UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 40-F
 
 
(Check One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
ANNUAL REPORT PURSUANT TO SECTION 13(A) OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
 
For the fiscal year ended: December 31, 2020
 
Commission file number: 001-33414
 
 
 
DENISON MINES CORP.
(Exact name of registrant as specified in its charter)
 
 
 
Ontario, Canada
(Province or other jurisdiction of incorporation or organization)
 
1090
(Primary standard industrial classification code number)
 
98-0622284
(I.R.S. employer identification number)
 
1100 – 40 University Avenue, Toronto, Ontario M5J 1T1 Canada; Phone number: 416-979-1991
(Address and telephone number of registrant’s principal executive offices)
 
C T Corporation System
28 Liberty Street
New York, NY 10005
Phone number: 212-894-8940
(Name, address and telephone number of agent for service in the United States)
 
Securities registered pursuant to Section 12(b) of the Act: Not applicable.
 
Securities registered pursuant to Section 12(g) of the Act: Common shares without par value.
 
 
 
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: Not applicable.
x
For annual reports, indicate by check mark the information filed with this form:
 
 
 
 
  Annual Information Form
 
  Audited Annual Financial Statements
 
 
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 678,981,882 Common Shares as at December 31, 2020.
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13(d) or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant has been required to file such reports); and (2) has been subject to such filing requirements in the past 90 days.
 
Yes  ☒            No   ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 
Yes  ☒            No   ☐
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
 
Emerging growth company  ☐
 
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
 
Yes  ☐            No   ☐
 
 
 
 
 
EXPLANATORY NOTE
 
Denison Mines Corp. (the “Company” or the “Registrant”) is an Ontario corporation eligible to file its Annual Report pursuant to Section 13(a) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form 40-F. The Registrant is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Equity securities of the Registrant are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 thereunder.
 
DOCUMENTS FILED PURSUANT TO GENERAL INSTRUCTIONS
 
In accordance with General Instruction B.(3) of Form 40-F, the Registrant hereby incorporates by reference Exhibits 99.1 through 99.3 as set forth in the Exhibit Index attached hereto, which are deemed filed herewith.
In accordance with General Instruction D.(9) of Form 40-F, the Company has filed written consents of certain experts named in the foregoing Exhibits as Exhibits 99.4 and 99.7 through 99.35, as set forth in the Exhibit Index attached hereto.
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
Certain of the information contained in this Annual Report on Form 40-F, including the documents incorporated herein by reference, may contain “forward-looking information”. Forward-looking information and statements may include, among others, statements regarding the future plans, costs, objectives or performance of the Company, or the assumptions underlying any of the foregoing. In this Annual Report on Form 40-F, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. Forward-looking statements and information are based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company’s control. These risks, uncertainties and assumptions include, but are not limited to, those described under the section “Risk Factors” in the Company’s Annual Information Form for the fiscal year ended December 31, 2020 (the “AIF”), which is filed as Exhibit 99.3 to this Annual Report on Form 40-F, and could cause actual events or results to differ materially from those projected in any forward-looking statements.
 
The Company’s forward-looking statements contained in the exhibits incorporated by reference into this Annual Report on Form 40-F are made as of the respective dates set forth in such exhibits. In preparing this Annual Report on Form 40-F, the Company has not updated such forward-looking statements to reflect any subsequent information, events or circumstances or otherwise, or any change in management’s beliefs, expectations or opinions that may have occurred prior to the date hereof, nor does the Company assume any obligation to update such forward-looking statements in the future, except as required by applicable laws.
 
NOTE TO UNITED STATES READERS – DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES
 
The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Annual Report on Form 40-F in accordance with Canadian disclosure requirements, which are different from those of the United States.
 
The Registrant prepares its consolidated financial statements, which are filed with this Annual Report on Form 40-F, in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS”). IFRS differ in some significant respects from United States generally accepted accounting principles (“U.S. GAAP”), and thus the Registrant’s financial statements may not be comparable to the financial statements of United States companies.
 
 
 
 
These differences between IFRS and U.S. GAAP might be material to the financial information presented in this Annual Report on Form 40-F. In addition, differences may arise in subsequent periods related to changes in IFRS or U.S. GAAP or due to new transactions that the Registrant enters into. The Registrant is not required to prepare a reconciliation of its consolidated financial statements and related footnote disclosures between IFRS and U.S. GAAP and has not quantified such differences.
 
RESOURCE AND RESERVE ESTIMATES
 
The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), which references the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves (“CIM Standards”), adopted by the CIM Council, as amended. These definitions differ from the definitions in Industry Guide 7 (“Industry Guide 7”) under the United States Securities Act of 1933, as amended. Under Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination. Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. Denison has not prepared a feasibility study for the purposes of NI 43-101 or the requirements of the SEC in connection with its probable mineral reserves disclosure, and therefore such mineral reserve disclosure is not comparable to information from U.S. companies subject to the reporting and disclosure requirements of the SEC. Further, until recently, the SEC has not recognized the reporting of mineral deposits which do not meet the Industry Guide 7 definition of “reserve”. In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under Industry Guide 7 and, until recently, have not been permitted to be used in reports and registration statements filed with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”).
 
The SEC adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the Exchange Act. These amendments became effective February 25, 2019 (the “SEC Modernization Rules”) with compliance required for the first fiscal year beginning on or after January 1, 2021. The SEC Modernization Rules replace the historical disclosure requirements for mining registrants that were included in SEC Industry Guide 7, which will be rescinded from and after the required compliance date of the SEC Modernization Rules. As a result of the adoption of the SEC Modernization Rules, the SEC now recognizes estimates of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”. In addition, the SEC has amended its definitions of “proven mineral reserves” and “probable mineral reserves” to be “substantially similar” to the corresponding definitions under the CIM Standards, as required under NI 43-101. Accordingly, during the period leading up to the compliance date of the SEC Modernization Rules, information regarding mineral resources or mineral reserves contained or referenced in this Annual Report may not be comparable to similar information made public by United States companies.
 
United States investors are cautioned that there are differences in the definitions under the SEC Modernization Rules and the CIM Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had the Company prepared the reserve or resource estimates under the standards adopted under the SEC Modernization Rules.
 
United States investors are also cautioned that while the SEC will now recognize “indicated mineral resources” and “inferred mineral resources”, investors should not assume that any part or all of the mineralization in these categories will ever be converted into a higher category of mineral resources or into mineral reserves. Mineralization described using these terms has a greater amount of uncertainty as to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to assume that any “indicated mineral resources” or “inferred mineral resources” that the Company reports are or will be economically or legally mineable. Further, “inferred mineral resources” have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that all or any part of the “inferred mineral resources” exist. In accordance with Canadian securities laws, estimates of “inferred mineral resources” cannot form the basis of feasibility or other economic studies, except in limited circumstances where permitted under NI 43-101.
 
 
 
 
Accordingly, information contained in this Annual Report on Form 40-F and the documents incorporated by reference herein containing descriptions of the Company’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
 
CURRENCY
 
Unless otherwise indicated, all dollar amounts in this Annual Report on Form 40-F are in Canadian dollars. The daily exchange rate published by the Bank of Canada for the exchange of Canadian dollars into United States dollars on December 31, 2020, the last business day of calendar 2020, was CDN$1.00 = U.S.$0.7854.
 
TAX MATTERS
 
Purchasing, holding, or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this Annual Report on Form 40-F.
 
DISCLOSURE CONTROLS AND PROCEDURES
 
 
A.
Evaluation of Disclosure Controls and Procedures
 
The Company maintains disclosure controls and procedures to ensure that information required to be disclosed in the Company’s filings under the Exchange Act, is recorded, processed, summarized and reported in accordance with the requirements specified in the rules and forms of the SEC. The Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of December 31, 2020 are effective to ensure that information required to be disclosed by the Registrant in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Registrant’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
 
The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and, as indicated in the preceding paragraph, the Chief Executive Officer and Chief Financial Officer believe that the Company’s disclosure controls and procedures are effective at that reasonable assurance level, although the Chief Executive Officer and Chief Financial Officer do not expect that the disclosure controls and procedures will prevent or detect all errors and all fraud.
 
It should be noted that a control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The Company will continue to periodically review its disclosure controls and procedures and may make such modifications from time to time as it considers necessary.
 
B.
Management’s Annual 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. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.
 
 
 
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.
 
Management conducted an assessment of the Company’s internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission on Internal Control — Integrated Framework (2013). Based on this assessment, management concluded that, as of December 31, 2020, the Company’s internal control over financial reporting is effective.
 
It should be noted that a control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met. The Company will continue to periodically review its internal control over financial reporting and may make such modifications from time to time as it considers necessary.
 
C.
Attestation Report of the Independent Registered Public Accounting Firm
 
The effectiveness of the Registrant’s internal control over financial reporting as of December 31, 2020 has been audited by KPMG LLP, an Independent Registered Public Accounting Firm, as stated in their report included with the Registrant’s Audited Financial Statements, which are an exhibit to this Annual Report on Form 40-F.
 
D.
Changes in Internal Control Over Financial Reporting
 
There was no change in the Company’s internal control over financial reporting that occurred during the twelve month period covered by this Annual Report on Form 40F that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
NOTICES PURSUANT TO REGULATION BTR
 
There were no notices required by Rule 104 of Regulation BTR during the fiscal year ended December 31, 2020, concerning any equity security subject to a blackout period under Rule 101 of Regulation BTR.
 
CORPORATE GOVERNANCE
 
The Company is listed on the Toronto Stock Exchange (the “TSX”) and is required to describe its practices and policies with regard to corporate governance with specific reference to the corporate governance guidelines of the Canadian Securities Administrators on an annual basis by way of a corporate governance statement contained in the Company’s Annual Information Form or Information Circular. The Company is also listed on the NYSE American LLC (the “NYSE American”) and additionally complies as necessary with the rules and guidelines of the NYSE American as well as the SEC. The Company reviews its governance practices on an ongoing basis to ensure it is in compliance with the applicable laws, rules and guidelines both in Canada and in the United States.
 
The Company’s Board of Directors (the “Board”) is responsible for the Company’s corporate governance policies and has separately designated a standing Corporate Governance and Nominating Committee. The Board has determined that the members of the Corporate Governance and Nominating Committee are independent, based on the criteria for independence and unrelatedness prescribed by the Sarbanes-Oxley Act of 2002, Section 10A(m)(3), and the NYSE American. Corporate governance relates to the activities of the Board, the members of which are elected by and are accountable to the shareholders, and takes into account the role of the senior officers who are appointed by the Board and who are charged with the day to day administration of the Company. The Board is committed to sound corporate governance practices that are both in the interest of its shareholders and contribute to effective and efficient decision making.

 
 
 
 
BENEFIT PLAN BLACKOUT PERIODS
Not applicable.
AUDIT COMMITTEE FINANCIAL EXPERT
 
The Company’s Board of Directors has determined that all three members of its Audit Committee (Ms. Catherine Stefan, Mr. Brian D. Edgar and Ms. Patricia M. Volker) are audit committee financial experts, within the meaning of paragraph 8(b) of General Instruction B of Form 40-F, and are also independent within the meaning of United States and Canadian securities regulations and applicable stock exchange requirements. A description of the education and experience of these persons is set forth in the table below:
 
 
 
 
 
 
Member Name
 
 
Education & experience relevant to
performance of audit committee duties
 
 
Catherine J.G. Stefan,
Chair of the Audit
Committee
 
 
 
 
 
 
Chartered Professional Accountant, Chartered Accountant
 
 
 
 
 
 
B.Comm
 
 
 
 
 
Held position of Chief Operating Officer of O&Y Properties Inc., President of Stefan & Associates and Executive Vice-President of Bramalea Group, Chair, Tax Committee of the Canadian Institute of Public Real Estate Companies (CIPREC).
 
 
 
 
 
 
Brian D. Edgar
 
 
 
 
Law degree, with extensive corporate finance experience
 
 
 
 
 
 
 
 
Held positions in a public company of Chairman since 2011 and President and Chief Executive Officer from 2005 to 2011.
 
 
 
 
 
 
 
 
Has served on audit committees of a number of public companies
 
 
 
 
Patricia M. Volker
 
 
 
 
Chartered Professional Accountant, Chartered Accountant, Certified Management Accountant
 
 
 
 
 
 
 
 
Over 17 years of service at the Chartered Professional Accountants of Ontario, the self-regulating body for Ontario’s CPAs
 
 
 
 
 
 
 
 
Has served and chaired audit committees of a number of companies
 
 
Through such education and experience, each of these three members has experience overseeing and assessing the performance of companies and public accountants with respect to the preparation, auditing and evaluation of financial statements, and has: (1) an understanding of generally accepted accounting principles and financial statements; (2) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; (3) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements; (4) an understanding of internal control over financial reporting; and (5) an understanding of audit committee functions.
The SEC has provided that the designation of an audit committee financial expert does not make him or her an “expert” for any purpose, impose on him or her any duties, obligations or liability that are greater than the duties, obligations or liability imposed on him or her as a member of the Audit Committee and the Board in the absence of such designation, or affect the duties, obligations or liability of any other member of the Audit Committee or Board.
 
 
 
 
CODE OF ETHICS
 
The Company has adopted a code of ethics that applies to the Company’s directors, officers and employees, including the Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller, persons performing similar functions and other officers, directors and employees of the Company. A current copy of the code of ethics is on the Company’s website at www.denisonmines.com. In the fiscal year ended December 31, 2020, the Company has not made any amendment to a provision of its code of ethics that applies to any of its Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller or persons performing similar functions that relates to one or more of the items set forth in paragraph (9)(b) of General Instruction B to Form 40-F. In the fiscal year ended December 31, 2020, the Company has not granted a waiver (including an implicit waiver) from a provision of its code of ethics to any of its Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller or persons performing similar functions that relates to one or more of the items set forth in paragraph (9)(b) of General Instruction B to Form 40-F.
 
PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
The following table discloses the fees billed to the Company by its external auditor during the last two financial years ended December 31, 2020 and 2019. Services were billed and paid in Canadian dollars and the table below reflects amounts in Canadian dollars.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Periods Ending
 
  
Audit Fees(1)
 
  
Audit Related Fees(2)
 
  
Tax Fees(3)
 
  
All Other Fees(4)
 
December 31, 2020
 
 
$
112,837
 
 
$
273,208(5)
 
 
$
24,015(6)
 
 
$
0
  
December 31, 2019
 
  
$
180,775
  
  
$
116,567   
  
  
$
0
  
  
$
0
  
Notes:
(1)
The aggregate fees billed for audit services of the Company’s consolidated financial statements.
 
(2)
The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not disclosed in the Audit Fees column. Fees relate to reviews of interim consolidated financial statements, specified audit procedures not included as part of the audit of the consolidated financial statements and consent procedures in connection with various equity issuance documents.
 
(3)
The aggregate fees billed for tax compliance, tax advice, and tax planning services, such as transfer pricing and tax return preparation
 
(4)
The aggregate fees billed for professional services other than those listed in the other three columns.
 
(5)
The increase in Audit-Related Fees in 2020 relates to the extensive work required of the auditors to support the Company’s 2020 equity issuances, including the completion and filing of a short-form prospectus and a short form base shelf prospectus.
 
(6)
The increase in Tax Fees is a result of the change in the Company’s auditor to KPMG LLP, which has historically been engaged by the Company to provide it with corporate tax advice.
 
(7)
Fees for 2019 relate to the Company’s former auditor; fees in 2020 include $59,337 of audit fees and $192,959 of audit related fees for professional services billed by our former auditor.
 
 
 
The Company’s Audit Committee mandate and charter provides that the Audit Committee shall (i) approve, prior to the auditor’s audit, the auditor’s audit plan (including, without limitation, staffing), the scope of the auditor’s review and all related fees, and (ii) pre-approve any non-audit services (including, without limitation, fees therefor) provided to the Company or its subsidiaries by the auditor or any auditor of any such subsidiary and shall consider whether these services are compatible with the auditor’s independence, including, without limitation, the nature and scope of the specific non-audit services to be performed and whether the audit process would require the auditor to review any advice rendered by the auditor in connection with the provision of non-audit services.
 
The following sets forth the percentage of services described above that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
 
 
2020
 
2019
Audit Related Fees:
 100%
 
100%
Tax Fees:
 100%
 
100%
All Other Fees:
 100%
 
100%
 
 
 
 
OFF-BALANCE SHEET ARRANGEMENTS
 
The Company does not have any off-balance sheet arrangements at December 31, 2020 and at the date hereof.
 
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
 
At December 31, 2020, the Company had a reclamation liability of $38,420,000, consisting of $21,523,000 for Elliot Lake obligations, $16,875,000 for the McClean Lake and Midwest joint venture obligations and $22,000 for other obligations. The Company maintains a trust fund equal to the estimated reclamation spending for the succeeding six calendar years, less interest expected to accrue on the funds, in respect of its liability for Elliot Lake. At December 31, 2020, the balance in the trust fund was $2,883,000. In addition, the Company has pledged as collateral $9,135,000 of cash to support its standby letters of credit from the Bank of Nova Scotia for the McClean and Midwest reclamation obligations.
 
In addition, the Company’s contractual obligations at December 31, 2020 are as follows:
 
 
(in thousands of dollars)
Total
 
1 Year
2-3 Years
4-5 Years
After 5 Years
Accounts payable and accrued liabilities
7,178
7,178
-
-
-
Lease liabilities
688
231
259
198
-
Debt obligations
35
9
19
7
-
 
See other information in the section entitled “Contractual Obligations and Contingencies” in the Company’s Management’s Discussion and Analysis of Results of Operations and Financial Condition for the Year ended December 31, 2020, filed herewith.
 
IDENTIFICATION OF THE AUDIT COMMITTEE
 
The Company has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The committee members are Ms. Catherine J. G. Stefan, Mr. Brian D. Edgar and Ms. Patricia M. Volker. For further information on these members, see “Audit Committee Financial Experts” above.
 
INTERACTIVE DATA FILE
 
An interactive data file has been filed herewith, with the Consolidated Audited Financial Statements for the Years Ended December 31, 2020 and 2019.
 
NYSE AMERICAN CORPORATE GOVERNANCE
 
The Company’s common shares are listed on the NYSE American. Section 110 of the NYSE American Company Guide permits the NYSE American to consider the laws, customs and practices of foreign issuers in relaxing certain NYSE American listing criteria, and to grant exemptions from the NYSE American listing criteria based on these considerations. An issuer seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law. A description of the significant ways in which the Company’s governance practices differ from those followed by domestic companies pursuant to the NYSE American standards is as follows:
 
Board Composition: The NYSE American requires that a listed company have a Board of Directors consisting of at least a majority of members who satisfy applicable independence standards under Section 803 of the NYSE American Company Guide (the “NYSE American Independence Standard”). The Company’s Board is currently composed of nine members, six of whom qualify as independent under the NYSE American Company Guide and who meet the NYSE American Independence Standard, namely Mses. Stefan and Volker and Messrs. Dengler, Edgar, Hochstein and Rand. Denison’s remaining three directors do not satisfy the NYSE American Independence Standard, being Messrs. Cates, Lundin and Park.
 
 
 
Shareholder Meeting Quorum Requirement: The NYSE American minimum quorum requirement for a shareholder meeting is one-third of the shares issued and outstanding and entitled to vote for a meeting of a listed company’s shareholders. The TSX does not specify a quorum requirement for a meeting of a listed company’s shareholders. The Company’s current required quorum at any meeting of shareholders as set forth in the Company’s by-laws is two persons present, each being a shareholder entitled to vote at the meeting or a duly appointed proxyholder for an absent shareholder so entitled, holding or representing in aggregate not less than 10% of the shares of the Company entitled to be voted at the meeting. The Company’s current quorum requirement is not prohibited by, and does not constitute a breach of, the Business Corporations Act (Ontario) (the “OBCA”), applicable Canadian securities laws or the rules and policies of the TSX.
 
Proxy Solicitation Requirement: The NYSE American requires the solicitation of proxies and delivery of proxy statements for all shareholder meetings of a listed company, and requires that these proxies be solicited pursuant to a proxy statement that conforms to the proxy rules of the U.S. Securities and Exchange Commission. The Company is a foreign private issuer as defined in Rule 3b-4 under the Exchange Act, and the equity securities of the Company are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act. The Company solicits proxies in accordance with the OBCA, applicable Canadian securities laws and the rules and policies of the TSX.
 
Shareholder Approval Requirements: The NYSE American requires a listed company to obtain the approval of its shareholders for certain types of securities issuances. One is the sale of common shares (or securities convertible into common shares) at a discount to officers or directors. The TSX rules require shareholder approval for the issuance of shares to insiders in private placements where insiders are being issued more than 10% of the presently issued and outstanding shares. The NYSE American also requires shareholder approval of private placements that may result in the issuance of common shares (or securities convertible into common shares) equal to 20% or more of presently outstanding shares for less than the greater of book or market value of the shares. There is no such requirement under Ontario law. The TSX rules require shareholder approval for private placements that materially affect control, or where more than 25% of presently issued and outstanding shares will be issued at a discount to market. The Company will seek a waiver from the NYSE American shareholder approval requirement should a dilutive securities issuance trigger such NYSE American shareholder approval requirement in circumstances where such securities issuance does not trigger a shareholder approval requirement under the rules of the TSX.
 
Compensation Committee Requirements: The NYSE American Company Guide requires that additional independence criteria be applied to each member of the Compensation Committee. The NYSE American Company Guide also mandates that the Compensation Committee must have the authority to hire compensation consultants, independent legal counsel and other compensation advisors and exercise the sole responsibility to oversee the work of any compensation advisors retained to advise the Compensation Committee. In addition, before engaging a compensation advisor, the Compensation Committee must consider at least six factors that could potentially impact compensation advisor independence. The Company follows Canadian Securities Administrators and TSX requirements for Compensation Committee charters, independence and authority. The Compensation Committee's Charter includes a requirement that each member of the Compensation Committee be independent and that the Compensation Committee have the authority to retain outside advisors and determine the extent of funding necessary for payment of consultants.
 
The foregoing are consistent with the laws, customs and practices in Canada.
 
In addition, the Company may from time-to-time seek relief from the NYSE American corporate governance requirements on specific transactions under Section 110 of the NYSE American Company Guide by providing written certification from independent local counsel that the non-complying practice is not prohibited by its home country law, in which case, the Company shall make the disclosure of such transactions available on its website at www.denisonmines.com. Information contained on, or accessible through, our website is not part of this Annual Report on Form 40-F.
 
 
 
 
MINE SAFETY DISCLOSURE
 
Not applicable.
 
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
 
 
A.
Undertaking
 
The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an Annual Report on Form 40-F arises; or transactions in said securities.
 
B.
Consent to Service of Process
 
The Company has previously filed with the SEC a Form F-X in connection with its common shares. Any change to the name or address of the Company’s agent for service shall be communicated promptly to the SEC by amendment to the Form F-X referencing the file number of the Company.
 
 
SIGNATURES
 
Pursuant to the requirements of the Exchange Act, the Company certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report on Form 40-F to be signed on its behalf by the undersigned, thereto duly authorized.
 
 
 
 
Registrant: DENISON MINES CORP.
 
 
 
By:
 
 
/s/ David D. Cates
 
 
 
Title:
 
 
President and Chief Executive Officer
 
 
 
Date:
 
 
March 29, 2021
 
 
 
 
 
 
 
EXHIBIT INDEX
 
 
 
 
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99.35
 
 
 
 
 
 
 
 
101
  
Interactive Data Files with respect to the Consolidated Audited Financial Statements for the Years Ended December 31, 2020 and 2019
 
 
101.INS     XBRL Instance Document
 
 
 
 
 
 
 
 
 
 
 
Exhibit 99.1
 
 
Denison Mines Corp.
 
 
2020 Annual Information Form
March 26, 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ABOUT THIS ANNUAL INFORMATION FORM
 
This annual information form (“AIF”) is dated March 26, 2021. Unless stated otherwise, all of the information in this AIF is stated as at December 31, 2020.
 
This AIF has been prepared in accordance with Canadian securities laws and contains information regarding Denison’s history, business, mineral reserves and resources, the regulatory environment in which Denison does business, the risks that Denison faces and other important information for Shareholders.
 
This AIF incorporates by reference:
 
Denison’s management discussion and analysis (“MD&A”) for the year ended December 31, 2020,
 
Denison’s audited consolidated financial statements for the year ended December 31, 2020,
 
both of which are available under the Company’s profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov/edgar.shtml) as an exhibit to the Company’s Form 40-F.
 
Financial Information
 
Unless otherwise specified, all dollar amounts referred to in this AIF are stated in Canadian dollars (“CAD”). References to “US$” or “USD” mean United States dollars.
 
Financial information is generally derived from consolidated financial statements that have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
 
 
Table of Contents
 
About this AIF
About Denison
Developments over the Last Three Years
The Uranium Industry
Mineral Resources and Reserves
Mineral Properties
Athabasca Exploration: Sampling, Analysis and Data Verification
Denison Operations
Manager of UPC
Denison Closed Mines Group
Environmental, Health, Safety and Sustainability Matters
Government Regulation
Risk Factors
Denison’s Securities
Denison’s Management
Legal and Regulatory Proceedings
Material Contracts
Names and Interests of Experts
Additional Information
Audit Committee Mandate
Glossary of Terms
 
 
1
6
8
17
24
27

102
107
111
112
 
112
114
120
139
140
146
147
149
150
A
B
Caution about Forward-Looking Information
 
Certain information contained in this AIF and the documents incorporated by reference concerning the business, operations and financial performance and condition of Denison constitutes forward-looking information within the meaning of the United States Private Securities Litigation Reform Act of 1995 and similar Canadian legislation.
 
Generally, the use of words and phrases like "plans", "expects", "is expected", "budget", "scheduled", "estimates", “forecasts", "intends", "anticipates", or "believes", or the negatives and/or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will" "be taken", "occur", "be achieved" or “has the potential to” and similar expressions are intended to identify forward-looking information.
 
Forward-looking information involves known and unknown risks, uncertainties, material assumptions and other factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking statements.
 
2020 Annual Information Form    1
 
 
Denison believes that the expectations and assumptions reflected in this forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct. Forward-looking information should not be unduly relied upon. This information speaks only as of the date of this AIF, and Denison will not necessarily update this information, unless required to do so by securities laws.
 
Examples of Forward-Looking Information
This AIF contains forward-looking information in a number of places, including statements pertaining to Denison’s:
 
expectations regarding raising capital and uses of capital
operational and business outlook, including exploration, evaluation and development plans and objectives
plans for capital expenditure programs, exploration and development expenditures and reclamation costs and timing
results of its Wheeler River PFS and plans with respect to the EA and FS process (each as defined below)
results of its Waterbury PEA (as defined below) and related plans and objectives
expectations regarding future uranium prices and/or applicable foreign exchange rates
expectations regarding the process for and receipt of regulatory approvals, permits and licences under governmental and other applicable regulatory regimes
estimates of its mineral reserves and mineral resources
expectations about 2021 and future market prices, production costs and global uranium supply and demand
expectations regarding ongoing joint arrangements and Denison's share of same
expectations regarding additions to its mineral reserves and resources through acquisitions and exploration 
expectations regarding the toll milling of Cigar Lake ores, and the relationships with its contractual partners with respect thereto 
future royalty and tax payments and rates
expectations regarding possible impacts of litigation and regulatory actions
 
Statements relating to "mineral resources" are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the mineral resources described can be profitably produced in the future.
 
