Enhanced Investments - Financial Portal

Published: 2021-08-05



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited - Expressed in thousands of Canadian dollars (“CAD”) except for share amounts)
					At June 30	At December 31

			2021		2020

ASSETS
Current
Cash and cash equivalents (note 4)			$					84,852 $	24,992
Trade and other receivables (note 5)								4,639	3,374
Inventories (note 6)								3,016	3,015
Investments-equity instruments (note 7)								21,847	16,657
Prepaid expenses and other								786	1,373
						115,140		49,411
Non-Current
Inventories-ore in stockpiles (note 6)								2,098	2,098
Investments-equity instruments (note 7)								245	293
Investments-uranium (note 7)								91,510	-
Prepaid expenses and other								312	-
Restricted cash and investments (note 8)								12,336	12,018
Property, plant and equipment (note 9)						256,484		256,870
Total assets			$		478,125 $		320,690

LIABILITIES
Current
Accounts payable and accrued liabilities (note 10)			$					17,069 $	7,178
Current portion of long-term liabilities:
Deferred revenue (note 11)								4,656	3,478
Post-employment benefits (note 12)								120	120
Reclamation obligations (note 13)								802	802
Other liabilities (note 15)								234	262
								22,881	11,840
Non-Current
Deferred revenue (note 11)								32,786	33,139
Post-employment benefits (note 12)								1,192	1,241
Reclamation obligations (note 13)								37,870	37,618
Share purchase warrants liability (note 14)								19,066	-
Other liabilities (note 15)								387	375
Deferred income tax liability								8,260	9,192
Total liabilities						122,442		93,405

EQUITY
Share capital (note 16)						1,506,888		1,366,710
Contributed surplus (note 17)								66,843	67,387
Deficit						(1,219,828)		(1,208,587)
Accumulated other comprehensive income (note 18)								1,780	1,775
Total equity						355,683		227,285
Total liabilities and equity			$		478,125 $		320,690

Issued and outstanding common shares (in thousands) (note 16)				805,711		678,982
Commitments and contingencies (note 24)
Subsequent events (note 25)

									The accompanying notes are integral to the condensed interim consolidated financial statements

		1



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited - Expressed in thousands of CAD dollars except for share and per share amounts)
			Three Month Ended		Six Months Ended
	June 30			June 30
			2021					2020		2021			2020


REVENUES (note 20)		$	4,626	$				2,926 $	7,122 $			7,586

EXPENSES
Operating expenses (note 19, 20)			(3,691)					(2,048)	(5,579)			(5,368)
Evaluation (note 20)			(6,381)					(364)	(9,142)			(1,855)
Exploration (note 20)			(528)					(481)	(1,876)			(2,181)
General and administrative (note 20)			(2,362)					(1,421)	(4,987)			(3,609)
Other income (expense) (note 19)			6,348					2,163	4,307			(1,029)
			(6,614)					(2,151)	(17,277)			(14,042)
Income (loss) before net finance expense			(1,988)					775	(10,155)				(6,456)
Finance expense, net (note 19)			(1,015)					(1,061)	(2,040)			(2,124)
Loss before taxes			(3,003)					(286)	(12,195)				(8,580)
Income tax recovery (expense) (note 22)
Deferred								646					(757)	954	874
Net loss for the period		$	(2,357) $			(1,043) $	(11,241) $				(7,706)

Other comprehensive income (loss) (note 18):
Items that may be reclassified to income (loss):
Foreign currency translation change			2			7	5	(7)
Comprehensive loss for the period		$	(2,355) $			(1,036) $	(11,236) $				(7,713)


Basic and diluted net loss per share:
Al operations		$	(0.00) $			(0.00) $	(0.01) $			(0.01)


Weighted-average number of shares outstanding (in thousands):
Basic and diluted			805,061			621,233	759,743			609,216

									The accompanying notes are integral to the condensed interim consolidated financial statements


		2



		INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited - Expressed in thousands of CAD dollars)
						Six Months Ended
				June 30
										2021	2020


Share capital (note 16)
Balance-beginning of period					$ 1,366,710 $ 1,335,467
Shares issued for cash, net of issue costs							134,050			6,878
Share options exercised-cash							4,289	-
Share options exercised-fair value adjustment							1,473	-
Share units exercised-fair value adjustment							366	80
Balance-end of period						1,506,888 1,342,425

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

Contributed surplus
Balance-beginning of period							67,387			65,417
Share-based compensation expense (note 17)							1,295			904
Share options exercised-fair value adjustment							(1,473)	-
Share units exercised-fair value adjustment							(366)			(80)
Warrants expired							-			435
Balance-end of period							66,843			66,676

Deficit
Balance-beginning of period						(1,208,587) (1,192,304)
Net loss							(11,241)			(7,706)
Balance-end of period						(1,219,828) (1,200,010)

Accumulated other comprehensive income (note 18)
Balance-beginning of period							1,775			1,134
Foreign currency translation							5	(7)
Balance-end of period							1,780			1,127


Total Equity
Balance-beginning of period							227,285			210,149
Balance-end of period					$	355,683 $			210,218

	The accompanying notes are integral to the condensed interim consolidated financial statements



			3



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited - Expressed in thousands of CAD dollars)
				Six Months Ended
				June 30
CASH PROVIDED BY (USED IN):						2021		2020

