Enhanced Investments - Financial Portal

Published: 2022-03-03

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
	FOR THE YEAR ENDED DECEMBER 31, 2021

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/ “David D. Cates”	/s/ “Gabriel (Mac) McDonald”
		David D. Cates	Gabriel (Mac) McDonald
		President and Chief Executive Officer	Executive Vice-President Finance and Chief Financial
		Officer
		March 3, 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 Committee 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, 2021.
		The effectiveness of the Company’s internal control over financial reporting as at December 31, 2021 has been audited
		by KPMG LLP, our independent auditor, as stated in its report which appears herein.
		Changes to Internal Control over Financial Reporting There has not been any change in the Company’s internal control over financial reporting that occurred during 2021
		that has materially affected, or is 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, 2021 and 2020, the

related consolidated statements of income (loss) and comprehensive income

(loss), changes in equity, and cash flow for the years then ended, 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, 2021 and 2020, and its

financial performance and its cash flows for the years then ended, 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, 2021, 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 3, 2022 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.

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.

firms affiliated with KPMG International Limited, a private English company limited by guarantee. Al rights reserved.

Denison Mines Corp.
March 3, 2022
Our audits also included evaluating the accounting principles used and significant
estimates made by management, as wel 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 especially 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, 2021 was $179,788 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.
Specifically, 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 following 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 over 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 3, 2022
	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, 2021, 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 all material respects, effective internal control over

financial reporting as of December 31, 2021, 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, 2021 and 2020, the

related consolidated statements of income (loss) and comprehensive income

(loss), changes in equity and cash flow for each of the years then ended and the

related notes (collectively, the consolidated financial statements), and our report

dated March 3, 2022 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.

firms affiliated with KPMG International Limited, a private English company limited by guarantee. Al rights reserved.

Denison Mines Corp.
March 3, 2022
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.
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 3, 2022
	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
				2021		2020

		ASSETS
		Current
		Cash and cash equivalents (note 4)			$	63,998 $		24,992
		Trade and other receivables (note 5)					3,656		3,374
		Inventories (note 6)					3,454		3,015
		Investments-equity instruments (note 7)					14,437		16,657
		Prepaid expenses and other					1,310		1,373
							86,855		49,411
		Non-Current
		Inventories-ore in stockpiles (note 6)					2,098		2,098
		Investments-equity instruments (note 7)					141		293
		Investments-uranium (note 7)					133,114	-
		Investments-joint venture (note 8)					21,392	-
		Prepaid expenses and other					221	-
		Restricted cash and investments (note 9)			12,001		12,018
		Property, plant and equipment (note 10)					254,462		256,870
		Total assets			$	510,284 $		320,690

		LIABILITIES
		Current
		Accounts payable and accrued liabilities (note 11)			$	8,590 $		7,178

		Warrants on investment (note 7)				1,625	-
		Current portion of long-term liabilities:
		Deferred revenue (note 12)					4,656		3,478
		Post-employment benefits (note 13)					120		120
		Reclamation obligations (note 14)					1,181		802
		Other liabilities (note 16)					179		262
							16,351		11,840
		Non-Current
		Deferred revenue (note 12)					31,852		33,139
		Post-employment benefits (note 13)					1,154		1,241
		Reclamation obligations (note 14)					36,351		37,618
		Share purchase warrants liability (note 15)					20,337	-
		Other liabilities (note 16)					329		375
		Deferred income tax liability (note 17)					7,219		9,192
		Total liabilities					113,593		93,405

		EQUITY
		Share capital (note 18)					1,517,029		1,366,710
		Contributed surplus (note 19)					67,496		67,387
		Deficit					(1,189,610)			(1,208,587)
		Accumulated other comprehensive income (note 20)					1,776		1,775
		Total equity					396,691		227,285
		Total liabilities and equity			$	510,284 $		320,690

		Issued and outstanding common shares (note 18)		812,429,995		678,981,882
									Commitments and contingencies (note 25); Subsequent events (note 27)
										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
			2021		2020


		REVENUES (note 22)				$	20,000 $	14,423

		EXPENSES
		Operating expenses (notes 21 and 22)					(12,901)	(10,594)
		Exploration (note 22)					(4,477)	(5,314)
		Evaluation (note 22)					(15,521)	(3,718)
		General and administrative (note 22)					(9,691)	(7,609)
		Other income (expense) (note 21)					44,163	(95)
							1,573	(27,330)
		Income (loss) before net finance expense, equity accounting	21,573	(12,907)

		Finance expense, net (note 21)					(4,127)	(4,236)
		Equity share of loss of joint venture (note 8)					(464)	-
		Income (loss) before taxes								16,982	(17,143)
		Income tax recovery (note 17):
		Deferred					1,995	860
		Net income (loss) for the period				$	18,977 $	(16,283)

		Other comprehensive income (loss) (note 20):
		Items that wil not be reclassified to income (loss):
						Experience gain-post employment liability			-	638
		Items that are or may be subsequently reclassified to income (loss):
						Foreign currency translation change						1	3
		Comprehensive income (loss) for the period				$	18,978 $	(15,642)


		Basic and diluted net income (loss) per share:
		Basic				$	0.02 $	(0.03)
		Diluted				$	0.02 $	(0.03)


		Weighted-average number of shares outstanding (in thousands):
		Basic	783,684	628,441
		Diluted					793,668	628,441

								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 dollars)
				Year Ended December 31
								2021	2020

		Share capital (note 18)
		Balance-beginning of period	$ 1,366,710 $ 1,335,467
		Shares issued for cash, net of issue costs		141,278				30,825
		Flow-through share premium				-	(22)
		Share options exercised-cash			6,300		148
		Share options exercised-transfer from contributed surplus		2,157	50
		Share units exercised-transfer from contributed surplus		566		242
		Share purchase warrants exercised-cash			14	-
		Share purchase warrants exercised-warrant liability settled			4	-
		Balance-end of period	1,517,029 1,366,710

		Share purchase warrants
		Balance-beginning of period				-	435
		Share purchase warrants expired				-	(435)
		Balance-end of period				-	-

		Contributed surplus
		Balance-beginning of period			67,387		65,417
		Share-based compensation expense (note 19)			2,832		1,827
		Share options exercised-transfer to share capital			(2,157)		(50)
		Share units exercised-transfer to share capital			(566)		(242)
		Warrants expired				-	435
		Balance-end of period			67,496		67,387

		Deficit
		Balance-beginning of period	(1,208,587) (1,192,304)
		Net income (loss)			18,977		(16,283)
		Balance-end of period	(1,189,610) (1,208,587)

		Accumulated other comprehensive income (note 20)
		Balance-beginning of period			1,775		1,134
		Experience gain-post employment liability			-	638
		Foreign currency translation				1	3
		Balance-end of period			1,776		1,775

		Total Equity
		Balance-beginning of period	$ 227,285 $				210,149
		Balance-end of period	$ 396,691 $				227,285

				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 dollars)
						Year Ended December 31
								2021		2020
		CASH PROVIDED BY (USED IN):