Material Risks
 
Denison's actual results could differ materially from those anticipated. Management has identified the following risk factors which could have a material impact on the Company or the trading price of its common shares (“Shares”):
 
the capital intensive nature of mining industry and the uncertainty of funding
global financial conditions, including market reaction to COVID-19 and operational risks related to the COVID-19 pandemic
the speculative nature of exploration and development projects
Denison’s history of negative cash flow
the imprecision of mineral reserve and resource estimates
the risks of, and market impacts on, developing mineral properties
risks associated with the selection of novel mining methods
dependence on obtaining licenses, and other regulatory and policy risks
  2020 Annual Information Form    2
 
uncertainty regarding engagement with Canada’s First Nations and Métis
environment, health and safety risks
lack of public market for uranium and global demand and international trade restrictions
the impact of uranium price volatility on the valuation of Denison’s assets, including mineral reserves and resources, and the market price of its Shares
uncertainty regarding public acceptance of nuclear energy and competition from other energy sources
volatility in the market price of the Company’s Shares
the risk of dilution from future equity financings
devaluation of any physical uranium held by the Company, and risk of losses, due to fluctuations in the price of uranium and/or foreign exchange rates
dependence on other operators of the Company’s projects
reliance on uranium storage facilities
reliance on contractors, experts and other third parties
the risk of failure to realize benefits from transactions
the risk of Denison’s inability to expand and replace its mineral reserves and resources
competition for properties
risk of challenges to property title and/or contractual interests in Denison’s properties
the risk of failure by Denison to meet its obligations to its creditors
change of control restrictions
uncertainty as to reclamation and decommissioning liabilities and timing
potential for technical innovation rendering Denison’s products and services obsolete
liabilities inherent in mining operations and the adequacy of insurance coverage
the ability of Denison to ensure compliance with anti-bribery and anti-corruption laws
the uncertainty regarding risks posed by climate change
the reliance of the Company on its information systems and the risk of cyber-attacks on those systems
dependence on key personnel
potential conflicts of interest for the Company’s directors who are engaged in similar businesses
limitations of disclosure and internal controls
   the potential influence of Denison’s largest Shareholder, Korea Electric Power Corporation (“KEPCO”) and its subsidiary, Korea Hydro & Nuclear Power (“KHNP”).
 
The risk factors listed above are discussed in more detail later in this AIF (see “Risk Factors”). The risk factors discussed in this AIF are not, and should not be construed as being, exhaustive.
 
Material assumptions
 
The forward looking statements in this AIF and the documents incorporated by reference are based on material assumptions, including the following, which may prove to be incorrect:
 
our budget, including expected exploration levels and costs and the assumptions regarding market conditions and other factors upon which we have based our expenditure expectations
our ability to execute our business plans for 2021 and beyond
our ability to, and the means by which the Company can, raise additional capital to advance other exploration and evaluation objectives
our ability to obtain all necessary regulatory approvals, permits and licences for our planned activities under governmental and other applicable regulatory regimes
our expectations regarding the demand for, and supply of, uranium, the outlook for long-term contracting, changes in regulations, public perception of nuclear power, and the construction of new and relicensing of existing nuclear power plants
our expectations regarding spot and long-term prices and realized prices for uranium, and that the price of uranium will not materially decline in the long-term
our expectations regarding our ability to acquire physical uranium on terms beneficial to the Company and that the physical uranium position will be advantageous in securing project financing and in securing long-term uranium supply agreements in the future
our expectations regarding tax rates, currency exchange rates and interest rates
our decommissioning and reclamation obligations and the status and ongoing maintenance of agreements with third parties with respect thereto
our mineral reserve and resource estimates, and the assumptions upon which they are based
our, and our contractors’, ability to comply with current and future environmental, safety and other regulatory requirements and to obtain and maintain required regulatory approvals
our operations are not significantly disrupted as a result of political instability, nationalization, terrorism, sabotage, social or political activism, breakdown, natural disasters, governmental or political actions, litigation or arbitration proceedings, equipment or infrastructure failure, labour shortages, transportation disruptions or accidents, or other development or exploration risks
  2020 Annual Information Form    3
 
 
A Note for US Investors Regarding Estimates of Measured, Indicated and Inferred Mineral Resources and Proven and Probable Mineral Reserves
 
This AIF uses the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource”, which are Canadian mining terms as defined in and required to be disclosed in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), which references the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves (“CIM Standards”), adopted by the CIM Council, as amended. However, these terms are not defined terms under Industry Guide 7 (“Industry Guide 7”) under the United States Securities Act of 1933, as amended, and, until recently, have not been permitted to be used in reports and registration statements filed with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”).
 
The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are also Canadian mining terms for the purposes of NI 43-101 and CIM Standards. These definitions differ from the definitions in Industry Guide 7. Under Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination. Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. Denison has not prepared a feasibility study for the purposes of NI 43-101 or the requirements of the SEC in connection with its probable mineral reserves disclosure, and therefore such mineral reserve disclosure is not comparable to information from U.S. companies subject to the reporting and disclosure requirements of the SEC. Further, until recently, the SEC has not recognized the reporting of mineral deposits which do not meet the Industry Guide 7 definition of “reserve”.
 
The SEC adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the Exchange Act. These amendments became effective February 25, 2019 (the “SEC Modernization Rules”) with compliance required for the first fiscal year beginning on or after January 1, 2021. The SEC Modernization Rules replace the historical disclosure requirements for mining registrants that were included in SEC Industry Guide 7. As a result of the adoption of the SEC Modernization Rules, the SEC now recognizes estimates of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”. In addition, the SEC has amended its definitions of “proven mineral reserves” and “probable mineral reserves” to be “substantially similar” to the corresponding definitions under the CIM Standards, as required under NI 43-101.
 
United States investors are cautioned that there are differences in the definitions under the SEC Modernization Rules and the CIM Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had the Company prepared the reserve or resource estimates under the standards adopted under the SEC Modernization Rules.
 
United States investors are also cautioned that while the SEC now recognizes “indicated mineral resources” and “inferred mineral resources”, investors should not assume that any part or all of the mineralization in these categories will ever be converted into a higher category of mineral resources or into mineral reserves. Mineralization described using these terms has a greater amount of uncertainty as to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to assume that any “indicated mineral resources” or “inferred mineral resources” that the Company reports are or will be economically or legally mineable. Further, “inferred mineral resources” have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that all or any part of the “inferred mineral resources” exist.
  2020 Annual Information Form    4
 
 
In accordance with Canadian securities laws, estimates of “inferred mineral resources” cannot form the basis of feasibility or other economic studies, except in limited circumstances where permitted under NI 43-101.
 
Accordingly, information contained in this AIF and the documents incorporated by reference herein containing descriptions of the Company’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
 
 
 
 
 
 
 
 
 
 
 
 
2020 Annual Information Form    5
 
 
ABOUT DENISON
 
Denison Mines Corp. is primarily engaged in uranium exploration and development. The registered and head office of Denison is located at 1100 – 40 University Avenue, Toronto, Ontario, M5J 1T1, Canada. Denison’s website address is www.denisonmines.com.

At the end of 2020, Denison had a total of 66 active employees, all of whom were employed in Canada. None of the Company’s employees are unionized.
 
The Shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol “DML” and on the NYSE American under the symbol “DNN.” Computershare Investor Services Inc. acts as the registrar and transfer agent for the Shares. The address for Computershare Investor Services Inc. is 100 University Avenue, 8th Floor, Toronto, ON, M5J 2Y1, Canada, and the telephone number is 1-800-564-6253.
 
Denison is a reporting issuer in all of the Canadian provinces and territories. The Shares are also registered under the United States Securities Exchange Act of 1934, as amended, and Denison files periodic reports with the United States Securities and Exchange Commission.
 
In this AIF, Denison or the Company means Denison Mines Corp., Shareholders means holders of Denison’s common shares and Shares means Denison’s common shares.

Denison’s Structure
 
Denison conducts its business through a number of subsidiaries. The following is a diagram depicting the corporate structure of Denison and its active subsidiaries as at December 31, 2020, including the name, jurisdiction of incorporation and proportion of ownership interest in each.
 
The Waterbury Lake Uranium Limited Partnership (“WLULP”) is held by Denison (66.89%) and Korea Waterbury Uranium Limited Partnership (“KWULP”) (33.09%) as limited partners and Waterbury Lake Uranium Corporation (“WLUC”) (0.02%), as general partner, with Denison and KWULP holding limited partnership interests of 66.90% and 33.10%, respectively.
 
Denison also owns a number of inactive subsidiaries which have no liabilities or assets and do not engage in any business activities.
 
2020 Annual Information Form    6
 
 
Denison Overview
 
Uranium Exploration and Development
 
Denison’s uranium exploration properties are principally held directly by the Company or indirectly through Denison Mines Inc. (“DMI”), Denison Waterbury Corp. and Denison AB Holdings Corp.
 
Denison’s Key Assets - In the Athabasca Basin Region of Northern Saskatchewan:
 
 A 90% interest in, and operator of, the Wheeler River Uranium project, which is host to the high-grade Phoenix and Gryphon uranium deposits – together representing the largest undeveloped uranium project in the infrastructure rich eastern Athabasca Basin.
 
 A 66.90% interest in, and operator of, the Waterbury Lake project, which includes the The Heldeth Túé (“THT”, formerly J Zone) and Huskie deposits.
 
 A 22.50% interest in the McClean Lake uranium processing facility and uranium deposits, through its interest in the McClean Lake Joint Venture (“MLJV”) operated by Orano Canada Inc. (“Orano Canada”).
 
 A 25.17% interest in the Midwest uranium project, operated by Orano Canada, which is host to the Midwest Main and Midwest A deposits.
 
 An extensive portfolio of exploration properties located in the Athabasca Basin.
 
 
Services
 
The Company generates cash flow through the following areas of its business:
 
(i)
Management of Uranium Participation Corporation (“UPC”)
 
Pursuant to a management services agreement, DMI serves as the manager of UPC, a publicly-traded company listed on the TSX under the symbol “U”, which invests in uranium oxide in concentrates (U3O8) and uranium hexafluoride (UF6).
 
(ii)
Denison’s Closed Mines group (formerly Denison Environmental Services)
 
Denison provides mine care & maintenance services to third party customers.
 
Toll Milling
 
Denison is a party to a toll-milling arrangement through its 22.50% interest in the MLJV, whereby ore is processed for the Cigar Lake Joint Venture (“CLJV”) at the McClean Lake processing facility (the “Cigar Toll Milling”). In February 2017, Denison completed a financing (the “APG Transaction”) with Anglo Pacific Group PLC ("APG") and its wholly owned subsidiary Centaurus Royalties Ltd. for gross proceeds to Denison of $43,500,000. The APG Transaction monetized a portion of Denison’s future share of the Cigar Toll Milling, providing Denison with the financial flexibility to advance its interests in the Athabasca Basin, including the Wheeler River project.
 
 
2020 Annual Information Form    7
 
 
While the APG Transaction monetized certain future toll milling receipts from the Cigar Toll Milling, Denison retains a 22.5% strategic ownership stake in the MLJV and McClean Lake processing facility. See “Denison’s Operations – Cigar Lake Toll Milling – APG Transaction”.
 
The Formation of Denison Mines Corp.
 
Denison was formed by articles of amalgamation as International Uranium Corporation (“IUC”) effective May 9, 1997 pursuant to the Business Corporations Act (Ontario) (the “OBCA”). On December 1, 2006, IUC combined its business and operations with DMI, by plan of arrangement under the OBCA (the “IUC Arrangement”). Pursuant to the IUC Arrangement, all of the issued and outstanding shares of DMI were acquired in exchange for IUC’s shares. Effective December 1, 2006, IUC’s articles were amended to change its name to “Denison Mines Corp.”
 
Denison subsequently completed a plan of arrangement with Energy Fuels Inc. in 2012 and filed articles of amalgamation on January 1, 2014, July 1, 2014 and July 3, 2014 in connection with Denison’s acquisitions of JNR Resources Inc. (“JNR”) and Fission Energy Corp. (“Fission”).
 
DEVELOPMENTS OVER THE LAST THREE YEARS
 
2018…
 
In January, the Company amended and extended its credit facility with the Bank of Nova Scotia (the “Credit Facility”) to January 31, 2019.
 
Also in January, Denison announced an 88% increase in the indicated mineral resources estimated for the Wheeler River project with the completion of an updated mineral resource estimate for the Gryphon deposit at Wheeler River. The Gryphon deposit is estimated to contain, above a cut-off grade of 0.2% U3O8, 61.9 million pounds of U3O8 (1,643,000 tonnes at 1.71% U3O8) in indicated mineral resources, plus 1.9 million pounds of U3O8 (73,000 tonnes at 1.18% U3O8) in inferred mineral resources. By comparison, the maiden mineral resource estimate, completed in September 2015, was comprised of inferred mineral resources of 43.0 million pounds of U3O8 above a cut-off grade of 0.2% U3O8 (834,000 tonnes at 2.3% U3O8). Together, Wheeler River is now host to 132.1 million pounds U3O8 (1,809,000 tonnes at an average grade of 3.3%) in total indicated mineral resources. Following the mineral resource update, Wheeler River retained and improved its standing as the largest undeveloped high-grade uranium project in the infrastructure rich eastern portion of the Athabasca Basin. In March, Denison filed a technical report containing the updated mineral resource estimate for the Wheeler River property. See “Mineral Properties – Wheeler River”.
 
In March, Denison also completed a review of an updated mineral resource estimate for the Midwest project. The review resulted in the estimation of (a) inferred mineral resources on the property increasing to 18.2 million pounds of U3O8 (100% basis; above a cut-off grade of 0.1% U3O8), an increase of 13.5 million pounds of U3O8 from the prior estimate; and (b) indicated mineral resources increasing to 50.78 million pounds U3O8 (100% basis; above a cut-off grade of 0.1% U3O8), an increase of 2.08 million pounds U3O8 from the prior estimate. A technical report was filed on March 27, 2018. See “Mineral Properties – Midwest”.
 
In April, Denison further amended the Credit Facility to accommodate the Company's change in financial statement presentation currency to Canadian dollars. The covenant in the Credit Facility to maintain a specified level of tangible net worth was changed to $131,000,000 (from US$150,000,000).
  2020 Annual Information Form    8
 
 
Also in April, the Company reported the completion of the winter drilling program at the Wheeler River project, including the discovery of high-grade uranium mineralization 600 metres and 1 kilometre to the northeast of the Gryphon uranium deposit. High-grade intercepts were obtained at the sub-Athabasca unconformity along the K-North trend from reconnaissance drill fences spaced 200 metres apart. The results were confirmed by chemical assays announced on June 6, 2018, which included 1.4% U3O8 over 5.5 metres (including 7.2% U3O8 over 1.0 metre) in drill hole WR-704, located 600 metres northeast of Gryphon; and 1.1% U3O8 over 3.0 metres (including 2.8% U3O8 over 1.0 metre) in drill hole WR-710D1, located 1 kilometre northeast of Gryphon. The winter drilling program at Wheeler River included 21,153 metres drilled in 29 diamond drill holes, largely focused on step-out drilling along strike of the Gryphon deposit and reconnaissance level regional exploration along the K-North and K-West trend.
 
And in April, Denison reported the expansion of the Huskie zone on the Waterbury Lake project, with the receipt of U3O8 chemical assay results from the Company's winter 2018 diamond drilling program. The results were highlighted by the following intercepts: 4.5% U3O8 over 6.0 metres (including 5.8% U3O8 over 4.5 metres), and 0.57% U3O8 over 6.3 metres (including 1.9% U3O8 over 1.0 metre) in drill hole WAT18-452; and 0.62% U3O8 over 1.0 metre in drill hole WAT18-460A. The winter drilling program involved 9,794 metres of diamond drilling in 19 drill holes, and was focused on 50 metre step-out drilling along strike and down-dip of the Huskie zone, as well as wider-spaced reconnaissance drilling to the west along the geological trend.
 
In May, Denison announced the results of its Annual General Shareholders Meeting, which included the ratification and approval of the Company’s new Share Unit Plan and the previous grants of share units thereunder.
 
In August, changes were made to the composition of the Company’s Board of Directors, with the appointment to the Board of David Cates (the Company’s President and Chief Executive Officer), Jack Lundin, Moo Hwan Seo and Patricia Volker. At that time, the Company accepted the resignation of Kwang-Hee Jeong and Lukas Lundin. In addition, Catherine Stefan, previously serving as the Company’s independent Lead Director, was appointed Chair of the Board.
 
In September, Denison entered into an agreement with Cameco Corporation (“Cameco”), pursuant to which Denison would increase its ownership interest in the Wheeler River project to 90% through the acquisition of 100% of Cameco’s minority interest in the Wheeler River Joint Venture (“WRJV”) (subject to certain rights of first refusal in favour of JCU (Canada) Exploration Limited (“JCU”), pursuant to the WRJV joint venture agreement) in exchange for the issuance to Cameco of 24,615,000 Shares of Denison. JCU waived its rights under the WRJV joint venture agreement to acquire any of Cameco’s interest, and Denison’s acquisition of Cameco’s interest was completed effective October 26, 2018 (the “Cameco Transaction”). See “Mineral Properties – Wheeler River”.
 
Also in September, Denison announced the appointment of Tim Gabruch as the Corporation’s Vice President Commercial.
 
And in September, Denison reported a new discovery of uranium mineralization on the Company's Waterbury Lake project. Basement-hosted uranium mineralization was intersected in two drill holes, approximately three kilometres northeast of the project's Huskie deposit, returning mineralized assay intervals of 0.43% U3O8 over 1.0 metre (including 0.73% U3O8 over 0.5 metres) in drill hole WAT18-478 and 0.45% U3O8 over 0.5 metre as well as 0.31% U3O8 over 0.5 metre and 0.20% U3O8 over 0.5 metre in drill hole WAT18-479. The zone of mineralization was subsequently named the GB zone.
 
  2020 Annual Information Form    9
 
 
In September, Denison announced the results of the Pre-Feasibility Study (“PFS”) for the Wheeler River project. The PFS was completed in accordance with NI 43-101 and is highlighted by the selection of the in-situ recovery (“ISR”) mining method for the development of the high-grade Phoenix deposit (“Phoenix”), with an estimated average operating cost of $4.33 (US$3.33) per pound U3O8. The PFS considers the potential economic merit of co-developing the Phoenix and Gryphon deposits. The ISR mining operation planned for Phoenix, would see associated processing to a finished product occurring at a plant to be built on site at Wheeler River. The Gryphon deposit is designed as an underground mining operation, utilizing a conventional long hole mining approach with processing of mine production assumed at Denison's 22.5% owned McClean Lake mill. Taken together, the project is estimated to have mine production of 109.4 million pounds U3O8 over a 14-year mine life, with a base case pre-tax Net Present Value (“NPV”) of $1.31 billion (8% discount rate), Internal Rate of Return (“IRR”) of 38.7%, and initial pre-production capital expenditures of $322.5 million. The base-case economic analysis assumes uranium sales are made at UxC Consulting Company, LLC's (“UxC”) annual estimated spot price (composite mid-point scenario) for mine production from Phoenix (from ~US$29/lb U3O8 to US$45/lb U3O8), and a fixed price for mine production from the Gryphon deposit (US$50/lb U3O8). The PFS is prepared on a project (100% ownership) and pre-tax basis, as each partner to the WRJV is subject to different tax and other obligations. The technical report in support of the PFS was filed on October 30, 2018. See “Mineral Properties – Wheeler River”.
 
In November, Denison reported that it had completed a maiden mineral resource estimate for the Huskie basement-hosted uranium deposit in accordance with NI 43-101 and CIM Definitions (2014), which was reviewed and audited by SRK Consulting (Canada) Inc. (“SRK”). The results are detailed in the updated technical report for Waterbury, filed on December 21, 2018. See “Mineral Properties – Waterbury Lake”.
 
Also in November, Denison reported the discovery of unconformity uranium and base metals mineralization on the K West trend at Wheeler River. Highlights from the Company's summer 2018 diamond drilling program at Wheeler River included drill hole WR-733D1, which returned 0.30% U3O8, 4.7% Co, 3.7% Ni and 0.55% Cu at the unconformity on the K West trend, approximately 500 metres west of the parallel K North trend, which hosts the Gryphon deposit.
 
And in November, Denison announced the completion of a private placement offering (the “2018 Offering”) of Shares issued on a "flow-through" basis pursuant to the Income Tax Act (Canada). The Company issued 4,950,495 Shares, at a price of $1.01 per Share, for total gross proceeds of approximately $5,000,000. The gross proceeds of the financing were used to fund expenses related to the Company's exploration activities in 2019.
 
In December, the Company's Board of Directors and the WRJV each approved the advancement of the Wheeler River project, following a detailed assessment of the robust economic results demonstrated in the PFS.
 
2019…
 
In January, the Company amended and extended its Credit Facility to January 31, 2020.
 
In March, the Company announced the execution of the new five-year management services agreement (the “MSA”) to provide management services to UPC. The MSA took effect on April 1, 2019, at the conclusion of the three-year term of the then current management services agreement between UPC and DMI. See “Manager of UPC”.
  2020 Annual Information Form    10
 
 
Also in March, Mr. Moo Hwan Seo resigned from the Board. Mr. Geun Park joined the Board, filling the vacancy created by Mr. Seo’s resignation.
 
In May, the Company announced the discovery of unconformity-hosted uranium mineralization along the southern portion of the K West trend at the Company’s Wheeler River Project, including 0.08% eU3O8 over 1.3 metres in drill hole WR-756, accompanied by strong sulphide mineralization and other geological features commonly associated with unconformity-related uranium deposits. The Company also announced the completion of follow-up drilling at the GB Zone at Waterbury Lake, which intersected basement-hosted mineralization in multiple drill holes, including 0.15% U3O8 over 6.0 metres in drill hole WAT19-480, and 0.25% U3O8 over 2.0 metres and 0.22% U3O8 over 1.5 metres in drill hole WAT19-486.
 
In June, the Canadian Nuclear Safety Commission (“CNSC”) and the Saskatchewan Ministry of Environment accepted the Provincial Technical Proposal and Federal Project Description (the “Project Description”) submitted by Denison for the ISR uranium mine and processing plant proposed for the Wheeler River Project. This acceptance initiated the Environmental Assessment (“EA”) process for Wheeler River in accordance with the requirements of both the Canadian Environmental Assessment Act, 2012 and the Saskatchewan Environmental Assessment Act.
 
Also in June, the Company announced that it had executed a series of Memoranda of Understanding (the “MOUs”), in support of the Wheeler River Project, with certain Indigenous communities who assert that Wheeler River falls partially or entirely within their traditional territories and where traditional land use activities are currently practiced within the local and regional area surrounding the project. These non-binding MOUs formalize the signing parties’ intent to work together in the spirit of mutual respect and cooperation, in order to collectively identify practical means by which to avoid, mitigate, or otherwise address potential impacts of the project upon the exercise of Indigenous rights, Treaty rights, and other interests, as well as to facilitate sharing in the benefits that are expected to flow from the project.
 
And in June, the Company announced its plans to undertake an initial ISR field program within the Phoenix orebody at Wheeler River, using water to evaluate hydrologic conditions that can be used to assess the hydraulic connections and potential mining solution flow between a series of test wells. Initial test results from Phoenix were announced in August, which confirmed hydraulic connectivity between multiple test wells, providing significant preliminary indications of the suitability of the area tested for the application of ISR mining. In September, the Company reported the initial results from the next test area of Phoenix, which also confirmed hydraulic connectivity within a significant portion of the ore zone tested.
 
In July, Denison’s Closed Mines group entered into a new two-year services agreement with Rio Algom Limited (“Rio Algom”), a subsidiary of BHP Billiton Limited (“BHP”). Under the terms of the agreement, the Closed Mines group is responsible for carrying out the management and operation of nine of Rio Algom’s decommissioned mine sites in Ontario and Quebec from July 1, 2019 to June 30, 2021, which services include the operation of water treatment plants and tailings management facilities; environmental monitoring and compliance, data management, and regulatory reporting; maintenance of roads, dams and electrical infrastructure; site management, including health and safety, procurement, logistics, and budgeting activities; and project management and execution for various projects, including infrastructure upgrades and replacements, engineering and environmental programs, as well as water management initiatives.
 
  2020 Annual Information Form    11
 
 
In September, following the positive initial results of its field program at Phoenix, Denison advanced to the second stage of ISR field testing – the installation of two large-diameter commercial scale wells (“CSW”s) at Phoenix, with each well designed to meet the technical and regulatory standards expected for a commercial ISR well at Phoenix.
 
In October, David Bronkhorst was appointed Vice President Operations with responsibility for overseeing and advancing the Company’s project evaluation programs for Wheeler River.
 
Also in October, the Company successfully installed two CSWs at Phoenix – marking the completion of the first CSWs designed for ISR mining in the Athabasca Basin. The completion of each CSW included the drilling of a large-diameter vertical borehole (~12 inches in diameter), to intersect the Phoenix ore body at a depth of approximately 400 metres below surface, and the installation of well materials designed to meet expected environmental and regulatory standards for eventual ISR mining. The Company also tested down-the-hole permeability enhancement techniques within the large diameter CSWs.
 
In December, Denison completed a private placement offering (the “2019 Offering”) of Shares issued on a "flow-through" basis pursuant to the Income Tax Act (Canada). Denison issued 6,934,500 flow-through shares, at a price of $0.68 per share, for aggregate gross proceeds to Denison of approximately $4.7 million, which includes the exercise, in full, of the over-allotment option of 904,500 shares. The gross proceeds from the financing were used to fund the Company’s Canadian exploration activities in 2020.
 
Also in December, Denison reported the completion of a highly successful ISR field program at Phoenix. The 2019 ISR field program was designed to validate the permeability of Phoenix, and to collect an extensive database of hydrogeological data to further evaluate the ISR mining conditions present at Phoenix. This detailed data is expected to facilitate detailed mine planning as part of the completion of a future Feasibility Study (“FS”). The ISR field program, as described above, successfully achieved each of its planned objectives.
 
Denison also announced the initiation of the next phase of ISR metallurgical laboratory testing for uranium recovery, which will utilize the mineralized drill core recovered through the installation of various test wells during the 2019 ISR field program. The metallurgical laboratory test program builds upon the laboratory tests completed for the recovery of uranium as part of the project’s PFS and is expected to further increase confidence and reduce risk associated with the application of ISR. The results are expected to facilitate detailed mine and process plant planning as part of a future FS, and will provide key inputs for the EA process. Significant components of the metallurgical laboratory test program include core leach tests, column leach tests, bench-scale tests and metallurgical modelling.
 
And in December, Denison received a positive scoping decision, with a Record of Decision issued by the CNSC on the scope of the factors to be taken into account for the EA for the Wheeler River project, which indicate that the EA will follow the CNSC’s generic guidelines.
 
2020…
 
In January, the Company amended and extended its Credit Facility to January 31, 2021.
 
Also in January, Mr. Geun Park resigned from the Board. Mr. Jun Gon Kim joined the Board effective February 17, 2020, filling the vacancy created by Mr. Park’s resignation.
 
  2020 Annual Information Form    12
 
 
In February, Denison reported that initial data from the Phoenix Deposit core leach tests includes elemental uranium concentrations, after test startup, in the range of 13.5 grams per litre (‘g/L’) to 39.8 g/L, and an average of 29.8 g/L over a 20-day period of testing. This compares favourably to the previous metallurgical test work completed to assess the use of the ISR mining method at Phoenix, which supported the use of an assumed uranium concentration of 10 g/L in the PFS design for the ISR processing plant.
 
Also in February, Denison reported that the results from the hydrogeological test work completed to-date have confirmed the ability to achieve bulk hydraulic conductivity values (a measure of permeability) consistent with the PFS. Extensive hydrogeological data sets were collected during the 2019 ISR field program for incorporation into a hydrogeological model being developed for Phoenix to be used for detailed planning for further ISR field testing intended to support the completion of a future FS.
 
In March, Denison announced the temporary suspension of Wheeler River EA activities, and adjustments to its prior 2020 Outlook, amidst the significant social and economic disruption resulting from the COVID-19 pandemic and the Company's commitment to ensure employee safety, support public health efforts to limit transmission of COVID-19, and exercise prudent financial discipline.
 
In April, Denison completed a US$5.75 million bought deal public offering, issuing 28,750,000 Shares, including the exercise in full of the underwriters’ over-allotment option of 3,750,000 Shares. The shares were qualified for issuance pursuant to a final short form prospectus in all provinces of Canada (other than Quebec), and in the United States pursuant to a related registration statement on Form F-10, as amended (SEC File No. 333-237381), filed with the United States Securities and Exchange Commission (the “SEC”) under the Canada/U.S. multi-jurisdictional disclosure system.
 