OPERATING ACTIVITIES
Net loss for the period			$	(11,241) $			(7,706)
Items not affecting cash and cash equivalents:
Depletion, depreciation, amortization and accretion				3,079		3,527
Share-based compensation (note 17)				1,295		904
Recognition of deferred revenue (note 11)				(719)		(1,115)
Gains on property, plant and equipment disposals (note 19)						(2)		(407)
Fair value change losses (gains):
							Investments-equity instruments (note 19)		(5,142)		961
							Investments-uranium (note 19)		(7,534)	-
							Share warrant liabilities (note 19)		5,832	-
Warrant liabilities issue costs expensed (note 16)						791	-
Foreign exchange losses (gains) (note 19)				1,618	-
Deferred income tax recovery				(954)		(874)
Post-employment benefit payments (note 12)				(61)		(38)
Reclamation obligation expenditures ( (note 13)				(420)		(427)
Change in non-cash working capital items (note 19)				618		(1,628)
Net cash used in operating activities				(12,840)			(6,803)

INVESTING ACTIVITIES
Sale of investments-equity instruments (note 7)				-		108
Purchase of investments-uranium (note 7)				(76,390)	-
Expenditures on property, plant and equipment (note 9)						(355)		(139)
Proceeds on sale of property, plant and equipment				2		137
Increase in restricted cash and investments						(318)		(377)
Net cash used in investing activities											(77,061)		(271)

FINANCING ACTIVITIES
Issuance of debt obligations (note 15)				34	-
Repayment of debt obligations (note 15)				(124)		(345)
Proceeds from unit issues, net of issue costs (note 16)						135,630	-
Proceeds from other share issues, net of issue costs (note 16)				10,863		6,878
Share option exercise proceeds (note 16)				4,289	-
Net cash provided by financing activities											150,692		6,533

Increase (decrease) in cash and cash equivalents				60,791		(541)
Foreign exchange effect on cash and cash equivalents				(931)	-
Cash and cash equivalents, beginning of period												24,992	8,190
Cash and cash equivalents, end of period			$	84,852 $		7,649


							The accompanying notes are integral to the condensed interim consolidated financial statements


		4



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2021

(Unaudited - Expressed in CAD dol ars except for shares and per share amounts)

1. NATURE OF OPERATIONS

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

The Company has a 90.0% interest in the Wheeler River Joint Venture (“WRJV”), a 66.90% interest in the
Waterbury Lake 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 11). In addition, the Company has varying
ownership interests in a number of other development and exploration projects located in Canada.

The Company provides mine decommissioning and other services (collectively “environmental services”) to third
parties through its Closed Mines group and was also the manager of Uranium Participation Corporation (“UPC”)
during the quarter, a publicly-listed investment holding company formed to invest substantially all of its assets in
uranium oxide concentrates (“U3O8”) and uranium hexafluoride (“UF6”). The Company has no ownership interest
in UPC but receives fees for management services it provides and commissions from the purchase and sale of
U3O8 and UF6 by UPC. See note 25 for an update on the Company’s management services agreement with UPC.

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.


2. STATEMENT OF COMPLIANCE

These condensed interim consolidated financial statements have been prepared in accordance with International
Accounting Standards (“IAS”) 34, Interim Financial Reporting. The condensed interim consolidated financial
statements should be read in conjunction with the audited annual consolidated financial statements for the year
ended December 31, 2020. The Company’s presentation currency is Canadian dol ars (“CAD”).

These financial statements were approved by the board of directors for issue on August 5, 2021.


3. ACCOUNTING POLICIES AND COMPARATIVE NUMBERS

Accounting Policies

The significant accounting policies followed in these condensed interim consolidated financial statements are
consistent with those applied in the Company’s audited annual consolidated financial statements for the year ended
December 31, 2020 except as noted below.

During the six months ended June 30, 2021, the Company acquired physical uranium to be held as a long-term
investment. As physical uranium is not a financial asset, the provisions of IFRS 9 “Financial Instruments” do not
apply to the Company’s investment in uranium. The Company has added the fol owing accounting policy in 2021
for its uranium investments:

(a) Investments-uranium

			Investments in uranium are initially recorded at cost, on the date that control of the uranium passes to the
			Company. Cost is calculated as the purchase price and any directly attributable expenditure. 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 dol ars 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
		5



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

			consolidated statement of income (loss) as a component of “Other Income (Expense)” in the period in which
			they arise.

			The Company is presenting its uranium investments at fair value based on the application of IAS 40 “Investment
			Property” which al ows for the use of a fair value model for assets held for long-term capital appreciation.

Comparative numbers

Certain classifications of the comparative figures have been changed to conform to those used in the current
period.


4. CASH AND CASH EQUIVALENTS

The cash and cash equivalent balance consists of:

					At June 30	At December 31
(in thousands of CAD dollars)					2021		2020

Cash			$		2,175 $		12,004
Cash in MLJV and MWJV					1,203				540
Cash equivalents					81,474		12,448
			$		84,852 $		24,992


5. TRADE AND OTHER RECEIVABLES

The trade and other receivables balance consists of:

					At June 30	At December 31
(in thousands of CAD dollars)					2021		2020

Trade receivables			$					4,315 $	2,644
Receivables in MLJV and MWJV								156	394
Sales tax receivables								166	154
Sundry receivables						2			182
			$					4,639 $	3,374


6. INVENTORIES

The inventories balance consists of:

					At June 30			At December 31
(in thousands of CAD dollars)					2021		2020

Inventory of ore in stockpiles			$					2,098 $	2,098
Mine and mil supplies in MLJV								3,016	3,015
			$					5,114 $	5,113

Inventories-by balance sheet presentation:
			Current	$						3,016 $	3,015
			Long-term-ore in stockpiles							2,098	2,098
			$					5,114 $	5,113


		6



		INTERIM CONSOLIDATED FINANCIAL STATEMENTS

7. INVESTMENTS

The investments balance consists of:

							At June 30		At December 31
(in thousands of CAD dollars)							2021		2020

Investments:
										Equity instruments
	Shares			$			21,847 $		16,657
	Warrants									245	293
										Uranium					91,510	-
												$			113,602 $		16,950

Investments-by balance sheet presentation:
										Current		$			21,847 $		16,657
										Long-term					91,755				293
				$			113,602 $		16,950

The investments continuity summary is as fol ows:

											Equity		Physical
(in thousands of CAD dollars)			Instruments		Uranium		Investments

										Balance - December 31, 2020	$	16,950 $						-	$	16,950
										Purchase of investments		-			83,976		83,976
										Fair value gain to profit and loss (note 18)		5,142			7,534		12,676
Balance – June 30, 2021			$	22,092 $			91,510	$	113,602

During the six months ended June 30, 2021, the Company entered into purchase agreements to acquire a total of
2,500,000 pounds of physical uranium as U3O8 to be held as a long-term investment. As at June 30, 2021, the
Company has purchased 2,300,000 pounds of physical uranium as U3O8 at a cost of $83,976,000
(USD$68,030,000), including purchase commissions. At June 30, 2021, $7,586,000 of this purchase amount is
included in the Company’s “Accounts payable and accrued liabilities” reported balance and an adjustment has
been made to exclude this amount from the purchases reported in the Company’s Consolidated statement of cash
flows. See note 24 for additional details on the Company’s remaining purchase commitment of physical uranium.


8. RESTRICTED CASH AND INVESTMENTS

The restricted cash and investments balance consists of:

							At June 30	At December 31
(in thousands of CAD dollars)							2021		2020

Cash and cash equivalents						$	12,336	$	2,883
Investments								-		9,135
						$	12,336	$	12,018

Restricted cash and investments-by item:
										El iot Lake reclamation trust fund				$				3,201	$	2,883
										Letters of credit facility pledged assets								9,000		9,000
										Letters of credit additional collateral								135			135
						$	12,336	$	12,018

At June 30, 2021, all term deposits have maturities of less than 90 days at date of purchase.

El iot Lake Reclamation Trust Fund

During the six months ended June 30, 2021, the Company deposited an additional $793,000 into the El iot Lake
			7



		INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Reclamation Trust Fund and withdrew $477,000.

	Letters of Credit Facility Pledged Assets

At June 30, 2021, the Company had on deposit $9,000,000 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 13 and 15).

Letters of Credit Additional Col ateral

	At June 30, 2021, the Company had on deposit an additional $135,000 of cash collateral with BNS in respect of
the portion of its issued reclamation letters of credit in excess of the collateral available under its letters of credit
facility (see notes 13 and 15).


9. PROPERTY, PLANT AND EQUIPMENT

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

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

Cost:
							Balance – December 31, 2020	$ 106,087 $						891 $ 179,743 $ 286,721
							Additions								324	83	22	429
							Disposals		(117)		-		-	(117)
							Recoveries		-			-		(1)	(1)
							Balance – June 30, 2021	$ 106,294 $						974 $ 179,764 $ 287,032

Accumulated amortization, depreciation:
							Balance – December 31, 2020	$	(29,495) $						(356) $	- $	(29,851)
							Amortization		(140)		-		-	(140)
							Depreciation		(574)						(100)	-	(674)
							Disposals								117	-		-	117
							Balance – June 30, 2021	$	(30,092) $						(456) $	- $	(30,548)

Carrying value:
							Balance – December 31, 2020	$	76,592 $						535 $ 179,743 $ 256,870
							Balance – June 30, 2021	$	76,202 $						518 $ 179,764 $ 256,484

Plant and Equipment – Owned

The Company has a 22.5% interest in the McClean Lake mil through its ownership interest in the MLJV. The
carrying value of the mil , comprised of various infrastructure, building and machinery assets, represents
$68,340,000, or 89.7%, of the June 2021 PP&E total carrying value amount. See note 10 for the current operating
status of the McClean Lake mil .

Plant and Equipment – Right-of-Use

The Company has included the cost of various right-of-use (“ROU”) assets within its PP&E carrying value amount.
These assets consist of building, vehicle and office equipment leases. The majority of the value, 77.3%, is
attributable to the building lease assets for the Company’s office and warehousing spaces located in Toronto and
Saskatoon.

Mineral Properties

As at June 30, 2021, 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 properties with significant carrying values, being Wheeler River, Waterbury Lake, Midwest, Mann
			8



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Lake, Wolly, Johnston Lake and McClean Lake, represent $162,663,000, or 90.5%, of the June 2021 total mineral
property carrying amount.


10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The accounts payable and accrued liabilities balance consists of:

				At June 30	At December 31
(in thousands of CAD dollars)				2021		2020

Trade payables			$				4,531 $	2,513
Trade payables – uranium investments							7,586	-
Payables in MLJV and MWJV							4,197	3,719
Other payables							755	946
			$	17,069 $		7,178


11. DEFERRED REVENUE

The deferred revenue balance consists of:

				At June 30	At December 31
(in thousands of CAD dollars)				2021		2020

Deferred revenue – pre-sold toll milling:
							CLJV toll milling – APG		$	37,442 $	36,617
			$	37,442 $		36,617

Deferred revenue-by balance sheet presentation:
							Current		$	4,656 $	3,478
							Non-current			32,786	33,139
			$	37,442 $		36,617

The deferred revenue liability continuity summary is as follows:

						Deferred
(in thousands of CAD dollars)				Revenue

							Balance - December 31, 2020					$	36,617
							Accretion (note 19)						1,544
							Revenue recognized during the period (note 20)						(719)
Balance – June 30, 2021								$	37,442

Arrangement with Anglo Pacific Group PLC (“APG”)

In February 2017, Denison closed an arrangement with APG under which Denison received an upfront payment
in exchange for its right to receive specified future toll mil ing cash receipts from the MLJV under the current toll
mil ing agreement with the CLJV from July 1, 2016 onwards. The APG Arrangement represents a contractual
obligation of Denison to pay onward to APG any cash proceeds of future toll milling revenue earned by the
Company related to the processing of specified Cigar Lake ore through the McClean Lake mil . The deferred
revenue balance represents a non-cash liability, which is adjusted as any toll mil ing revenue received by Denison
is passed through to APG or any changes in Cigar Lake Phase 1 and Phase 2 toll mil ing production estimates are
recognized.