		OPERATING ACTIVITIES
		Net income (loss) for the period		$		18,977 $	(16,283)
		Adjustments and items not affecting cash and cash equivalents:
		Depletion, depreciation, amortization and accretion				7,385		7,145
		Joint venture-equity share of loss (note 8)				464	-
		Recognition of deferred revenue (note 12)				(3,207)		(2,762)
		Post-employment benefit payments (note 13)				(110)		(90)
		Loss (gain) on reclamation obligation revisions (note 14)				(585)		3,595
		Reclamation obligation expenditures (note 14)				(815)		(826)
		Gain on debt obligation adjustment (note 16)				(4)	(2)
		Deferred income tax recovery (note 17)				(1,995)		(860)
		Share purchase warrants liability issue costs expensed (note 18)	791	-
		Gain on property, plant and equipment disposals (note 21)	(135)		(405)
		Fair value change losses (gains):
		Investment-equity instruments (notes 7 and 21)			(10,454)				(5,046)
		Investments-uranium (notes 7 and 21)			(41,440)	-
		Warrants on investment (notes 7 and 21)				(1,149)	-
		Share purchase warrants liabilities (notes 15 and 21)				7,104	-
		Foreign exchange loss (note 21)				1,295		529
		Share-based compensation (note 19)				2,832		1,827
		Change in non-cash operating working capital items (note 21)				(199)		(307)
		Net cash used in operating activities			(21,245)			(13,485)

		INVESTING ACTIVITIES
		Sale of investments-equity instruments (note 7)				12,826		477
		Sale of warrants on investment (note 7)				2,774	-
		Purchase of investments-equity (note 7)					-	(7)
		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)	-
		Additions of property, plant and equipment (note 10)				(1,230)		(278)
		Proceeds on disposal of property, plant and equipment	139		137
		Decrease (increase) in restricted cash and investments	17		(24)
		Net cash provided by (used in) investing activities			(99,004)				305

		FINANCING ACTIVITIES
		Issuance of debt obligations (note 16)				34	-
		Repayment of debt obligations (note 16)				(252)		(467)
		Proceeds from unit issues, net of issue costs (note 18)			135,630				30,825
		Proceeds from share issues, net of issue costs (note 18)				18,091	-
		Proceeds from warrants exercised (note 18)				14	-
		Proceeds from share options exercised (note 18)				6,300		148
		Net cash provided by financing activities			159,817				30,506

		Increase in cash and cash equivalents				39,568		17,326
		Foreign exchange effect on cash and cash equivalents				(562)		(524)
		Cash and cash equivalents, beginning of period				24,992		8,190
		Cash and cash equivalents, end of period		$		63,998 $		24,992
		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, 2021 AND 2020

		(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 properties, as well as the 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 66.90% 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.
		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 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 33.8123%) and Christie Lake (JCU 34.4508%). See note 8 for details.

		The Company also provides mine decommissioning and other services (col ectively “environmental services”)
		through its Closed Mines Group, which manages Denison’s El iot Lake reclamation projects and provides third-
		party post-closure mine care and maintenance services. Prior to July 19, 2021, the Company was also the manager
		of Uranium Participation Corporation (“UPC”). See note 23 for further details.

		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 “2021” and “2020” refer to the year ended December 31, 2021 and the year ended December 31,
		2020 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 3, 2022.

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

	11


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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 (including structured 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 fully 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 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. The consolidated
		financial statements of the Company include its share of the assets in such joint operations, together with its share
		of the liabilities, 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 an arrangement over which the Company shares joint control and which provides the Company
		with the rights to the net assets of the 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, 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.
		Typically, 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.

		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
	12


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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 substantially al risks and
		rewards of ownership. Financial liabilities are derecognized when the obligations specified in the contract are
		discharged, cancelled or expire.

		At initial recognition, the Company classifies its financial instruments in the following 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 collect 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 initially 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 associated with its financial assets that
		are not carried at FVTPL. Expected credit losses 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 and other receivables”, the Company calculates expected credit losses based on historical credit loss
		experience, adjusted for forward-looking factors specific to debtors and the economic environment. In recording
		an impairment loss, the carrying amount of the asset is reduced by this computed amount either directly or indirectly
		through the use of an allowance account.

	13


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		F. Inventories

		Expenditures, including depreciation, depletion and amortization of production assets, incurred in the mining and
		processing activities that wil 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 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 wel 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 net realizable value.

		G. Investments-uranium

		The Company’s uranium investments are held for long-term capital appreciation. Investments in uranium are
		initial y 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 prices 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 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 or 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

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 expenditures are expensed as incurred.

Evaluation expenditures are expensed as incurred, until an area of interest is considered by management to be

sufficiently advanced. Once this determination is made, the area of interest is classified as an “Advanced

Evaluation Stage” mineral property, a component of the Company’s mineral properties, and all further non-

exploration expenditures for the current and subsequent periods are capitalized. These expenses can include

further evaluation expenditures such as mining method selection and optimization, metallurgical sampling test work

and costs to further delineate the ore body to a higher confidence level.

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

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

development costs are capitalized to the asset. Further development costs include costs related to constructing a

mine, such as shaft sinking and access, lateral development, drift development, engineering studies and

environmental permitting, infrastructure development and the costs of maintaining the site until commercial

production.

Such development costs represent the net expenditures incurred and capitalized as at the balance sheet date and

do not necessarily reflect present or future values.

Once a development stage mineral property goes into commercial production, the property 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. Commercial production occurs when a property is

substantially complete and ready for its intended use.

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 and

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 all 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 substantial y al 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.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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 allocated 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

		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
		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 actuarial y 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
	16


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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
		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 general y 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 differences 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 allocation 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
	17


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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 full value of the tax assets
		renounced is recorded as a deferred tax expense.

		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 mil ing services are
		provided. At contract inception, the Company estimates the expected transaction price of the toll mil ing 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. 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 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 MSA 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 to the uranium has been transferred to the customer.

		Uranium can be delivered either to the customer directly (physical deliveries) or notionally 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
	18


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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.

		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 material y different.

		Significant estimates and judgements made by management relate to:

		A. Determination of a mineral property being sufficiently advanced

		The Company follows a policy of capitalizing non-exploration related expenditures on properties it considers to be
		sufficiently advanced. Once a mineral property is determined to be sufficiently advanced, that determination is
		irrevocable and the capitalization policy continues to apply over the life of the property. In determining whether or
		not a mineral property is sufficiently advanced, management considers a number of factors, including, but not
		limited to: current uranium market conditions, the quality of resources identified, access to the resource, the
		suitability of the resource to current mining methods, ease of permitting, confidence in the jurisdiction in which the
		resource is located and mil processing complexity.

		Many of these factors are subject to risks and uncertainties that can support a “sufficiently advanced” determination
		as at one point in time but not support it at another. The final determination requires significant judgment on the
		part of the Company’s management and directly impacts the carrying value of the Company’s mineral properties.

		B. Mineral property impairment reviews and impairment adjustments

		Mineral properties are tested for impairment when events or changes in circumstances indicate that the carrying
		amount may not be recoverable. 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.

		C. Deferred tax assets and liabilities

		Deferred tax assets and liabilities are computed in respect of taxes that are based on taxable profit. Taxable profit
		will often differ from accounting profit and management may need to exercise judgement to determine whether
		some taxes are income taxes (and subject to deferred tax accounting) or operating expenses.

		Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply
		when the temporary differences between accounting carrying values and tax basis are expected to be recovered
	19


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		or settled. The determination of the ability of the Company to utilize tax loss carry forwards and other deferred tax
		assets to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions
		about the future performance of the Company. Management is required to assess whether it is “probable” that the
		Company wil benefit from these prior losses and other deferred tax assets. Changes in economic conditions,
		commodity prices and other factors could result in revisions to the estimates of the benefits to be realized or the
		timing of utilizing the losses.

		D. 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)		2021	2020

			Cash	$	2,002 $	12,004
			Cash in MLJV and MWJV		1,275	540
			Cash equivalents		60,721	12,448
				$	63,998 $	24,992

		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)		2021	2020

			Trade receivables	$	2,866 $	2,644
			Receivables in MLJV and MWJV		533	394
			Sales tax receivables		255	154
			Sundry receivables				2	182
				$	3,656 $	3,374

	20


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		6. INVENTORIES

		The inventories balance consists of:

							At December 31 At December 31
			(in thousands)					2021		2020

			Uranium concentrates		$			451	$		-
			Inventory of ore in stockpiles					2,098		2,098
			Mine and mil supplies in MLJV					3,003		3,015
					$			5,552	$	5,113

			Inventories-by balance sheet presentation:
			Current		$			3,454	$	3,015
			Long term-ore in stockpiles					2,098		2,098
					$			5,552	$	5,113

		Long-term ore in stockpile inventory represents an estimate of the quantity 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)					2021		2020

			Investments:
			Equity instruments
			Shares		$			14,349	$	16,657
			Warrants					229		293
			Uranium					133,114		-
					$			147,692	$	16,950

			Investments-by balance sheet presentation:
			Current		$			14,437	$	16,657
			Long-term					133,255		293
					$			147,692	$	16,950


		The investments continuity summary is as fol ows:

										Equity		Physical
			(in thousands)	Instruments		Uranium		Total

			Balance-January 1, 2020	$	12,104 $								-	$	12,104
			Proceeds from property disposal		270								-		270
			Purchase of investments		7								-		7
			Sale of investments		(477)								-		(477)
			Fair value gain to profit and loss (note 21)		5,046								-		5,046
			Balance-December 31, 2020	$	16,950 $ -				$	16,950
			Purchase of investments		-			91,674		91,674
			Sale of investments		(12,826)				-		(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

		At December 31, 2021, 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.
	21

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

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 allocated 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 $0.80, for 18 months after issuance (April 2024).

The fair value of the GoviEx Warrants on the date of issuance 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.

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

full, Denison wil transfer a further 32,500,000 GoviEx common shares to the warrant holders.

Number of

Warrant

(in thousands except warrant amounts)

Warrants

Liability

Balance-December 31, 2020

- $

Warrants on investment

32,500,000

2,774

Change in fair value (note 21)

(1,149)

Balance-December 31, 2021

32,500,000

1,625

8. INVESTMENT IN JOINT VENTURE

The investment in joint venture balance consists of:

At December 31 At December 31

(in thousands)

2021

2020

Investment in joint venture:

JCU

21,392

A summary of the investment in JCU is as follows:

(in thousands)

Balance-December 31, 2020

Investment at cost:

Acquisition of 50% of JCU

21,856

Equity share of loss

(464)

Balance-December 31, 2021

21,392


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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 following 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 (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, $20,500,000 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 the WRJV, a 30.099% interest in the Mil ennium project (Cameco Corporation 69.901%), a
		33.8123% interest in the Kiggavik project (Orano Canada Inc. 66.1877%), and a 34.4508% interest in the Christie
		Lake Project (UEX 65.5492%).

		The following 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
			(in thousands)			2021		Acquisition (1)

			Total current assets(2)	$		4,851	$	5,825
			Total non-current assets			38,067		38,067
			Total current liabilities			(134)	(181)
			Total non-current liabilities					-		-
			Total net assets	$		42,784	$	43,711

										4 Months Ended
									November 30,2021

			Revenue						$	-
			Net loss							(927)
			Other comprehensive income (loss)						$	-


			Reconciliation of JCU net assets to Denison investment carrying value:

			Net assets of JCU-at acquisition						$	43,711
			Net loss							(927)
			Net assets of JCU-at December 31, 2021						$	42,784
			Denison ownership interest							50.00%
			Denison share of net assets of JCU							21,392
			Investment in JCU						$	21,392

		(1) Based on financial information on the acquisition date of August 3, 2021.
		(2) Included in current assets are $2,525,000 in cash and cash equivalents, $2,322,000 in restricted cash, and $4,000 in accounts receivable













	23


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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)		2021		2020

			Cash and cash equivalents	$	2,866	$	2,883
			Investments		9,135		9,135
				$	12,001	$	12,018

			Restricted cash and investments-by item:
			El iot Lake reclamation trust fund	$	2,866	$	2,883
			Letters of credit facility pledged assets		9,000		9,000
			Letters of credit additional collateral		135		135
				$	12,001	$	12,018

		At December 31, 2021 and December 31, 2020, investments consist of guaranteed investment certificates with
		maturities of less than 90 days.

		El iot 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 2021, the Company deposited an additional $793,000 into the El iot Lake reclamation trust fund and withdrew
		$815,000. In 2020, the Company deposited an additional $803,000 into the El iot Lake reclamation trust fund and
		withdrew $811,000.

		Letters of credit facility pledged assets

		At December 31, 2021, the Company had $9,000,000 in cash on deposit with the Bank of Nova Scotia (“BNS”) as
		pledged restricted cash and investments pursuant to its obligations under an amended and extended letters of
		credit facility (see notes 14 and 16).

		Letters of credit additional col ateral

		At December 31, 2021, the Company had an additional $135,000 of cash on deposit with BNS as collateral for the
		portion of its issued reclamation letters of credit in excess of the amount available under its letters of credit facility
		(see notes 14 and 16).
















	24


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		10. PROPERTY, PLANT AND EQUIPMENT

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

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

			Cost:
			Balance-January 1, 2020	$ 104,587 $					906 $ 179,481 $ 284,974
			Additions							16	26	262	304
			Disposals							(60)	(41)	-	(101)
			Reclamation adjustment (note 14)		1,544	-			-	1,544
			Balance-December 31, 2020	$ 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

			Accumulated amortization, depreciation:
			Balance-January 1, 2020	$	(27,518) $					(197) $	- $	(27,715)
			Amortization		(243)	-			-	(243)
			Depreciation		(2,037)					(198)	-	(2,235)
			Disposals							60	39	-	99
			Reclamation adjustment (note 14)							243	-			-	243
			Balance-December 31, 2020	$	(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)

			Carrying value:
			Balance-December 31, 2020	$	76,592 $					535 $ 179,743 $ 256,870
			Balance-December 31, 2021	$	74,263 $					411 $ 179,788 $ 254,462

		Plant and Equipment - Owned

		The Company has a 22.5% interest in the McClean Lake mill through its ownership interest in the MLJV. The
		carrying value of the mil , comprised of various infrastructure, building and machinery assets, represents
		$66,931,000, or 90.1%, of the December 2021 total carrying value amount of owned PP&E assets.