In June, the Company filed a short form base shelf prospectus (“2020 Prospectus”) with the securities regulatory authorities in each of the provinces and territories of Canada and a registration statement on Form F-10 was filed with the SEC. The 2020 Prospectus qualifies the issuance of certain securities and combinations of securities, for an aggregate offering amount of up to $175,000,000 during the 25 month period beginning June 2, 2020, in amounts, at prices and on terms to be subsequently determined and disclosed, as applicable.
 
Also in June, the Company announced the completion of independent hydrogeologic modeling for the Phoenix deposit at Wheeler River, based on site-specific data collected from the 2019 ISR field program, which produced demonstration of “proof of concept” for the application of the ISR mining method at Phoenix, with respect to potential operational extraction and injection rates, a significant milestone in de-risking the technical risks identified in the 2018 PFS.
 
In July, Denison announced the resumption of ISR field testing activities at Phoenix, with the commencement of the 2020 ISR field program. The work was intended to build additional confidence in the results of the hydrogeologic model developed for the deposit, and to support further field work expected to be required for the completion of a future FS. Denison also announced that, in order to ensure the Company's operations comply with all applicable health and safety guidelines associated with the COVID-19 pandemic, all operating procedures at the Company's Wheeler River site were reviewed and adapted to incorporate physical distancing and enhanced hygiene protocols, as well as special travel protocols designed by Denison for northern Saskatchewan. Where applicable, the Company's protocols incorporated feedback received from potentially impacted communities in northern Saskatchewan to minimize any health and safety risks associated with travel to and from site.
  2020 Annual Information Form    13
 
 
Also in July, the Company announced the completion of a conceptual mining study, evaluating the use of the ISR mining method, for the J Zone deposit at the Waterbury Lake project and the initiation of a preliminary economic assessment (the “Waterbury PEA”).
 
And in July, Denison announced the London Court of International Arbitration had rendered a final award in favour of Denison in the arbitration between Denison and Uranium Industry a.s. (“UI”) with respect to the contingent proceeds of Denison’s sale to UI of its interest in the Gurvan Saihan Joint Venture in Mongolia in 2015 (the “Mongolia Transaction”). The arbitration panel declared that UI violated its obligations to the Company under the related agreements, and ordered UI to pay the Company US$10,000,000 plus interest at a rate of 5% per annum from November 16, 2016, plus certain legal and arbitration costs. The arbitration panel further dismissed all other claims and counterclaims. For further updates, see “Legal and Regulatory Proceedings”.
 
In October, the Company completed a bought deal equity offering (the “October 2020 Offering”) of 51,347,321 Shares, which included the partial exercise of the over-allotment option granted to the underwriters, for aggregate gross proceeds of approximately US$19 million. The October 2020 Offering was completed pursuant to a prospectus supplement to the 2020 Prospectus. Proceeds of the October 2020 Offering are anticipated to be used to fund evaluation and EA activities on the Wheeler River project in 2021, as well as for general working capital purposes.
 
Also in October, Denison provided an update on field activities at Wheeler River, with the completion of its 2020 ISR field program at Phoenix and the commencement of an ~12,000 metre exploration drilling program designed to test initially for extensions to known mineralization at Phoenix and then advance to regional targets for the discovery of satellite uranium deposits potentially amenable to ISR mining. The ISR field program included the installation of five additional monitoring wells in two clusters, which will allow for long-term monitoring and the modelling of groundwater impacts through construction, operations and decommissioning of the Phoenix project, each of which will be an important element of the effect assessment in an Environmental Impact Statement (“EIS”).
 
In November, Denison announced its decision to restart the formal EA process for Wheeler River effective January 2021. The decision to resume the EA process marked the end of the temporary suspension announced in March 2020 amidst the significant social and economic disruption that emerged as a result of the COVID-19 pandemic.
 
Also in November, the Company announced it had entered into an equity distribution agreement (“EDA”) providing for an at-the-market (“ATM”) equity offering program, with Cantor Fitzgerald Canada Corporation, Scotia Capital Inc., Cantor Fitzgerald & Co. and Scotia Capital (USA) Inc. The intention of the ATM was to allow Denison to, through the agents and from time to time, offer and sell, in Canada and the United States by means of ordinary brokers’ transactions through the facilities of the TSX and/or NYSE American, such number of Shares as would have an aggregate offering price of up to US$20 million. The sale of the Company's Shares through the ATM were made pursuant to and qualified by a prospectus supplement to the 2020 Prospectus. As at the date hereof, Denison, through its agents, has issued 4,230,186 Shares under the ATM, at an average price of $0.93, for aggregate gross proceeds of $3,914,000. In connection with the March 2021 Offering (described below), Denison terminated the EDA, and ATM issuances pursuant thereto, as the aggregate issuances pursuant to prospectus supplements under the 2020 Prospectus, including the ATM and March 2021 Offering, had neared the 2020 Prospectus limit for aggregate issuance price of securities qualified for issuance by the 2020 Prospectus. See “Denison’s Securities – ATM Program Activity”.
 
  2020 Annual Information Form    14
 
 
And in November, Denison announced the successful completion of the independent PEA for the Waterbury Lake property evaluating the potential use of the ISR mining method at the THT deposit. The PEA was completed in accordance with NI 43-101. The THT ISR operation is estimated to produce total mine production of 9.7 million pounds U3O8 (177,664 tonnes at 2.49% U3O8) over an approximate six year mine-life with final processing occurring at Denison’s 22.5% owned McClean Lake mill with a base case pre-tax NPV of $177 million (8% discount rate), IRR of 39.1%, and initial capital expenditures of $111.6 million, excluding pre-construction evaluation and development costs. The base-case economic analysis assumes uranium sales are made at UxC’s forecasted annual “Composite Midpoint” spot price from the Q3’2020 Uranium Market Outlook, stated in constant dollars (from ~US$49/lb U3O8 to US$57/lb U3O8). The PEA was prepared on a project (100% ownership) and pre-tax basis as each partner to of the Waterbury Lake Uranium Limited Partnership is subject to different tax and other obligations. The technical report in support of the PEA was filed on December 30, 2020. See “Mineral Properties – Waterbury”.
 
In December, Denison announced the completion of a trade-off study assessing the merit of adopting a freeze wall design as part of the ISR mining approach planned for Phoenix. Based on the results of the trade-off study, it was determined that a freeze wall design has the potential to offer significant environmental, operational, and financial advantages compared to the freeze cap (or freeze "dome") design previously planned for the project and included in the Wheeler PFS. Accordingly, the Company has decided to adapt its plans for the Project to use a freeze wall in future Project design and environmental assessment efforts. See “Mineral Properties – Wheeler River”.
 
Also in December, Denison completed a non-brokered private placement of 1,081,959 Shares that qualify as "flow-through shares" for purposes of the Income Tax Act (Canada), at $0.86 per share, for gross proceeds of approximately $930,000 (the “2020 FT Offering”). The Company will use the proceeds to fund its share of exploration expenditures in 2021.
 
2021 Recent Developments…
 
In January, the Company amended and extended its Credit Facility to January 31, 2022.
 
Also in January, the Company reported the results from its 2020 regional exploration program at Wheeler River, which included the discovery of new high-grade unconformity-hosted uranium mineralization up to 7.66% U3O8. Drill hole WR-741AD2, which was completed along the K West conductive trend on the western side of the Wheeler River property, intersected high-grade uranium mineralization approximately four kilometers north northwest of Phoenix. Similar to Phoenix, uranium mineralization discovered in WR-741AD2 is interpreted to straddle the unconformity contact of the underlying basement rocks and the overlying Athabasca Basin sandstone. In addition to high-grade uranium, the assay results from WR-741AD2 are highlighted by the presence of high-grade nickel.
 
In February, Denison announced that the company finalized its 2021 plans for the further advancement of the Wheeler River project and additional field testing activities for the de-risking of the application of the ISR mining method at Phoenix. To facilitate these plans, the WRJV has approved a $24.0 million budget for 2021 (100% basis), which is highlighted by the resumption of the EA process, as well as the advancement of engineering studies, metallurgical testing, and field programs to support the future initiation of a formal a FS and the submission of a draft EIS. Denison’s net share of the 2021 budget for Wheeler River is $19.4 million, which reflects operator’s fees earned by Denison and its 90% ownership interest in the project.
  2020 Annual Information Form    15
 
 
Also in February, the Company reported the results from the 2020 exploration and expansion drilling program focused on the area proximal to the Phoenix deposit at Wheeler River. As part of this program, 21 drill holes were completed for a total of approximately 8,100 metres – all of which were located outside of the extents of the mineral resources currently defined at Phoenix. The results from the program were highlighted by the intersection of high-grade uranium mineralization in Zone C, where no mineral resource is currently estimated: 5.69% U3O8 over 5.0 metres in WR-328D1, located approximately 22 metres northeast of historic mineralized hole WR-368 (1.59% U3O8 over 2.0 metres); and 8.84% U3O8 over 2.5 metres in WR-767D1, located approximately 35 metres to the northeast of WR-328D1.
 
And in February, 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 US$0.91 per unit for gross proceeds of $36,266,000 (US$28,750,000), including the full exercise of the underwriters’ over-allotment option, accounting for 4,120,950 units (the “February 2021 Offering”). Each unit consists of one Share and one-half of one transferable common share purchase warrant of the Company. Each full warrant is exercisable to acquire one Share of the Company at an exercise price of US$2.00 for 24 months after issuance. Proceeds of the February 2021 Offering are anticipated to be used to fund evaluation and environmental assessment activities in support of the advancement of the proposed Phoenix ISR uranium mining operation at Wheeler River, as well as for general working capital purposes.
 
In March, the Company completed a private placement of 5,926,000 Shares that qualify as "flow-through shares" for purposes of the Income Tax Act (Canada) at a price of $1.35 per share for gross proceeds of approximately $8,000,000 (the “2021 FT Offering”), the proceeds of which are to be used on the Company’s exploration activities in 2021 and 2022. The income tax benefits of this issue will be renounced to subscribers with an effective date of December 31, 2021.
 
Also in March, the Company announced its inclusion in the S&P/TSX Composite Index – the headline index for the Canadian equity market – effective prior to the open of trading on Monday March 22, 2021.
 
And in March, the Company announced a project finance initiative to acquire physical uranium, intended to enhance its ability, if a future decision is made to advance Wheeler River into construction, to (i) access future project financing with the potential collateralization of the uranium holdings and/or (ii) provide the Company with increased flexibility to negotiate long-term uranium supply arrangements with future customers. To fund the uranium acquisition, 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 US$1.10 per unit for gross proceeds of US$86,273,000, including the full exercise of the underwriters’ over-allotment option, accounting for 10,230,000 units (the “March 2021 Offering”). Each unit consists 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 Share of the Company at an exercise price of US$2.25 for 24 months after issuance. In connection with the March 2021 Offering, the Company agreed to terminate the EDA for its existing ATM, and cease distributions thereunder.
 
2020 Annual Information Form    16
 
 
THE URANIUM INDUSTRY
 
Nine years after the March 2011 Fukushima Daichii nuclear incident occurred, the uranium market, amongst others, became the focus of unexpected supply disruptions resulting from the COVID-19 pandemic. In the case of the uranium market, demand remained relatively steady as the world responded to the pandemic and nuclear power plants continued to operate largely without disruption, while the supply side of the market experienced significant disruptions from the world’s largest and most influential uranium producers. This marked the beginning of a meaningful price recovery through the first part of 2020. The unexpected supply reaction catalyzed by the pandemic was layered on top of a uranium supply/demand picture that had already begun to change over the past couple of years, with demand outstripping supply from primary production and the shortfall being made up by inventories and other secondary supplies. As this dynamic has played out, sentiment regarding a recovery in the uranium price has improved, particularly with the high-profile shutdown and curtailment of many supply sources across the industry, including the world’s largest and highest grade uranium mine, Cameco Corporation’s (“Cameco”) McArthur River Mine in northern Saskatchewan, Canada, which was placed into care and maintenance indefinitely in July 2018.
 
COVID-19’s short term effect on uranium supply has been dramatic, with additional production cuts announced by several of the world’s largest uranium producers. In March 2020, Cameco and Orano announced the closure of the lone remaining uranium production centre in Canada – the Cigar Lake Mine and the McClean Lake Mill. In April 2020, the world’s largest producer of uranium, National Atomic Company Kazatomprom (“Kazatomprom”), announced that it would reduce operational activities across all of its uranium mines for an expected period of three months. Kazatomprom indicated that production was expected to decrease by up to 4,000 tU (10.4 million pounds U3O8) over this period. Together, these supply shocks resulted in the uranium price quickly rising almost 40%, from a low of US$24.10 in mid-March 2020, to a high of US$34.00 in May 2020.
 
In July 2020, Cameco announced that it would reopen its Cigar Lake mine in September. This news surprised many market participants and the uranium price slowly fell from above US$32.20 at the time of the announcement, to US$30.65 by the end of August. The spot price remained relatively stable for the remainder of the year, with the market registering the highest ever spot market volumes for a single year. By the end of December, the spot volume transacted reached 92.3 million pounds U3O8, breaking the previous annual spot volume record from 2018 of 88.7 million pounds U3O8.
 
In August 2020, Kazatomprom announced that it had decided to maintain its 20% reduction in production below the planned levels in its subsoil use contracts through 2022. Kazatomprom also confirmed that it had purchased uranium in the spot market and could continue to do so through the rest of the year. These announcements seemed to help stabilize general market sentiment following the unexpected restart of Cigar Lake.
 
Based on these events, and other significant COVID-19 related production disruptions, it is clear that large volumes of inventories and other secondary supplies were depleted faster than expected in 2020 – essentially accelerating the supply-demand rebalancing that was put into motion with the shutdown of the McArthur River mine in 2018. This, coupled with the fact that nuclear power plants around the globe have remained online and using uranium, largely without disruption, through this difficult period, is expected to help move the market towards a long-term sustainable price increase sooner than it otherwise would have, absent COVID-19.
  2020 Annual Information Form    17
 
 
The uranium price demonstrated stability through the end of 2020, holding between US$29.00 and US$30.00. In December 2020, Cameco announced another temporary suspension of production at Cigar Lake as a result of rising COVID-19 cases in Saskatchewan’s far north. While the uranium price increased following this decision, the lack of buying activity as the market slowed for the holiday season seemingly flattened the impact of the announcement. Entering 2021, the market will watch closely to see how long Cigar Lake remains shut down and whether buyers are willing to enter the market before an eventual restart is announced.
 
Several trade issues in the United States have impacted the nuclear fuel market over the past few years, and the resolution of those matters in 2020 has brought growing market stability. In 2018, a petition was filed with the US Department of Commerce (“DOC”) to investigate the import of uranium into the US under Section 232 of the 1962 Trade Expansion Act. In July 2019, the US President ultimately concluded that uranium imports do not threaten national security and no trade actions were implemented. In conjunction with this, a further review was ordered of the nuclear supply chain in the US, and the Nuclear Fuels Working Group (“NFWG”) was established. The NFWG reported its findings in April 2020, which, among other recommendations, included a plan to budget US$150 million per year, in each of the next 10 years, for uranium and conversion purchases from US producers to stock the nation’s strategic reserve. In December 2020, review and discussion around this matter ended when the US Congress passed a Bill that included initial funding of US$75 million to begin building a US uranium reserve. The Bill passed the US House and Senate with bipartisan support, and was signed into law in late December, 2020.
 
The review of the Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation (also known as the Russian Suspension Agreement, or “RSA”) also created uncertainty in the uranium market during 2020, as the RSA was due to expire at the end of the year. A draft amendment, however, was announced in September 2020 and finalized in October 2020. The new arrangement extends the agreement until 2040 and aims to reduce US reliance on Russian uranium products over the next 20 years. The deal negotiated between the US DOC and Russian government reduces Russian exports of the enrichment component from the current level of approximately 20% of US enrichment demand to an average of 17% over the 20-year period, and limits Russian uranium concentrates and conversion components contained in the enriched uranium product to an average equivalent of approximately 7% of US enrichment demand. The agreement’s conclusion brought significant clarity and stability to many nuclear fuel market participants.
 
Overall, uranium demand has grown in recent years as new reactors have been started around the world and demand now exceeds the annual levels that existed prior to Japan shutting down all its nuclear units following the 2011 Fukushima Daichii nuclear incident. According to UxC, as of December 2020, there were 437 nuclear reactors operating in 31 countries and generating nearly 389 GWe – together supplying over 10% of the world's electrical requirements. In addition, there are 58 nuclear reactors being constructed in 18 countries, with a number of countries acting as principal drivers of this expansion, including China, India, South Korea, Russia, and the United Arab Emirates (“UAE”). By 2035, UxC LLC (“UxC”) forecasts in its Q1 2021 Uranium Market Outlook (“Q1 2021 Outlook”), under its base case, that operating reactors will increase to 468, generating around 456 GWe. Through this period, annual uranium demand is expected to grow from a projected 175 million pounds U3O8 in 2021 to around 213 million pounds U3O8 by 2035. Importantly, uncovered utility uranium requirements in this period, not including typical inventory building, are over 1.35 billion pounds U3O8. 
 
UxC had estimated annual global uranium primary production in 2020 would be approximately 142 million pounds U3O8.
  2020 Annual Information Form    18
 
 
This changed materially with the additional curtailment of production as a result of COVID-19. Actual production for 2020 is now estimated by UxC to have been only 124 million U3O8 pounds, which has created an even greater shortfall to 2020 estimated global annual demand of 181 million pounds U3O8. Though rebounding a little from 2020, UxC estimates that primary production in 2021 will remain low at 127 million pounds U3O8, as COVID-19 restarts are offset by the planned shutdown of long-standing production sources including Energy Resources of Australia’s Ranger mine and Orano’s COMINAK project in Niger. With annual demand for 2021 projected by UxC to be 175 million pounds U3O8, the 2021 differential between primary production and annual demand is projected to remain high, at approximately 48 million pounds U3O8.
 
With primary mine production in 2020 estimated by UxC to have supplied approximately 68% of the year’s estimated base case demand, the balance of demand is expected to have been supplied from secondary sources. These sources include the draw-down of commercial inventories, reprocessing of spent fuel, sales by uranium enrichers and inventories held by governments, such as those held by the US Department of Energy, and the Russian government.
 
The process of inventory drawdowns is indicative of a market that is approaching an inflection point – where the surplus material that has been easy to procure in past years is diminished and end-users of uranium begin to question where long-term uranium supplies will come from and how secure that supply will be over the long lives of their nuclear reactors. There is a growing sense that market participants are beginning to look beyond near-term market conditions in an attempt to understand what the supply environment will look like in the mid-2020s and beyond. With a renewed focus on nuclear energy as a critical element in the ‘energy transition’ that many nations are looking to in order to battle climate change, it is expected that global utilities will be looking to source future supply from operations that are not only low-cost, reliable, and situated in stable jurisdictions (the typical criteria for a good supplier), but also those which are flexible and environmentally responsible.
 
Future and growing reliance on nuclear energy is again being considered by policy makers and interest groups around the world. As many industries were shut down around the globe in 2020 under the strain of COVID-19 related problems, nuclear electricity generation worldwide remained steadfast, providing the secure, baseload electricity needed to drive key infrastructure, including hospitals – all the while producing little to no carbon emissions. Building on the growing world view of the reliability and clean nature of nuclear power, there continued to be many positive news stories emerging on the demand side of the nuclear fuel market throughout 2020, including the following:
 
● The UAE announced that its first nuclear power plant, Barakah unit 1, achieved initial criticality in July 2020. By December, the unit reached 100% power and is reportedly generating 1400 MW of electricity. Once the other units are operational, the four-unit plant will generate around 25% of the UAE’s electricity, preventing the release of up to 21 million tonnes of carbon emissions annually.
 
● China National Nuclear Corp reported, also in July 2020, that Unit 5 at its Tianwan nuclear power plant attained initial criticality. Construction of the unit began in December 2015. Unit 6 at the site began construction in September 2016. Both are expected to attain full commercial operation before the end of 2021.
  2020 Annual Information Form    19
 
 
● China continues to be a bright spot in the industry having recently reiterated in-country nuclear growth plans. The government indicated that it would build six to eight nuclear reactors each year between 2020 and 2025 in an effort to get back on track with past goals – aiming to have total capacity installed and under construction to be around 200 GW by 2035. At the end of 2020 China has approximately 49 nuclear reactors in operation, generating 51 GW, and 12 under construction. According to China’s Nuclear Energy Association, Chinese nuclear reactors produced 366.2 TWh of electricity in 2020, which represents an increase of roughly 5% compared to 2019. Nuclear power’s share of electricity in China was 4.9% in 2020. Looking ahead to 2021 China also is anticipated to announce its 14th Five Year Plan in March, which is expected to continue to emphasize its goals for nuclear energy.
 
● Russia’s Rosatom reported in August 2020 that Unit 2 of the Leningrad II plant successfully reached the minimum controlled power level, meaning that a controlled, self-sustaining reaction had begun in the new reactor. Commercial operation is set to begin in 2021.
 
● In the US, Southern Companies’ Georgia Power reached a milestone in the completion of its new reactor when it took delivery of the first nuclear fuel for Vogtle unit 3. The AP1000 reactor is approximately 96% complete, with fuel loading expected in April 2021. That company also added itself to a growing list of US utilities to announce a commitment to a long-term reduction in greenhouse gas emissions to net-zero emissions by 2050; its ability to reach that goal will be enhanced by completion of its new Vogtle Units 3 & 4.
 
● In Canada, following the recent reconnection of Unit 2 at Ontario Power Generation’s (“OPG”) Darlington Nuclear Generating Station, OPG announced another major milestone in September when work commenced on the refurbishment of Unit 3 following a brief postponement related to the COVID-19 pandemic.
 
● OPG also added its name to the list of utilities committing to achieving net-zero carbon emissions – committing to reach that goal by 2040 and committing to help the markets in which they operate achieve net-zero carbon economies by 2050. The company also announced in November that it would begin advancing plans to locate a small modular reactor (‘SMR’) at its Darlington site in order to support its net-zero goals. This built on an earlier announcement that OPG would leverage its more than 50 years of nuclear experience to advance engineering and design work with three grid-scale SMR developers, GE Hitachi Nuclear Energy, Terrestrial Energy Inc. and X-Energy LLC.
 
● The Canadian federal government also reinforced its support for nuclear energy and the development of SMRs, as a pillar in its plans for achieving the country’s climate change goals. Federal energy minister, Seamus O’Regan, highlighted the importance of nuclear power multiple times in 2020, including as part of a statement while releasing Canada’s national SMR Action Plan which calls for the development, demonstration, and deployment of SMRs.
 
● Positive nuclear news also emerged from Japan late in 2020 as the country’s new leader, Prime Minister Yoshihide Suga, pledged that the country will become carbon neutral by 2050. Japan’s current energy plan, set in 2018, calls for 22-24% of its energy to come from renewables, 20-22% from nuclear power, and 56% from fossil fuels. Suga, did not provide details on how Japan would reduce carbon emissions to zero, but said it would promote renewable energy and prioritize safety as it seeks a bigger role for nuclear.
 
● France’s President Macron indicated that nuclear will remain a key part of the country’s energy mix, highlighting that the nuclear industry will remain the cornerstone of France’s strategic autonomy. Though France has previously said it will cut its reliance on nuclear energy from 75% to 50% by 2035, it is also considering building next-generation EPR nuclear reactors.
  2020 Annual Information Form    20
 
 
Reinforcing the changing global energy landscape, the International Energy Agency (“IEA”) released its first Electricity Market Report in December 2020. The report highlighted growth in renewable electricity generation at the expense of conventional sources, such as coal-fired generation, as well as expectations for nuclear power generation to grow by approximately 2.5% in 2021. The IEA, together with the OECD’s Nuclear Energy Agency, also showcased the global competitiveness of nuclear energy as the most dispatchable low-carbon technology, with the lowest expected costs, in the report ‘Projected Costs of Generating Electricity 2020’, which also refers to a decline in costs for new nuclear power plants owing to lessons learned from recent first-of-a-kind new build projects.
 
Uranium Demand
 
According to UxC’s Q1 2021 Outlook, global nuclear power capacities are projected to increase to 447 reactors in 33 countries in 2021, generating approximately 398 gigawatts of electricity (“GWe”) as new plants come on line. By 2035, that is expected to be 468 reactors, generating approximately 456 GWe in 36 countries. According to the WNA, as of March 2021, current nuclear generation equates to approximately 10% of the world's electrical requirements, with twelve countries producing 25% or more of their country’s electricity from nuclear.
 
According to the WNA, there are currently 54 nuclear reactors under construction in 19 countries with the principal drivers of this expansion being China (16 reactors under construction), India (6), South Korea (4), UAE (3), and Turkey (3). In addition, there are another 97 reactors currently planned around the world.
 
In the Q1 2021 Outlook, UxC estimates base case demand will be 175 million pounds U3O8 in 2021. UxC also estimates that annual uranium demand could grow to 213 million pounds U3O8 under their base case by 2035 and to almost 300 million pounds U3O8 in their high case in the same period.
 
Primary Uranium Supply
 
UxC’s Q1 2021 Outlook estimates that world uranium production for 2021 is expected to be approximately 127 million pounds U3O8, a slight increase over 2020’s estimated production of 124 million pounds U3O8.
 
In Canada, Cigar Lake has temporarily suspended production as a result of the COVID-19 pandemic. The Q1 2021 Outlook has estimated that production at Cigar Lake will restart in June 2021, and will produce approximately 11 million pounds U3O8 in 2021. Annual production is then estimated to ramp up to 18 million pounds U3O8 by 2023, before ramping down in 2026 through 2031. McArthur River remains closed indefinitely with no immediate plans for future production, and a decision to restart is expected to be dependent on market conditions. Given the shutdowns of both McArthur River and Cigar Lake, during 2021 Canada is expected to be fourth largest producing nation (down from second largest in prior years), with more than 8% of the world’s expected 2021 production. Australia and Namibia are both expected to contribute more than 10% of expected 2021 production, and Kazakhstan is expected to continue to be the world’s largest producer of uranium in 2021 by a large margin, representing more than 45% of expected production.
 
UxC estimates in its Q1 2021 Outlook that existing mine production, plus new planned and potential mine production under its base case, will reach a peak of 147 million pounds U3O8 by 2028, before declining back down to 97 million pounds U3O8 by 2035. At its projected height in 2028, production levels are anticipated to include the resumption of mining at McArthur River, with UxC anticipating the mine will ramp up from 4 million pounds U3O8 in 2026 to 18 million pounds U3O8 by 2027.
  2020 Annual Information Form    21
 
 
While Kazakhstan is seen to maintain relatively consistent supply in future years, it does start to drop off significantly closer to 2035. In order for other projects to move forward and increase production forecasts, UxC believes uranium prices will need to increase appreciably to support higher cost production profiles and the significant capital expenditures that will be required.
 
Secondary Uranium Supply
 
In the Q1 2021 Outlook, primary mine production in 2021 is estimated to supply approximately 73% of the year’s estimated base case demand, with the balance of demand expected to be supplied from secondary sources. These sources include commercial inventories, reprocessing of spent fuel, sales by uranium enrichers and inventories held by governments, such as the U.S. Department of Energy, and the Russian government. Primary mine production’s share of annual demand remains lower than pre-2017 levels, in which primary production made up 85% or more of annual demand.
 
Secondary supplies remain a complexity of the uranium market. The Q1 2021 Outlook forecasts that 49 million pounds U3O8 will enter the market from secondary supplies in 2021, leaving a surplus of approximately 1 million pounds U3O8, if the base case demand scenario for 2021 is met.
 