In the six months ended June 30, 2021, the Company has recognized $719,000 of toll milling revenue from the
draw-down of deferred revenue consisting of $658,000 based on Cigar Lake toll mil ing production in the quarter
(2,542,000 pounds U3O8 on a 100% basis) and a retroactive $61,000 increase in revenue resulting from changes
in estimates to the tol mil ing drawdown rate in the second quarter of 2021. For the comparative six months ended
June 30, 2020, the Company recognized $1,115,000 of tol mil ing revenue from the draw-down of deferred revenue
		9



		INTERIM CONSOLIDATED FINANCIAL STATEMENTS

comprised of $1,056,000 based on Cigar Lake toll mil ing production in the quarter (4,184,000 pounds U3O8 on a
100% basis) and a retroactive $59,000 increase in revenue resulting from changes in estimates to the toll mil ing
drawdown rate in the second quarter of 2020.

Production at the Cigar Lake mine and the McClean Lake mil , which had been temporarily suspended since the
beginning of 2021 in response to the COVID-19 pandemic, has resumed. Cameco restarted ore production at the
Cigar Lake mine in April 2021 and toll-mil ing production at McClean Lake restarted in May 2021 with packaged
uranium production occuring in early June 2021. The current portion of the deferred revenue liability at June 2021
reflects Denison’s estimate of Cigar Lake toll mil ing over the next 12 months. This assumption is based on current
mil packaged production expectations and will be reassessed on a quarterly basis throughout fiscal 2021.


12. POST-EMPLOYMENT BENEFITS

The post-employment benefits balance consists of:

					At June 30	At December 31
(in thousands of CAD dollars)					2021		2020

							Accrued benefit obligation			$	1,312 $	1,361
				$	1,312 $		1,361

Post-employment benefits-by balance sheet presentation:
							Current			$			120 $	120
							Non-current				1,192	1,241
				$	1,312 $		1,361

The post-employment benefits continuity summary is as follows:

						Post-Employment
(in thousands of CAD dollars)					Benefits

							Balance - December 31, 2020							$	1,361
							Accretion (note 19)									12
							Benefits paid								(61)
Balance – June 30, 2021								$	1,312


13. RECLAMATION OBLIGATIONS

	The reclamation obligations balance consists of:

					At June 30	At December 31
(in thousands of CAD dollars)					2020		2020

Reclamation obligations-by location:
							Elliot Lake			$	21,481 $	21,523
							McClean and Midwest Joint Ventures				17,169	16,875
							Other						22		22
				$	38,672 $		38,420

Reclamation obligations-by balance sheet presentation:
							Current			$			802 $	802
							Non-current				37,870	37,618
				$	38,672 $		38,420

			10



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The reclamation obligations continuity summary is as follows:

					Reclamation
(in thousands of CAD dollars)			Obligations

Balance - December 31, 2020				$	38,420
Accretion (note 19)						672
Expenditures incurred						(420)
Balance – June 30, 2021				$	38,672

Site Restoration: Elliot Lake

Spending on restoration activities at the El iot Lake site is funded from monies in the El iot Lake Reclamation Trust
fund (see note 8).

Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture

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 relating to future decommissioning and
reclamation plans that have been filed and approved by the applicable regulatory authorities. As at June 30, 2021,
the Company has provided irrevocable standby letters of credit, from a chartered bank, in favour of the
Saskatchewan Ministry of Environment, totalling $24,135,000 which relate to the most recently filed reclamation
plan dated March 2016.


14. SHARE PURCHASE WARRANTS LIABILITY

In connection with the public offerings of units in February 2021 and March 2021 (see note 16), 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. 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.

Since both of these warrants are excercisable in U.S. dollars (“USD”), which dif ers from the Company’s CAD
functional currency, they are classified as derivative liabilities and are required to be carried as liabilities at fair
value through profit and loss. 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.

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 67.3%, risk-free interest rate of
0.22%, dividend yield of 0% and an expected term of 2 years.

At June 30, 2021, the fair value of the February 2021 warrants was estimated to be $0.3793, using a USD to CAD
foreign exchange rate of 0.8068 and incorporating the fol owing assumptions in the Black-Scholes option pricing
model – expected volatility of 80.1%, risk-free interest rate of 0.44%, dividend yield of 0% and an expected term
of 1.64 years.

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 71.54%, risk-free interest rate of
0.27%, dividend yield of 0% and an expected term of 2 years.

At June 30, 2021, the fair value of the March 2021 warrants was estimated to be $0.3342, using a USD to CAD
foreign exchange rate of 0.8068 and incorporating the fol owing assumptions in the Black-Scholes option pricing
model – expected volatility of 78.0%, risk-free interest rate of 0.44%, dividend yield of 0% and an expected term
of 1.72 years.