		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 tol mil ing fee and other benefits (Denison further has an agreement with APG regarding the receipt of
		certain toll mil ing 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 mil feed related to MLJV ores, MWJV ores and the CLJV toll mil ing contract.
		Milling activities in 2021 at the McClean Lake mil included processing and packaging ore for the Cigar Lake mine
		as well as from the test mining activities that occurred at the MLJV during the year. Milling activity in 2020 was
		dedicated exclusively to processing and packaging ore from the Cigar Lake mine. Mil production in 2020 and
		2021 was impacted by the COVID-19 pandemic. See note 12 for the current operating status of the McClean Lake
		mill.

		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 offices and warehousing space located
		in Toronto and Saskatoon.
	25


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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 $162,687,000, or 90.5%, of the carrying value amount of mineral property
		assets as at December 31, 2021:

		a) Wheeler River – the Company has a 90.0% direct interest in the project, and an additional 5.0% interest
			through its investment in JCU (includes the Phoenix and Gryphon deposits);
		b) Waterbury Lake – the Company has a 66.90% 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 21.32% 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).

		Wheeler River

		On August 3, 2021, Denison completed the acquisition of 50% of JCU from UEX, for cash consideration plus
		transaction costs of $21,856,000 (see note 8). 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 33.8123% interest in the Kiggavik project (Orano Canada
		Inc. 66.1877%), and a 34.4508% interest in the Christie Lake Project (UEX 65.5492%). The acquisition increased
		the Company’s effective interest in the WRJV to 95.0%.


		11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

		The accounts payable and accrued liabilities balance consists of:

					At December 31 At December 31
			(in thousands)			2021	2020

			Trade payables	$		3,179 $	2,513
			Payables in MLJV and MWJV			4,316	3,719
			Other payables			1,095		946
				$		8,590 $	7,178


		12. DEFERRED REVENUE

		The deferred revenue balance consists of:

					At December 31 At December 31
			(in thousands)			2021	2020

			Deferred revenue-pre-sold toll milling:
			CLJV Toll Milling-APG		$	36,508 $	36,617
					$	36,508 $	36,617

			Deferred revenue-by balance sheet presentation:
			Current		$	4,656 $	3,478
			Non-current			31,852	33,139
					$	36,508 $	36,617





	26

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

The deferred revenue liability continuity summary is as follows:

(in thousands)

2021

2020

Balance-January 1

36,617 $

36,321

Revenue earned during the period (note 22)

(3,207)

(2,762)

Accretion (note 21)

3,098

3,058

Balance-December 31

36,508 $

36,617

Arrangement with Anglo Pacific Group PLC (“APG”)

In February 2017, Denison closed an arrangement with APG under which Denison received an upfront payment

of $43,500,000 in exchange for its right to receive future tol 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 APG Arrangement represents a contractual obligation of Denison to pay onward to APG 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 APG 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 APG 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 APG, BNS and Denison (see note 16).

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.

In 2020, the Company recognized $2,762,000 of toll mil ing revenue from the draw-down of deferred revenue,

based on Cigar Lake toll mil ing production of 10,069,000 pounds U3O8 (100% basis). The drawdown in 2020

includes a cumulative increase in revenue for prior periods of $168,000 resulting from changes in estimates to the

toll mil ing drawdown rate during 2020.

In response to the COVID-19 pandemic, the CLJV temporarily suspended production at the Cigar Lake mine from

the end of March 2020 until September 2020, and then again from the end of December 2020 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.

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.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		The post-employment benefits balance consists of:

				At December 31 At December 31
			(in thousands)		2021		2020

			Accrued benefit obligation	$	1,274 $		1,361
				$	1,274 $		1,361

			Post-employment benefits-by balance sheet presentation:
			Current	$	120 $		120
			Non-current		1,154		1,241
				$	1,274 $		1,361

		The post-employment benefits continuity summary is as follows:

			(in thousands)		2021		2020

			Balance-January 1	$	1,361	$	2,258
			Accretion (note 21)		23		57
			Benefits paid		(110)		(90)
			Experience gain adjustment					-		(864)
			Balance-December 31	$	1,274	$	1,361


		14. RECLAMATION OBLIGATIONS

			The reclamation obligations balance consists of:

				At December 31 At December 31
			(in thousands)		2021		2020

			Reclamation obligations-by item:
			Elliot Lake	$	20,877 $		21,523
			MLJV and MWJV		15,405		16,875
			Other		1,250				22
				$	37,532 $		38,420

			Reclamation obligations-by balance sheet presentation:
			Current	$	1,181 $		802
			Non-current		36,351		37,618
				$	37,532 $		38,420

			The reclamation obligations continuity summary is as follows:

			(in thousands)		2021		2020

			Balance-January 1	$	38,420 $		32,512
			Accretion (note 21)		1,343		1,352
			Expenditures incurred		(815)		(826)
			Liability adjustments-income statement (note 21)	(585)		3,595
			Liability adjustments-balance sheet (note 10)		(831)		1,787
			Balance-December 31	$	37,532 $		38,420

		Site Restoration: El iot Lake

		The El iot 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,
	28


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		based on assumptions as to what levels of treatment wil be required in the future, discounted at 4.06% per annum
		(December 31, 2020 - 3.50%). As at December 31, 2021, the undiscounted amount of estimated future reclamation
		costs, in current year dollars, is $35,837,000 (December 31, 2020 - $32,335,000). 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 4.06% per annum
		(December 31, 2020 - 3.50%). As at December 31, 2021, the undiscounted amount of estimated future reclamation
		costs, in current year dol ars, is $24,617,000 (December 31, 2020 - $24,135,000). The majority of the reclamation
		costs are expected to be incurred between 2038 and 2056. Revisions to the reclamation liabilities for the MLJV
		and MWJV are recognized on the balance sheet as adjustments to the net reclamation assets associated with the
		sites.

		Under the Mineral Industry Environmental Protection Regulations (1996), the Company is required to provide its
		pro-rata share of financial assurances to the province of Saskatchewan based on periodic filings of estimated
		reclamation plans and the associated undiscounted future reclamation costs included therein. Accordingly, as at
		December 31, 2021, the Company has in place irrevocable standby letters of credit, from a chartered bank, in
		favour of the Saskatchewan Ministry of the Environment, totalling $24,135,000 which relate to the most recently
		filed reclamation plan dated March 2016. See Note 27 for further details.

		Site Restoration: Other

		The Company’s exploration and evaluation activities are subject to environmental regulations as set out by the
		Saskatchewan government. 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 4.06% per annum
		(December 31, 2020 - nil%). As at December 31, 2021, the undiscounted amount of estimated future reclamation
		costs, in current year dollars, is estimated at $1,562,000 (December 31, 2020 - $nil). 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.


		15. SHARE PURCHASE WARRANTS LIABILITY

		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 (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 (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
	29


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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.

		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.

