UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 6-K
 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
Date: August 6, 2021
 
Commission File Number: 001-33414
 
 
Denison Mines Corp. 
 (Name of registrant)
 
 
 
1100-40 University Avenue
Toronto Ontario
 M5J 1T1 Canada
 
 (Address of principal executive offices)
 

 Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
Form 20-F  ☐            Form    40-F   ☒
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐
 

 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
 
DENISON MINES CORP.
 
 
 
 
 
 
 
/s/ Amanda Willett
Date August 6, 2021
 
 
 
Amanda Willett
 
 
 
 
Vice President Legal and Corporate Secretary
 
 
 
 
 
FORM 6-K EXHIBIT INDEX
 
Exhibit Number
  
Description
 
 
99.1
 
99.2
 
99.3
 
99.4
 
99.5
 
 
 
Exhibit 99.1 


INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
(Unaudited - Expressed in thousands of Canadian dollars (“CAD”) except for share amounts)
 
 
 
 
At June 30
2021
 
At December 31
2020
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Current
 
 
 
 
 
 
Cash and cash equivalents (note 4)
 
 
$
84,852
$
24,992
Trade and other receivables (note 5)
 
 
 
4,639
 
3,374
Inventories (note 6)
 
 
 
3,016
 
3,015
Investments-equity instruments (note 7)
 
 
 
21,847
 
16,657
Prepaid expenses and other
 
 
 
786
 
1,373
 
 
 
 
115,140
 
49,411
Non-Current
 
 
 
 
 
 
Inventories-ore in stockpiles (note 6)
 
 
 
2,098
 
2,098
Investments-equity instruments (note 7)
 
 
 
245
 
293
Investments-uranium (note 7)
 
 
 
91,510
 
-
Prepaid expenses and other
 
 
 
312
 
-
Restricted cash and investments (note 8)
 
 
 
12,336
 
12,018
Property, plant and equipment (note 9)
 
 
 
256,484
 
256,870
Total assets
 
 
$
478,125
$
320,690
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
Current
 
 
 
 
 
 
Accounts payable and accrued liabilities (note 10)
 
 
$
17,069
$
7,178
Current portion of long-term liabilities:
 
 
 
 
 
 
Deferred revenue (note 11)
 
 
 
4,656
 
3,478
Post-employment benefits (note 12)
 
 
 
120
 
120
Reclamation obligations (note 13)
 
 
 
802
 
802
Other liabilities (note 15)
 
 
 
234
 
262
 
 
 
 
22,881
 
11,840
Non-Current
 
 
 
 
 
 
Deferred revenue (note 11)
 
 
 
32,786
 
33,139
Post-employment benefits (note 12)
 
 
 
1,192
 
1,241
Reclamation obligations (note 13)
 
 
 
37,870
 
37,618
Share purchase warrants liability (note 14)
 
 
 
19,066
 
-
Other liabilities (note 15)
 
 
 
387
 
375
Deferred income tax liability
 
 
 
8,260
 
9,192
Total liabilities
 
 
 
122,442
 
93,405
 
 
 
 
 
 
 
EQUITY
 
 
 
 
 
 
Share capital (note 16)
 
 
 
1,506,888
 
1,366,710
Contributed surplus (note 17)
 
 
 
66,843
 
67,387
Deficit
 
 
 
(1,219,828)
 
(1,208,587)
Accumulated other comprehensive income (note 18)
 
 
 
1,780
 
1,775
Total equity
 
 
 
355,683
 
227,285
Total liabilities and equity
 
 
$
478,125
$
320,690
 
 
 
 
 
 
 
Issued and outstanding common shares (in thousands) (note 16)
 
805,711
 
678,982
Commitments and contingencies (note 24)
 
 
 
 
 
 
Subsequent events (note 25)
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are integral to the condensed interim consolidated financial statements
 
 
 
 1
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
 
(Unaudited - Expressed in thousands of CAD dollars except for share and per share amounts)
 
 
Three Month Ended
June 30
 
Six Months Ended
June 30
 
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES (note 20)
$
4,626
$
2,926
$
7,122
$
7,586
 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
Operating expenses (note 19, 20)
 
(3,691)
 
(2,048)
 
(5,579)
 
(5,368)
Evaluation (note 20)
 
(6,381)
 
(364)
 
(9,142)
 
(1,855)
Exploration (note 20)
 
(528)
 
(481)
 
(1,876)
 
(2,181)
General and administrative (note 20)
 
(2,362)
 