		11



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The share purchase warrants liability continuity is as fol ows:

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

			Balance - December 31, 2020				- $	-
			Warrants issued on February 19, 2021	15,796,975		3,499
			Warrants issued on March 22, 2021	39,215,000		9,735
			Change in fair value estimates				-		5,832
			Balance – June 30, 2021	55,011,975	$	19,066


15. OTHER LIABILITIES

The other liabilities balance consists of:

											At June 30		At December 31
(in thousands of CAD dollars)											2021		2020

Debt obligations:
			Lease liabilities									$	558 $	582
			Loan liabilities										63		33
			Flow-through share premium obligation (note 17)									-	22
										$	621 $	637

Other liabilities-by balance sheet presentation:
			Current									$	234 $	262
			Non-current										387	375
										$	621 $	637

Debt Obligations

At June 30, 2021, the Company’s debt obligations are comprised of lease liabilities and loan liabilities. The debt
obligations continuity summary is as follows:

										Lease						Loan	Total Debt
(in thousands of CAD dollars)																		Liabilitites	Liabilities	Obligations

Balance – December 31, 2020			$			582 $	33 $	615
Accretion (note 19)						24	-	24
Additions						72	34	106
Repayments										(120)	(4)	(124)
Balance – June 30, 2021			$			558 $	63 $	621

Debt Obligations – Scheduled Maturities

The fol owing table outlines the Company’s scheduled maturities of its debt obligations at June 30, 2021:

										Lease						Loan	Total Debt
(in thousands of CAD dollars)																		Liabilitites	Liabilities	Obligations

Maturity analysis – contractual undiscounted cash flows:
			Next 12 months		$			217 $	17 $	234
			One to five years					431	52	483
			More than five years					-	-	-
Total obligation – June 30, 2021 – undiscounted				648	69	717
Present value discount adjustment						(90)	(6)	(96)
Total obligation – June 30, 2021 – discounted	$			558 $	63 $	621

		12



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Letters of Credit Facility

In January 2021, the Company entered into an amending agreement for its letters of credit facility with BNS (the
“2021 Facility”). Under the amendment, the maturity date of the 2021 Facility has been extended to January 31,
2022. Al other terms of the 2021 Facility (tangible net worth covenant, pledged cash, investment amounts and
security for the facility) remain unchanged from the previous facility. Accordingly, the 2021 Facility continues to
provide the Company with 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) subject to letter of credit fees of 2.40% (0.40% on the $9,000,000
covered by pledged cash collateral) and standby fees of 0.75%.

At June 30, 2021, the Company is in compliance with its facility covenants and $24,000,000 (December 31, 2020:
$24,000,000) of the facility is being utilized as col ateral for letters of credit issued in respect of the reclamation
obligations for the MLJV and MWJV. During the six months ended June 30, 2021, the Company incurred letter of
credit fees of $196,000 (June 30, 2020: $198,000).


16. 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		Share
(in thousands of CAD dollars except share amounts)				Shares		Capital

			Balance - December 31, 2020	678,981,882 $				1,366,710
			Issued for cash:
			Unit issue proceeds – total	110,023,950		144,214
			Less: al ocation to share warrants liability (note 14)				-		(13,234)
			Unit issue costs - total				-		(8,584)
			Less: al ocation to share warrants issue expense				-		791
			Other share issue proceeds – total	10,156,186		11,914
			Less: other share issue costs				-		(1,051)
			Share option exercises	5,918,248		4,289
			Share option exercises – fair value adjustment				-		1,473
			Share units exercises – fair value adjustment	630,499		366
				126,728,883		140,178
			Balance – June 30, 2021	805,710,765	$			1,506,888

Unit and Other Share Issues

In January and February 2021, Denison, through its agents, issued 4,230,186 common shares under its at-the-
market (“ATM”) program 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 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 ATM program and has ceased
any distributions thereunder.

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 14) 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 19).

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
wil be renounced to subscribers with an effective date of December 31, 2021. The related flow-through share
		13

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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 14) 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 19).

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 June 30, 2021, the Company estimates that it has satisfied its obligation to spend $930,485 on eligible

exploration expenditures in fiscal 2021 due to 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 notes 15 and 22).

As at June 30, 2021, the Company estimates that it has incurred $377,000 of expenditures towards its obligation

to spend $8,000,000 on eligible exploration expenditures by the end of fiscal 2022 due to the issuance of flow-

through shares in March 2021.

17. SHARE-BASED COMPENSATION

The Company’s share based compensation arrangements include stock 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:

Three Months Ended

Six Months Ended

June 30

(in thousands of CAD dollars)

2021

2020

2021

2020

Share based compensation expense for:

Stock options

(420) $

(139) $

(615) $

(296)

RSUs

(457)

(259)

(663)

(487)

PSUs

(43)

(23)

(17)

(121)

Share based compensation expense

(920) $

(421) $

(1,295) $

(904)

An additional $4,153,000 in share-based compensation expense remains to be recognized, up until May 2024, on

outstanding options and share units at June 30, 2021.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

Stock options granted in 2021 vest over a period of 24 months. A continuity summary of the stock options granted

under the Company’s stock-based compensation plan is presented below:

Weighted-

Average

Exercise

Number of

Price per

Common

(CAD)

Stock options outstanding – December 31, 2020

15,077,243 $

0.67

Grants

3,969,000

1.27

Exercises (1)

(5,918,248)

0.72

Expiries

(15,000)

0.64

Forfeitures

(693,000)

0.69

Stock options outstanding – June 30, 2021

12,419,995 $

0.83

Stock options exercisable – June 30, 2021

6,863,995 $

0.68

(1) The weighted average share price at the date of exercise was $1.23.