		The share purchase warrants liability continuity is as follows:

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

			Balance-December 31, 2020				- $	-
			Share purchase warrants issued on February 19, 2021	15,796,975		3,499
			Share purchase warrants issued on March 22, 2021	39,215,000		9,735
			February 2021 warrants exercised	(5,500)		(1)
			Fair value loss (note 21)				-	7,104
			Balance-December 31, 2021	55,006,475	$	20,337


		16. OTHER LIABILITIES

		The other liabilities balance consists of:

									At December 31	At December 31
			(in thousands)							2021		2020

			Debt obligations:
			Lease obligations						$	452 $	582
			Loan obligations							56	33
			Flow-through share premium obligation (note 18)						-	22
									$	508 $	637

			Other liabilities-by balance sheet presentation:
			Current						$	179 $	262
			Non-current							329	375
									$	508 $	637

















	30


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		Debt Obligations

		At December 31, 2021, 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, 2020	$						739 $	263 $		1,002
			Accretion (note 21)							56	-			56
			Additions							26	-			26
			Repayments							(237)	(230)		(467)
			Liability adjustment gain (note 21)							(2)	-	(2)
			Balance-December 31, 2020	$						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

		Debt Obligations – Scheduled Maturities

		The following table outlines the Company’s scheduled maturities of its debt obligations at December 31, 2021:

					Lease				Loan		Total Debt
			(in thousands)							Liabilities					Liabilities	Obligations

			Maturity analysis-contractual undiscounted cash flows:
			Next 12 months	$						162 $	17 $		179
			One to five years							359	43		402
			More than five years			-	-	-
			Total obligation-end of period-undiscounted							521	60		581
			Present value discount adjustment							(69)	(4)				(73)
			Total obligation-end of period-discounted	$						452 $	56 $		508

		Letters of Credit Facility

		In 2021, the Company had a facility in place with BNS for credit of up to $24,000,000 with a one year term and a
		maturity date of January 31, 2022 (the “2021 Facility”). Use of the 2021 Facility is restricted to non-financial letters
		of credit in support of reclamation obligations.

		The 2021 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 $9,000,000 in restricted cash and investments as collateral for the facility (see note
		9). As additional security for the 2021 Facility, DMC has provided an unlimited full 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 2021 Facility is subject to letter of credit fees of 2.40% (0.40% on the
		$9,000,000 covered by pledged cash col ateral) and standby fees of 0.75%.

		At December 31, 2021, the Company was in compliance with its 2021 Facility covenants and $24,000,000 of the
		2021 Facility was being utilized as col ateral for certain letters of credit (December 31, 2020 - $24,000,000). During
		2021, the Company incurred letter of credit and standby fees of $397,000 (2020 - $398,000).

		In January 2022, the Company entered into an agreement with BNS to amend the terms of the 2021 Facility to
		extend the maturity date to January 31, 2023 (see note 27).


	31


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		17. INCOME TAXES

		The income tax recovery balance from continuing operations consists of:

			(in thousands)	2021		2020

			Deferred income tax:
			Origination of temporary differences		$	1,795 $		710
			Tax benefit-previously unrecognized tax assets		247		1,255
			Prior year over (under) provision			(47)		(1,105)
						1,995		860
			Income tax recovery		$	1,995 $		860

		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)	2021		2020

			Income (loss) before taxes		$	16,982 $		(17,143)
			Combined Canadian tax rate			26.50%		26.50%
			Income tax (expense) recovery at combined rate		(4,500)		4,543

			Difference in tax rates			(1,704)		1,746
			Non-deductible amounts			(4,637)		(2,579)
			Non-taxable amounts			13,518		2,535
			Previously unrecognized deferred tax assets (1)			247		1,255
			Renunciation of tax attributes-flow through shares		(423)		(417)
			Change in deferred tax assets not recognized			(233)		(5,960)
			Change in tax rates, legislation			(29)		(55)
			Prior year over (under) provision			(47)		(1,105)
			Other			(197)		897
			Income tax recovery		$	1,995 $		860

		(1) The Company has recognized certain previously unrecognized Canadian tax assets in 2021 and 2020 as a result of the renunciation of certain
			tax benefits to subscribers pursuant to its December 2020 $930,000 and December 2019 $4,715,000 flow-through share offerings.

























	32


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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)			2021		2020

			Deferred income tax assets:
			Property, plant and equipment, net		$	387 $		387
			Post-employment benefits			331		355
			Reclamation obligations			11,420		11,709
			Non-capital tax loss carry forwards			16,910		16,943
			Capital loss carry forward			6,862	-
			Other			7,942		7,747
			Deferred income tax assets-gross			43,852		37,141
			Set-off against deferred income tax liabilities			(43,852)		(37,141)
			Deferred income tax assets-per balance sheet		$		- $	-

			Deferred income tax liabilities:
			Inventory		$	(755) $		(757)
			Property, plant and equipment, net			(42,322)		(44,436)
			Investments-equity instruments and uranium			(6,862)	-
			Other			(1,132)		(1,140)
			Deferred income tax liabilities-gross			(51,071)		(46,333)
			Set-off of deferred income tax assets			43,852		37,141
			Deferred income tax liabilities-per balance sheet	$	(7,219) $		(9,192)

		The deferred income tax liability continuity summary is as follows:

			(in thousands)			2021		2020

			Balance-January 1		$	(9,192) $		(8,924)
			Recognized in income (loss)			1,995		860
			Recognized in other liabilities (flow-through shares)		(22)		(902)
			Recognized in other comprehensive income				-	(226)
			Balance-December 31		$	(7,219) $		(9,192)

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

					At December 31 At December 31
			(in thousands)			2021		2020

			Deferred income tax assets not recognized
			Property, plant and equipment		$	4,022	$	4,744
			Tax losses-capital			58,312		66,873
			Tax losses-operating			51,353		42,635
			Tax credits			1,126		1,126
			Other deductible temporary differences			5,023		1,441
			Deferred income tax assets not recognized		$	119,836	$	116,819

	33


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

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

					Expiry				At December 31 At December 31
			(in thousands)		Date					2021		2020

			Tax losses-gross		2025-2041			$	251,967	$	220,039

			Tax benefit at tax rate of 26% - 27%							68,263		59,578
			Set-off against deferred tax liabilities							(16,910)		(16,943)
			Total tax loss assets not recognized						$	51,353	$	42,635

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

		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, 2020	597,192,153 $			1,335,467
			Issued for cash:
			Unit issue proceeds-total		81,179,280		33,933
			Unit issue costs-total			-	(3,108)
			Share option exercises		251,500		148
			Share option exercises-transfer from contributed surplus			-	50
			Share unit exercises-transfer from contributed surplus		358,949		242
			Flow-through share premium liability (note 16)			-	(22)
					81,789,729		31,243
			Balance-December 31, 2020	678,981,882 $			1,366,710

			Issued for cash:
			Unit issue proceeds-total	110,023,950			144,214
			Less: allocation to share purchase warrants liability (note 15)			-	(13,234)
			Unit issue costs-total			-	(8,584)
			Less: allocation 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 settled			-	4
				133,448,113			150,319
			Balance-December 31, 2021	812,429,995 $			1,517,029

		Unit and Other Share Issues

		In April 2020, the Company completed a public offering of 28,750,000 common shares at a price of USD$0.20 per
		share for gross proceeds of $8,041,000 (USD$5,750,000). The offering included the ful exercise of an over-
		allotment option of 3,750,000 common shares granted to the underwriters.

		In October 2020, the Company completed a public offering of 51,347,321 common shares at a price of USD$0.37
		per share for gross proceeds of approximately $24,962,000 (USD$18,999,000), which included the partial exercise
		by the underwriters of their over-allotment option.