(1,421)
 
(4,987)
 
(3,609)
Other income (expense) (note 19)
 
6,348
 
2,163
 
4,307
 
(1,029)
 
 
(6,614)
 
(2,151)
 
(17,277)
 
(14,042)
Income (loss) before net finance expense
 
(1,988)
 
775
 
(10,155)
 
(6,456)
Finance expense, net (note 19)
 
(1,015)
 
(1,061)
 
(2,040)
 
(2,124)
Loss before taxes
 
(3,003)
 
(286)
 
(12,195)
 
(8,580)
Income tax recovery (expense) (note 22)
 
 
 
 
 
 
 
 
Deferred
 
646
 
(757)
 
954
 
874
Net loss for the period
$
(2,357)
$
(1,043)
$
(11,241)
$
(7,706)
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss) (note 18):
 
 
 
 
 
 
 
 
Items that may be reclassified to income (loss):
 
 
 
 
 
 
 
 
Foreign currency translation change
 
2
 
7
 
5
 
(7)
Comprehensive loss for the period
$
(2,355)
$
(1,036)
$
(11,236)
$
(7,713)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net loss per share:
 
 
 
 
 
 
 
 
All operations
$
(0.00)
$
(0.00)
$
(0.01)
$
(0.01)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding (in thousands):
 
 
 
 
Basic and diluted
 
805,061
 
621,233
 
759,743
 
609,216
 
 
 
 
 
 
 
 
 
The accompanying notes are integral to the condensed interim consolidated financial statements
 
 
 
 
 2
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 
(Unaudited - Expressed in thousands of CAD dollars)
 
 
 
 
Six Months Ended
June 30
 
 
 
 
 
 
2021
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share capital (note 16)
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
$
1,366,710
$
1,335,467
Shares issued for cash, net of issue costs
 
 
 
 
 
134,050
 
6,878
Share options exercised-cash
 
 
 
 
 
4,289
 
-
Share options exercised-fair value adjustment
 
 
 
 
 
1,473
 
-
Share units exercised-fair value adjustment
 
 
 
 
 
366
 
80
Balance-end of period
 
 
 
 
 
1,506,888
 
1,342,425
 
 
 
 
 
 
 
 
 
Share purchase warrants
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
-
 
435
Warrants expired
 
 
 
 
 
-
 
(435)
Balance-end of period
 
 
 
 
 
-
 
-
 
 
 
 
 
 
 
 
 
Contributed surplus
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
67,387
 
65,417
Share-based compensation expense (note 17)
 
 
 
 
 
1,295
 
904
Share options exercised-fair value adjustment
 
 
 
 
 
(1,473)
 
-
Share units exercised-fair value adjustment
 
 
 
 
 
(366)
 
(80)
Warrants expired
 
 
 
 
 
-
 
435
Balance-end of period
 
 
 
 
 
66,843
 
66,676
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
(1,208,587)
 
(1,192,304)
Net loss
 
 
 
 
 
(11,241)
 
(7,706)
Balance-end of period
 
 
 
 
 
(1,219,828)
 
(1,200,010)
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income (note 18)
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
1,775
 
1,134
Foreign currency translation
 
 
 
 
 
5
 
(7)
Balance-end of period
 
 
 
 
 
1,780
 
1,127
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Equity
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
227,285
 
210,149
Balance-end of period
 
 
 
 
$
355,683
$
210,218
 
 
 
 
 
 
 
 
 
The accompanying notes are integral to the condensed interim consolidated financial statements
 
 
 
 
 3
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
 
(Unaudited - Expressed in thousands of CAD dollars)
 
 
 
 
Six Months Ended
June 30
CASH PROVIDED BY (USED IN):
 
 
 
 
 
2021
 
2020
 
 
 
 
 
 
 
 
 
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
Net loss for the period
 
 
 
 
$
(11,241)
$
(7,706)
Items not affecting cash and cash equivalents:
 
 
 
 
 
 
 
 
Depletion, depreciation, amortization and accretion
 
 
 
 
 
3,079
 
3,527
Share-based compensation (note 17)
 
 
 
 
 
1,295
 
904
Recognition of deferred revenue (note 11)
 
 
 
 
 
(719)
 
(1,115)
Gains on property, plant and equipment disposals (note 19)
 
 
 
(2)
 
(407)
Fair value change losses (gains):
 
 
 
 
 
 
Investments-equity instruments (note 19)
 
 
 
(5,142)
 
961
Investments-uranium (note 19)
 
 
 