Though excess commercial inventories, which were one of the major sources of secondary supplies during the period from the early 1970s to the early 2000s, were largely consumed in that same period, the planned shutdown of nuclear programs in countries like Germany, and the continued struggles of the Japanese nuclear program to restart following Fukushima have contributed to commercial inventories again becoming a more significant factor. Government inventories also continue to contribute substantially to the secondary supply picture, particularly in the U.S. and Russia. The disposition of these commercial and government inventories may have a market impact in the near to medium term, although, UxC expects their role will diminish over time as these inventories continue to be depleted and the uranium and enrichment markets rebalance themselves.
 
In general, UxC expects that secondary sources of supply will fall significantly from estimated 2021 levels of 49 million pounds U3O8 to less than 17 million pounds U3O8 per year by 2035.
 
Uranium Prices
 
Imbalances between supply and demand of uranium significantly influence uranium spot prices. According to the Q1 2021 Outlook, it is projected that primary production and secondary supply will be sufficient to meet base case demand for U3O8 through the mid 2020’s, with significant supply deficits emerging later in the decade, contributing to upward price momentum.
 
With respect to long-term prices, utility uncovered requirements and long-term demand are significant influencers. Historically, nuclear utilities have purchased uranium primarily through long-term contracts. These contracts usually provide for deliveries beginning two to four years after they are signed with delivery typically extending anywhere from three or four years to ten years or more. In awarding medium and long-term contracts, electric utilities consider the producer’s uranium reserves, record of performance and production cost profile, in addition to the commercial terms offered. Prices are established by a number of methods, including base prices adjusted by inflation indices, reference prices (generally spot price indicators, but also long-term reference prices) and annual price negotiations. Contracts may also contain annual volume flexibility, floor prices, ceiling prices and other negotiated provisions. Under these contracts, the actual price mechanisms are usually confidential.
  2020 Annual Information Form    22
 
 
The long-term uranium demand that actually enters the market is affected in a large part by utilities’ uncovered requirements. This is the amount of uranium required by utilities to operate their fleet that is not yet covered by purchase contracts with suppliers. UxC estimates, in the Q1 2021 Outlook, that uncovered demand for 2021 was under 3 million pounds U3O8. Of course, this uncovered demand increases over time and is projected by UxC to increase significantly over the next decade. While more than 53 million pounds U3O8 are projected to remain uncovered in 2025, this number grows to almost 114 million pounds U3O8 in 2030. In 2035, this number grows to 166 million pounds U3O8 of uncovered demand, or roughly 82% of total expected base case demand in that year. In total just over 1.35 billion pounds U3O8 remain uncovered between 2021 and 2035.
 
At 166 million pounds U3O8, uncovered demand in 2035 is approximately 69 million pounds U3O8 more than total production expected from existing uranium mines for the same year, which UxC estimates at 97 million pounds U3O8. Uncovered demand in 2035 also exceeds the combined supply available from primary production and secondary sources by approximately 52 million pounds U3O8. In order to address the rising portion of demand that is uncovered, utilities will have to return to the market and enter into long-term contracts. From 2006 to 2010, on average, 39 million pounds U3O8 equivalent were purchased on the spot market per year and roughly 200 million pounds U3O8 equivalent were contracted in the long-term market each year. In contrast, in 2020, 93.6 million pounds U3O8 equivalent were purchased on the spot market, and 56.8 million pounds U3O8 equivalent contracted in the long-term market. Considering contract volumes over the past year remain well below annual requirements, and uncovered requirements are increasing out in time, we expect that long-term contracting activity will continue to increase in the future as utilities look to secure future supply in order to fuel the world’s growing fleet of nuclear reactors.
 
The long-term price is published on a monthly basis and increased slightly in 2020, starting the year at US$32.00 per pound U3O8 and ending the year at US$33.00 per pound U3O8. Nuclear utilities procure their remaining uranium requirements through spot and near-term purchases from uranium producers, traders and other suppliers. Historically, spot prices are more volatile than long-term prices. The spot price began 2020 at US$25.00 per pound U3O8, and increased during the year, in part as a result of COVID-19 related production curtailments, to reach a high of $34.00 before retreating slightly to US$30.00 per pound U3O8 at year end.
 
Competition
 
The uranium industry is small compared to other commodity or energy industries. Uranium demand is international in scope, but supply is characterized by a relatively small number of companies operating in only a few countries. Primary uranium production is concentrated amongst a limited number of producers and is also geographically concentrated with more than 75% of the world’s production in 2021 projected to be coming from only four countries: Kazakhstan, Canada, Australia and Namibia.
 
Competition is somewhat different amongst exploration & development companies focused on the discovery or development of a uranium deposit. Exploration for uranium is being carried out on various continents, but in recent years development activities by public companies have been generally concentrated in Canada, Africa and Australia. In Canada, exploration has focused on the Athabasca Basin region in northern Saskatchewan. Explorers have been drawn to this area by the high-grade uranium deposits that have produced some of the most successful uranium mining operations in recent history.
 
  2020 Annual Information Form    23
 
 
Within the Athabasca Basin region, exploration is generally divided between activity that is occurring in the eastern portion of the Basin and the western portion of the Basin. The eastern portion of the Basin is a district that is defined by rich infrastructure associated with existing uranium mines and uranium processing facilities. Infrastructure includes access to the provincial power grid and a network of provincial all-weather highways. By comparison, in the western portion of the Basin, there are no uranium mines or processing facilities and access to the provincial power grid is not currently available. Several uranium discoveries have been made in the Athabasca Basin region in recent years, and competition for capital can be intense.
 
MINERAL RESERVES AND MINERAL RESOURCES
 
Each of David Bronkhorst, P.Eng, Denison's Vice-President Operations, and Andy Yackulic, P.Geo., Denison’s Director, Exploration, is a “Qualified Person” in accordance with the requirements of NI 43-101, and has reviewed and approved all disclosure of scientific or technical information in this AIF.
 
Summary of Mineral Reserves and Mineral Resources
 
NI 43-101 requires mining companies to disclose mineral reserve and resource estimates using the subcategories of proven mineral reserves, probable mineral reserves, measured mineral resources, indicated mineral resources and inferred mineral resources.
 
The following tables show the Company's estimates of mineral reserves and mineral resources as at December 31, 2020. The estimates are reported in the applicable technical reports prepared in accordance with NI 43-101, adjusted for mining activity where applicable. The summary information below on Denison’s proven mineral reserve estimates was prepared from the year-end stockpile survey reported by Orano Canada Inc. (“Orano Canada”), the MLJV operator.
 
For full details, reference should be made to the applicable technical reports for the properties.
 
See “Mineral Properties” for more information.
 
Proven Mineral Reserve Estimates (1,10)
 
100% Basis
 
Company Share(9)
 
 
Project/Deposit
 
Tonnes
 
Grade
% U3O8
Pounds of U3O8
(,000)
 
Pounds of U3O8
(,000)
McClean - Ore Stockpile
90,000
0.37
716
 
161
Total Proven Mineral Reserves
90,000
 
716
 
161
 
Probable Mineral Reserve Estimates (1,2,3,4,10)
 
100% Basis
 
Company Share(9)
 
 
Project/Deposit
 
Tonnes
 
Grade
% U3O8
Pounds of U3O8
(,000)
 
Pounds of U3O8
(,000)
Wheeler River - Phoenix
141,000
19.1
59,700
 
53,730
Wheeler River - Gryphon
1,257,000
1.8
49,700
 
44,730
Total Probable Mineral Reserves
1,398,000
 
109,400
 
98,460
 
 
2020 Annual Information Form    24
 
 
Indicated Mineral Resource Estimates (1,5,10)
 
100% Basis
 
Company Share(9)
 
 
Project/Deposit
 
Tonnes
 
Grade
% U3O8
Pounds of U3O8
(,000)
 
Pounds of U3O8
(,000)
Wheeler River - Phoenix(7)
166,000
19.1
70,200
 
63,200
Wheeler River - Gryphon(7)
1,643,000
1.7
61,900
 
55,700
Wheeler River Subtotal
1,809,000
 
132,100
 
118,900
McClean - Caribou
47,800
2.6
2,800
 
600
McClean - Sue D
122,800
1.1
2,800
 
600
McClean - McClean North
205,800
2.8
12,400
 
2,800
McClean Subtotal
376,400
 
18,000
 
4,000
Midwest - Midwest Main
453,000
4.0
39,900
 
10,100
Midwest - Midwest A
566,000
0.87
10,800
 
2,700
Midwest Subtotal
1,019,000
 
50,700
 
12,800
Waterbury - THT (formerly J Zone)
291,000
2.0
12,800
 
8,600
Total Indicated Mineral Resources
3,495,400
 
213,600
 
144,300
 
Inferred Mineral Resource Estimates (1,6,10)
 
 
100% Basis
 
Company Share(9)
 
 
Project/Deposit
 
Tonnes
 
Grade
% U3O8
Pounds of U3O8
(,000)
 
Pounds of U3O8
(,000)
Wheeler River - Phoenix
9,000
5.8
1,100
 
1,000
Wheeler River - Gryphon
73,000
1.2
1,900
 
1,700
Wheeler River Subtotal
82,000
 
3,000
 
2,700
McClean - Sue D
24,200
0.39
200
 
0
McClean - Sue E(8)
483,400
0.69
7,300
 
1,600
McClean - McClean North
3,300
0.79
100
 
0
McClean Subtotal
510,900
 
7,600
 
1,600
Midwest - Midwest Main
793,000
0.66
11,500
 
2,900
Midwest - Midwest A
53,000
5.8
6,700
 
1,700
Midwest Subtotal
846,000
 
18,200
 
4,600
Waterbury - Huskie
268,000
0.96
5,700
 
3,800
Total Inferred Mineral Resources
1,706,900
 
34,500
 
12,700
 
Notes:
(1) CIM definitions were followed for classification of mineral reserves and mineral resources. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
(2) Mineral reserves for the Phoenix deposit are reported at the mineral resource cut-off grade of 0.8% U3O8. The mineral reserves are based on the block model generated for the May 28, 2014 mineral resource estimate. A mining recovery factor of 85% has been applied to the mineral resource above the cut-off grade.
(3) Mineral reserves for the Gryphon deposit are estimated at a cut-off grade of 0.58% U3O8 using a long-term uranium price of US$40/lb, and a US$/CAD$ exchange rate of 0.80. The mineral reserves are based on the block model generated for the January 30, 2018 mineral resource estimate. The cut-off grade is based on an operating cost of $574/tonne, milling recovery of 97%, and a 7.25% fee for Saskatchewan royalties (basic royalty plus resource surcharge).
(4) Mineral reserves are stated at a processing plant feed reference point and include diluting material and mining losses.
(5) The indicated mineral resources were estimated at various cut-off grades. They are:
 Phoenix:  0.80% U3O8
 McClean North: 0.10% U3O8
 Gryphon:  0.20% U3O8
 Midwest Main: 0.10% U3O8 (0.085% U)
 Caribou:  0.10% U3O8
 Midwest A:  0.10% U3O8 (0.085% U)
 Sue D:  0.10% U3O8
 THT (J Zone): 0.10% U3O8
  2020 Annual Information Form    25
 
(6) The inferred mineral resources were estimated at various cut-off grades. They are:
 Phoenix:  0.80% U3O8
 McClean North: 0.10% U3O8
 Gryphon:  0.20% U3O8
 Midwest Main: 0.10% U3O8 (0.085% U)
 Sue D:  0.10% U3O8
 Midwest A:  0.10% U3O8 (0.085% U)
 Sue E:  0.10% U3O8
 Huskie:  0.10% U3O8
(7) Indicated mineral resources for Phoenix and Gryphon deposits are inclusive of probable mineral reserves.
(8) The operator conducted confirmatory drilling on a portion of the Sue E mineral resources outside the designated pit and late in 2006 submitted a preliminary analysis detailing an inferred mineral resource of approximately 2 million pounds on a 100% basis in this area, as compared to the 7.3 million pounds that Scott Wilson Roscoe Postle Associates Inc. (“Scott Wilson RPA”), now Roscoe Postle Associates Inc., estimated in its February 2006 technical report. Roscoe Postle Associates Inc. has not re-estimated the mineral resource using the new drill information.
(9) As at December 31, 2020, pursuant to the terms of the agreements with its applicable joint venture partners, the Company had a 90.00% interest in the Wheeler River project, a 22.50% interest in the McClean Lake property; a 25.17% interest in the Midwest project; and a 66.90% interest in the Waterbury Lake property.
(10) Numbers may not add due to rounding.
 
The table below details the changes to the Company’s mineral resource estimates during the fiscal year ended December 31, 2020 from those at December 31, 2019.
 
Change to Denison’s Share of Indicated Mineral Resources
(in thousands of pounds U3O8)
 
Project/Deposit
December 31, 2019
 
Additions
(Deletions)
 
December 31, 2020
Waterbury - THT
8,500
 
100(1)
 
8,600
Notes:
(1)
The Company increased its interest in the Waterbury Lake project by 0.33% in 2020, in accordance with the terms of the applicable agreements with Denison’s partner on the project. The change was not large enough to reflect a change to Denison’s share of inferred mineral resources at Huskie, due in part to rounding.
 
Historical Estimates
On the McClean Lake property, the McClean South trend is located parallel to and approximately 500 metres south of the McClean North trend (see “Mineral Properties – McClean Lake”). There are two known mineralized pods which were drilled by the original owner of the property, Canadian Oxy, during 1979-1980: the Southwest Pod and the Southeast Pod. Canadian Oxy prepared estimates of tonnages, grades and contained uranium for these deposits as of 1980, which have not been verified by Denison. The results of these estimates are set out below. The Company is not treating this historical estimate as current mineral resources or mineral reserves.
 
McClean South Historical Estimates (1,2)
 
100% Basis
 
Company’s Share
 
Deposit
Tons
(,000)
Grade
(% U3O8)
Pounds of U3O8
(,000)
 
Pounds of U3O8
(,000)
Southwest Pod
47.6
2.10
 2,000
 
500
Southeast Pod
126.7
0.73
 1,900
 
400
Notes:
(1) The historical estimates do not comply with the requirement of NI 43-101. CIM definitions are not used.
   (2) The historical estimates cannot be verified and are not necessarily indicative of mineralization.
 
2020 Annual Information Form    26
 
 
MINERAL PROPERTIES
Denison’s Priority Properties:
 
 Wheeler River            
 
 Waterbury Lake       
 
 McClean Lake     
 
 Midwest     
 
 Other Exploration Properties   
 
 
 
Page 30
 
Page 65
 
Page 85
 
Page 91
 
Page 99
 
Denison’s mineral property interests are located in the Athabasca Basin region of northern Saskatchewan, the majority of which are located in the eastern portion of the Athabasca Basin, which is host to considerable existing infrastructure including uranium mines and mills, and provincial powerlines and highways (see location map, below). As at December 31, 2020, Denison has interests in 32 mineral properties in the Athabasca Basin, comprised of 204 claims covering 268,725 hectares.
 
Location Map of Denison’s Athabasca Basin Mineral Properties
 
 
2020 Annual Information Form    27
 
 
Athabasca Basin Overview
 
The Athabasca Basin covers an area of approximately 100,000 square kilometres in northern Saskatchewan and northeastern Alberta. The Athabasca Basin is one of the principal uranium producing districts in the world and is host to the world’s highest-grade and some of the world’s largest uranium mines and deposits, including the McArthur River mine and Cigar Lake mine located in the eastern Athabasca Basin.
The uranium deposits are classified as unconformity-associated (also unconformity-related and –type) deposits owing to their spatial association with a major unconformable contact between a relatively undeformed Proterozoic sedimentary basin (the Athabasca Basin) and underlying metamorphosed and deformed Archean to Palaeoproerozoic basement rocks.
 
A broad variety of unconformity-associated deposit shapes, sizes, and compositions have been discovered. Two distinct varieties have been classified; 1) ‘egress-style’ polymetallic lenses at and above the unconformity, with variable and often highly elevated base metal and rare earth elements (“REE”) contents, and 2) ‘ingress-style’ vein sets within basement rocks, with typically lower base metal and REE contents.
 
Egress-style deposits can occur in the sandstone, directly above the unconformity (e.g. Cigar Lake, Sue A and B), straddling the unconformity (e.g. Phoenix, Collins Bay B Zone, Midwest Main, Midwest A, McClean North, Key Lake) or perched high above the unconformity (certain zones at McClean Lake, Midwest, Cigar Lake). Ingress-style deposits are located in the basement rocks (Gryphon, Huskie, Eagle Point, Sue C, Sue E, Millennium, Arrow, Triple R), however the Millennium deposit, and to an extent the Gryphon deposit, also contain subordinate mineralization at and above the unconformity. The Shea Creek deposits contain mineralization in the basement, deep in the basement, at the unconformity, and perched in the sandstone. In some deposit areas, there is a plunge to the mineralized pods from sandstone-hosted to basement-hosted within deposit–scale strike lengths (Rabbit Lake-Collins Bay-Eagle Point trend, Sue trend deposits, McClean North).
 
The Athabasca unconformity-associated deposits are typically related to graphite-bearing structural zones within the metamorphosed and deformed Archean to Palaeoproerozoic basement rocks, which are often termed ‘corridors’ or ‘trends’. Alteration ‘halos’ or ‘envelopes’ tend to surround the mineralization, most notably in the overlying sandstone, and provide an enlarged exploration target through the detection of diagnostic alteration clays and geochemical pathfinder elements. Empirical exploration for the deposits typically involves mapping of structural corridors/trends by geophysical methods, dominantly electromagnetics, resistivity or magnetics, followed by drill testing given the buried or blind nature of the deposits below glacial cover or Athabasca sandstone, respectively. Drill core is subject to a variety of sampling and analytical methods to determine possible vectors toward mineralization, and downhole surveying is commonplace to test for elevated radioactivity or reconcile geophysical responses. The significant number of Athabasca uranium discoveries to date has also led to the development of numerous exploration models which are commonly used to facilitate interpretations and prioritize target areas.
 
Historical uranium production in the basin was initiated in the 1970s and 1980’s using conventional open pit mining methods at Rabbit Lake, Cluff Lake and Key Lake. Later in the mine life of each of Cluff Lake and Rabbit Lake, there was a transition to underground mining of other deposits on those properties. In the 1990s another open pit operation at McClean Lake began production.
 
  2020 Annual Information Form    28
 
 
The discovery of high-grade deposits such as Midwest, McArthur River and Cigar Lake in the 1980s did not immediately lead to production. The combination of challenging ground conditions (most notably the friable and water-saturated Athabasca sandstone conditions above the mineralization), depth, and the high-grade nature of the deposits, required extensive research and development to design safe extraction methods before production was possible. Production from McArthur was achieved in the early 2000s while Cigar Lake only initiated production in 2014. Production from these mines was only made possible by their unique combination of high grades (average grades > 10% U3O8) and large scale (>300 million lbs U3O8), as well as the development of innovative mining techniques including ground freezing combined with either raise-bore mining or the use of the jet-boring mining system (JBS). The Midwest deposits are smaller in size than McArthur River and Cigar Lake, and remain undeveloped.
 
In terms of mineral processing, each historic mining operation included a dedicated processing plant: Cluff Lake, Key Lake, Rabbit Lake and McClean Lake operations included on-site processing plants. Due to the rising cost of construction for such facilities and the availability of highways and other infrastructure in Saskatchewan’s North, processing of ores has transitioned to toll milling at existing facilities. McArthur River ore production is toll milled at the Key Lake mill, while Cigar Lake production is toll milled at the McClean Lake mill. With the suspension of operations at Rabbit Lake in 2016 and McArthur River in 2018, only the Cigar Lake mine and the McClean Lake mill continued to operate and produce yellowcake in Saskatchewan.
 
In March 2020, Cameco and Orano Canada announced the temporary closure of the Cigar Lake Mine and the McClean Lake Mill, in connection with the COVID-19 pandemic. Production resumed in September 2020, but in December 2020, Cameco and Orano Canada announced another temporary suspension of production at Cigar Lake as a result of a resurgence of COVID-19 cases in Saskatchewan’s far north. As a result, as at the date hereof, there is no active uranium production in the Athabasca Basin.
 
 
 
 
 
 
2020 Annual Information Form    29
 
 
Wheeler River
 
The Wheeler River project is the largest undeveloped uranium project in the infrastructure rich eastern portion of the Athabasca Basin region, in northern Saskatchewan. The project is host to the high-grade Phoenix and Gryphon uranium deposits, discovered by Denison in 2008 and 2014, respectively, and is a joint venture between Denison (90%) and JCU (Canada) Exploration Company Limited (10%). Denison is the operator/manager of the project.
 
The PFS for the Wheeler River project was completed in 2018, considering the potential economic merit of developing the Phoenix deposit as an ISR operation and the Gryphon deposit as a conventional underground mining operation. Taken together, the project is estimated to have mine production of 109.4 million pounds U3O8 over a 14-year mine life, with a base case pre-tax NPV of $1.31 billion (8% discount rate), IRR of 38.7%, and initial pre-production capital expenditures of $322.5 million. The Phoenix ISR operation is estimated to have a stand-alone base case pre-tax NPV of $930.4 million (8% discount rate), IRR of 43.3%, initial pre-production capital expenditures of $322.5 million, and industry leading average operating costs of US$3.33/lb U3O8. The results of the PFS are described in greater detail below.
 
A technical report entitled “Prefeasibility Study Report for the Wheeler River Uranium Project Saskatchewan, Canada” dated October 30, 2018 (the “Wheeler PFS Report”) has been prepared for the project, a copy of which is available on the Companys website. The principal author of the Wheeler PFS Report was Mr. Mark Liskowich, P.Geo. of SRK, who is an independent Qualified Person in accordance with the requirements of NI 43-101.
 
The Wheeler PFS Report describes the results of the PFS for the Wheeler River project with an effective date of September 24, 2018, based in part upon the mineral resource estimates for the Gryphon deposit effective January 30, 2018 and the Phoenix deposit effective May 28, 2014.
 
Except as otherwise indicated, the following project description is a summary, supported by the Wheeler PFS Report. We recommend you read the Wheeler PFS Report in its entirety to fully understand the technical aspects of the project. The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the Wheeler PFS Report and in the “Risk Factors” set forth below; in particular, any advancement or development of the Wheeler River project is subject to attainment of any required approvals, agreements or resources, including capital funding.
 
Given social, financial and market disruptions related to the onset of the COVID-19 pandemic, Denison suspended certain activities at Wheeler River, including the Environmental Assessment program; the program is on the critical path to achieving the project development schedule outlined in the PFS. On November 9, 2020, Denison announced its decision to restart the EA effective January 2021. However, uncertainty associated with the temporary suspension remains and the Company is not yet able to estimate the impact to the project development schedule outlined in the PFS, and users are cautioned that the estimates provided therein regarding the start of pre-production activities in 2021 and first production in 2024 should not be relied upon.
 
Property Description, Location and Access
 
The property is located along the eastern edge of the Athabasca Basin in northern Saskatchewan, Canada and is located approximately 35 km north-northeast of the Key Lake mill and 35 km southwest of the McArthur River uranium mine.
  2020 Annual Information Form    30
 
 
Access to the property is by road or air from Saskatoon. The property is well located with respect to all-weather roads and the provincial power grid. Vehicle access to the property is by the provincial highway system to the Key Lake mill then by the ore haul road between the Key Lake and McArthur River operations to the eastern part of the property. An older access road, the Fox Lake Road, between Key Lake and McArthur River, provides access to most of the northwestern side of the property. Gravel and sand roads and drill trails provide access by either four-wheel-drive or all-terrain-vehicle to the rest of the property.
 
The property consists of 19 mineral claims totaling 11,720 hectares, with an aggregate annual requirement of $293,000 in either work or cash to maintain title to the mineral claims. Based on previous work submitted and approved by the province of Saskatchewan, title is secure until 2041.
 
The Wheeler River project is located within the boundaries of Treaty 10 (entered into between the Government of Canada and the First Nations People of Saskatchewan and Alberta). It is also located within the traditional territory of the English River First Nation and in the homeland of the Métis, each of whom have identified a strong and significant relationship to the land.
 
Location Map, Showing Regional and Proposed Infrastructure.
  2020 Annual Information Form    31
 
 
Any uranium produced from the Wheeler River property is subject to uranium mining royalties in Saskatchewan in accordance with Part III of The Crown Mineral Royalty Regulations. See “Government Regulation - Canadian Royalties.” There is also a 10% Net Profits Interest (“NPI”) associated with the property held by the WRJV in proportion to the ownership interests of each WRJV participant. There are no other back-in rights or third-party royalties applicable to this property.
 
There are no known environmental liabilities associated with the property. Before work can be performed on the property, the appropriate exploration or other permits must be applied for and obtained. If Denison was unable to satisfy its obligations with respect to the regulatory and consultation process and obtain the necessary permits, the Company’s plans for exploration or other work on the property could be delayed or halted. See “Risk Factors” for more information on this and other potential risks that may affect access, title or the right or ability to perform work on the property. For surface exploration and evaluation activities that may occur in 2021, the Company has obtained or applied for all necessary permits. Additional permits and licenses may be required in connection with the Company’s project evaluation activities beyond 2021 and will be required (refer to section 20 of the Wheeler PFS Report) prior to commencement of development and production activities.
 
History
 
The Wheeler River property was staked on July 6, 1977, due to its proximity to the Key Lake uranium discoveries, and on December 28, 1978, it was vended into an agreement between AGIP Canada Ltd., E&B Explorations Ltd. and Saskatchewan Mining Development Corporation, with each holding a one-third interest. On July 31, 1984, each party divested a 13.3% interest and allowed Denison Mines Limited, a predecessor company to Denison, to earn in to a 40% interest.
 
In late 2004, Denison entered into an agreement to earn a further 20% interest by expending $7,000,000 within six years. In connection with that, Denison became the project operator (2005 being the first full year of operatorship). In 2007, when the earn-in obligations were completed, the participating and ownership interests were Denison 60%; Cameco 30%, and JCU 10% and they remained that way up to the end of 2016. In January 2017, Denison, Cameco and JCU executed an agreement, pursuant to which the WRJV Parties agreed to allow for a one-time election by Cameco to fund 50% of its ordinary share (30%) of joint venture expenses in 2017 and 2018. The shortfall in Cameco's contribution was funded by Denison, in exchange for a transfer to Denison of a portion of Cameco's interest in the WRJV.
 
Accordingly, Denison's share of joint venture expenses was 75% in 2017 and 2018, and Cameco and JCU's participating share of joint venture expenses was 15% and 10%, respectively. As a result of that agreement, Denison’s interest increased to approximately 66%, with Cameco holding approximately 24% and JCU holding 10%.
 
Subsequently, Denison and Cameco completed the Cameco Transaction, pursuant to which Denison acquired all of Cameco’s minority interest in the WRJV effective October 26, 2018, resulting in WRJV participating and ownership interests being Denison 90% and JCU 10%.
 
  2020 Annual Information Form    32
 
 
Exploration and Development History
Period (Year)
Activity
1978-Present
The area was previously explored by AGIP and SMDC (Cameco). Since 1978, several airborne and ground geophysical surveys have defined 152 km of conductor strike length in 14 conductive zones.
1986-1988
AGIP, SMDC, and Cameco drilled a total of 192 drill holes encountering sub-economic uranium mineralization in the M Zone (1986), O Zone (1986), and K Zone (1988). Rare earth element mineralization was also discovered in the MAW Zone (1982).
2004
Denison assumed operatorship in late 2004 and initially focused on exploration drilling on the western side of the quartzite ridge (west side of the property) intersecting sub-economic uranium mineralization.
2008
During a regional exploration campaign, three resistivity targets were drilled leading to the discovery of the Phoenix deposit.
2008-2014
During this period, drilling predominantly focused on delineation of the Phoenix deposit.
2014-2017
Exploration drilling at K North in early 2014 resulted in the discovery of the Gryphon deposit. Delineation drilling of the Gryphon deposit was undertaken throughout this period. A Preliminary Economic Assessment was completed for the Project in early 2016.
2018-PFS
A Pre-Feasibility Study was completed for the Project in late 2018. Exploration drilling undertaken on regional targets.
Post-PFS: 2019
Initial field program was completed within the Phoenix orebody evaluating the ISR mining method.
Post-PFS: 2020
Further field programs were completed within the Phoenix orebody. In addition, exploration drilling along the K West conductive trend in late 2020 resulted in the discovery of new high-grade unconformity hosted uranium mineralization. Additional delineation drilling completed in areas of lower confidence surrounding the defined extents of the current Phoenix resource model.
 