A summary of the Company’s stock options outstanding at June 30, 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)

Stock options outstanding

$ 0.25 to $ 0.49

3.72

2,722,000 $

0.45

$ 0.50 to $ 0.74

2.28

3,503,395

0.64

$ 0.75 to $ 0.99

0.69

2,383,600

0.85

$ 1.00 to $ 1.39

4.69

3,508,000

1.26

$ 1.40 to $ 1.99

4.86

303,000

1.43

Stock options outstanding – June 30, 2021

3.03

12,419,995 $

0.83

Options outstanding at June 30, 2021 expire between August 2021 and May 2026.

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

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

during the current period:

Six Months Ended

June 30, 2021

Risk-free interest rate

0.70% - 0.76%

Expected stock price volatility

66.11% - 68.86%

Expected life

3.4 years

Expected dividend yield

Fair value per share under options granted

$0.59 - $0.69

Share Units

RSUs granted under the plan in 2021 vest ratably over a period of three years. No PSUs have been granted in

2021 as at June 30, 2021.



		INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

				RSUs			PSUs
							Weighted						Weighted
							Average						Average
				Number of	Fair Value		Number of			Fair Value
				Common	Per RSU		Common			Per PSU
				Shares							(CAD)					Shares			(CAD)

Units outstanding – December 31, 2020				5,691,899 $					0.52	2,020,000 $			0.63
Grants				1,886,000					1.42	-		-
Exercises (1)				(420,499)					0.54	(210,000)	0.66
Forfeitures				(767,228)					0.56	(180,000)	0.69
Units outstanding – June 30, 2021				6,390,172 $					0.78	1,630,000 $			0.62
Units vested – June 30, 2021				2,319,173 $					0.59	870,000 $	0.63

(1) The weighted average share price at the date of exercise was $1.35 for RSUs and $1.41 for PSUs.

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.


18. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The accumulated other comprehensive income (loss) balance consists of:

											At June 30		At December 31
(in thousands of CAD dollars)											2021			2020

										Cumulative foreign currency translation							$	418 $		413
										Unamortized experience gain-post employment liability
										Gross								1,847		1,847
										Tax effect								(485)		(485)
										$	1,780 $			1,775


19. SUPPLEMENTAL FINANCIAL INFORMATION

The components of operating expenses are as fol ows:

				Three Months Ended						Six Months Ended
		June 30			June 30
(in thousands of CAD dollars)													2021						2020		2021	2020

Cost of goods and services sold:
										Cost of goods sold – mineral concentrates $	- $		- $	- $	(526)
										Operating overheads:
	Mining, other development expense					(823)		(334)	(1,055)	(547)
	Mil ing, conversion expense					(471)		(6)	(475)	(746)
	Less absorption:
	-Mineral properties					11		13	22		25
										Cost of services		(2,338)				(1,659)	(3,931)	(3,374)
Cost of goods and services sold				(3,621)					(1,986)	(5,439)	(5,168)
Reclamation asset amortization						(70)		(62)	(140)	(122)
Selling expenses				-		-	-		(14)
Sales royalties and non-income taxes				-		-	-		(64)
Operating expenses			$	(3,691) $					(2,048) $	(5,579) $	(5,368)

			16



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

			Three Months Ended		Six Months Ended
	June 30			June 30
(in thousands of CAD dollars)							2021						2020		2021				2020

Gains (losses) on:
									Foreign exchange	$	(2,059) $				(98) $	(1,618) $				(78)
									Disposal of property, plant and equipment		2					405	2				407
									Fair value changes:
									Investments-equity instruments (note 7)		5,233				1,989	5,142				(961)
									Investments-uranium (note 7)		7,534	-	7,534	-
									Warrant liabilities (note 14)		(4,268)	-	(5,832)	-
									Issue costs-warrant liabilities (note 16)		(2)		-	(791)	-
									Uranium investment carrying charges									(54)	-	(54)	-
									Other									(38)	(133)	(76)		(397)
Other income (expense)		$	6,348 $				2,163 $	4,307 $				(1,029)

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

			Three Months Ended		Six Months Ended
	June 30			June 30
(in thousands of CAD dollars)							2021						2020		2021				2020

Interest income		$								130 $	64 $	213 $				156
Interest expense			(1)					(1)	(1)	(3)
Accretion expense
									Deferred revenue (note 11)									(790)	(755)	(1,544)		(1,537)
									Post-employment benefits (note 12)		(6)					(17)	(12)				(34)
									Reclamation obligations (note 13)									(336)	(338)	(672)		(676)
									Debt obligations (note 14)									(12)	(14)	(24)		(30)
Finance income (expense)		$	(1,015) $				(1,061) $	(2,040) $				(2,124)

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

			Three Months Ended		Six Months Ended
	June 30			June 30
(in thousands of CAD dollars)							2021						2020		2021				2020

Operating expenses
									Mining, other development expense	$	- $					(1) $	(1) $	(2)
									Mil ing, conversion expense		(429)	-	(429)				(736)
									Cost of services									(46)	(47)	(91)		(100)
									Evaluation		(9)					(9)	(18)				(18)
									Exploration									(50)	(37)	(80)		(78)
General and administrative										(30)	(32)	(55)				(64)
Depreciation expense-gross		$	(564) $				(126) $	(674) $				(998)

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

			Three Months Ended		Six Months Ended
	June 30			June 30
(in thousands of CAD dollars)							2021						2020		2021				2020

Salaries and short-term employee benefits		$	(2,104) $				(1,545) $	(5,138) $				(3,703)
Share-based compensation (note 17)			(920)				(421)	(1,295)				(904)
Termination benefits			-		-	(29)	-
Employee benefits expense		$	(3,024) $				(1,966) $	(6,462) $				(4,607)
		17



		INTERIM CONSOLIDATED FINANCIAL STATEMENTS


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

							Six Months Ended
					June 30
				(in thousands of CAD dollars)					2021	2020

				Change in non-cash working capital items:
				Trade and other receivables		$	(1,265) $	890
				Inventories			(1)	433
				Prepaid expenses and other assets			262	401
				Accounts payable and accrued liabilities			1,622	(3,352)
				Change in non-cash working capital items		$	618 $	(1,628)


20. 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
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 from UPC has been included with general corporate expenses due to the shared infrastructure between
the two activities.