(7,534)
 
-
Share warrant liabilities (note 19)
 
 
 
5,832
 
-
Warrant liabilities issue costs expensed (note 16)
 
 
 
791
 
-
Foreign exchange losses (gains) (note 19)
 
 
 
 
 
1,618
 
-
Deferred income tax recovery
 
 
 
 
 
(954)
 
(874)
Post-employment benefit payments (note 12)
 
 
 
 
 
(61)
 
(38)
Reclamation obligation expenditures ( (note 13)
 
 
 
 
 
(420)
 
(427)
Change in non-cash working capital items (note 19)
 
 
 
 
 
618
 
(1,628)
Net cash used in operating activities
 
 
 
 
 
(12,840)
 
(6,803)
 
 
 
 
 
 
 
 
 
INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Sale of investments-equity instruments (note 7)
 
 
 
 
 
-
 
108
Purchase of investments-uranium (note 7)
 
 
 
 
 
(76,390)
 
-
Expenditures on property, plant and equipment (note 9)
 
 
 
(355)
 
(139)
Proceeds on sale of property, plant and equipment
 
 
 
 
 
2
 
137
Increase in restricted cash and investments
 
 
 
(318)
 
(377)
Net cash used in investing activities
 
 
 
 
 
(77,061)
 
(271)
 
 
 
 
 
 
 
 
 
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Issuance of debt obligations (note 15)
 
 
 
 
 
34
 
-
Repayment of debt obligations (note 15)
 
 
 
 
 
(124)
 
(345)
Proceeds from unit issues, net of issue costs (note 16)
 
 
 
135,630
 
-
Proceeds from other share issues, net of issue costs (note 16)
 
 
 
 
 
10,863
 
6,878
Share option exercise proceeds (note 16)
 
 
 
 
 
4,289
 
-
Net cash provided by financing activities
 
 
 
 
 
150,692
 
6,533
 
 
 
 
 
 
 
 
 
Increase (decrease) in cash and cash equivalents
 
 
 
 
 
60,791
 
(541)
Foreign exchange effect on cash and cash equivalents
 
 
 
 
 
(931)
 
-
Cash and cash equivalents, beginning of period
 
 
 
 
 
24,992
 
8,190
Cash and cash equivalents, end of period
 
 
 
 
$
84,852
$
7,649
 
 
The accompanying notes are integral to the condensed interim consolidated financial statements
 
 
 
 
 
 
 
 
 4
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2021
 
 
(Unaudited - Expressed in CAD dollars except for shares and per share amounts)
 
 
1.
NATURE OF OPERATIONS
 
Denison Mines Corp. (“DMC”) and its subsidiary companies and joint arrangements (collectively, “Denison” or the “Company”) are engaged in uranium mining related activities, which can include acquisition, exploration and development of uranium bearing properties, extraction, processing and selling of uranium.
 
The Company has a 90.0% interest in the Wheeler River Joint Venture (“WRJV”), a 66.90% interest in the Waterbury Lake Limited Partnership (“WLULP”), a 22.5% interest in the McClean Lake Joint Venture (“MLJV”) (which includes the McClean Lake mill) and a 25.17% interest in the Midwest Joint Venture (“MWJV”), each of which are located in the eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada. The McClean Lake mill is contracted to provide toll milling services to the Cigar Lake Joint Venture (“CLJV”) under the terms of a toll milling agreement between the parties (see note 11). In addition, the Company has varying ownership interests in a number of other development and exploration projects located in Canada.
 
The Company provides mine decommissioning and other services (collectively “environmental services”) to third parties through its Closed Mines group and was also the manager of Uranium Participation Corporation (“UPC”) during the quarter, a publicly-listed investment holding company formed to invest substantially all of its assets in uranium oxide concentrates (“U3O8”) and uranium hexafluoride (“UF6”). The Company has no ownership interest in UPC but receives fees for management services it provides and commissions from the purchase and sale of U3O8 and UF6 by UPC. See note 25 for an update on the Company’s management services agreement with UPC.
 
DMC is incorporated under the Business Corporations Act (Ontario) and domiciled in Canada. The address of its registered head office is 40 University Avenue, Suite 1100, Toronto, Ontario, Canada, M5J 1T1.
 
 
2.
STATEMENT OF COMPLIANCE
 
These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting. The condensed interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2020. The Company’s presentation currency is Canadian dollars (“CAD”).
 
These financial statements were approved by the board of directors for issue on August 5, 2021.
 