Geological Setting, Mineralization and Deposit Types
 
The Wheeler River property is located near the southeastern margin of the Athabasca Basin in the southwest part of the Churchill Structural Province of the Canadian Shield. The Athabasca Basin is a broad, closed, and elliptically shaped cratonic basin with an area of 425 km (east-west) by 225 km (north-south). The bedrock geology of the Athabasca basin area consists of Archean and Paleoproterozoic gneisses unconformably overlain by up to 1,500 m of flat-lying unmetamorphosed sandstones and conglomerates of the mid-Proterozoic Athabasca Group.
 
The Wheeler River property is located near the transition zone between two prominent litho-structural domains within the Precambrian basement, namely the Mudjatik Domain to the west and the Wollaston Domain to the east. The Mudjatik Domain is characterized by elliptical domes of Archean granitoid orthogenesis separated by keels of metavolcanic and metasedimentary rocks, whereas the Wollaston Domain is characterized by tight to isoclinal, northeasterly trending, doubly plunging folds developed in Paleoproterozoic metasedimentary rocks of the Wollaston Supergroup, which overlie Archean granitoid orthogenesis identical to those of the Mudjatik Domain. The area is cut by a major northeast-striking fault system of Hudsonian Age. The faults occur predominantly in the basement rocks but often extend up into the Athabasca Group due to several periods of post-depositional movement.
  2020 Annual Information Form    33
 
 
Local geology is comprised of relatively undeformed late Paleoproterozoic to Mesoproterozoic Athabasca Group strata comprised of Manitou Falls Formation sandstones and conglomerates which unconformably overlie the crystalline basement and have a considerable thickness from 170 m over the quartzite ridge to at least 560 m on the western side of the property. Basement rocks beneath the Phoenix and Gryphon deposits are part of the Wollaston Domain and are comprised of metasedimentary and granitoid gneisses. The metasedimentary rocks include graphitic and non-graphitic pelitic and semipelitic gneisses, meta-quartzite, and rare calc-silicate rocks. Pegmatitic segregations and intrusions are common in all units with garnet, cordierite, and sillimanite occurring in the pelitic strata, indicating an upper amphibolite grade of metamorphism. Graphitic pelite and quartzite units appear to play important roles in the genesis of Athabasca Basin unconformity-associated deposits. Thus, the presence of extensive subcrop of both units (18 km of quartzite and 152 line-km of conductors, assumed to be graphitic pelite) greatly enhances the geological potential of the Wheeler River property. The Wheeler River property is partially covered by lakes and muskeg, which overlie a complex succession of glacial deposits up to 130 m in thickness. These include eskers and outwash sand plains, well-developed drumlins, till plains, and glaciofluvial plain deposits. The orientation of the drumlins reflects southwesterly ice flow.
 
The Phoenix uranium deposit was discovered in 2008 and can be classified as an unconformity-associated deposit of the sandstone-hosted or egress-style variety. The deposit occurs dominantly within sandstone immediately above the sub-Athabasca unconformity approximately 400 metres below surface and comprises three elongate pods of mineralization (Zone A, B, and C) which cover a strike length of 1.1 kilometres. Zone A, the largest of the three pods, is approximately 380 metres in length, up to 80 metres wide, up to 15 metres thick, and consists of an exceptionally high-grade core (62,900 tonnes at 43.2 % U3O8 for 59.9 million pounds U3O8 in estimated Indicated resources) surrounded by a lower grade shell. The deposit occurs along a prominent post-Athabasca basement thrust fault (WS Shear) which occurs footwall to a graphite-rich pelitic gneiss unit and hangingwall to a garnetiferous pelitic gneiss and quartzite unit. Mineralization within the Phoenix deposit is dominated by massive to semi-massive uraninite associated with an alteration assemblage comprising hematite, dravitic tourmaline, illite, and chlorite. Secondary uranium minerals (including uranophane) and sulphides are trace in quantity.
 
The Gryphon uranium deposit was discovered in 2014 and can be classified as an unconformity-associated deposit of the basement-hosted or ingress-style variety. The deposit occurs within southeasterly dipping crystalline basement rocks below the regional sub-Athabasca Basin unconformity. The deposit is located from 520 to 850 metres below surface, has an overall strike length of 610 metres and dip length of 390 metres, and varies in thickness between two and 70 metres, depending on the number of mineralized lenses present. The mineralized lenses are controlled by reverse fault structures, which are largely conformable to the basement stratigraphy and dominant foliation. The A, B, and C series of lenses are comprised of stacked, parallel lenses which plunge to the northeast along a fault zone (G-Fault) which occurs between hangingwall graphite-rich pelitic gneisses and a more competent pegmatite-dominated footwall. A ubiquitous zone of silicification (Quartz-Pegmatite Assemblage) straddles the G-Fault and the A, B, and C series of lenses occur in the hangingwall of, within, and in the footwall of the Quartz-Pegmatite Assemblage respectively. The D series lenses occur within the pegmatite-dominated footwall along a secondary fault zone (Basal Fault) or within extensional relay faults which link to the G-Fault. The E series lenses occur along the G-Fault, up-dip and along strike to the northeast of the A and B series lenses, within the upper basement or at the sub-Athabasca unconformity.
  2020 Annual Information Form    34
 
 
Mineralization within the Gryphon deposit lenses is dominated by massive, semi-massive, or fracture-hosted uraninite associated with an alteration assemblage comprising hematite, dravitic tourmaline, illite, chlorite, and kaolinite. Secondary uranium minerals (including uranophane and carnotite) and sulphides are trace in quantity.
 
Exploration and Drilling
 
As operator, Denison has conducted numerous geophysical surveys across the property, generating many drill targets over several years. Airborne surveys have included two electromagnetic surveys (totaling 2,005 line kilometres) and one gravity survey (totaling 1,711 line kilometres). Ground surveys have included four electromagenetic surveys (488 line kilometres), 10 resistivity surveys (979 line kilometres), two gravity surveys (2,920 stations) and 45 downhole geophysical surveys. Results to date indicate the property comprises multiple prospective trends that warrant drill testing. These trends are interpreted primarily from magnetic and electromagnetic and/or resistivity data to infer the location of faulted graphitic basement horizons that may have associated uranium mineralization.
 
Denison has completed 392,552 metres of exploration diamond drilling in 764 holes on the Wheeler River property during the period from 2005 to the end of 2020. The majority of this drilling has been focused on the discovery and delineation of the Phoenix (270 holes totaling 123,377 metres) and Gryphon (214 holes totaling 120,351 metres) deposits.
 
Discovery and Delineation of the Phoenix Deposit
 
In the summer of 2008, as a direct result of the 2007 DC resistivity survey along the hanging wall of the quartzite ridge, two drill holes were located 600 metres apart along the same low resistivity trend. This drilling intersected a zone of characteristic sandstone alteration and uranium mineralization linked to unconformity-associated uranium deposits. All drill holes during the summer of 2008 intersected either uranium mineralization or very strong alteration close to mineralization.
 
Subsequent drilling programs conducted during 2009 and 2010 extended the mineralized zone for a strike length of greater than 900 metres. An initial mineral resource estimate was completed at the end of 2010. Aggressive drilling programs in 2011 and 2012 successfully added additional mineral resources. In 2013, drilling was completed at the Phoenix deposit, but a large portion of the 2013 Wheeler River drilling program was also allocated to exploration of several other target areas on the property. Some additional infill drilling was completed at the Phoenix deposit in early 2014, and this work was successful in extending some high grade mineralization into areas previously modeled as low grade. These results, combined with results from 2013, were the catalyst for the updated mineral resource estimate for the Phoenix deposit effective May 2014.
 
Discovery and Delineation of the Gryphon Deposit
 
In March 2014, drill hole WR-556 resulted in discovery of the Gryphon deposit, intersecting uranium mineralization averaging 15.33% U3O8 over 4.0 metres in basement graphitic gneiss, 200 metres below the sub-Athabasca unconformity. The Gryphon deposit occurs on the K-North trend, which exhibits numerous favourable exploration criteria including basement quartzite and graphitic gneisses, basement structures, reverse offsets of the unconformity, weak basement hosted mineralization near the unconformity, and anomalous sandstone geochemistry and alteration.
 
  2020 Annual Information Form    35
 
 
Historical holes ZK-04 and ZK-06 drilled in the late 1980s, along the K-North trend, targeted unconformity-related mineralization and intersected favourable sandstone structure and alteration as well as alteration and weak mineralization in the basement approximately 35 metres below the unconformity. Follow-up drilling campaigns attempted to locate unconformity mineralization up dip of the weak basement mineralization. Gryphon deposit discovery drill hole WR-556 was the first to evaluate the down dip projection of these intersections into the basement.
 
Since the discovery hole at Gryphon, subsequent drilling campaigns in 2014 and 2015 were completed and an initial resource estimate was released in November 2015. Additional mineralization was discovered immediately northeast of Gryphon in 2016, which was subsequently named the “D Series Lenses”. Continued drilling during 2016 and 2017 was focused on expanding the mineral resources at Gryphon and increasing the level of confidence from an inferred to indicated category and an updated mineral resource estimate for the Gryphon deposit was released in January 2018. Drilling was completed during 2018 (15,621 metres in 23 drill holes), successfully extending the Gryphon deposit to the northeast by approximately 200 metres; however these results have yet to be included in a mineral resource estimate. The Gryphon deposit remains open in numerous areas and the 2018 results confirm potential to continue to expand the Gryphon mineral resource outside of the current extents of the deposit.
 
Post-PFS: 2019 Regional Exploration Drilling Activities
 
Denison conducted winter and summer diamond drilling programs at Wheeler River during 2019, totalling 10,573 metres in 20 holes. The programs focused on testing regional exploration target areas (K West, Q South East, K South, O Zone) where the potential exists to identify additional high-grade uranium deposits that could potentially become satellite operations for the planned Phoenix ISR operation. The 2019 winter drilling program was highlighted by WR-756, which encountered weak, unconformity-hosted uranium mineralization along the southern portion of the K West trend, approximately 2 kilometres southwest of the Gryphon deposit. WR-756 intersected 0.03% U3O8 over 1.5 metres, and 1.3% Cu and 0.13% Ni over 4.0 metres, and 0.18% Co over 6.0 metres, located immediately above the sub-Athabasca unconformity.
 
While no uranium mineralization was encountered at Q South East, K South, or O Zone, drilling in each area identified indicative structure and alteration coincident with weakly anomalous uranium geochemistry. Drilling at Q South East, intersected structured and hydrothermally altered sandstone, unconformity offset of 16 metres and basement stratigraphy identical to the Phoenix deposit. Additional targets exist along strike, particularly to the northeast along the Quartzite Ridge's eastern edge, which is largely untested for 8.8 kilometres.
 
Drill tests of DCIP resistivity targets at the O Zone confirmed the presence of a major post-Athabasca thrust fault with an unconformity offset of over 60 vertical metres and associated significant sandstone structure and hydrothermal alteration. Additional targets exist over the 3 kilometres of interpreted strike length along the O Zone thrust fault.
 
At K South, drill hole WR-749 intersected anomalous uranium in both the upper sandstone (average 1.29 parts per million (“ppm”) uranium from 15 to 130 metres) and the lower sandstone (average 1.03 ppm uranium from 360 to 435 metres). The lower sandstone was also marked by significant hydrothermal alteration including anomalous clay signatures up to 80 metres above the unconformity. The granite intersected at the unconformity, at 465 metres, indicates the drill hole overshot the optimal target. The highly anomalous sandstone signatures indicate compelling future targets remain to the southeast, and along strike, where graphitic basement rocks and associated structure are interpreted to occur (subcrop) at the unconformity.
 
  2020 Annual Information Form    36
 
 
Post-PFS: 2020 Exploration Drilling Activities
 
During 2020, exploration drilling focused on the Phoenix deposit with the objective of upgrading portions of the mineral resource that lie within the planned ISR freeze containment from Inferred Mineral Resources so that may be incorporated into a future FS. Priority target areas included the “A/B Gap” (between Zones A and B), Zone B, and Zone C.
 
Once drilling at Phoenix was completed, the focus of the 2020 drill program shifted towards evaluating regional target areas. Drilling was completed at both K West and M Zone.
 
Phoenix Zone A and Zone B
 
Eight diamond drill holes totalling 3,796 metres were completed to test the extents of known mineralization at Zones A and B (See locations in figure below). While several drill holes intersected weak uranium mineralization, the only notable potential extension of existing mineralization was reported in drill hole WR-765D1 in Zone B – which intersected 0.36% U3O8 over 3.5 metres (from 401.3 to 404.8 metres; drilled at an azimuth of 332.3° and an inclination of -79.6°), approximately 15 metres east of WR-333 (which previously intersected 14.6% U3O8 over 6.0 metres).
 
Phoenix Deposit - 2020 Exploration Drilling

Phoenix Zone C
 
Zone C is the southwestern-most known mineralized zone at Phoenix. Prior to the 2020 drilling program, Zone C was defined over a strike length of approximately 250 metres by only five mineralized intersections. As a result of the lack of historical drilling at Zone C, no resource estimate exists for the mineralization previously identified at Zone C.
 
  2020 Annual Information Form    37
 
 
The 2020 drilling program at Phoenix was designed to test the continuity and extents of known mineralization at Zone C: 11 drill holes were completed in 2020 for a total of 3,633 metres. Three of these drill holes at Zone C returned uranium mineralization, successfully extending the mineralized zone's strike length by approximately 20 metres to the southwest and delineating a potential high-grade mineralized “core.” Additional drilling will be required to determine the extent of uranium mineralization at Zone C. Mineralized intersections from 2020 drilling at Zone C are outlined in the table below, and identified in the “Phoenix Deposit - 2020 Exploration Drilling” figure above.
Phoenix Zone C Mineralized Intersections
Hole-ID
From (m)
To (m)
Length (m)
U3O8(%)
WR-328D11,3,4
376.4
381.4
5.0
5.69
WR-767D11,3,4
382.0
384.5
2.5
8.84
WR-7712,3,4
376.5
377.5
1.0
0.89
Notes:
(1)
Intersection interval is composited above a cut-off grade of 1.0% U3O8;
(2)
Intersection interval is composited above a cut-off grade of 0.1% U3O8;
(3)
WR-328D1 was drilled at an azimuth of 333.7°, inclination of -80.3°; WR-767D1 was drilled at an azimuth of 310.4°, inclination of -79.3°; WR-771 was drilled at an azimuth of 310.0°, inclination of -79.5°; and
(4)
Lengths indicated are the down-hole length and do not represent the true thickness of mineralization. True thickness is estimated to be approximately 98% of stated downhole length.
 
 
Regional Exploration
 
2020 Regional Exploration Drilling Program Target Areas
 
 
 
  2020 Annual Information Form    38
 
 
K West
 
The K West fault, which lies within the K West conductive trend, at or near the contact between a graphitic pelite and underlying Archean granite, is the primary exploration target in this area. The K West fault has been drill-defined over a strike length of approximately 15 km, on both the Wheeler River property and on adjacent properties located to the north of Wheeler River, where several zones of high-grade unconformity-hosted mineralization have been identified (including on Denison’s 30% owned Mann Lake property). Historical drilling at K-West, which has been interpreted to have intersected the unconformity anywhere from 30 to 100 metres hangingwall of the K West fault, has defined a broad zone of anomalous uranium pathfinder geochemistry, specifically copper, nickel, and cobalt.
 
A total of 6 drill holes were completed at K-West as part of the 2020 exploration program, including drill hole WR-741AD1, which was designed to test the up-dip projection of the K West fault intersected in 2018 by drill hole WR-741A. WR-741AD1, intersected weak mineralization hosted within a narrow breccia approximately 3 metres below the unconformity, located at the upper contact of the K-West fault. In addition, composite sandstone samples from WR-741AD1 returned highly anomalous copper and nickel concentrations over the lower 310 metres of the sandstone column.
 
WR-741AD2 was drilled 10 metres to the northwest of WR-741AD1, to test the extents of the mineralization identified below the unconformity. WR-741AD2 intersected high-grade uranium mineralization that is interpreted to straddle the unconformity contact. In addition, low-grade mineralization was encountered straddling the unconformity in WR-775, located approximately 400 m to the south of WR-741AD2.
 
K West Mineralized Intersections
Hole-ID
From (m)
To (m)
Length (m)
U3O8(%)
WR-741AD11,3
 
644.8
 
647.8
 
3.0
 
0.42
 
WR-741AD21,4
 
640.3
 
644.3
 
4.0
 
2.14
 
(includes)2
 
643.3
 
644.3
 
1.0
 
7.66
 
WR-7751,5
 
594.4
 
595.4
 
1.0
 
0.30
 
 
Notes:
(1)
Intersection interval is composited above a cut-off grade of 0.1% U3O8;
(2)
Intersection interval is composited above a cut-off grade of 1.0% U3O8;
(3)
drilled at an azimuth of 295.7° and an inclination of -71.0°;
(4)
drilled at an azimuth of 294.3° and an inclination of -63.0°;
(5)
drilled at an azimuth of 282.0° and an inclination of -74.0°; and
(6)
lengths indicated are the down-hole length and do not represent the true thickness of mineralization.
  2020 Annual Information Form    39
 
 
K West - 2020 Drilling
 
M Zone
 
Regional exploration drilling was also completed at the M Zone target area during the 2020 Wheeler River exploration program. M Zone is located approximately 5.5 kilometres east of Phoenix and lies roughly 700 metres from the McArthur River – Key Lake haul road. Denison’s exploration team conducted a core-relogging program in 2018 and identified several historical drill holes at M Zone that encountered indicative structure, alteration, elevated radioactivity or anomalous pathfinder geochemistry worthy of follow-up.
 
A total of 4 drill holes were completed at M Zone as part of the 2020 exploration program, including drill hole WR-778, which was designed to test the subcrop of a graphitic fault at the sub-Athabasca unconformity that was previously intersected at depth in DDH ZM-17. WR-778, intersected a wide reverse fault zone in the lower sandstone, highlighted by multiple basement wedges, intense hydrothermal alteration, and a broad interval of weak uranium mineralization.
 
The presence of basement wedges in WR-778 and an interpreted unconformity elevation offset of 25 metres indicates that the broad zone of weak mineralization is controlled by a large reverse fault. See figures “Phoenix Deposit - 2020 Exploration Drilling” above and “M Zone - 2020 Drilling” below, illustrating the location of the 2020 M Zone drilling.
 
Weak uranium mineralization was returned along the nose of basement wedges within a broad reverse fault zone, as summarized in the table below. Due to extensive core loss, the mineralized intervals are reported as the radiometric equivalent uranium (“eU3O8”) derived from a total gamma down-hole probe. Taken together, the results from WR-778 present a model that may be similar to Zone 4 at McArthur River.
 
  2020 Annual Information Form    40
 
 
While the mineralization at M Zone is significantly lower grade than McArthur, there are many similarities, and future exploration drilling is expected to test if the area is analogous to Zone 4 at McArthur River.
M Zone Mineralized Intersection
Hole-ID
From (m)
To (m)
Length (m)
eU3O8(%)
WR-7782
397.1
407.3
10.2
0.08
And
411.2
414.2
3.0
0.08
Notes:
(1)
Due to core loss, the interval is reported as radiometric equivalent U3O8 (eU3O8) derived from a calibrated total gamma downhole probe;
(2)
Intersection interval is composited above -a cut-off grade of 0.1% eU3O8; drilled at an azimuth of 304° and an inclination of -80.0°; and
(3)
Lengths indicated are the down-hole length and do not represent the true thickness of mineralization.
 
M Zone - 2020 Drilling
 
Proposed 2021 Wheeler River Exploration Program
 
Exploration activities are planned for 2021, with the primary objective to evaluate the potential for unconformity-associated uranium mineralization along several prospective corridors on the Wheeler River project: K West, M Zone, Gryphon South, N Zone, and Quartzite East. The Company believes these areas are either under-explored or are where historical drilling has returned highly anomalous results that have not been adequately followed up.
 
Testing the extent of the high-grade mineralization intersected in 2020 at K West will be the first objective of the 2021 program, as Denison continues the evaluation of this highly prospective trend. It is anticipated that a minimum of four holes will be drilled at K West in 2021.
  2020 Annual Information Form    41
 
 
Additional drilling is also currently planned for M Zone, to follow up WR-778, which intersected weak uranium mineralization associated with a broad fault zone containing several basement wedges. It is anticipated that four holes will be drilled at M Zone as part of the 2021 program.
 
Evaluation Activities
 
Subsequent to the completion of the PFS in 2018, project development and evaluation activities have pivoted towards initiating and supporting EA and FS processes for Phoenix. Work during 2019 focused on (a) those activities necessary to support and move forward the environmental assessment process (see “Government Regulation – Environmental Assessments” below), which is currently expected to take 36-48 months to complete from initiation, and (b) those engineering and other studies required to de-risk the Phoenix deposit as an ISR mining operation.
 
Engineering and other studies completed in 2019 included (i) ISR field programs, including the installation of CSWs at Phoenix, as the first CSWs designed for ISR mining in the Athabasca Basin, and (ii) further ISR metallurgical laboratory testing for uranium recovery (see “Mineral Processing and Metallurgical Testing, below).
 
Highlights of the 2020 evaluation program at Wheeler River include field work at the Phoenix deposit, important metallurgical testing for leaching at low temperatures and the separation of iron and radium precipitates from the uranium bearing solution, and a study to evaluate the use of a freeze wall rather than a freeze dome design for the proposed Phoenix ISR project (see “Mining Evaluation and Development Operations”, below). In addition, input criteria for the EA and the installation of additional groundwater monitoring wells around the Phoenix deposit were completed during the year.
 
Post-PFS - 2019 Field Program
 
The 2019 field program was designed to assess the permeability of Phoenix, and to collect an extensive database of hydrogeological data to further evaluate the ISR mining conditions present at Phoenix. This data is of critical importance to the advancement of Phoenix as an ISR mining operation – as it is expected to support a detailed assessment of the ISR requirements related to permeability, and be further incorporated into a detailed ISR mine plan as part of the completion of a future FS.
 
The Company successfully completed the planned ISR field work and safely concluded operations on site at Wheeler River during the fourth quarter of 2019. The field activities associated with the 2019 field program were completed over a period of approximately 23 weeks (starting in June and completed in late November), and required the support of approximately 40 Denison employees and contractor staff.
 
The objectives of the program were extensive, and the scope of the work completed on site during the program was considerable. The following represent the key components of field work completed as part of the 2019 field program:
 
Installation of 4 small-diameter pump/injection (‘P/I’) wells.
 
Installation of 11 small-diameter observation wells within and outside the Phoenix orebody.
 
Installation of 2 test wells containing Vibrating Wire Piezometers (‘VWPs’), equipped with pressure transducers, at different depth locations.
  2020 Annual Information Form    42
 
 
Installation of 12 small-diameter regional observation wells, for environmental monitoring and baseline data collection.
 
Installation of 1 re-charge well, for recharging formation test waters.
 
Completion of a series of short-duration hydrogeological tests within the small-diameter wells to identify hydraulic connectivity between test wells.
 
Installation of 2 large-diameter CSWs (CSW1 and CSW2) within the ore zone.
 
Deployment of a permeability enhancement tool in each CSW to complete an array of lateral drill holes (penetration tunnels) designed to enhance access from each CSW to the existing permeability within the ore zone.
 
Completion of a further series of short-duration preliminary and long-duration hydrogeological tests, using each of CSW1 and CSW2 to pump water from or inject water into the ore zone.
 
Completion of extensive permeameter testing in the field, utilizing a portable nitrogen gas probe permeameter adapted for testing whole drill core pieces.
 
The 2019 field program achieved each of the program’s planned objectives, and was highlighted by several key de-risking accomplishments, including the following:
 
Confirmation of significant hydraulic connectivity within the Phoenix ore zone;
 
Installation of the Athabasca Basin’s first CSWs for ISR;
 
Confirmation of limited hydraulic connectivity within the underlying basement units, supportive of a lower aquatard;
 
Demonstration of the effectiveness of permeability enhancements to increase CSW access to existing permeability; and
 
Confirmation of ability to achieve hydraulic conductivity values consistent with PFS.
 
Post-PFS - 2020 Field Program
 
A hydrogeologic model was created for Phoenix, developed based on actual field data collected from the 2019 field program. The modelling, produced by an independent consulting firm, demonstrated a hydrogeologic “Proof of Concept” for the application of ISR mining method at Phoenix, with respect to potential operational extraction and injection rates.
 
The ISR field work completed in 2020 was designed with the primary objective of building additional confidence in the results of the independent hydrogeologic “Proof of Concept” model.
 
The hydrogeological data collected as part of the 2020 field program is expected to build additional confidence in the Company’s understanding of the fluid pathways within Test Area 1 and Test Area 2 of the 2019 field program (see “2020 Hydrogeological Test Area Wells” figure, below), to further validate the Company’s hydrogeologic model for Phoenix, and to support the design and permitting of field tests in future years, which are expected to support a future FS.
 
Key elements of the completed 2020 field program included:
 
  2020 Annual Information Form    43
 
 
Hydrogeological Test Work
 
Based on the positive results from the hydrogeologic model, the Company developed and commenced the 2020 ISR field program to further evaluate and verify the ISR mining conditions present at Phoenix by supplementing the extensive dataset acquired in the 2019 Field Test. 17 pump and injection tests were completed between Test Area 1 and Tests Area 2 at Phoenix Zone A. The data collected is expected to provide additional insight into individual well capacities and the overall hydrogeological network of the deposit areas.
 
Permeameter Analysis
 
Over 1,000 additional drill core samples were collected from historic holes, dried, and analyzed for permeability and porosity. Samples were selected to refine the Company’s understanding of the mineralized hydrogeologic horizons, including the low permeability basement rocks and the overlying sandstone.
 
Rock Mechanics
 
Mineralized core samples were collected and shipped to SNC Lavalin for rock mechanics tests, including tensile strength and uniaxial compressive strength. The samples targeted various previously identified hydrogeologic units, including the Upper Clay Zone, Lower Clay Zone and High-Grade Friable Zone. Results from these tests will be utilized to better define the design of certain permeability enhancement techniques for subsequent field programs.
 
Groundwater Sampling
 
Groundwater samples were collected from eight different environmental monitoring wells in the Phoenix deposit area. Sampling occurred at several horizons within each well, including the horizons above, below, and within the Phoenix ore body. Samples have been submitted to the Saskatchewan Research Council (“SRC”) for analysis. Once received, data from these samples will be utilized to support the design and permitting of additional field tests expected to be incorporated into a future FS.
 
Installation of Additional Environmental Monitoring Wells
 
Five additional monitoring wells were installed in two clusters, located approximately 500 metres northeast of Phoenix and 750 metres southeast of Phoenix (see “2020 Environmental Sampling Wells” figure, below). The additional monitoring wells will allow for the collection of groundwater flow information at locations further away from the Phoenix deposit than had been previously studied, providing additional data for the site groundwater model. This is intended to allow for long-term monitoring and the modelling of ground water impacts, which will be an important element of the effects assessments in an EIS.
 
Post-PFS - 2021 Field Program Planning
 
In late 2020, Denison advanced its plans for additional field testing at Phoenix in 2021. The 2021 ISR field program has been designed to (1) further de-risk, evaluate and confirm the hydrogeological and geochemical characteristics of the Phoenix ore body through a series of additional hydrogeological and tracer tests, (2) finalize the production well design pattern and spacing, (3) confirm cost estimates for optimized commercial scale wells, (4) further evaluate and confirm additional permeability enhancement techniques and their relative application and
 
  2020 Annual Information Form    44
 
 
(5) ultimately set-up for a subsequent lixiviant test currently contemplated for 2022. The lixiviant test is considered a potential key milestone for the project, intended to confirm technical feasibility while verifying the permeability, leachability and containment parameters needed for the successful application of ISR mining at the Phoenix deposit.
 