		In December 2020, Denison completed a private placement of 1,081,959 flow-through common shares at a price
	34


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		of $0.86 per share for gross proceeds of $930,485. The income tax benefits of this issue were renounced to
		subscribers with an effective date of December 31, 2020. The related flow-through share premium liabilities are
		included as a component of other liabilities on the balance sheet at December 31, 2020 and were extinguished in
		2021 when the tax benefit was renounced to the shareholders (see note 16).

		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 full 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 ($3,499,000 – see note 15) has been
		allocated to share warrant liabilities on a relative fair value basis and the pro-rata share of the issue costs
		associated with the offering has been 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.

		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-allotment 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 ($9,735,000 – see note 15) has been
		allocated to share warrant liabilities on a relative fair value basis and the pro-rata share of the issue costs
		associated with the offering has been 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 and a registration statement on Form F-10 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 sell, 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. As
		of 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 Prospectus and 2021
		ATM Program.

		Flow-Through Share Issues

		The Company finances 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 $930,485 on eligible
	35

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

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, 2021, the Company estimates that it has incurred $2,283,000 of expenditures towards its

obligation to spend $8,000,000 on eligible exploration expenditures by the end of fiscal 2022 in connection with

the issuance of flow-through shares in March 2021.

19. SHARE-BASED COMPENSATION

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

and performance share units (“PSUs”).

A summary of share-based compensation expense recognized in the statement of income (loss) is as fol ows:

(in thousands)

2021

2020

Share-based compensation expense for:

Share options

(1,383) $

(559)

RSUs

(1,435)

(1,034)

PSUs

(14)

(234)

Share based compensation expense

(2,832) $

(1,827)

An additional $2,382,000 in share-based compensation expense remains to be recognized, up until November

2024, on options and share units outstanding at December 31, 2021.

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, 2021, an aggregate of 26,226,093 options (December 31, 2020 - 23,401,593) 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 periods up to 24 months.

A continuity summary of the share options of the Company granted under the Share Option Plan for 2021 and

2020 is presented below:

2021

2020

Weighted

Average

Exercise

Number of

Price per

Number of

Price per

Common

(CAD)

Share options outstanding-January 1

15,077,243 $

0.67 13,827,243 $

0.75

Grants

4,171,000

1.30

3,671,000

0.46

Exercises (1)

(8,451,848)

0.75

(251,500)

0.59

Expiries

(31,000)

0.66 (1,424,000)

0.97

Forfeitures

(1,315,500)

0.79

(745,500)

0.67

Share options outstanding-December 31

9,449,895 $

0.86 15,077,243 $

0.67

Share options exercisable-December 31

4,370,895 $

0.61 10,289,743 $

0.74

(1) The weighted average share price at the date of exercise was CAD$1.49 (December 31, 2020 - CAD$0.72).

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Company’s share options outstanding at December 31, 2021 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

3.21

2,354,500 $

0.45

$ 0.50 to $ 0.74

1.69

3,054,395

0.64

$ 0.75 to $ 0.99

0.19

331,000

0.85

$ 1.00 to $ 1.49

4.20

3,606,000

1.28

$ 1.50 to $ 1.99

$ 2.00 to $ 2.49

4.87

104,000

2.29

Share options outstanding-December 31, 2021

3.01

9,449,895 $

0.86

Share options outstanding at December 31, 2021 expire between March 2022 and November 2026.

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

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

granted:

2021

2020

Risk-free interest rate

0.70% - 1.29%

0.27% - 0.67%

Expected share price volatility

66.11% - 73.37%

44.16% - 54.16%

Expected life

3.4 years

Estimated forfeiture rate

3.13% - 3.91%

2.84% - 3.08%

Expected dividend yield

–

Fair value per option granted

CAD$0.59 - CAD$1.22

CAD$0.15 - CAD$0.25

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, to date, vest ratably over a period of three years.

PSUs granted under the plan, to date, vest ratably 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. No PSUs

were granted in 2021.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		A continuity summary of the RSUs of the Company granted under the share unit plan for 2021 and 2020 is
		presented below:

					2021		2020
							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		5,691,899 $				0.52	2,754,099 $			0.70
			Grants		1,958,000				1.44	3,345,750			0.38
			Exercises (1)		(760,329)				0.56	(238,949)	0.69
			Forfeitures	(1,087,729)				0.63	(169,001)	0.59
			RSUs outstanding-December 31		5,801,841 $				0.80	5,691,899 $			0.52
			RSUs vested-December 31		1,997,677 $				0.59	970,670 $	0.69

			(1) The weighted average share price at the date of exercise was CAD$1.54 (December 31, 2020 - CAD$0.56).

		A continuity summary of the PSUs of the Company granted under the share unit plan for 2021 and 2020 is
		presented below:
					2021		2020
							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		2,020,000 $				0.63	2,140,000 $			0.65
			Grants		-					-			180,000	0.38
			Exercises (1)		(210,000)				0.66	(120,000)	0.65
			Forfeitures		(280,000)				0.68	(180,000)	0.65
			PSUs outstanding-December 31		1,530,000 $				0.62	2,020,000 $			0.63
			PSUs vested-December 31		870,000 $				0.63	700,000 $	0.65

			(1) The weighted average share price at the date of exercise was CAD$1.41 (December 31, 2020 - CAD$0.67).

		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 (LOSS)

		The accumulated other comprehensive income balance consists of:

										At December 31	At December 31
			(in thousands)								2021	2020

			Cumulative foreign currency translation							$	414 $			413
			Experience gains-post employment liability
			Gross								1,847			1,847
			Tax effect								(485)			(485)
										$	1,776 $			1,775

	38


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		21. SUPPLEMENTAL FINANCIAL INFORMATION

		The components of operating expenses are as follows:

			(in thousands)											2021	2020

			Cost of goods and services sold:
			Cost of goods sold-mineral concentrates				$			- $	(526)
			Operating Overheads:
							Mining, other development expense									(2,630)		(1,165)
							Mil ing, conversion expense									(2,697)		(1,769)
							Less absorption:
							- Mineral properties									46		39
							- Milling									451	-
			Cost of services-Closed Mines Services						(7,791)		(6,852)
			Cost of goods and services sold					(12,621)			(10,273)
			Reclamation asset amortization						(280)		(243)
			Selling expenses							-	(14)
			Sales royalties and non-income taxes							-	(64)
			Operating expenses				$	(12,901) $			(10,594)

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

			(in thousands)						2021			2020

			Gains (losses) on:
			Foreign exchange			$		(1,295) $		(529)
			Disposal of property, plant and equipment					135		405
			Fair value changes:
			Investments-equity instruments (note 7)	10,454			5,046
			Investments-uranium (note 7)	41,440			-
			Warrants on investment (note 7)	1,149		-
			Share purchase warrants (note 15)	(7,104)	-
			Share purchase warrants issue expense (note 18)	(791)	-
			Reclamation obligation adjustments (note 14)	585		(3,595)
			Uranium investment carrying charges	(223)	-
			Debt obligation adjustments (note 16)	4		2
			Legal settlement (note 25)						-	(850)
			Other					(191)		(574)
			Other income (expense)			$	44,163 $			(95)