			18



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended June 30, 2021, reportable segment results were as follows:

									Closed
								Mine	Corporate
(in thousands of CAD dollars)			Mining				Services	and Other	Total

Statement of Operations:
Revenues				719					4,310	2,093	7,122

Expenses:
Operating expenses				(1,648)					(3,931)	-	(5,579)
Evaluation				(9,142)								-	-	(9,142)
Exploration				(1,876)								-	-	(1,876)
General and administrative				(17)								-	(4,970)	(4,987)
				(12,683)					(3,931)	(4,970)	(21,584)
Segment income (loss)				(11,964)					379	(2,877)	(14,462)

Revenues – supplemental:
Environmental services				-	4,310	-	4,310
Management fees				-				-	2,093	2,093
Toll milling services–deferred revenue (note 11)				719								-	-	719
													719		4,310	2,093	7,122

Capital additions:
Property, plant and equipment				310								36	83	429

Long-lived assets – as at June 30, 2021:
Plant and equipment
									Cost				101,829		4,465	974	107,268
									Accumulated depreciation				(26,910)		(3,167)	(471)	(30,548)
Mineral properties				179,764								-	-	179,764
				254,683					1,298	503	256,484

For the three months ended June 30, 2021, reportable segment results were as follows:

									Closed
								Mine	Corporate
(in thousands of CAD dollars)			Mining				Services	and Other	Total

Statement of Operations:
Revenues				582					2,566	1,478	4,626

Expenses:
Operating expenses				(1,353)					(2,338)	-	(3,691)
Evaluation				(6,381)								-	-	(6,381)
Exploration				(528)								-	-	(528)
General and administrative				-				-	(2,362)	(2,362)
				(8,262)					(2,338)	(2,362)	(12,962)
Segment income (loss)				(7,680)					228	(884)	(8,336)

Revenues – supplemental:
Environmental services				-	2,566	-	2,566
Management fees				-				-	1,478	1,478
Toll milling services–deferred revenue (note 11)				582								-	-	582
													582		2,566	1,478	4,626

		19



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended June 30, 2020, reportable segment results were as follows:

									Closed
								Mine	Corporate
(in thousands of CAD dollars)			Mining				Services	and Other	Total

Statement of Operations:
Revenues				1,967					4,132	1,487	7,586

Expenses:
Operating expenses				(1,994)					(3,374)	-	(5,368)
Evaluation				(1,855)									-	-	(1,855)
Exploration				(2,181)									-	-	(2,181)
General and administrative				(19)									-	(3,590)	(3,609)
				(6,049)					(3,374)	(3,590)	(13,013)
Segment income (loss)				(4,082)					758	(2,103)	(5,427)

Revenues – supplemental:
Environmental services				-	4,132	-	4,132
Management fees				-				-	1,487	1,487
Uranium concentrate sales				852									-	-	852
Toll milling services–deferred revenue (note 11)				1,115									-	-	1,115
														1,967		4,132	1,487	7,586

Capital additions:
Property, plant and equipment				124									15	-	139

Long-lived assets – as at June 30, 2020:
Plant and equipment
									Cost					99,994		4,546	908	105,448
									Accumulated depreciation					(25,305)		(3,102)	(368)	(28,775)
Mineral properties				179,605									-	-	179,605
				254,294					1,444	540	256,278

For the three months ended June 30, 2020, reportable segment results were as follows:

									Closed
								Mine	Corporate
(in thousands of CAD dollars)			Mining				Services	and Other	Total

Statement of Operations:
Revenues				152					2,104	670	2,926

Expenses:
Operating expenses				(389)					(1,659)	-	(2,048)
Evaluation				(364)									-	-	(364)
Exploration				(481)									-	-	(481)
General and administrative										(5)	-	(1,416)	(1,421)
				(1,239)					(1,659)	(1,416)	(4,314)
Segment income (loss)				(1,087)					445	(746)	(1,388)

Revenues – supplemental:
Environmental services				-	2,104	-	2,104
Management fees				-				-	670	670
Toll milling services–deferred revenue (note 11)				152									-	-	152
														152		2,104	670	2,926

		20

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

21. RELATED PARTY TRANSACTIONS

Uranium Participation Corporation

The current management services agreement (“MSA”) with UPC became effective on April 1, 2019 and has a term

of five years (the “Term”). Under the MSA, Denison receives the following management fees from UPC: a) a base

fee of $400,000 per annum, payable in equal quarterly instal ments; 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.

The MSA may be terminated during the Term by Denison upon the provision of 180 days written notice. The MSA

may be terminated during the Term by UPC (i) in the event of a material breach, (i ) within 90 days of certain events

surrounding a change of both of the individuals serving as Chief Executive Officer and Chief Financial Officer of

UPC, and / or a change of control of Denison, or (i i) upon the provision of 30 days writ en notice and, subject to

certain exceptions, a cash payment to Denison of an amount equal to the base and variable management fees

that would otherwise be payable to Denison (calculated based on UPC’s current uranium holdings at the time of

termination) for the lesser period of a) three years, or b) the remaining term of the MSA.

See note 25 for further information regarding the UPC MSA.