2020 Hydrogeological Test Area Wells, shown on Basement Geology Map
 
 
 
 
 
  2020 Annual Information Form    45
 
 
2020 Environmental Sampling Wells, Shown on Site Orthophoto
Mineral Processing and Metallurgical Testing
 
A number of metallurgical testing programs have been undertaken at the project, to evaluate the mineral processing potential for both the Gryphon and the Phoenix deposits.
 
2014-2018
 
In 2014, preliminary metallurgical test work was initiated to assess the basic metallurgical properties of the deposit ores. In 2017 and 2018, advanced metallurgical testing was completed, to test mill performance at extremes of potential ore feed grades and impurity levels, as well as optimize processing parameters. Results of this testing are incorporated in the Wheeler PFS Report.
 
In summary, for both the Phoenix and Gryphon deposits, results of the testing indicate that ores are readily amenable to acid base leaching with high uranium extraction rates. Performance in terms of retention time, reagent usage and consumption are all consistent with current industry operating parameters. Test work results were positive, with results generally in line with capacities at existing plants and with yellowcake produced meeting all specifications from ASTM C967-13 “Standard Specifications for Uranium Ore Concentrate”.
 
  2020 Annual Information Form    46
 
 
In order to support the evaluation of a contemplated ISR operation for Phoenix, during the PFS process, Denison completed Leach Amenability Studies (Bottle Roll Tests) and column leach tests from 2016 to 2018. Testing included subjecting appropriate ore samples to various pH, ORP and other solution characteristics and monitoring progress of leaching over time. Results of these initial tests demonstrated Phoenix ore responded strongly to acid leach conditions with low impurities removal, extremely low reagent consumption levels and high uranium recovery.
 
2019-2021
 
In December 2019, Denison initiated the next phase of ISR metallurgical laboratory testing for uranium recovery at Phoenix, which will utilize the mineralized drill core recovered through the installation of various test wells during the 2019 ISR field program. The metallurgical laboratory test program builds upon the laboratory tests completed for the recovery of uranium as part of the project’s PFS and is expected to further increase confidence and reduce risk associated with the application of the ISR mining method. The results are expected to facilitate detailed mine and process plant planning as part of a future FS, and will provide key inputs for the EA process. Significant components of the metallurgical laboratory test program include core leach tests, column leach tests, bench-scale tests and metallurgical modelling.
 
Metallurgical test work commenced in the fourth quarter of 2019 and has continued to-date:
 
Core Leach Tests:
 
Specialized core leach tests involve the testing of intact mineralized core samples, representative of the in-situ conditions at Phoenix, to evaluate uranium recovery for the ISR mining method. Mineralized core samples of between 0.75 metres and 1.5 metres in length were obtained from the 2019 ISR field program. A triple-tube method of core recovery was employed to ensure the core could be recovered with minimal breakage and would be representative of the in-situ Phoenix ore. Core samples were collected to represent the various ore types and grade ranges (~1% to 60% U3O8) at Phoenix. 
 
The specialized laboratory apparatus used for these tests allows for intact core samples (5 centimetres to 25 centimetres in length) to be mounted within a flexible sleeve with a confining pressure applied to the exterior of the sleeve. Lixiviant (in the case of Phoenix, an acid-bearing mining solution) can then be injected into the intact core at one end of the sample without having a way to by-pass the intact core. As a result, the lixiviant travels through the core to the other end of the sample, where a uranium bearing solution is recovered. The tests utilize mining solution (or lixiviant) with acid and oxidant concentrations, and injection pressures, and temperatures similar to those envisaged during commercial ISR operations. Denison considers this type of specialized test of intact competent core samples to be the most representative available laboratory test of the natural leach conditions of the host rock. Accordingly, these tests are expected to provide important detailed metallurgical recovery data to inform the Company’s understanding of the potential scope of the start-up, steady state, and closure of ISR wells.
 
In February 2020, the Company reported on the results from the initial core leach tests. At that time, over 50 days of testing had been completed on a mineralized core sample recovered from drill hole GWR-016. The core sample was recovered from between 405 and 407 metres below surface within the extent of the high-grade core of Phoenix Zone A. Various parameters for lixiviant composition (including both acid and oxidant concentration) have been tested to date. In all cases, the lixiviant is injected into the core continuously and only interrupted periodically if a change in the lixiviant composition is required.
 
  2020 Annual Information Form    47
 
 
After the initial test startup, uranium bearing solution recovered from the core sample returned uranium content in the range of 13.5 g/L to 39.8 g/L. The average uranium concentration returned over the last 20 days of testing was 29.8 g/L – which represents a uranium content that is approximately 200% higher than (or three times) the minimum level used for the ISR process plant design in the PFS of 10 g/L.
 
Several additional core leach tests are currently planned for 2021, involving various cores representative of the differences in grade and permeability within the Phoenix deposit.
 
Column Leach Tests:
 
Additional core samples in the same grade ranges (~1% to 60% U3O8) were obtained from the 2019 ISR field program and preserved for metallurgical tests. These samples will be crushed and packed into test columns at the test facility, in order to complete traditional column leach tests utilizing the same mining solutions as the Core Leach Tests. The testing is expected to provide additional data on the recovery of uranium, and any other metals, from the various ore types and grade ranges associated with the Phoenix deposit under the envisaged ISR mining conditions. The purpose of the Column Leach Tests is to correlate data from the specialized Core Leach Tests to the traditional ISR laboratory testing methods used during the PFS. Additionally, the Column Leach Tests are able to generate uranium bearing solutions in larger quantities for further laboratory testing of the process plant flowsheet.
 
Bench Scale Tests:
 
Upon completion of the Core Leach Tests and Column Leach Tests, Bench-Scale Tests of each unit operation in the proposed flowsheet is planned. These tests are expected to use the uranium-bearing solution produced from both of the Leach Tests. The data from the Bench-Scale Tests is expected to provide key details for plant design for impurity removal, uranium precipitation, solid liquid separation, reagent usage and water treatment.
 
Metallurgical Modelling:
 
Concurrent with these tests, Denison is building a metallurgical simulation model with the basic parameters for mass, energy and water balances. The data from all laboratory tests will be incorporated into a model update once testing is completed.
 
Iron/Radium Removal from Uranium Bearing Solution (“UBS”):
 
The operating plan envisioned for the Phoenix deposit results in minimal “contaminants of concern” remaining on surface at mine closure. The process plant will be designed to remove essentially all contaminants of concern at the front end of the plant with precipitation of Iron and Radium as the first unit operation. Testing to date has indicated that to remove the majority of iron and radium contaminants would result in the capture of approximately 1% of the uranium in the precipitate, and testing of this process and the recovery of such uranium, were undertaken in 2020 and expected to continue in 2021.
 
  2020 Annual Information Form    48
 
 
Low Temperature Leach Tests:
 
The temperature of the Phoenix deposit at 400 m depth is estimated to be 5 to 10 degrees Celsius. Most uranium mills run their leach circuits at 20 to 50 degrees Celsius. Due to this significant temperature difference, 2020 test work was undertaken at lower temperatures to determine the lixiviant concentrations required to counter the lower leaching kinetics experienced at lower temperatures. Conclusions from completed tests indicate that varying the lixiviant composition can compensate for the impact of lower temperature on the rate of leaching.
 
Sampling, Analysis and Data Verification
 
See “Athabasca Exploration: Sampling, Analysis and Data Verification” for details.
 
Mineral Reserve and Mineral Resource Estimates
 
RPA, an independent technical consulting firm with relevant experience, was retained by Denison on behalf of the WRJV to prepare and audit the mineral resource estimates for the Gryphon and Phoenix deposits in accordance with CIM Definition Standards (2014) and NI 43-101. The Wheeler PFS Report contains a combined mineral resource estimate for the Wheeler River project, with effective dates for the mineral resource estimates for the Gryphon and Phoenix deposits of January 30, 2018 and May 28, 2014, respectively. See “Mineral Reserves and Mineral Resources”, above, for a summary of the combined mineral resource estimate for the Wheeler River project.
 
Phoenix Deposit Mineral Resource Estimation Methodology
 
Geology, structure, and the size and shape of the mineralized zones have been interpreted using data from 243 diamond drill holes which resulted in three-dimensional wireframe models that represent 0.05% U3O8 grade envelopes. The mineralization model generally consists of a higher-grade zone within an envelope of lower grade material, resulting in two main estimation domains - higher grade and lower grade. Additionally, a small zone of structurally controlled basement mineralization was modelled at the north end of the deposit.
 
Based on 196 dry bulk density determinations, Denison developed a formula relating bulk density to uranium grade which was used to assign a density value to each assay. Bulk density values were used to weight grades during the resource estimation process and to convert volume to tonnage.
 
Uranium grade times density (“GxD”) values and density (“D”) values were interpolated into blocks in each domain using an inverse distance squared (“ID2”) algorithm. Hard domain boundaries were employed such that drill hole grades from any given domain could not influence block grades in any other domain. Very high-grade composites were not capped but grades greater than a designated threshold level for each domain were subject to restricted search ellipse dimensions in order to reduce their influence. Block grade was derived from the interpolated GxD value divided by the interpolated D value for each block. Block tonnage was based on volume times the interpolated D value.
 
The mineral resources estimated for the Phoenix deposit were classified as indicated or inferred based on drill hole spacing and apparent continuity of mineralization. The block models were validated by comparison of domain wireframe volumes with block volumes, visual comparison of composite grades with block grades, comparison of block grades with composite grades used to interpolate grades, and comparison with estimation by a different method.
 
  2020 Annual Information Form    49
 
 
Gryphon Deposit Mineral Resource Estimation Methodology
 
The three-dimensional mineralized wireframes were created by Denison utilizing Gemcom software following detailed interpretation of the deposit geology and structure. The wireframes were defined using a threshold of 0.05% U3O8 and minimum thickness of two metres. One higher grade domain was defined within the A1 lenses and three higher grade domains were defined in the D1 lenses based on a threshold of 4.0% U3O8. The wireframes and drilling database were sent to RPA for grade modelling following QAQC which included ensuring the wireframes were ‘snapped’ to the drill hole mineralized intervals.
 
Based on 279 dry bulk density determinations, a polynomial formula was determined relating bulk density to uranium grade which was used to assign a density value to each assay. Bulk density values were used to weight grades during the resource estimation process and to convert volume to tonnage. Uranium GxD values and D values were interpolated into blocks measuring 5 metres by 1 metre by 2 metres using an ID2 algorithm since variograms were not considered good enough to derive kriging parameters. Hard domain boundaries were employed at the wireframe edges, so that blocks within a given wireframe were only informed by grade data from that wireframe. For the A1 high-grade domain, assays were capped at 30% U3O8 with a search restriction applied to composite grades over 20% and for the D1 high-grade domains, assays were capped at 20% U3O8 with no search restriction. For the A1-A4, B3-B7, C4-C5 and D2-D4 low-grade domains, assays were capped at 10% U3O8. For the C1 low-grade domain, assays were capped at 20% U3O8 with a search restriction applied to composite grades over 10%. For the B1, B2, E1 and E2 low-grade domains, assays were capped at 15% U3O8 with search restrictions applied to composite grades over 10% U3O8 for the B1 domain and 5.0% U3O8 for the E2 domain. For the D1 low-grade domain, assays were capped at 5% U3O8. Block grade was derived from the interpolated GxD value divided by the interpolated D value for each block. Block tonnage was based on volume times the interpolated D value.
 
The mineral resources estimated for the Gryphon deposit were classified according to the drill hole spacing and the apparent continuity of mineralization, as either indicated mineral resources (generally, drill hole spacing of 25 x 25 metres) or inferred mineral resources (generally, drill hole spacing of 50 x 50 metres). The block models were validated by comparison of domain wireframe volumes with block volumes, visual comparison of composite grades with block grades, comparison of block grades with composite grades used to interpolate grades, and comparison with estimation by a different method.
 
Phoenix and Gryphon Deposit Reserve Calculations
 
The mineral reserve for the Phoenix and Gryphon deposits are summarized in the following table. For Phoenix, the ISR process has been designed to a level appropriate for a PFS and mineral reserve estimation, with application of appropriate modifying factors including geological, mining, hydrogeological, metallurgical and cut-off grades. The Gryphon mine design has been completed to a level appropriate for a PFS and the mineral reserve estimation, with application of appropriate modifying factors including geological, mining recovery and dilution and cut-off grades. The estimated mineral reserves are based on previously estimated indicated mineral resources, which are converted to probable reserves.
 
  2020 Annual Information Form    50
 
 
Mineral Reserve Estimate – Wheeler River Project – September 1, 2018
Deposit
Category
Tonnes
Grade(% U3O8)
Million lbs U3O8(100% Basis)
Phoenix
Probable
141,000
19.1
59.7
Gryphon
Probable
1,257,000
1.8
49.7
Total
1,398,000
3.5
109.4
Notes:
1. CIM definitions (2014) were followed for classification of mineral reserves.
2. Mineral reserves for the Phoenix deposit are reported at the mineral resource cut-off grade of 0.8% U3O8 and are based on the block model generated for the May 28, 2014 mineral resource estimate. Mining recovery factor of 85% has been applied to the mineral resource above the cut-off grade.
3. Mineral reserves for the Gryphon deposit are estimated at a cut-off grade of 0.58% U3O8 using a long-term uranium price of US$40/lb, and a US$/CAD$ exchange rate of 0.80. The mineral reserves are based on the block model generated for the January 30, 2018 mineral resource estimate. The cut-off grade is based on an operating cost of $574/tonne, milling recovery of 97%, and a 7.25% fee for Saskatchewan royalties (basic royalty plus resource surcharge).
4. Mineral reserves are stated at a processing plant feed reference point and include diluting material and mining losses.
5. Numbers may not add due to rounding.
 
Mining Evaluation and Development Operations
 
Phoenix
 
ISR mining has become the industry’s leading low-cost uranium production method globally – following on from initial use in the 1960s to extensive use at present in Kazakhstan (the world's largest and lowest cost producer of uranium), the United States, China, Russia, and Australia, amongst others. ISR mining is amenable to uranium deposits in certain sedimentary formations and is well known in the industry for comparatively minimal surface impact, high production flexibility, and low operating and capital costs. In 1998, ISR mining represented roughly 13% of global uranium production, increasing rapidly to the point where it was estimated to account for over 50% of global uranium production as at the date of the Wheeler PFS. There has been continuous development and improvement of ISR mining techniques in past years, particularly in the two decades since the International Atomic Energy Agency (“IAEA”) published the Manual of Acid In-Situ Leach Uranium Mining Technology (IAEA-TECDOC-1239).
 
ISR mining involves recovery of uranium by pumping a mining solution (also referred to as a “lixiviant”) through an appropriately permeable orebody. The method eliminates the need to physically remove ore and waste from the subsurface – thus eliminating the related surface disturbance and tailings normally related to underground or open pit operations. The mining solution dissolves the uranium as it travels through the ore zone – effectively reversing the natural process that originally deposited the uranium. The mining solution is injected into the ore zone through a series of cased drill holes called injection wells and pumped back to surface via a similar series of recovery wells. The collective of the various injection and recovery wells is referred to as a wellfield. Once on surface, the uranium bearing solution is sent to a surface processing plant for the chemical separation of the uranium. Following the uranium removal, the mining solution is reconditioned (often referred to as the barren mining solution) and returned back to the wellfield for further production.
 
ISR wellfields are designed to effectively target delineated mineralization and achieve the operation’s desired production level. At present, the Company expects the drilling of individual wells will be carried out utilizing either air rotary or mud rotary methods.
  2020 Annual Information Form    51
 
 
The wellfield at Phoenix has been designed using a standard hexagonal pattern with 10m spacing between wells.
 
Containment of the solution is a requirement in ISR operations to ensure recovery of the uranium and to minimize regional groundwater infiltration into the ore zone and associated dilution of the mining solution. In typical ISR operations, this is normally achieved through natural clay or other impermeable geological layers.
 
At Phoenix, the basement rock below the orebody achieves this purpose but the sandstone formation which hosts and surrounds the ore zone is not impermeable. As a result, in order to maintain containment, it is proposed that the entire orebody will be isolated by use of an artificial freeze wall (see below for more information). Circulation of a low temperature brine solution in the holes will remove heat from the ground, freezing the natural groundwater, and establishing an impermeable frozen wall encapsulating the deposit.
 
Benefits of ISR operations generally include:
 
Established safety practices and procedures to ensure health and safety of workers.
 
Minimal environmental impacts, including low noise, dust, and air emissions, low water consumption levels, minimal surface disturbance, and full rehabilitation of the area.
 
Ability to scale production up or down to meet market demands.
 
Insensitivity to ore grades (i.e. lixiviants will dissolve the uranium at any grades).
 
Low initial capital costs and short timeframe to production.
 
Low operating costs.
 
The Company's evaluation of the ISR mining method at Phoenix, as detailed in the PFS, has identified several significant environmental and permitting advantages, particularly when compared to the impacts associated with conventional uranium mining in Canada. The PFS’s plan for the proposed ISR mining operation is expected to produce no tailings, generate very small volumes of waste rock, and has the potential for low volumes or possibly no treated water discharge to surface water bodies, as well as the potential to use the existing power grid to operate on a near zero carbon emissions basis.
 
The planned use of the freeze wall, to encapsulate the ore zone and contain the mining solution used in the ISR operation, has the potential to streamline the mining process, minimize interaction with the environment, and facilitate controlled reclamation of the site at decommissioning.
 
Taken together, ISR mining at Phoenix has the potential to be one of the most environmentally friendly uranium mining and processing operations in the world.
 
Phoenix Freeze Wall
 
In December 2020, Denison announced the results of a trade-off study completed post-PFS, assessing the merit of adopting a freeze wall design as part of the ISR mining approach planned for Phoenix. Based on the results of the trade-off study, a freeze wall design has the potential to offer significant environmental, operational, and financial advantages compared to the freeze cap (or freeze “dome”) design previously planned for the project and included in the project’s PFS.
  2020 Annual Information Form    52
 
 
Accordingly, the Company has decided to adapt its plans for the Project to use a freeze wall in future Project design and environmental assessment efforts. The trade-off study highlights the potentially significant benefits anticipated from a freeze wall design:
 
Enhanced environmental design:
 
The freeze wall design provides full hydraulic containment of the ISR wellfield by establishing a physical perimeter around the mining area, which will extend from the basement rock underlying Phoenix to surface – enhancing environmental protection in the area of the ISR mining operation, thereby minimizing potential environmental impacts during the life of the operation, while still establishing a defined area for decommissioning and reclamation;
 
Lower technical complexity and operational risks:
 
A freeze wall is expected to be installed using existing and proven vertical or angled diamond drilling methods, rather than the directional / horizontal drilling approach proposed in the PFS to establish a freeze cap. The use of conventional diamond drilling methods is expected to substantially decrease the technical complexity associated with project construction. Similarly, the adaptation of previous plans (described in the PFS), to remove the cap design is expected to significantly reduce operational risks by eliminating the potential intersection of freeze holes during the installation of future ISR wells as the ISR wells will no longer have to pierce a freeze cap to access the mining horizon;
 
Expected reduction in initial capital costs, with phased mining approach:
 
The PFS freeze cap design contemplated the use of a small number of large horizontal freeze holes to encapsulate the entire Phoenix deposit at depth prior to first production. In contrast, the freeze wall design, which consists of vertical / angled freeze holes, provides the flexibility for a phased mining approach that requires a relatively limited initial freeze wall installation to commence mining, with additional ground freezing occurring throughout the life of the mine in sequential phases. This is likely to reduce the project’s upfront capital requirements and initial ground freezing time.
 
Strengthened project sustainability:
 
The predominant drilling method used in the freeze wall design is conventional diamond drilling. This existing and proven method is widely employed and established in northern Saskatchewan. Accordingly, it is anticipated that Denison will be able to leverage the existing skilled work force in the region to increase business and employment opportunities for residents of Saskatchewan’s north.
 
 
 
 
 
2020 Annual Information Form    53
 
 
The trade-off study provides for mining to occur over 5 phases, as outlined in the tables below. This approach is expected to match the overall mine production schedule of the PFS.
 
Freeze Wall Phased Mining Approach
 
 
Phase 1
 
Phase 2
 
Phase 3
 
Phase 4
 
Phase 5
 
Total
 
Reserves (% of total)*
 
36%
26%
14%
15%
9%
100%
Expected Life (months)
 
43
31
17
19
11
121
*Note: These amounts are estimates and projections only and do not include Phoenix Zone B2 reserves of 133,000 lbs U3O8, representing 0.2% of the total reserves for Phoenix outlined in the PFS. This expected change is driven by the estimated costs and other assumptions set forth in the PFS plus the estimated incremental cost of an expansion of the freeze wall, rendering mining in this area uneconomic. The aggregate reserves, and many of the assumptions and qualifications related thereto, as well as the mine plan associated with the declared reserves are set forth in the Wheeler River PFS.
 
Freeze Wall Holes Drilled Per Phase
 
 
Phase 1
 
Phase 2
 
Phase 3
 
Phase 4
 
Phase 5
 
Total
 
Expected (# of holes)
 
57
41
54
52
118
322
Expected Meterage
 
24,500
17,600
23,200
22,400
50,700
138,400
 
The currently forecasted freeze wall construction requirements for Phase 1 include 57 vertical freeze holes with 24,500 metres of diamond drilling. For comparison, the PFS model for the freeze cap included 30 horizontal freeze holes installed during construction for an overall drilling meterage of 32,700 m, using more expensive horizontal drilling methods. With the freeze wall design, subsequent mining phase areas would be established prior to completion of mining in the previous phase area to provide uninterrupted mine production.
 
The freeze wall phased approach is anticipated to minimize initial capital and construction timeline requirements for the Project by spreading out the freeze wall construction over the life of mine. Only the Phase 1 freeze wall is required during initial construction to achieve first mine production. A reduced initial freeze wall also has a reduced initial freeze plant capacity requirement. As the freeze plant is modular in design, the freezing capacity can also be deferred over the life of mine. The projected lower initial capital requirements associated with the phased freeze wall approach are expected to have positive impacts on the economics of the Project.
 
 
 
 
 
 
  2020 Annual Information Form    54
 
 
 
Proposed Phoenix Wellfield and Freeze Wall Containment Configuration
 
  2020 Annual Information Form    55
 
 
Gryphon
 
The extraction strategy for Gryphon, as described in the PFS, has not changed from the approach described in the Company’s preliminary economic assessment released in March 2016. The planned mining method for Gryphon is conventional longhole stoping with backfill. Longhole stoping is a widely used conventional mining method applied in both the Canadian uranium industry as well as in the broader mining industry for the extraction of base metals, gold, and other commodities.
 
According to the planned approach, access to the Gryphon deposit will be established through two shafts. The primary shaft will provide for movement of personnel and supplies, ore/waste hoisting, and fresh air to the underground operations. The second shaft will be solely for exhaust air and secondary egress. Both shafts will be excavated through blind boring methods. Blind bored shafts have been selected for vertical access in favour of typical full-face shaft sinking with cover grouting or freeze curtain protection. Blind bored shafts offer more competitive costs and construction schedules, and a reduced risk profile while sinking through saturated ground conditions. A composite steel/concrete liner will be installed over the full length of the shaft and grouted into basement rock.
 
In the underground operation, initial underground development will focus on establishment of permanent infrastructure and flow through ventilation between the main shaft and the exhaust shaft. Most of the permanent infrastructure will be located on the 500 m level, the level of the main shaft station. Following this, development priorities will be to establish access to the E series lense (E Zone), which provides early opportunity for ore production and waste rock storage (in mined out stopes). As mining is initiated in the E Zone, ramp development will continue to provide access to the remainder of the ore zones.
 
The PFS also assumes that the ore will be hoisted to surface and transported to the McClean Lake mill for processing. A two-year ramp-up to full production is planned, with the full production rate set at 9 million pounds U3O8 per year. Processing at the McClean Lake mill will require the negotiation and execution of a toll milling agreement, which is not currently established, and will also require regulatory approvals, which have not been obtained.
 
After careful consideration of the risks and opportunities associated with concurrent permitting and advancement of project engineering activities, the Company decided to submit a Project Description and initiate the Environmental Assessment process in early 2019 to support the advancement of the Phoenix ISR operation, and to bring the Gryphon operation forward at a later date (still in line with the PFS plan of Gryphon first production by 2030).
 
Processing and Recovery
 
Phoenix
 
The uranium bearing solution from the Phoenix wellfield will be directed to a self-contained processing facility located adjacent to the wellfield. The processing plant is expected to house most of the process equipment in a 46,500 square foot pre-fabricated metal building.
 
The proposed processing plant for the Phoenix ISR process will have four major circuits: impurities removal, yellowcake precipitation, dewatering/drying, and packaging. The processing plant will also have filtration systems, bulk chemical storage, process solution storage tanks, and a control room.
 
  2020 Annual Information Form    56
 
 
As described above, Denison is currently conducting additional leaching tests at the Saskatchewan Research Council laboratories in Saskatoon. The future results from these tests are expected to form the basis for the Processing Plant designs planned to be incorporated into a future FS. Testing is expected to include all unit operations currently included in the flow-sheet from the PFS, as summarized in the figure below.
Phoenix ISR Processing Plant Design
Broadly, the ISR processing plant design at Phoenix involves the beneficiation of the uranium bearing solution recovered from the wellfields and pumped to the processing plant, as described below:
 
Impurities removal – Uranium liberated from underground in the Phoenix deposit will be routed to an iron/radium removal circuit, where the pH of the solution will be adjusted to allow the precipitation of iron hydroxide and other metals. Once the iron hydroxide has precipitated out of the solution, the solution will be routed to the primary yellowcake precipitation circuit.
 
Yellowcake precipitation – The solution will be pH adjusted to optimal levels for uranium precipitation with sodium hydroxide, then yellowcake product will be precipitated with hydrogen peroxide, using sodium hydroxide (or other suitable high pH solution) to maintain optimal pH. Following uranium precipitation into yellowcake slurry, the barren mining solution will be reconstituted to the proper acid level prior to being pumped back to the wellfield for reinjection.
  2020 Annual Information Form    57
 
 
Yellowcake dewatering/drying – The precipitated yellowcake slurry will be transferred to a filter press, where excess liquid will be removed. Following a fresh water wash step that will further clean the yellowcake product, the resulting yellowcake will be transferred to the dryer, which will further reduce the moisture content, yielding the final dried, free-flowing product.
 
Packaging – Refined yellowcake will be packaged in 55-gallon drums.
 
Taken together, the processing plant is expected to achieve 98.5% recovery of uranium from the uranium bearing solution. The simplified processing plant design, together with the use of the freeze cap, creates a closed loop system with the prospect of achieving zero discharge of effluent to the environment. The different types of chemical reagents will be stored, used, and managed to ensure worker and environmental safety, in accordance with standards developed by regulatory agencies and vendors.
 
Gryphon
 
The PFS plan assumes that Gryphon ore will be transported to the McClean Lake mill for processing.
 
The results of the metallurgical test work program completed for the PFS indicate that the Gryphon deposit is amenable to recovery utilizing the existing McClean Lake mill flowsheet. Moreover, the deposit is amenable to processing under similar conditions to those currently used in the McClean Lake mill. The mill is currently processing material from the Cigar Lake mine; however, it has additional licenced processing capacity to a total annual production of up to 24 million pounds U3O8. Overall process recovery based on metallurgical test work conducted to date has been estimated at 98.4% for Gryphon ore. 
 