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

			(in thousands)								2021		2020

			Interest income				$		383 $		291
			Interest expense						(2)		(4)
			Accretion expense:
			Deferred revenue (note 12)						(3,098)		(3,058)
			Post-employment benefits (note 13)						(23)		(57)
			Reclamation obligations (note 14)					(1,343)		(1,352)
			Debt obligations (note 16)					(44)		(56)
			Finance expense, net				$		(4,127) $		(4,236)

	39


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

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

			(in thousands)						2021	2020

			Operating expenses:
			Mining, other development expense	$		(2) $	(3)
			Milling, conversion expense			(2,053)		(1,730)
			Cost of services			(179)		(192)
			Exploration			(180)		(148)
			Evaluation			(36)		(36)
			General and administrative			(114)		(126)
			Depreciation expense-gross	$		(2,564) $		(2,235)

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

			(in thousands)						2021	2020

			Salaries and short-term employee benefits	$		(9,358) $		(7,405)
			Share-based compensation (note 19)			(2,832)		(1,827)
			Termination benefits			(125)		(35)
			Employee benefits expense-gross	$	(12,315) $			(9,267)

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

			(in thousands of CAD dollars)								2021	2020

			Accretion expense on lease liabilities	$		(44) $		(56)
			Expenses relating to short-term leases			(3,920)		(2,287)
			Expenses relating to non-short term low-value leases		(6)		(13)
			Lease related expense-gross	$		(3,970) $		(2,356)

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

			(in thousands)						2021	2020

			Change in non-cash working capital items:
			Trade and other receivables		$	(282) $		649
			Inventories			(410)		220
			Prepaid expenses and other assets			(183)		(422)
			Accounts payable and accrued liabilities			676		(754)
			Change in non-cash working capital items		$	(199) $		(307)

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

			(in thousands)						2021	2020

			Supplemental cash flow disclosure:
			Interest paid		$	(2) $	(4)
			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, mil ing (including toll mil ing) 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, 2021, reportable segment results were as follows:

										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

	41


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		For the year ended December 31, 2020, reportable segment results were as follows:

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

			Statement of Operations:
			Revenues					3,614							8,205	2,604	14,423

			Expenses:
			Operating expenses					(3,742)							(6,849)	(3)	(10,594)
			Exploration					(5,314)											-	-	(5,314)
			Evaluation					(3,718)											-	-	(3,718)
			General and administrative					(19)											-	(7,590)	(7,609)
						(12,793)						(6,849)	(7,593)	(27,235)
			Segment income (loss)					(9,179)							1,356	(4,989)	(12,812)

			Revenues-supplemental:
			Uranium concentrate sales					852											-	-	852
			Environmental services					-	8,205	-	8,205
			Management fees					-				-	2,604	2,604
			Toll milling services-deferred revenue (note 12)			2,762										-	-	2,762
								3,614							8,205	2,604	14,423

			Capital additions:
			Property, plant and equipment (note 10)					289											15	-	304

			Long-lived assets:
			Plant and equipment
			Cost					101,540							4,546	892	106,978
			Accumulated depreciation					(26,241)							(3,194)	(416)	(29,851)
			Mineral properties					179,743											-	-	179,743
								255,042							1,352	476	256,870

		Revenue Concentration

		The Company’s business is such that, at any given time, it sells its environmental and other services to a relatively
		small number of customers. During 2021, one customer from the Corporate and Other segment, two customers
		from Closed Mines Services segment and one customer from the Mining segment accounted for approximately
		100% of total revenues consisting of 40%, 44% and 16% respectively. During 2020, one customer from the
		Corporate and Other segment, three customers from the Closed Mine Services segment and one customer from
		the Mining segment accounted for approximately 94% of total revenues consisting of 18%, 57% and 19%
		respectively.

		Revenue Commitments

		Denison’s revenue portfolio consists of short and long-term sales commitments. The following table summarizes
		the expected future revenue, by segment, based on the customer contract commitments and information that exists
		as at December 31, 2021:

																	There-
			(in thousands)		2022	2023						2024				2025	after	Total

			Revenues-by Segment:
			Closed Mines Services
			Environmental services				7,218	3,301											-	-		- 10,519
			Total Revenue Commitments				7,218	3,301											-	-		- 10,519

		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
	42

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

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 APG all toll mil ing

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 was a publicly-listed investment holding company which invested substantial y 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 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.

On July 19, 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.

As at December 31, 2021, UPC is no longer considered a related party of Denison.

The following transactions were incurred with UPC for the periods noted:

(in thousands)

2021

2020

Management fees:

Base and variable fees

1,069 $

2,011

Discretionary fees

350

300

Commission fees

697

293

Termination fee

5,848

7,964 $

2,604

At December 31, 2021, accounts receivable includes $nil (December 31, 2020: $265,000) due from UPC with

respect to the fees and transactions indicated above.

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, 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%.

As at December 31, 2021, KEPCO, through its subsidiaries, holds 58,284,000 shares of Denison representing

approximately 7.17% of Denison’s issued and outstanding shares. KHNP Canada Energy Ltd (“KHNP Canada”),

a subsidiary of KHNP, is the holder of the majority of the shares.

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

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,

2021, WLUC is owned by Denison Waterbury Corp (60%) and KWULP (40%) while the WLULP is owned by

Denison Waterbury Corp (66.90% - limited partner), KWULP (33.09% - 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.

In January 2014, Denison agreed to al ow 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 2020, Denison funded 100% of the approved fiscal 2020 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 66.57% to 66.90%,

in two steps, which was accounted for using effective dates of June 30, 2020 and November 30, 2020. 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 $223,000.

Other

During 2021, the Company incurred investor relations, administrative service fees and certain pass-through

expenses of $164,000 (2020: $206,000) with Namdo Management Services Ltd (“Namdo”), a company of which a

former director of Denison is a shareholder. These services were incurred in the normal course of operating a

public company. As at December 31, 2021, Namdo is no longer considered a related party of Denison.

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 following compensation was awarded to key management personnel:

(in thousands)

2021

2020

Salaries and short-term employee benefits

(2,546) $

(1,899)

Share-based compensation

(2,277)

(1,507)

Key management personnel compensation

(4,823) $

(3,406)

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 central y 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.


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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.

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

				At December 31 At December 31
			(in thousands)		2021		2020

			Net cash and investments:
			Cash and cash equivalents	$	63,998 $		24,992
			Equity instrument investments (note 7)		14,578		16,950
			Investments-uranium (note 7)		133,114	-
			Debt obligations-current (note 16)		(179)		(240)
			Net cash and investments	$	211,511 $		41,702

		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)						2021	2020

			Cash and cash equivalents			$	63,998 $	24,992
			Trade and other receivables				3,656	3,374
			Restricted cash and investments				12,001	12,018
						$	79,655 $	40,384

		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 and other receivables balance
		relates to a small 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 al owance for credit loss of
		$nil as at December 31, 2021 and December 31, 2020.

		(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 committed 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.