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

Three Months Ended

Six Months Ended

June 30

(in thousands of CAD dollars)

2021

2020

2021

2020

Management fees:

Base and variable fees

571 $

551 $

1,046 $

1,014

Commission fees

697

119

697

173

Discretionary fees

210

350

300

1,478 $

670 $

2,093 $

1,487

At June 30, 2021, accounts receivable includes $1,199,000 (December 31, 2020: $265,000) due from UPC with

respect to the fees indicated above.

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

As at June 30, 2021, KEPCO, through its subsidiaries, holds 58,284,000 shares of Denison representing a share

interest of approximately 7.23%. KHNP Canada Energy Ltd., a subsidiary of KEPCO’s subsidiary KHNP, is the

holder of the majority of Denison’s shares and is also the majority member of 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 Waterbury Lake Uranium Limited Partnership (“WLULP”),

entities whose key asset is the Waterbury Lake property.

Other

During the six months ended June 30, 2021, the Company incurred investor relations, administrative service fees

and certain pass-through expenses of $164,000 (June 30, 2020: $96,000) with Namdo Management Services Ltd,

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

of operating a public company. At June 30, 2021, an amount of $71,000 (December 31, 2020: $nil) was due to this

company.

Compensation of Key Management Personnel

Key management personnel are those persons having authority and responsibility for planning, directing and

controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s

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

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The fol owing compensation was awarded to key management personnel:

Three Months Ended

Six Months Ended

June 30

(in thousands of CAD dollars)

2021

2020

2021

2020

Salaries and short-term employee benefits

(494) $

(371) $

(1,537) $

(955)

Share-based compensation

(737)

(320)

(1,057)

(750)

Key management personnel compensation

(1,231) $

(691) $

(2,594) $

(1,705)

22. INCOME TAXES

For the six months ended June 30, 2021, Denison has recognized deferred tax recoveries of $954,000. The

deferred tax recovery includes the recognition of previously unrecognized Canadian tax assets of $247,000 relating

to the February 2021 renunciation of the tax benefits associated with the Company’s $930,485 flow-through share

issue in December 2020.

23. FAIR VALUE OF 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, or the variable interest rate associated with

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

During the six months ended June 30, 2021, there were no transfers between levels 1, 2 and 3 and there were no

changes in valuation techniques.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The fol owing table il ustrates the classification of the Company’s financial assets within the fair value hierarchy as

at June 30, 2021 and December 31, 2020:

June 30

December 31,

Financial

Fair

2021

2020

Instrument

Value

Fair

(in thousands of CAD dollars)

Category(1)

Hierarchy

Value

Financial Assets:

Cash and equivalents

Category B

84,852 $

24,992

Trade and other receivables

Category B

4,639

3,374

Investments

Equity instruments-shares

Category A

Level 1

21,847

16,657

Equity instruments-warrants

Category A

Level 2

245

293

Restricted cash and equivalents

El iot Lake reclamation trust fund

Category B

3,201

2,883

Credit facility pledged assets

Category B

9,000

Reclamation letter of credit collateral

Category B

135

$ 123,919 $

57,334

Financial Liabilities:

Accounts payable and accrued liabilities

Category C

17,069

7,178

Share purchase warrants liabilty

Category A

Level 2

19,066

Debt obligations

Category C

621

615

36,756 $

7,793

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

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

24. COMMITMENTS AND CONTINGENCIES

Specific Legal Matters

Mongolia Mining Division Sale – Arbitration Proceedings with Uranium Industry

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

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. Hearings

in front of the arbitration panel were held in December 2019. 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. Denison



	INTERIM CONSOLIDATED FINANCIAL STATEMENTS

and UI have exchanged correspondence, and award recovery options are being considered.

Uranium Purchase Commitments

Denison has entered into agreements to purchase 2,500,000 pounds of U3O8 for delivery in 2021. As at June
30th, Denison has taken delivery of 2,300,000 pounds with the remaining 200,000 pounds to be delivered at
various times between July 1, 2021 and October 31, 2021. The purchase commitment for the remaining deliveries
is valued at USD$6,100,000 ($7,560,000 using the June 30, 2021 foreign exchange rate of 1.2394).

25. SUBSEQUENT EVENTS

Uranium Participation Corporation

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 and Denison received a termination payment from UPC of $5,848,000.

Acquisition of 50% of JCU (Canada) Exploration Company, Limited (“JCU”) from UEX Corporation (“UEX”)

On August 3, 2021, Denison acquired 50% ownership of JCU from UEX for cash consideration of $20.5 mil ion.
JCU holds a portfolio of twelve uranium project joint venture interests in Canada, including a 10% interest in
Wheeler River, a 30.099% interest in the Mil enium project, a 33.8123% interest in the Kiggavik project and a
34.4508% interest in the Christie Lake project.

On August 3, 2021, UEX acquired 100% of JCU from OURD for $40.5 mil ion, which was funded by Denison
providing UEX an interest-free term loan for three-months in the amount of $41.0 mil ion (“UEX Term Loan”). Half
of the amount owing from UEX to Denison was settled on the transfer of 50% of the shares of JCU to Denison,
with UEX continuing to owe Denison $20.5 mil ion. The UEX Term Loan is secured by al of the shares of JCU
owned by UEX. UEX may extend the term of the loan by an additional three months, in which case interest wil be
charged at a rate of 4% from the original start date of the UEX Term Loan.

Denison and UEX have entered into a shareholder’s agreement which governs the operating activities of JCU,
including provisions for future funding, dilution and the resolution of management deadlock situations.

At June 30, 2021, Denison has capitalized $76,000 of transaction costs related to the JCU acquisition on its
statement of financial position.





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