 
3.
ACCOUNTING POLICIES AND COMPARATIVE NUMBERS
 
Accounting Policies
 
The significant accounting policies followed in these condensed interim consolidated financial statements are consistent with those applied in the Company’s audited annual consolidated financial statements for the year ended December 31, 2020 except as noted below.
 
During the six months ended June 30, 2021, the Company acquired physical uranium to be held as a long-term investment. As physical uranium is not a financial asset, the provisions of IFRS 9 “Financial Instruments” do not apply to the Company’s investment in uranium. The Company has added the following accounting policy in 2021 for its uranium investments:
 
(a)
Investments-uranium
 
Investments in uranium are initially recorded at cost, on the date that control of the uranium passes to the Company. Cost is calculated as the purchase price and any directly attributable expenditure. Subsequent to initial recognition, investments in uranium are measured at fair value at each reporting period end. Fair value is determined based on the most recent month-end spot prices for uranium published by UxC LLC (“UxC”) and converted to Canadian dollars using the foreign exchange rate at the date of the consolidated statement of financial position. Related fair value gains and losses subsequent to initial recognition are recorded in the consolidated statement of income (loss) as a component of “Other Income (Expense)” in the period in which they arise.
 
 
 
 5
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
The Company is presenting its uranium investments at fair value based on the application of IAS 40 “Investment Property” which allows for the use of a fair value model for assets held for long-term capital appreciation.
 
Comparative numbers
 
Certain classifications of the comparative figures have been changed to conform to those used in the current period.
 
 
4.
CASH AND CASH EQUIVALENTS
 
The cash and cash equivalent balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Cash
 
 
$
2,175
$
12,004
Cash in MLJV and MWJV
 
 
 
1,203
 
540
Cash equivalents
 
 
 
81,474
 
12,448
 
 
 
$
84,852
$
24,992
 
 
5.
TRADE AND OTHER RECEIVABLES
 
The trade and other receivables balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Trade receivables
 
 
$
4,315
$
2,644
Receivables in MLJV and MWJV
 
 
 
156
 
394
Sales tax receivables
 
 
 
166
 
154
Sundry receivables
 
 
 
2
 
182
 
 
 
$
4,639
$
3,374
 
 
6.
INVENTORIES
 
The inventories balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Inventory of ore in stockpiles
 
 
$
2,098
$
2,098 
Mine and mill supplies in MLJV
 
 
 
3,016
 
3,015
 
 
 
$
5,114
$
5,113 
 
 
 
 
 
 
 
Inventories-by balance sheet presentation:
 
 
 
 
 
 
Current
 
 
$
3,016
$
3,015 
Long-term-ore in stockpiles
 
 
 
2,098
 
2,098 
 
 
 
$
5,114
$
5,113 
 
 
 
 6
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
7.
INVESTMENTS
 
The investments balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
Equity instruments
 
 
 
 
 
 
Shares
 
 
$
21,847
$
16,657
Warrants
 
 
 
245
 
293
Uranium
 
 
 
91,510
 
-
 
 
 
$
113,602
$
16,950
 
 
 
 
 
 
 
Investments-by balance sheet presentation:
 
 
 
 
 
 
Current
 
 
$
21,847
$
16,657
Long-term
 
 
 
91,755
 
293
 
 
 
$
113,602
$
16,950
 
The investments continuity summary is as follows:
 
 
(in thousands of CAD dollars)
 
Equity
Instruments
 
Physical
Uranium
 
 
Investments
 
 
 
 
 
 
 
Balance - December 31, 2020
$
16,950
$
-
$
16,950
Purchase of investments
 
-
 
83,976
 
83,976
Fair value gain to profit and loss (note 18)
 
5,142
 
7,534 
 
12,676 
Balance – June 30, 2021
$
22,092
$
91,510
$
113,602
 
During the six months ended June 30, 2021, the Company entered into purchase agreements to acquire a total of 2,500,000 pounds of physical uranium as U3O8 to be held as a long-term investment. As at June 30, 2021, the Company has purchased 2,300,000 pounds of physical uranium as U3O8 at a cost of $83,976,000 (USD$68,030,000), including purchase commissions. At June 30, 2021, $7,586,000 of this purchase amount is included in the Company’s “Accounts payable and accrued liabilities” reported balance and an adjustment has been made to exclude this amount from the purchases reported in the Company’s Consolidated statement of cash flows. See note 24 for additional details on the Company’s remaining purchase commitment of physical uranium.
 