Should Denison proceed with processing the Gryphon deposit at the McClean Lake mill, such processing will require certain modifications to the McClean Lake mill. These modifications include expansion of the leaching circuit, the addition of a filtration system to complement the Counter Current Decantation (CCD) circuit capacity, the installation of an additional tailings thickener, and expansion of the acid plant. Various other upgrades will also be required throughout the mill to permit production at the full 24 million pounds per year U3O8 licenced capacity, as described in greater detail in the PFS.
 
Infrastructure, Permitting and Compliance Activities
 
As a remote northern greenfield site, the Wheeler River project would require substantial infrastructure to support operations. The site is located approximately 5 kilometres from a provincial highway and powerline. Tie-ins from that infrastructure into site would be required.
 
Additional surface infrastructure required to be located at the sites would include:
 
5 km access road from provincial highway 914 to site;
5 km power distribution line from provincial power grid into site; and
1,600 m airstrip.
 
In accordance with the plan, production from the Gryphon site will be trucked to the existing McClean Lake mill to the northeast, via existing Provincial Highway 914, including 51 km of new road required between the McArthur River mine and the Cigar Lake mine.
 
  2020 Annual Information Form    58
 
 
The large scale infrastructure described above and the existing regional infrastructure in the proximity to the Wheeler River project is illustrated in the figure below.
 
Wheeler River Regional Infrastructure
 
The figure below reflects the conceptual plan for the Phoenix operation’s surface facilities, showing the relative scale and nominal footprint of site infrastructure, including (all estimated sizes are approximate):
 
Area allocation over the defined deposit for an ISR wellfield (90 m x 800 m);
ISR processing plant (90 m x 48 m);
Operations centre (61 m x 41 m), including men’s and women’s dry facilities, 3-bay maintenance shop, welding bay, warehouse, emergency response vehicle storage, mine rescue and emergency response office, laboratory, nurse’s station, training room, offices (administration, maintenance, and supply chain), meeting rooms, lunch room, and radiation monitoring room;
150-person camp with kitchen and laundry facilities;
Personal-vehicle parking;
Main electrical substation (50 m x 50 m);
North and south gatehouses;
Outdoor and covered storage (15 m x 30 m);
Wash bay and scanning facility;
  2020 Annual Information Form    59
 
30 m long, 80 tonne weigh scale;
Potable water treatment facility;
Fuel storage and dispensing facility (gas and diesel);
Fire water tank and pumphouse;
Two bullet propane tank farm;
Sewage treatment facility;
Incinerator;
Backfill plant with storage facility;
Outdoor fenced hazardous storage area (30 m x 30 m);
Fenced landfill area (90 m x 90 m);
Water discharge station;
Special waste storage (46 m x 46 m, 3,200 cubic metre capacity); and
Clean waste rock storage (60 m x 60 m, 7,100 cubic metre capacity).
 
Phoenix Site Conceptual Layout
 
Taken together, the Phoenix operation has the potential to be one of the most environmentally friendly uranium mining projects in the world. Per the plan in the PFS:
 
The planned ISR approach produces no tailings.
The closed loop system of the processing plant has the potential to eliminate any major sources of treated water to be discharged to the environment. Due to evaporation and moisture content of the yellowcake product, the processing plant may require small volumes of make-up water.
  2020 Annual Information Form    60
 
Minimal volumes of surface run-off will be captured, treated, and used as make-up water in the processing plant, re-injected underground or processed in the water treatment plant.
Low to near zero carbon emissions due to the lack of heavy equipment and provision of power from the provincial power grid.
Small volumes of waste products from the iron precipitation circuits will be temporarily stored on surface and disposed of in the underground stopes at Gryphon or other suitable long term storage facility.
 
At Gryphon, the most significant environmental concern associated with the project will be the management of treated mine effluent. Investigations into environmentally acceptable discharge locations has identified suitable sites nearby that will minimize any impacts from treated effluent discharge. Other waste products, such as potentially acid generating waste rock or low-grade waste products, will be used underground as backfill on a priority basis where possible. Otherwise, such materials will be stored in approved facilities designed for safe closure and decommissioning. Future studies will evaluate the potential for 100% underground storage to eliminate the need for surface facilities.
 
Denison believes all potential environmental impacts associated with the planned Phoenix or Gryphon operations can be successfully mitigated through the implementation of industry best practices.
 
The project will require completion of Federal and Provincial environmental impact assessments. In June 2019, the CNSC and the Saskatchewan Ministry of Environment accepted the Project Description submitted by Denison for the ISR uranium mine and processing plant proposed for Phoenix at the Wheeler River Project. This acceptance initiated the EA process of assessments for construction, operation and closure of the Phoenix deposit at Wheeler River for Phoenix in accordance with the requirements of both the Canadian Environmental Assessment Act, 2012 and the Saskatchewan Environmental Assessment Act. It is estimated the assessments will require approximately 36 to 48 months to complete following these submissions. In late December 2019, Denison received a Record of Decision from the CNSC, on the scope of the factors to be taken into account for the Wheeler River EA, which indicates that the EA will follow the CNSC’s generic guidelines.
 
See “Government Regulation – Environmental Assessments” for more information.
 
Denison recognizes the importance of early engagement and has been developing relationships with key interested parties since 2016. Amongst Denison’s guiding principles is the outmost respect for Indigenous communities, Indigenous Rights, and traditional knowledge. Denison wishes to share the land and to work in partnership to return meaningful benefits from the Wheeler River project to potentially impacted Rights holders, communities, and/or groups. Denison understands the importance of protecting the area in which it is working, including the land, the water, the animals, the air and the history. Denison welcomes input from all interested parties through the regulatory engagement and consultation process and interested parties are invited to contact Denison directly to express any comments (positive or negative) or recommendations regarding its activities so the input can be incorporated into project plans, designs, and decisions.
 
To support its engagement and consultation activities, Denison has developed practices to (1) ensure that employment opportunities are established for residents from the communities of interest; (2) procure goods and services from suppliers from the communities of interest and/or Indigenous-owned suppliers, to support continued exploration and evaluation activities; (3) support important community-led activities related to wellness and/or the preservation of traditional knowledge;
  2020 Annual Information Form    61
 
 
and (4) solicit input through engagement and consultation activities into aspects of project designs (for example, selection of mining methods, access road routing, and selection of preferred treated water discharge locations).
 
Capital and Operating Costs
 
Capital and operating cost estimates were developed to support the PFS of the Gryphon and Phoenix deposits. The estimates address the initial capital, sustaining capital and operating costs required to engineer, procure, construct, commission, start-up and operate the mines, ISR precipitation plant and related infrastructure at the Wheeler River site and upgrades at the McClean Lake mill based on the preliminary project plans projected in the PFS.
 
Estimates were completed to ‘Association for the Advancement of Cost Engineering’ class four level with an accuracy of -15% to -30% on the low side and +20% to +50% on the high side.
 
The Wheeler River project total capital cost is estimated at approximately $1.13 billion, comprised of $322.5 million of initial pre-production capital for the Phoenix operation and $623.1 million of initial pre-production capital for the Gryphon operation as outlined in the following table.
Capital Cost Summary
 
Wheeler River Capital Cost (1,000's)
Area
Initial
Sustaining
Total
Phoenix
 $ 322,539
 $ 103,411
$ 425,950
Gryphon
 $ 623,120
 $ 82,743
$ 705,863
Sub Total
 $ 945,659
 $ 186,154
$ 1,131,813
 
The capital costs for the ISR mining of the Phoenix deposit are categorized as follows:
Phoenix Capital Cost Summary
Phoenix Capital Cost Details (1,000's)
Direct Capital Costs
Initial
Sustaining
Total
Wellfield
 $ 63,674
 $ 35,402
 $ 99,076
ISR Precipitation Plant
 $ 50,935
 $ 4,606
 $ 55,541
Water Treatment Plant
 $ 1,268
 $ 18,676
 $ 19,944
Surface Facilities
 $ 22,325
 $ 49
 $ 22,374
Utilities
 $ 6,538
 $ 803
 $ 7,341
Electrical
 $ 18,834
 $ -
 $ 18,834
Civil & Earthworks
 $ 44,309
 $ 1,331
 $ 45,640
Offsite Infrastructure
 $ 7,950
 $ -
 $ 7,950
Decommissioning
 $ -
 $ 27,454
 $ 27,454
Total Direct Costs
 $ 215,834
 $ 88,321
 $ 304,155
Indirect Costs
 $ 28,288
 $ 5,669
 $ 33,957
Other (Owner's) Costs
 $ 14,227
 $ -
 $ 14,227
Contingency Costs
 $ 64,190
 $ 9,421
 $ 73,611
Total Costs
 $ 322,539
 $ 103,411
 $ 425,950
 

 
  2020 Annual Information Form    62
 
 
The capital costs for the underground mining of the Gryphon deposit are shown in the following table.
 
Gryphon Capital Cost Summary
 
Gryphon Capital Cost Details (1,000's)
Direct Capital Costs
Initial
Sustaining
Total
Shafts
 $ 131,522
 $ -
 $ 131,522
Surface Facilities
 $ 46,932
 $ 6,074
 $ 53,006
Underground
 $ 49,518
 $ 68,842
 $ 118,360
Utilities
 $ 3,946
 $ 263
 $ 4,209
Electrical
 $ 3,613
 $ -
 $ 3,613
Civil & Earthworks
 $ 11,791
 $ 483
 $ 12,274
McClean Mill Upgrades
 $ 49,920
 $ -
 $ 49,920
Offsite Infrastructure
 $ 32,392
 $ -
 $ 32,392
Decommissioning
 $ -
 $ 1,575
 $ 1,575
Total Direct Costs
 $ 329,634
 $ 77,237
 $ 406,871
Indirect Costs
 $ 142,015
 $ 5,112
 $ 147,127
Other (Owner's) Costs
 $ 28,143
 $ -
 $ 28,143
Contingency Costs
 $ 123,328
 $ 394
 $ 123,722
Total Costs
 $ 623,120
 $ 82,743
 $ 705,863
 
Operating costs are estimated for the 14-year mine production period from July 1, 2024 through to March 31, 2037. Phoenix mine production is scheduled from July 1, 2024 to June 30, 2034 and Gryphon mine production is scheduled from September 1, 2030 to March 31, 2037. The table below presents a summary of the Wheeler River prefeasibility level operating cost estimates.
 
Wheeler River Operating Cost Summary
 
Cost Area
Phoenix
Gryphon
Total Cost
 $000's
 $/lb U₃O₈
 $000's
 $/lb U₃O₈
 $000's
Mining
 $ 44,020
 $ 0.75
 $ 266,202
 $ 5.46
 $ 310,222
Milling
 $ 115,577
 $ 1.97
 $ 412,621
 $ 8.45
 $ 528,198
Transport to Convertor
 $ 12,341
 $ 0.21
 $ 10,252
 $ 0.21
 $ 22,593
Site Support / Administration
 $ 82,264
 $ 1.40
 $ 53,346
 $ 1.09
 $ 135,610
Total
 $ 254,202
 $ 4.33
 $ 742,421
 $ 15.21
 $ 996,623
Total US$
 
 $ 3.33
 
 $ 11.70
 
U308 Sales - lbs in 000's
58,767
48,817
 
 
The project economics have been analyzed on a pre-tax basis (100% basis) and a Denison specific post-tax basis (90% basis, based on Denison’s current ownership interest and reflected as a pro-forma analysist in the PFS). Inputs into both pre-tax and post-tax models include:
Discount rate of 8%.
Estimated metallurgical process uranium recoveries of 98.5% and 98.2% for Phoenix and Gryphon mill feeds, respectively.
Project capital and operating cost assumptions, as further described in the PFS.
Project schedule assumptions from 2019 to 2043, as further described in the PFS.
Mine production assumptions, as further described in the PFS. 
  2020 Annual Information Form    63
 
Uranium pricing scenarios, as follows:
o
Base case: (a) Phoenix – based on UxC’s Q3-2018 Uranium Market Report Composite Midpoint spot price projection, in constant (uninflated) 2018 dollars, ranging from US$29.48 to US$45.14 per pound U3O8 during the Phoenix mine production period; and (b) Gryphon – based on a fixed price of US$50.00 per pound U3O8 during the Gryphon mine production period. US$ amounts translated to CAD using an exchange rate of 1.30 CAD/US$.
o
High case: a fixed price of US$65.00 per pound U3O8 for both the Phoenix and Gryphon production.
Saskatchewan revenue-based royalties and surcharges applicable to uranium revenue, as follows: a) a basic royalty of 5.0% of uranium revenue; b) a resource credit of 0.75% of uranium revenue (which partially offsets the basic royalty); and c) a resource surcharge of 3.0% of the value of uranium revenue. For the purposes of these calculations, revenue has been computed as gross uranium revenue less transportation costs to the convertor.
No inflation or escalation of revenue or costs have been incorporated.
 
The Wheeler River project pre-tax indicative economic results are illustrated below.
Pre-tax Economic Results (100% basis)
Pre-Tax Results
NPV 8%
IRR
Payback
Base Case
$1,308 million
38.7%
~ 24 Months
High Case
$2,587 million
67.4%
~ 11 Months
(1)
NPV and IRR are calculated to the start of pre-production activities for the Phoenix operation in 2021.
(2)
Payback period is stated as number of months to pay back from start of uranium production.
 
A post-tax Denison-specific economic assessment includes similar inputs as the pre-tax assessment with the following modifications:
Denison’s share of project development costs is included in the project’s capital costs along with their impact on Denison’s estimated tax pools.
The impact of the Saskatchewan Profit Royalty as estimated for Denison is included.
Denison’s expected provincial and federal income taxes payable are included.
Denison’s recovery of toll milling fees paid to the MLJV (22.5% owned by Denison) by the WRJV for the toll milling of Gryphon ores are incorporated.
 
The Wheeler River project post-tax Denison-specific (90% basis) indicative economic results are further detailed in the PFS, and summarized as follows:
 
Post-tax Economic Results to Denison (90% basis)
Post-Tax Results
NPV 8%
IRR
Payback
Base Case
$755.9 million
32.7%
~26 months
High Case
$1,483.8 million
55.7%
~12 months
(1) NPV and IRR are calculated to the start of pre-production activities for the Phoenix operation in 2021;
(2)
Payback period is stated as number of months to pay back from start of uranium production
 

 
2020 Annual Information Form    64
 
 
Waterbury Lake
 
The Waterbury Lake Uranium Limited Partnership (“WLULP”) is held by Denison (66.89%) and Korea Waterbury Uranium Limited Partnership (“KWULP”) (33.09%) as limited partners and Waterbury Lake Uranium Corporation (“WLUC”) (0.02%), as general partner, with Denison and KWULP holding limited partnership interests of 66.90% and 33.10%, respectively. Denison holds a 60% interest in WLUC, and in aggregate, holds a 66.90% interest in the WLULP through its limited partner and general partner ownership interests. Denison is operator of the project.
 
This project description is based on the project’s technical report entitled “Preliminary Economic Assessment for the Tthe Heldeth Túé (J Zone) Deposit, Waterbury Lake Property, Northern Saskatchewan, Canada” effective October 30, 2020 (the “Waterbury PEA”). The main author was Mr. Gordon Graham, P.Eng of EngComp, who is an independent Qualified Person in accordance with NI 43-101. A copy of the Waterbury PEA is available on the Company’s website.
 
The conclusions, projections and estimates included in this description are subject to the qualifications, assumptions and exclusions set out in the Waterbury PEA. We recommend you read the technical report in its entirety to fully understand the project.
 
Property Description, Location and Access
 
The Waterbury Lake property is located within the eastern part of the Athabasca Basin in Northern Saskatchewan, which is within Treaty 10, in Nuhenéné / Athabasca Denesųłiné territory, and in Métis Northern Region 1 within the Métis Homeland.
 
The Waterbury Lake project, as of December 31, 2020, is comprised of thirteen (13) mineral dispositions, covering 40,256 ha. The THT and Huskie Zone deposits are located within the property near its eastern edge. All dispositions have sufficient approved assessment credits to maintain the ground in good standing until at least 2033.
 
The project dispositions are approximately 750 km by air north of Saskatoon and about 420 km by road north of the town of La Ronge. Points North Landing, a privately-owned service centre with accommodations and an airfield, is located near the eastern edge of the property. Several uranium deposits are located nearby including the Roughrider, McClean Lake, Midwest Main, and Midwest A deposits.
 
Any uranium produced from the Waterbury Lake property is subject to uranium mining royalties in Saskatchewan in accordance with Part III of The Crown Mineral Royalty Regulations. See “Government Regulation – Canadian Royalties”. Denison has a 2% net smelter return royalty on the portion of the project that it does not own. There are no other contractual royalties on the property.
 
There are no known environmental liabilities associated with the Waterbury Lake property, and there are no other significant factors and risks that may affect access, title, or the right or ability to perform work on the property.
 
  2020 Annual Information Form    65
 
 
Location of the THT (formerly J Zone) and Huskie Deposits on the Waterbury Lake project
 
2020 Annual Information Form    66
 
 
History
 
Uranium exploration activities have been conducted over various portions of the Waterbury Lake mineral claims over the past 50 years. The current Waterbury Lake mineral claims were originally staked by Strathmore Minerals Corp. in 2004. Strathmore subsequently spun out its Canadian assets to Fission in 2007. On January 30, 2008, KWULP and Fission entered into an earn-in agreement for the Waterbury Lake property, pursuant to which Fission granted KWULP the exclusive rights to earn up to a 50% interest in the Waterbury Lake property by funding $14,000,000 of expenditures on or before January 30, 2011. Additionally, Fission retained an overriding royalty interest in the property of 2% of net smelter returns. On April 29, 2010, KWULP had fully funded its $14 million of expenditures and consequently earned a 50% interest in the property. Fission and KWULP subsequently formed the WLULP in December 2010 with each party owning an equal interest. In April 2011, Fission exercised a back-in option right and increased its interest in the WLULP to 60%.
 
Effective April 26, 2013, Denison acquired Fission and all of Fission’s rights and entitlements to the Waterbury Lake property, including the 2% net smelter returns royalty. Denison became manager of WLULP and operator of Waterbury Lake. KWULP has not funded spending programs of the WLULP since January 2014 and, as a result, Denison has increased its interest in the WLULP (now 66.90%) while KWULP has diluted.
 
The Waterbury Lake uranium project currently contains two deposits: the THT deposit and the Huskie deposit.
 
The THT uranium deposit was discovered during the winter 2010 drill program. The second drill hole of the campaign, WAT10-063A, was an angled hole drilled from a peninsula extending into McMahon Lake. It intersected 10.5 metres of uranium mineralization grading 1.91% U3O8, including 1.0 metre grading 13.87% U3O8 as well as an additional four meters grading at 0.16% U3O8. Subsequent drilling led Fission to focus in on a significant mineralized trend immediately adjacent to the southeastern boundary of disposition S-107370. The maiden mineral resource estimate for the THT was issued by Fission in 2011.
 
Denison first discovered mineralization at the Huskie zone in summer 2017 with the intersection 9.10% U3O8 over 3.7 metres, including 16.78% U3O8 over 2 metres, from 306.5 to 310.2 metres depth in drill hole WAT17-466A. Further drilling in 2017 and 2018 resulted in a maiden mineral resource estimate in December 2018.
 
Geological Setting, Mineralization and Deposit Types
 
The Waterbury Lake property is located near the southeastern margin of the Athabasca Basin in the southwest part of the Churchill Structural Province of the Canadian Shield. The Athabasca Basin is a broad, closed, and elliptically shaped, cratonic basin with an area of 425 km east-west by 225 km north-south. The bedrock geology of the area consists of Archean and Paleoproterozoic gneisses unconformably overlain by flat-lying, unmetamorphosed sandstones and conglomerates of the mid-Proterozoic Athabasca Group.
 
The Waterbury Lake property is located near the transition zone between two prominent litho-structural domains within the Precambrian basement, the Mudjatik Domain to the west and the Wollaston Domain to the east. The Mudjatik Domain is characterized by elliptical domes of Archean granitoid orthogenesis separated by keels of metavolcanic and metasedimentary rocks, whereas the Wollaston Domain is characterized by tight to isoclinal, northeasterly trending, doubly plunging folds developed in Paleoproterozoic metasedimentary rocks of the Wollaston Supergroup, which overlie Archean granitoid orthogenesis identical to those of the Mudjatik Domain.
 
  2020 Annual Information Form    67
 
 
The area is cut by a major northeast-striking fault system of Hudsonian Age. The faults occur predominantly in the basement rocks but often extend up into the Athabasca Group due to several periods of post-depositional movement.
 
The basement beneath the Waterbury Lake project is comprised of approximately northeast-trending corridors of metasediments wrapping around orthogneissic domes and locally in the Discovery Bay trend an east-west trending corridor of metasediments bounded to the north and south by thick zones of orthogneiss that, based on interpretation of aeromagnetic images, may represent two large dome structures. As discussed in the Waterbury Report, the metasediments and the orthogneiss domes are interpreted to be Paleoproterozoic and Archean in age, respectively.
 
The THT deposit is hosted within an east-west trending faulted package of variably graphitic and pyritic metasediments bounded by orthogneiss to both the north and south. The pelitic metasedimentary assemblage, which ranges in thickness from 90 to 120 metres and is moderately steep dipping to the north includes, from north to south, a roughly 50 metre thick pelitic gneiss underlain by 20 metre thick graphitic pelitic gneiss, underlain by a 10 to 15 metre thick quartz-feldspar wedge underlain by 20 metre thick graphitic pelitic gneiss, underlain by a 15 to 25 metre thick pelitic gneiss, then back into a footwall orthogneiss. There are discontinuous offsets at the unconformity that range from a few metres to as much as ten metres.
 
It is currently defined by 268 drill holes intersecting uranium mineralization over a combined east-west strike length of up to 700 metres and a maximum north-south lateral width of 70 metres. The deposit trends roughly east-west (80°) in line with the metasedimentary corridor and cataclastic graphitic fault zone. A 45 metre east-west intermittently mineralized zone occurs in the target area formerly known as Highland roughly separating the THT deposit into two segments referred to as the eastern and western lenses which are defined over east-west strike lengths of 260 and 318 metres, respectively. A thin zone of unconformity uranium mineralization occurs to the north of intermittently mineralized zone which is interpreted to represent a mineralized block that has been displaced northwards by faulting and is referred to as the mid lens.
 
Mineralization thickness varies widely throughout the THT deposit and can range from tens of centimetres to over 19.5 metres in vertical thickness. In cross section, THT mineralization is roughly trough shaped with a relatively thick central zone that corresponds with the interpreted location of the cataclasite and rapidly tapers out to the north and south. Locally, a particularly high-grade (upwards of 40% U3O8) but often thin lens of mineralization is present along the southern boundary of the metasedimentary corridor, as seen in holes WAT10-066, WAT10-071, WAT10-091, and WAT10-103. Ten-metre step out drill holes to the south from these high-grade holes have failed to intersect any mineralization, demonstrating the extremely discreet nature of mineralization.
 
Uranium mineralization is generally found within several metres of the unconformity at depth ranges of 195 to 230m below surface at the THT. Mineralization occurs in three distinct settings: (1) entirely hosted within the Athabasca sediments, (2) entirely within the metasedimentary gneisses or (3) straddling the boundary between them. A semi-continuous, thin zone of uranium mineralization has been intersected in occasional southern THT drill holes well below the main mineralized zone, separated by several meters of barren metasedimentary gneiss. This mineralized zone is informally termed the South-Side Lens and can host grades up to 3.70% U3O8, as seen in drill hole WAT11-142.
 
  2020 Annual Information Form    68
 
 
The Huskie deposit is entirely hosted within competent basement rocks below the sub-Athabasca unconformity primarily within a faulted, graphite-bearing pelitic gneiss (“graphitic gneiss”) which forms part of an east-west striking, northerly dipping package of metasedimentary rocks flanked to the north and south by granitic gneisses. The Athabasca Group sandstones that unconformably overlie the basement rocks are approximately 200 metres thick.
 
The deposit comprises three stacked, parallel lenses (Huskie 1, Huskie 2 and Huskie 3), which are conformable to the dominant foliation and fault planes within the east-west striking graphitic gneiss unit. The drilling to date suggests the grade, thickness, and number of lenses present is controlled by the presence of northeast striking faults which cross-cut the graphitic gneiss unit. The northeast striking faults identified at the Huskie deposit are interpreted to be part of the regional Midwest structure. The deposit occurs over a strike length of approximately 210 metres, dip length of approximately 215 metres and has an overall true thickness of approximately 30 metres (individual lenses vary in true thickness of between 1 metre and 7 metres). The deposit occurs at vertical depths ranging between 240 and 445 metres below surface and 40 to 245 metres below the sub-Athabasca unconformity. The high-grade mineralization within the lenses is comprised of massive to semi-massive uraninite (pitchblende) and subordinate bright yellow secondary uranium minerals occurring along fault or fracture planes, or as replacement along foliation planes. Disseminations of lower grade mineralization occur within highly altered rocks proximal to fault planes. The mineralization is intimately associated with hematite, which both occur central to a broad and pervasive alteration envelope of white clays, chlorite and silicification.
 
Exploration
 
With the exception of drilling, and related work, exploration on the Waterbury Lake property has mostly been in the form of geophysical surveys. Airborne magnetic surveys have been flown property wide and have been used to identify significant basement structures and to help map basement rock types. Airborne and ground based EM surveys have also been carried out across the property in order to define conductive, likely graphitic basement structures that may be associated with uranium mineralization. Additionally, ground based induced polarization (DC-IP) and gravity surveys have aimed to identify zones of low resistivity and negative gravity anomalies resulting from quartz dissolution and clay alteration.
 
A DCIP resistivity survey comprising 28.8 kilometres (16 lines) was completed during October 2018. The survey was designed to map the possible extension of the Midwest structure on to the Waterbury Lake property and to define possible drill targets for future testing.
 
No significant geological mapping has been conducted on the Waterbury Lake property to date as the property is predominantly covered by a thick layer of Quaternary sediments resulting in poor outcrop exposure; however, several reconnaissance scale surface geochemical surveys have been undertaken on the Waterbury Lake property.
 
Drilling
 
The THT deposit is extremely well defined by 268 drill holes intersecting uranium mineralization over a combined east-west strike length of up to 700 metres and a maximum north-south lateral width of 70 metres. The mineralization thickness varies from tens of centimetres to 19.5 metres and the mineralization is found within several metres of the unconformity at depths of 195 to 230 metres. The THT deposit has been drilled, on average, at 10 metre by 25 metre spacings across the deposit and in some cases a more dense drill spacing has been applied. The genesis and structural complexity of the deposit are well understood. There are no outlying elements of the deposit requiring further drill testing.
 
  2020 Annual Information Form    69
 
 
Most recently, the 2019 drilling program commenced in January and was concluded in March. Activities focused on drill testing priority target areas associated with the regional Midwest Structure, which is interpreted to be located along the eastern portion of the Waterbury Lake property. Target areas tested included the GB Zone (3,385 metres; 9 drill holes), Oban South (1,127 metres; 3 drill holes), GB Northeast (323 metres; 1 drill hole) and the Midwest Extension (900 metres; 2 drill holes), with highlight results described below:
 
GB Zone – Nine drill holes were completed to follow-up on basement-hosted mineralization discovered during the summer 2018 drilling program. The winter 2019 drill holes were oriented steeply to the northeast on an approximate 100 x 100 metre spacing to test the faulted graphitic basement sequence which dips steeply to the southwest. Basement-hosted mineralization was intersected in drill hole WAT19-480, highlighted by 0.15% U3O8 over 6.0 metres, including 0.26% U3O8 over 3.0 metres. Additional basement-hosted mineralized intercepts were obtained approximately 100 metres to the southeast of WAT19-480 in drill hole WAT19-486 highlighted by 0.25% U3O8 over 2.0 metres and 0.22% U3O8 over 1.5 metres.
 
Oban South – The target area at Oban South comprises the interpreted intersection of the east-west trending Oban South graphitic conductor and the north-northeast trending regional Midwest structure. Three drill holes were completed as an initial test of the geological concept. The drilling successfully identified a faulted graphitic unit within the basement, which was hydrothermally altered, and a broad zone of desilicification within the lower sandstone, which included 10 ppm uranium and over 100 ppm boron within the basal 12.5 metres of sandstone immediately overlying the unconformity.
 
