements, including their classification within a

hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:

•

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

•

Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly;

and

•

Level 3 - Inputs that are not based on observable market data.

The fair value of financial instruments which trade in active markets, such as share and warrant equity instruments,

is based on quoted market prices at the balance sheet date. The quoted market price used to value financial assets

held by the Company is the current closing price. Warrants that do not trade in active markets have been valued

using the Black-Scholes pricing model. Debt instruments have been valued using the effective interest rate for the

period that the Company expects to hold the instrument and not the rate to maturity.

Except as otherwise disclosed, the fair values of cash and cash equivalents, trade and other receivables, accounts

payable and accrued liabilities, restricted cash and cash equivalents and debt obligations approximate their

carrying values as a result of the short-term nature of the instruments, the variable interest rate associated with

the instruments or the fixed interest rate of the instruments being similar to market rates.

During 2022 and 2021, there were no transfers between levels 1, 2 and 3 and there were no changes in valuation

techniques.

The following table il ustrates the classification of the Company’s financial assets and liabilities within the fair value

hierarchy as at December 31, 2022 and December 31, 2021:

Financial

Fair

December 31, December 31,

Instrument

Value

2022

2021

(in thousands)

Category(1)

Hierarchy

Fair Value

Financial Assets:

Cash and equivalents

Category B

50,915 $

63,998

Trade and other receivables

Category B

4,143

3,656

Investments

Equity instruments-shares

Category A

Level 1

8,022

14,349

Equity instruments-warrants

Category A

Level 2

229

Restricted cash and equivalents

El iot Lake reclamation trust fund

Category B

3,133

2,866

Credit facility pledged assets

Category B

7,972

9,000

Reclamation letter of credit collateral

Category B

135

74,272 $

94,233

Financial Liabilities:

Account payable and accrued liabilities

Category C

10,299

8,590

Debt obligations

Category C

576

508

Warrants on investment

Category A

Level 2

1,625

Share purchase warrants

Category A

Level 2

20,337

10,875 $

31,060

(1) Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category

B=Financial assets at amortized cost; and Category C=Financial liabilities at amortized cost.

Investments in uranium are categorized in Level 2. Investments in uranium are measured at fair value at each

reporting period based on the month-end spot price for uranium published by UxC and converted to Canadian

dollars during the period-end indicative foreign exchange rate.

25. COMMITMENTS AND CONTINGENCIES

General Legal Matters

The Company is involved, from time to time, in various legal actions and claims in the ordinary course of business.

In the opinion of management, the aggregate amount of any potential liability is not expected to have a material

adverse effect on the Company’s financial position or results.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		Specific Legal Matters

		Mongolia Mining Division Sale – Arbitration Proceedings with Uranium Industry a.s

		In November 2015, the Company sold all of its mining assets and operations located in Mongolia to Uranium
		Industry a.s (“UI”) pursuant to an amended and restated share purchase agreement (the “GSJV Agreement”). The
		primary assets at that time were the exploration licenses for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects.
		As consideration for the sale per the GSJV Agreement, the Company received cash consideration of
		USD$1,250,000 prior to closing and the rights to receive additional contingent consideration of up to
		USD$12,000,000.

		On September 2016, the Mineral Resources Authority of Mongolia (“MRAM”) formally issued mining license
		certificates for all four projects, triggering Denison’s right to receive contingent consideration of USD$10,000,000
		(collectively, the “Mongolia Sale Receivable”). The original due date for payment of the Mongolia Sale Receivable
		by UI was November 16, 2016. This contingent consideration is accounted for at fair value. Upon the issuance the
		mining license receivable, the fair value of the contingent consideration was increased from $nil to US$10,000,000
		and upon the non-payment by UI the fair value was reduced back to $nil.

		Under an extension agreement between UI and the Company, the payment due date of the Mongolia Sale
		Receivable was extended from November 16, 2016 to July 16, 2017 (the “Extension Agreement”). As consideration
		for the extension, UI agreed to pay interest on the Mongolia Sale Receivable amount at a rate of 5% per year,
		payable monthly up to July 16, 2017 and they also agreed to pay a USD$100,000 instalment amount towards the
		balance of the Mongolia Sale Receivable amount. The required payments were not made.

		In February 2017, the Company served notice to UI that it was in default of its obligations under the GSJV
		Agreement and the Extension Agreement and on December 12, 2017, the Company filed a Request for Arbitration
		between the Company and UI under the Arbitration Rules of the London Court of International Arbitration. The final
		award was rendered by an arbitration panel on July 27, 2020, with the panel finding in favour of Denison and
		ordering UI to pay the Company USD$10,000,000 plus interest at a rate of 5% per annum from November 16,
		2016, plus certain legal and arbitration costs.