 
8.
RESTRICTED CASH AND INVESTMENTS
 
The restricted cash and investments balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
$
12,336
$
2,883 
Investments
 
 
 
-
 
9,135 
 
 
 
$
12,336
$
12,018 
 
Restricted cash and investments-by item:
 
 
 
 
 
 
Elliot Lake reclamation trust fund
 
 
$
3,201
$
2,883 
Letters of credit facility pledged assets
 
 
 
9,000
 
9,000 
Letters of credit additional collateral
 
 
 
135
 
135 
 
 
 
$
12,336
$
12,018 
 
At June 30, 2021, all term deposits have maturities of less than 90 days at date of purchase.
 
Elliot Lake Reclamation Trust Fund
 
During the six months ended June 30, 2021, the Company deposited an additional $793,000 into the Elliot Lake Reclamation Trust Fund and withdrew $477,000.
 
 
 7
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
Letters of Credit Facility Pledged Assets
 
At June 30, 2021, the Company had on deposit $9,000,000 with the Bank of Nova Scotia (“BNS”) as pledged restricted cash and investments pursuant to its obligations under an amended and extended letters of credit facility (see notes 13 and 15).
 
Letters of Credit Additional Collateral
 
At June 30, 2021, the Company had on deposit an additional $135,000 of cash collateral with BNS in respect of the portion of its issued reclamation letters of credit in excess of the collateral available under its letters of credit facility (see notes 13 and 15).
 
 
9.
PROPERTY, PLANT AND EQUIPMENT
 
The property, plant and equipment (“PP&E”) continuity summary is as follows:
 
 
 
Plant and Equipment
 
Mineral
 
Total
(in thousands of CAD dollars)
 
Owned
 
Right-of-Use
 
Properties
 
PP&E
 
 
 
 
 
 
 
 
 
Cost:
 
 
 
 
 
 
 
 
Balance – December 31, 2020
$
106,087
$
891
$
179,743
$
286,721
Additions
 
324
 
83
 
22
 
429
Disposals
 
(117)
 
-
 
-
 
(117)
Recoveries
 
-
 
-
 
(1)
 
(1)
Balance – June 30, 2021
$
106,294
$
974
$
179,764
$
287,032
 
 
 
 
 
 
 
 
 
Accumulated amortization, depreciation:
 
 
 
 
 
 
 
 
Balance – December 31, 2020
$
(29,495)
$
(356)
$
-
$
(29,851)
Amortization
 
(140)
 
-
 
-
 
(140)
Depreciation
 
(574)
 
(100)
 
-
 
(674)
Disposals
 
117
 
-
 
-
 
117
Balance – June 30, 2021
$
(30,092)
$
(456)
$
-
$
(30,548)
 
 
 
 
 
 
 
 
 
Carrying value:
 
 
 
 
 
 
 
 
Balance – December 31, 2020
$
76,592
$
535
$
179,743
$
256,870
Balance – June 30, 2021
$
76,202
$
518
$
179,764
$
256,484
 
Plant and Equipment – Owned
 
The Company has a 22.5% interest in the McClean Lake mill through its ownership interest in the MLJV. The carrying value of the mill, comprised of various infrastructure, building and machinery assets, represents $68,340,000, or 89.7%, of the June 2021 PP&E total carrying value amount. See note 10 for the current operating status of the McClean Lake mill.
 
Plant and Equipment – Right-of-Use
 
The Company has included the cost of various right-of-use (“ROU”) assets within its PP&E carrying value amount. These assets consist of building, vehicle and office equipment leases. The majority of the value, 77.3%, is attributable to the building lease assets for the Company’s office and warehousing spaces located in Toronto and Saskatoon.
 
Mineral Properties
 
As at June 30, 2021, the Company has various interests in development, evaluation and exploration projects located in Saskatchewan, Canada, which are either held directly or through option or various contractual agreements. The properties with significant carrying values, being Wheeler River, Waterbury Lake, Midwest, Mann Lake,
 8
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
Wolly, Johnston Lake and McClean Lake, represent $162,663,000, or 90.5%, of the June 2021 total mineral property carrying amount.
 