GB Northeast – A single reconnaissance drill hole was completed to test a coincident airborne electromagnetic conductor and magnetic low approximately 2.5 kilometres to the northeast of the GB Zone. The drill hole intersected moderately to locally strong sandstone alteration and an altered and faulted graphitic pelite unit immediately below the unconformity. The drill hole was highlighted by a discrete spike in basement radioactivity of 1,520 counts per second (“cps”), measured with an RS-125 gamma hand-held spectrometer, within the faulted graphitic pelite unit accompanied by elevated uranium (up to 200 ppm over 0.5 metres) and pathfinder geochemistry.
 
Sampling, Analysis and Data Verification
 
For THT, drill core was split once geological logging, sample mark up and photographing were completed. All drill core samples were marked out and split at the splitting shack by employees, put into 5-gallon sample pails and sealed and transported to Points North, Saskatchewan only prior to shipment. The samples were then transported directly to the Saskatchewan Research Council Geoanalytical laboratories (the “SRC Lab”) in Saskatoon, Saskatchewan by Marsh Expediting. All geochemical, assay and bulk density samples were split using a manual core splitter over the intervals noted in the sample booklet. Half of the core was placed in a plastic sample bag with the sample tag and taped closed with fibre tape. The other half of the core was returned to the core box in its original orientation for future reference. All drill core samples were evenly and symmetrically split in half in order to try and obtain the most representative sample possible. Mineralized core samples which occur in drill runs with less than 80% core recovery are flagged for review prior to the resource estimation process.
 
Recovery through the mineralized zone is generally good and assay samples are assumed to adequately represent in situ uranium content. The SRC Lab offers an ISO/IEC 17025:2005 accredited method for the determination of U3O8 weight % in geological samples. Rock samples are crushed to 60 % at -2 mm and a 100-200g sub sample is split out using a riffler. The sub sample is further crushed to 90% at -106 microns using a standard puck and ring grinding mill.
 
  2020 Annual Information Form    70
 
 
An aliquot of pulp is digested in a concentrated mixture of HNO3:HCl in a hot water bath for an hour before being diluted by deionized water. Samples are then analyzed by a Perkin Elmer ICP-OES instrument (models DV4300 or DV5300).
 
Drill core samples collected for bulk density measurements were first weighed as they are received and then submerged in deionized water and re-weighed. The samples are then dried until a constant weight is obtained. The sample is then coated with an impermeable layer of wax and weighed again while submersed in deionized water. Weights are entered into a database and the bulk density of the core waxed and un-waxed (immersion method) is calculated and recorded. Not all density samples had both density measurements recorded. Water temperature at the time of weighing is also recorded and used in the bulk density calculation. The detection limit for bulk density measurements by this method is 0.01 g/cm3.
 
Prior to the summer 2010 drill program, the only QAQC procedures implemented on drill core samples from the project were those performed internally by the SRC Lab. The in-house SRC Lab QAQC procedures involve inserting one to two quality control samples of known value with each new batch of 40 geochemical samples. All of the reference materials used by the SRC Lab on the Waterbury project are certified and provided by CANMET Mining and Mineral Services. The SRC Lab internal QAQC program continued through the 2013 drill program. Starting in the summer of 2010 and continuing into the 2013 drill program (discontinued after DDH WAT13-350), an internal QAQC program was designed by Fission to independently provide confidence in the core sample geochemical results provided by the SRC Lab. The internal QAQC sampling program determines analytical precision through the insertion of sample duplicates, accuracy through the insertion of materials of “known” composition (reference material) and checks for contamination by insertion of blanks. Blanks, reference standards and duplicates were inserted into the sample sequence including field duplicates (quarter core every 1 in 20 samples), prep and pulp duplicates (inserted by the SRC Lab every 1 in 20 samples) and blank samples (1 sample for every mineralized drill hole). Beginning in 2012 certified, internal reference standards were used in all holes drilled at Waterbury Lake, replacing the re-analysed low, medium and high grade reference samples. The results of the QAQC programs indicate there are no issues with the drill core assay data. The data verification programs undertaken on the data collected from the Project support the geological interpretations, and the analytical and database quality, and therefore the data can support mineral resource estimation.
 
With respect to its work on the Huskie deposit, Denison has developed and documented several QA/QC procedures and protocols for all exploration projects which include the following components: (a) Determination of precision – achieved by regular insertion of duplicates for each stage of the process where a sample is taken or split; (b) Determination of accuracy – achieved by regular insertion of standards or materials of known composition; and (c) Checks for contamination – achieved by insertion of blanks.
 
The SRC laboratory has a quality assurance program dedicated to active evaluation and continual improvement in the internal quality management system. The laboratory is accredited by the Standards Council of Canada as an ISO/IEC 17025 Laboratory for Mineral Analysis Testing and is also accredited ISO/IEC 17025:2005 for the analysis of U3O8. The laboratory is licensed by the CNSC for possession, transfer, import, export, use, and storage of designated nuclear substances by CNSC Licence Number 01784-1-09.3. As such, the laboratory is closely monitored and inspected by the CNSC for compliance.
 
  2020 Annual Information Form    71
 
 
All analyses are conducted by SRC, which has specialized in the field of uranium research and analysis for over 30 years. SRC is an independent laboratory, and no associate, employee, officer, or director of Denison is, or ever has been, involved in any aspect of sample preparation or analysis on samples from the THT or Huskie deposits.
 
The SRC uses a laboratory management system (“LMS”) for quality assurance. The LMS operates in accordance with ISO/IEC 17025:2005 (CAN-P-4E) “General Requirements for the Competence of Mineral Testing and Calibration Laboratories” and is also compliant to CAN-P-1579 “Guidelines for Mineral Analysis Testing Laboratories”. The laboratory continues to participate in proficiency testing programs organized by CANMET (CCRMP/PTP-MAL).
 
Mineral Processing and Metallurgical Testing
 
A preliminary assessment of the mineralogical and leaching characteristics of a representative selection of drill core samples from the THT deposit was undertaken between July and December 2011 by Mineral Services Canada.
 
The study was based on a suite of 48 samples of mineralized material collected from thirty-two drill holes (2010 and 2011 programs). These were chosen to provide good spatial representation of the THT mineralization as well as representing a wide range of uranium content. The samples were derived from the half split core remaining after the initial geochemical / assay sampling process. All samples were submitted to the SRC Lab for comprehensive mineralogical analysis and preparation of thin sections for petrographic analysis. The results of mineralogical work were used, in conjunction with spatial considerations, to define suitable composite samples for preliminary leaching test work undertaken by the SRC Mining and Minerals Division.
 
Mineralogical analysis, utilizing XRD, quantitative mineralogical analysis (Q-Min), petrography and SEM-EDS analysis, determined that the most abundant uranium-bearing minerals in the THT deposit are uraninite and/or pitchblende, and coffinite. The gangue mineralogy is essentially comprised of various amounts of quartz, phyllosilicates (illite-sericite, chlorite, biotite, kaolinite) and (Fe, Ti)-oxides (hematite, goethite and anatase). Feldspars also occur in most samples and carbonates as well as a variety of sulphides are locally present. Ni-arsenides are recognized throughout the samples as well. The results of the mineralogical analyses identified five groupings of samples with ore mineralogies typically dominated by either uranium oxide or uranium silicate phases.
 
Preliminary acid leaching tests were undertaken by SRC Mining and Minerals Division on composite samples prepared from the sample set. Only the leaching time and rate of acid addition were considered in the tests while the other parameters (e.g. solid percentage in the slurry, temperature, pressure and agitation conditions) remained fixed. A total of five composite samples were defined based on spatial location. Acid leaching (H2SO4) was performed on each of the composite samples for 12 hours under atmospheric pressure and at a temperature of 55-65°C. Agitation was used to create adequate turbulence. Sodium Chlorate was used as the oxidant. The tests were undertaken on the assay lab rejects from XRD analyses that were ground to 90% passing 106 microns. The percentage of solids in the slurry was set at 50%. The only variables were the acid addition and leaching residence time. Two different H2SO4 dosages were used to create an initial leaching environment with 25 mSc/cm and 55 mSc/cm, respectively. Each composite sample was split into two subsamples labelled A and B. The A sample was used to test high acid addition with high initial conductivity and the B sample was used to test low acid addition with low initial conductivity. The preliminary acid leaching tests showed that maximum extraction rates of 97.6 % to 98.5 % U3O8 can be obtained (depending on the acid addition) within 4 to 8 hours of leaching time, and that the leaching efficiency was variably affected by acid addition and leaching time.
 
  2020 Annual Information Form    72
 
 
Additional test work was undertaken in 2020. Leaching tests to determine key ISR data such as optimum reagent addition rates at lower leaching temperatures (10 to 20 degrees Celsius) and expected Uranium Bearing Solution (UBS) head grade were conducted and the outcomes were used to drive reagent quantities.
 
A new composite THT east pod metallurgical testing sample was generated from 33 individual assay reject samples stored at the Saskatchewan Research Council (SRC) facilities in Saskatoon. The individual samples, distributed through the deposit, allowed preparation of a deposit representative sample. The composite sample assayed 2.72% U3O8. Acid leaching tests at 10 deg C, using hydrogen peroxide (H2O2) oxidant, with varying sulphuric acid (H2SO4) concentrations (100, 80, 60 and 40 g/L) showed that extraction rates of 90% U3O8 can be obtained within 2 hours of leaching time, and that the leaching efficiency was affected by acid addition.
 
Mineral Resource Estimates
 
Tthe Heldeth Túé Deposit
 
The Mineral Resources for the Waterbury Lake Project comprise the THT and the Huskie deposits. The Mineral Resource Statement presented herein represents the Mineral Resource evaluation prepared for the Waterbury Lake Project in accordance with NI 43-101.
 
The THT deposit is estimated to contain an indicated mineral resource, using a base case cut-off grade of 0.10% U3O8, totaling 12,810,000 lbs based on 291,000 tonnes at an average grade of 2.00% U3O8 (100% basis).
 
For the 2013 mineral resource estimate, a 3D wireframe model was constructed based generally on a cut-off grade of 0.03 to 0.05 % U3O8 which involved visually interpreting mineralized zones from cross sections using histograms of U3O8. 3D rings of mineralized intersections were created on each cross section and these were tied together to create a continuous wireframe solid model in Gemcom GEMS 6.5 software. The modeling exercise provided broad controls on the size and shape of the mineralized volume. Inverse distance squared interpolation restricted to a mineralized domain was used to estimate tonnes, density and U3O8 grades as well as gold, arsenic, cobalt, copper, molybdenum and nickel grades into the block model.
 
A range of resources at various U3O8 cut-off grades (COG) has been estimated for THT. The current indicated resource is stated using a grade cut-off of 0.10% U3O8.
 
Two passes were used to interpolate all of the blocks in the wireframe, but 99% of the blocks were filled by the first pass. The size of the search ellipse, in the X, Y, and Z direction, used to interpolate grade into the resource blocks is based on 3D semi-variography analysis (completed in GEMS) of mineralized points within the resource model. For the first pass, the search ellipse was set at 25 x 15 x 15 metres in the X, Y, Z direction respectively. For the second pass, the search ellipse was set at 50 x 30 x 30 metres in the X, Y, Z direction respectively. The Principal azimuth is oriented at 75º, the Principal dip is oriented at 0° and the Intermediate azimuth is oriented at 0°.
 
Huskie Deposit
 
The Huskie Deposit is currently estimated to contain an inferred mineral resource, using a base case cut-of-grade of 0.10% U3O8, totaling 5,687,000 lbs U3O8 based on 268,000 tonnes at an average grade of 0.96% U3O8 (100% basis). The Huskie Deposit resource estimate was prepared by Denison and independently audited and verified to confirm that the mineral resources were estimated in accordance with the widely accepted CIM Estimation of Mineral Resource and Mineral Reserve Best Practices Guidelines.
 
  2020 Annual Information Form    73
 
 
The mineral resources may be affected by further infill and exploration drilling that may result in increases or decreases in subsequent mineral resource estimates. The mineral resources may also be affected by subsequent assessments of mining, environmental, processing, permitting, taxation, socio-economic, and other factors.
 
For the 2018 mineral resource estimate, GEOVIA GEMS™ software (version 6.8) was used to build three-dimensional mineralized wireframes for the Huskie 1, Huskie 2 and Huskie 3 lenses based on lithological and structural data from core logs and geochemical assay (or radiometric probe) data collected from 28 holes totaling 12,273 metres completed by Denison. A lower cut-off of 0.05% U3O8 and a minimum thickness of 1 metre was selected for the mineralized wireframe model.
 
The mineral resource model was constrained by the mineralization wireframes. The assay database (% U3O8 or % eU3O8) used for resource modelling consists of 201 assays from the 10 mineralized boreholes, contained within the three mineralized lenses. The 0.5 metre interval assays were composited to 1.0 metre lengths. Capping was considered, with only assay data from Huskie 2 being capped for % U3O8. Density values were assigned to the database based on a regression between U3O8 and density data pairs using the relationship determined for Denison’s Gryphon deposit, which is also hosted within comparable basement rocks. The validity of the Gryphon grade:density regression for the Huskie deposit was confirmed by plotting 12 bulk dry density samples collected by the technical report authors from the Huskie deposit. Variograms were modelled to determine appropriate search radii for grade estimation.
 
An accumulation-like approach was used, wherein “U3O8*density” and “density” were estimated into a three-dimensional block model, constrained by wireframes in two passes using ID2. A %U3O8 grade was then calculated into each block by dividing the estimated U3O8*density by the estimated density. A block size of 10 by 5 by 5 metres was selected. Search radii were based primarily on visual observations and variogram analyses. The estimation of U3O8*density and density were based on two estimation passes. The block model was validated using nearest neighbour estimation and by visual inspection of the block grades relative to composites and swath plots comparing the ID2 and nearest neighbour model. All blocks were classified as Inferred.
 
No pre-feasibility or feasibility studies have been completed to allow conversion of the mineral resources to mineral reserves. Consequently, no mineral reserves exist for the Waterbury Lake property at the present time.
 
Mining Operations
 
The THT deposit is proposed to be mined using the ISR method. The indicated Mineral Resource estimated for the Waterbury PEA mine plan includes the THT East pod only and is estimated at 9.7 million pounds of U3O8 with an average grade of 2.49% over 178,000 tonnes.
 
A small percentage of the THT East pod resource has not been included in the mine plan due to sterilization by freeze methods. Due to the geometry of the deposit and the nature of freeze technology applied to the deposit to allow for sufficient containment of mining fluid, the extreme western and easternmost portions of the deposit have not been considered in the Potentially Recoverable Resource. The collective resource attributed to sterilization is 206,180 lbs, representing 1.7% of the THT East pod.
 
  2020 Annual Information Form    74
 
 
Additionally, an 85% mining recovery factor was applied to the projected resource available for mining to account for sweep efficiencies and metallurgical recovery envisioned and deemed appropriate for the nature of the THT deposit. The mining recovery factor is a product of the metallurgical recovery and sweep efficiencies based on knowledge gained during the project development of the Phoenix deposit utilizing the ISR method. The sweep efficiency is defined as the percentage of mineralized rock in contact with the lixiviant as it circulates between the injection wells and surrounding recovery wells. The metallurgical recovery is determined by the amount and rate at which the uranium dissolves from the rock when in contact with the lixiviant.
 
Tthe Heldeth Túé East Pod Projected Mine Production (0% Grade cut-off (1))
Deposit Category
Classification
Percentage
Tonnes
Pounds U3O8   (100% Basis)
Grade
(% U3O8)
Tthe Heldeth Túé East Pod: In-Situ Resource
Indicated
100%
211,997
11,633,762
2.49%
Sterilized Resource
Indicated
100%
(2,980)
(206,180)
-
Tthe Heldeth Túé East Pod: Mineable Resource
Indicated
100%
209,017
11,427,582
-
Mining Recovery Factor
 
85%
 
 
 
Projected Mine Production
 
 
177,664
9,713,445
2.49%
(1) Projected Mine Production presented at a 0% grade cut off to reflect nonselective ISR mining method.
 
The foregoing is based upon estimated indicated mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
 
A key hydrologic property that affects ISR mining is the permeability (hydraulic conductivity) of the ore zone and, just as importantly, the hydraulic communication (interconnectedness of the permeability/porosity) across the ore zone. The ability to transmit fluids through the ore body via well injection and recovery is fundamental to the efficacy of ISR mining.
 
Denison has performed permeameter testing of exploratory boring cores that were recovered from the ore zone and overlying and underlying strata at the site. The permeameter testing was conducted utilizing a portable nitrogen gas probe permeameter adapted for testing drill core pieces. Permeameter testing measures the matrix permeability of the core sample. Permeameter testing was performed by applying an epoxy ring at the sample location and sealing the permeameter probe against the ring to ensure a tight seal. Pressure is measured upstream of the probe tip at a sampling interval of two seconds, and the pressure decay of the nitrogen gas injection is measured to determine permeability in the drillcore at the sample location. In general, the gas pressure pulse applied to the drillcore is approximately 30 to 50 psi, and test durations are less than 20 minutes per test. This methodology was applied extensively at the Phoenix project, with testing conducted on core at approximate 10 centimeter intervals, resulting in a total of over 1,200 measurements.
 
Permeameter test results were reported for 150 core sample measurements in the THT East pod. Of the 150 measurements, 25 were from core collected within the mineralized zone, 43 were from the overlying Athabasca Sandstones, with the remainder from the underlying metasedimentary basement. The samples were further grouped into lithologic units.
 
The median hydraulic conductivity value for all of the mineralized samples for the THT is 1.1E-10 m/s with a range of 1.0E-13 to1.7E-07 m/s. The matrix permeability test work conducted for the Phoenix deposit at Wheeler River and outlined in Denison’s press release dated February 24, 2020 shows hydraulic conductivity values ranging from 1.5 x 10-13 to 5.0 x 10-6 m/s for the Phoenix Deposit:
 
  2020 Annual Information Form    75
 
 
the permeameter testing results from cores collected from borings at the Phoenix project correlates reasonably well to the hydraulic conductivity values published from the pumping and injection tests conducted at Phoenix. The data from Phoenix suggest that permeameter data can provide a reasonable initial estimate of hydraulic conductivity.
 
Given the positive correlation between bulk hydraulic conductivity testing and permeameter testing of core samples in estimating hydraulic conductivity at the Phoenix deposit at Wheeler River, it is reasonable to assume a similar correlation for the THT deposit based on a comparable geologic setting. The recently conducted permeameter testing from the THT deposit should provide a reasonable initial estimate of hydraulic conductivity, although, the degraded state of the core most likely biased the tested samples toward lower permeabilities. Based on the currently available data, the hydraulic conductivity estimated from the THT permeameter testing appears to be notably lower than what was estimated for the Phoenix Project.
 
Several factors should be considered in the evaluation of permeability and its potential impacts to ISR mining applied to the THT deposit. First, as previously indicated, the samples suitable for conducting the permeameter testing are biased toward the more dense and intact (and likely lower permeability) core material. Second, the inter-well spacing (distance between wells within a well pattern) planned for the project will be less than what is proposed for the Wheeler River project at the Phoenix deposit, which will reduce the residence time for lixiviant to move from injection well to extraction well. Third, application of permeability enhancement methods will be utilized to increase the near well-bore permeability within the mineralized zone.
 
In conventional ISR operations, containment of the mining solution is typically achieved by natural impermeable bounding layers in the geological strata and/or by creating a natural drawdown (via pumping) of the water table towards the ore zone. At the THT deposit, there is a natural impermeable layer below the deposit, in the form of a competent package of basement rocks, but the deposit is otherwise hydraulically connected to the vast regional groundwater system in the overlying sandstone formation that defines the Athabasca Basin.
 
In order to maintain containment, the entire deposit will be isolated by use of an artificial and impermeable freeze wall that will surround the deposit. The freeze wall will be established by drilling a series of cased holes from surface and along the perimeter of the deposit, and keyed into the basement rock. The freeze wall will be comprised of 92 holes planned at a 7 metre spacing at the target depth of 200 metres and extend 30 metres below the unconformity elevation. The freeze wall is planned to be drilled entirely from land on the peninsula on McMahon Lake which extends to the eastern portion of THT. Freeze holes will be angled out to surround the mining zone with the minimum drilling angle limited to 45º to reduce technical risk of drilling and installing the freeze holes. Circulation of a low temperature brine solution in the holes will remove heat from the ground, freezing the natural groundwater, and establishing an impermeable frozen wall around the deposit.
 
The wellfield design included in the Waterbury PEA uses 184 wells at 7 metre spacing arranged in a 5-spot pattern, with four injection wells around one recovery well. The wells will be drilled from surface within the freeze wall and angled out to penetrate the mineralized zone at depth with a roughly 7 metre spacing.
 
Eight monitoring wells will be installed outside of the freeze wall to detect and remediate any excursion of lixiviant from the mining zone.
 
  2020 Annual Information Form    76
 
 
Summary THT ISR Wellfield Wells
 
Number of Wells
Drill Metres
Recovery Wells
66
20,637
Injection Wells
118
36,896
Monitoring Wells
8
1,750
Total
192
59,283
 
Proposed THT Wellfield and Freeze wall configuration
 
2020 Annual Information Form    77
 
Processing and Recovery Operations
 
Final mineral processing of the UBS expected to be recovered from the THT deposit is assumed to occur at the nearby McClean Lake mill. The mill is owned by the MLJV of which Orano Canada holds a 77.5% interest, and Denison Mines Inc. (a wholly-owned subsidiary of Denison) holds a 22.5% interest. The mill is currently processing material from the Cigar Lake mine under a toll milling agreement (up to 18 million lbs U3O8 per year); however, it has approximately 6 million lbs U3O8 per year in additional licenced processing capacity, with a total licensed capacity of up to 24 million lbs U3O8 per year. The Waterbury PEA assumes a recovery rate of 98.5% from the processing of UBS from the THT deposit at the McClean Lake mill.
 
It is assumed that the UBS will be transported to McClean Lake in trucks utilizing specifically designed tanks for transportation. The trucks would return with necessary lixiviant to complete ISR mining at THT. The McClean Lake Mill is assumed to have all necessary infrastructure to process the UBS and provide the lixiviant except for the facilities to provide surge storage of UBS and lixiviant at both the THT site and at McClean Lake.
 
The limited metallurgical testing of the THT deposit and a review of the Roughrider PEA indicates that a UBS head grade of 7 g/l may be possible through enhanced permeability techniques commercially available. The metallurgical tests completed during the Waterbury PEA indicate that approximately 27,000 tonnes of sulphuric acid will be required to leach the approximate 10 million lbs of U3O8 located within the THT East pod. Approximately 9,000 tonnes of hydrogen peroxide will be required. Lixiviant concentrations of 35 g/L hydrogen peroxide and 100 g/L of sulphuric acid have been estimated from metallurgical leach tests. Currently available data from metallurgical leach tests indicate no iron needs be added to the lixiviant.
 
Processing THT at the McClean Lake mill would require minor mill modifications. THT UBS, trucked to the mill, would be stored in a tank or pond, providing surge capacity for both the mine and mill. From the UBS storage it would be pumped into the mill leach circuit. The McClean mill may find it advantageous to mix the UBS into their leaching process to take advantage of the low pH, reducing acid addition rates for their other feed streams. Following CCD solution clarification, the solution would be processed as per the current mill flowsheet.
 
Toll milling agreement terms have not been assessed as part of this study. UBS from the THT deposit at a production rate 2.1 million lbs of U3O8/yr will make up a small portion of the entire McClean Lake mill feed (estimated in the range of 10 to 15%). Final drummed “yellowcake” will be a blend of the entire feed stream through McClean. The THT deposit is a relatively clean ore feed source in comparison to either Cigar Lake or the Midwest deposits both of which have contaminates of concern, that could result in penalties at the refinery. The scope of this study has not considered what other ores will be co-milled with the THT UBS, and therefore the final product make-up cannot be determined.
 
Infrastructure, Permitting and Compliance Activities
 
The THT site infrastructure has been modelled after the Wheeler River Phoenix infrastructure scaled appropriately for the requirements of the THT project.
 
Main land access to the site is from Saskatchewan Highway 905, via a road developed by Rio Tinto for their Roughrider exploration requirements. A road extension of 1.5 km will be required to access the ISR wellfield. Additionally, the existing road has been assumed to be upgraded from highway 905 to facilitate trucking of UBS and lixiviant.
 
  2020 Annual Information Form    78
 
 
Due to the initial capital costs required to install a standalone processing plant at THT, processing of the THT deposit is expected to occur at the McClean Lake mill with the UBS being transported via trucks from the THT site to McClean Lake on the existing provincial road (45 kilometre one way). The trucks would complete the return trip to THT loaded with lixiviant.
 
Electrical power has been chosen for the PEA to be fed from a substation located approximately 13 km from the THT Site. Power has been assumed to be brought to site at 25 kV. A tradeoff study was completed as part of this study to compare line power to power generated at site, the conclusion of which favored line power. Additional work studying transmission and distribution options is required should further studies be completed.
 
The planned surface infrastructure at the THT site includes:
ISR wellfield and header houses
Freeze plant
Special and clean waste pads
UBS and lixiviant transportation pump stations for loading and unloading transport trucks
UBS storage pond
Lixiviant solution storage pond
Contaminated landfill
Operations center, complete with potable water, fire suppression and septic
  2020 Annual Information Form    79
 
Electrical distribution
Wash bay, warehouse and shop
Propane and fuel storage tanks
Operational waste water management pond
 
The planned infrastructure at McClean Lake includes:
UBS storage pond
Lixiviant Storage pond
Lixiviant transportation truck loading station
 
 
  2020 Annual Information Form    80
 
 
At this stage, no environmental fatal flaws have been identified for the project. Through project design and implementation of various best management practices, project effects on the environment are expected to be avoided or minimized while meeting all applicable environmental guidelines and regulations. Given the proximity of the project to a surface waterbody it is likely that the most significant public concern will be the potential impacts to the lake, and it will be imperative for Denison to demonstrate how the groundwater and surface water environments will remain protected. The project will require completion of a provincial environmental assessment and federal licensing which includes the review of the environmental assessment to support a licensing decision. The approval process is anticipated to take 24 months following the submission of the draft licensing and environmental impact assessment documents.
 
Denison recognizes the importance of early identification of Interested Parties, and in particular, Indigenous and non-Indigenous Communities of Interest who may have an interest in the THT project based on historical and / or contemporary land use activities, known and asserted traditional territories, and / or historical precedent with the uranium industry in the eastern Athabasca Basin region. As noted above, also of importance consideration is the strong interest most Interested Parties hold with respect to the protection of water, further underscoring the need for a proper and complete engagement strategy. As part of this process, Denison has identified a number of potential Communities of Interest for the THT project and can begin the process of suitable and appropriate engagement for the stage of the development of the THT project. This will assist Denison to determine the number and scale of Impact Benefit Agreements, which are often an important element as part of advancing a resource extraction project through the regulatory process in Canada.
 
Capital and Operating
 
The capital costs for the THT project were estimated relying on available data from the Wheeler River PFS and the 2016 NI 43-101 Cigar lake Operation Technical Report, as well as based on quotes and first principles estimates. The initial capital investment is estimated at $111.6 million, sustaining capital at $24.8 million and decommissioning costs at $25.2 million. The initial CAPEX includes a 30% contingency and excludes $20.1 million of project evaluation costs that must be incurred prior to construction. These costs should be considered when assessing the merit of advancing the project to a development decision in the future. The THT capital costs are outlined as follows:
 
THT Capital Costs ($ million) (1)
 
Initial
Sustaining
Total
Wellfield
49.6
24.4
74.0
Milling (McClean Lake modifications)
1.1
-
1.1
Surface facilities
2.1
-
2.1
Utilities
0.7
-
0.7
Electrical
5.0
-