		In January 2022, the Company executed a Repayment Agreement with UI (the “Repayment Agreement”). Under
		the terms of the Repayment Agreement, UI has agreed to make scheduled payments on account of the Arbitration
		Award, plus additional interest and fees, through a series of quarterly installments and annual milestone payments
		until December 31, 2025. The total amount due to Denison under the Repayment Agreement is approximately
		USD$16,000,000 inclusive of additional interest to be earned over the term of the agreement at a rate of 6.5% per
		annum. The Repayment Agreement 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 Repayment Agreement.

		During the year ended December 31, 2022, the Company received US$4,800,000 from UI (December 31, 2021 -
		$nil), of which a portion relates to reimbursement of legal and other expenses incurred by Denison, resulting in the
		recognition of income of $6,142,000 (December 31, 2021 - $nil) in the period. This contingent consideration
		continues to be recorded at fair value at each period end (December 31, 2022 and 2021 - $nil).

		Performance Bonds and Letters of Credit

		In conjunction with various contracts, reclamation and other performance obligations, the Company may be
		required to issue performance bonds and letters of credit as security to creditors to guarantee the Company’s
		performance. Any potential payments which might become due under these items would be related to the
		Company’s non-performance under the applicable contract. As at December 31, 2022, the Company had
		outstanding letters of credit of $23,964,000 for reclamation obligations which are collateralized by the Company’s
		2023 Credit Facility (see note 16) .


		26. INTEREST IN OTHER ENTITIES

		The significant subsidiaries, associates and joint arrangements of the Company at December 31, 2022 are listed
		below. The table also includes information related to key contractual arrangements associated with the Company’s
		mineral property interests that comprise 90.5% of the December 31, 2022 carrying value of its Mineral Property
		assets (see note 10).

	48

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

December December

Fiscal

Place

31, 2022

31, 2021

2022

Ownership Ownership Participating

Accounting

Business

Interest (1)

Interest (2)

Method

Subsidiaries

Denison Mines Inc.

Canada

100.00%

N/A

Consolidation

Denison AB Holdings Corp.

Canada

100.00%

N/A

Consolidation

Denison Waterbury Corp

Canada

100.00%

N/A

Consolidation

9373721 Canada Inc.

Canada

100.00%

N/A

Consolidation

Denison Mines (Bermuda) I Ltd

Bermuda

100.00%

N/A

Consolidation

Joint Operations

Waterbury Lake Uranium Corp(3)

Canada

60.00%

100%

Voting Share (4)

Waterbury Lake Uranium LP(3)

Canada

67.41%

66.90%

100%

Voting Share (4)

Joint Venture

JCU

Canada

50.00%

Equity(5)

Key Contractual Arrangements

Wheeler River Joint Venture

Canada

90.00%

90.00%(5)

Denison Share (4)

Midwest Joint Venture

Canada

25.17%

Denison Share (4)

Mann Lake Joint Venture

Canada

30.00%

N/A (6)

Denison Share (4)

Wolly Joint Venture

Canada

20.77%

21.32%

nil%

Denison Share (4)

McClean Lake Joint Venture

Canada

22.50%

Denison Share (4)

(1) Ownership Interest represents Denison’s percentage equity / voting interest in the entity or contractual arrangement.

(2) Participating interest represents Denison’s percentage funding contribution to the particular joint operation or contractual arrangement. This

percentage can differ from ownership interest in instances where other parties to the arrangement have carried interests, they are earning-in

to the arrangement, or they are diluting their interest in the arrangement (provided the arrangement has dilution provisions therein).

(3) WLUC and WLULP were acquired by Denison as part of the Fission Energy Corp. Acquisition in April 2013. Denison uses its equity interest

to account for its share of assets, liabilities, revenues and expenses for these joint operations. In 2022, Denison funded 100% of the activities

in these joint operations pursuant to the terms of an agreement that allows it to approve spending for the WLULP without having the required

75% of the voting interest (see note 23).

(4) Denison Share is where Denison accounts for its share of assets, liabilities, revenues and expenses in accordance with the specific terms

within the contractual arrangement. This can be by using either its ownership interest (i.e. Voting Share) or its participating interest (i.e.

Funding Share), depending on the arrangement terms. The Voting Share and Funding Share approaches produce the same accounting result

when the Company’s ownership interest and participating interests are equal.

(5) Denison indirectly owns an additional 5% ownership interest through its joint venture in JCU, which is accounted for using the equity method

and is thus not reflected here as part of its participating share in the WRJV.

(6) The participating interest for 2022 for these arrangements is shown as Not Applicable as there were no approved spending programs carried

out during fiscal 2022.