	45

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

The maturities of the Company’s financial liabilities at December 31, 2021 are as follows:

Within 1

1 to 5

(in thousands)

Year

Years

Accounts payable and accrued liabilities

8,590

Debt obligations (note 16)

179

329

8,769

329

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

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 dollar relative to the U.S. dollar

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

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, 2021, the Company’s net U.S dollar financial assets and uranium investments were $8,697,000,

and $133,114,000, respectively. 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:

December 31

Sensitivity

2021

Foreign

Change in

Exchange

net income

(in thousands except foreign exchange rates)

Rate

(loss)

Currency risk

CAD weakens

1.2678

1.3945

14,181

CAD strengthens

1.2678

1.1410

(14,181)

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, 2021, a 10%

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

$13,311,000, while a 10% decrease would have decreased the Company’s holdings of physical uranium by

$13,311,000.

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

(f) Equity Price Risk

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

companies as well as on the GoviEx Warrants. The sensitivity analysis below il ustrates the impact of equity price

risk on the equity investments held by the Company and the GoviEx Warrants at December 31, 2021:

Change in

net income

(in thousands)

(loss)

Equity price risk

10% increase in equity prices

1,049

10% decrease in equity prices

(1,080)

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;

•

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 2021 and 2020, there were no transfers between levels 1, 2 and 3 and there were no changes in valuation

techniques.

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

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

hierarchy as at December 31, 2021 and December 31, 2020:

Financial

Fair

December 31, December 31,

Instrument

Value

2021

2020

(in thousands)

Category(1)

Hierarchy

Fair Value

Financial Assets:

Cash and equivalents

Category B

63,998 $

24,992

Trade and other receivables

Category B

3,656

3,374

Investments

Equity instruments-shares

Category A

Level 1

14,349

16,657

Equity instruments-warrants

Category A

Level 2

229

293

Restricted cash and equivalents

El iot Lake reclamation trust fund

Category B

2,866

2,883

Credit facility pledged assets

Category B

9,000

Reclamation letter of credit collateral

Category B

135

94,233 $

57,334

Financial Liabilities:

Account payable and accrued liabilities

Category C

8,590

7,178

Debt obligations

Category C

508

615

Warrants on investment

Category A

Level 2

1,625

Share purchase warrants

Category A

Level 2

20,337

31,060 $

7,793

(1) Financial instrument designations are as fol ows: 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.

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 20, 2016, the Mineral Resources Authority of Mongolia (“MRAM”) formal y issued mining license

certificates for all four projects, triggering Denison’s right to receive contingent consideration of USD$10,000,000

(collectively, the “Mining License Receivable”). The original due date for payment of the Mining License Receivable

by UI was November 16, 2016.

Under an extension agreement between UI and the Company, the payment due date of the Mining License

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 Mining License 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


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		balance of the Mining License Receivable amount. The required payments were not made.

		On February 24, 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.

		On January 13, 2022, the Company and UI executed a Repayment Schedule Agreement. See note 27 for details.

		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, 2021, the Company had
		outstanding letters of credit of $24,135,000 for reclamation obligations of which $24,000,000 is collateralized by
		the Company’s 2021 credit facility (see note 16) and the remainder is collateralized by cash (see note 9).

		Purchase of Office Building in Saskatoon

		During the year ended December 31, 2021, the Company entered into an agreement to purchase an office building
		in Saskatoon, Saskatchewan to accommodate the Company’s growing workforce. A deposit of $200,000 was made
		prior to year-end, with the balance of the purchase amount, $2,800,000 due upon the closing of the transaction in
		January 2022.


		26. INTEREST IN OTHER ENTITIES

		The significant subsidiaries, associates and joint arrangements of the Company at December 31, 2021 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, 2021 carrying value of its Mineral Property
		assets (see note 10).





	49

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

December December

Fiscal

Place

31, 2021

31, 2020

2021

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

66.90%

100%

Voting Share (4)

Joint Venture

JCU

Canada

50.00%

nil%

50.00%(5)

Equity(6)

Key Contractual Arrangements

Wheeler River Joint Venture

Canada

90.00%

90.00%(6)

Denison Share (4)

Midwest Joint Venture

Canada

25.17%

Denison Share (4)

Mann Lake Joint Venture

Canada

30.00%

N/A (7)

Denison Share (4)

Wolly Joint Venture

Canada

21.32%

21.89%

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. 2013. Denison uses its equity

interest to account for its share of assets, liabilities, revenues and expenses for these joint operations. In 2021, Denison funded 100% of the

activities in these joint operations pursuant to the terms of an agreement that al ows 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 acquired its 50% interest in JCU on August 3, 2021 (see note 8).

(6) 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.

(7) The participating interest for 2021 for these arrangements is shown as Not Applicable as there were no approved spending programs carried

out during fiscal 2021.

27. SUBSEQUENT EVENTS

Tailings Management Facility Expansion and Updated Reclamation Plan Approved for MLJV and MWJV

Operations

In January 2022, the Canadian Nuclear Safety Commission approved an amendment to the operating license for

the MLJV and MWJV Operations, which allows for the expansion of the McClean Lake Tailings Management

Facility (“TMF”), along with the associated revised Preliminary Decommissioning Plan and cost estimate. As a

result of this updated plan, the Company’s pro-rata share of the financial assurances, required to be provided to

the Province of Saskatchewan, has decreased from $24,135,000 to $22,972,000. This wil result in a decrease in

the pledged amount required under the 2022 Facility to $7,972,000, and the full release of the Company’s

additional cash collateral of $135,000. The Company’s reclamation obligation related to the MLJV is also expected

to decrease.

Mongolia Mining Division Sale – Repayment Schedule Agreement with Uranium Industry a.s

In January 2022, the Company executed a Repayment Schedule Agreement (the “Repayment Agreement”)

pursuant to which the parties negotiated the repayment of the debt owing from UI to Denison. In accordance with

the terms of the Repayment Agreement, the Company received an initial USD$2 mil ion debt repayment instalment

in January 2022.

Under the terms of the Repayment Agreement, UI has agreed to make scheduled payments on account of the


ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

		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, including
		the initial USD$2 mil ion already received, is approximately USD$16 mil ion. 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.

		Bank of Nova Scotia Credit Facility Renewal

		On January 21, 2022, the Company entered into an amending agreement with BNS to extend the maturity date of
		the 2021 Facility (see note 16). Under the facility amendment, the maturity date has been extended to January 31,
		2023 (the “2022 Facility”). Al other terms of the 2022 Facility (tangible net worth covenants, pledged cash,
		investment amounts and security for the facility) remain unchanged from those of the 2021 Facility, and the
		Company continues to have access to credit up to $24,000,000 the use of which is restricted to non-financial letters
		of credit in support of reclamation obligations.

		The 2022 Facility remains subject to letter of credit and standby fees of 2.40% (0.40% on the $9,000,000 covered
		by pledged cash collateral) and 0.75% respectively.

		Changes to Composition of the Board of Directors

		In January 2022, Ms. Laurie Sterritt was appointed to Denison’s Board of Directors. Ms. Sterritt, Partner at Leaders
		International, has over 25 years of experience in the fields of Indigenous, government, and community relations.

		In February 2022, Mr. Yun Chang Jeong joined the Company's Board of Directors. Mr. Jeong, General Manager
		of the Nuclear Fuel Supply Section of KHNP, was nominated by KHNP pursuant to the KHNP Strategic
		Relationship Agreement (‘KHNP SRA'), to fil the vacancy on the Board created by the February 2022 resignation
		of Mr. Jun Gon Kim.
	51