 
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 
The accounts payable and accrued liabilities balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Trade payables
 
 
$
4,531
$
2,513
Trade payables – uranium investments
 
 
 
7,586
 
-
Payables in MLJV and MWJV
 
 
 
4,197
 
3,719
Other payables
 
 
 
755
 
946
 
 
 
$
17,069
$
7,178
 
 
11. DEFERRED REVENUE
 
The deferred revenue balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Deferred revenue – pre-sold toll milling:
 
 
 
 
 
 
CLJV toll milling – APG
 
 
$
37,442
$
36,617
 
 
 
$
37,442
$
36,617
 
 
 
 
 
 
 
Deferred revenue-by balance sheet presentation:
 
 
 
 
 
 
Current
 
 
$
4,656
$
3,478
Non-current
 
 
 
32,786
 
33,139
 
 
 
$
37,442
$
36,617
 
The deferred revenue liability continuity summary is as follows:
 
 
(in thousands of CAD dollars)
 
 
 
 
 
Deferred
Revenue
 
 
 
 
 
 
 
Balance - December 31, 2020
 
 
 
 
$
36,617
Accretion (note 19)
 
 
 
 
 
1,544 
Revenue recognized during the period (note 20)
 
 
 
 
 
(719)
Balance – June 30, 2021
 
 
 
 
$
37,442
 
Arrangement with Anglo Pacific Group PLC (“APG”)
 
In February 2017, Denison closed an arrangement with APG under which Denison received an upfront payment in exchange for its right to receive specified future toll milling cash receipts from the MLJV under the current toll milling agreement with the CLJV from July 1, 2016 onwards. The APG Arrangement represents a contractual obligation of Denison to pay onward to APG any cash proceeds of future toll milling revenue earned by the Company related to the processing of specified Cigar Lake ore through the McClean Lake mill. The deferred revenue balance represents a non-cash liability, which is adjusted as any toll milling revenue received by Denison is passed through to APG or any changes in Cigar Lake Phase 1 and Phase 2 toll milling production estimates are recognized.
 
In the six months ended June 30, 2021, the Company has recognized $719,000 of toll milling revenue from the draw-down of deferred revenue consisting of $658,000 based on Cigar Lake toll milling production in the quarter (2,542,000 pounds U3O8 on a 100% basis) and a retroactive $61,000 increase in revenue resulting from changes in estimates to the toll milling drawdown rate in the second quarter of 2021. For the comparative six months ended June 30, 2020, the Company recognized $1,115,000 of toll milling revenue from the draw-down of deferred revenue
 
 9
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
comprised of $1,056,000 based on Cigar Lake toll milling production in the quarter (4,184,000 pounds U3O8 on a 100% basis) and a retroactive $59,000 increase in revenue resulting from changes in estimates to the toll milling drawdown rate in the second quarter of 2020.
 
Production at the Cigar Lake mine and the McClean Lake mill, which had been temporarily suspended since the beginning of 2021 in response to the COVID-19 pandemic, has resumed. Cameco restarted ore production at the Cigar Lake mine in April 2021 and toll-milling production at McClean Lake restarted in May 2021 with packaged uranium production occuring in early June 2021. The current portion of the deferred revenue liability at June 2021 reflects Denison’s estimate of Cigar Lake toll milling over the next 12 months. This assumption is based on current mill packaged production expectations and will be reassessed on a quarterly basis throughout fiscal 2021.
 
 
12. POST-EMPLOYMENT BENEFITS
 
The post-employment benefits balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Accrued benefit obligation
 
 
$
1,312
$
1,361
 
 
 
$
1,312
$
1,361
 
 
 
 
 
 
 
Post-employment benefits-by balance sheet presentation:
 
 
 
 
Current
 
 
$
120
$
120
Non-current
 
 
 
1,192
 
1,241
 
 
 
$
1,312
$
1,361
 
The post-employment benefits continuity summary is as follows:
 
 
(in thousands of CAD dollars)
 
 
 
 
 
Post-Employment
Benefits
 
 
 
 
 
 
 
Balance - December 31, 2020
 
 
 
 
$
1,361
Accretion (note 19)
 
 
 
 
 
12 
Benefits paid
 
 
 
 
 
(61)
Balance – June 30, 2021
 
 
 
 
$
1,312 
 
 
13. RECLAMATION OBLIGATIONS
 
The reclamation obligations balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2020
 
2020
 
 
 
 
 
 
 
Reclamation obligations-by location:
 
 
 
 
 
 
Elliot Lake
 
 
$
21,481
$
21,523
McClean and Midwest Joint Ventures
 
 
 
17,169
 
16,875
Other
 
 
 
22
 
22
 
 
 
$
38,672
$
38,420 
 
 
 
 
 
 
 
Reclamation obligations-by balance sheet presentation:
 
 
 
 
Current
 
 
$
802
$
802
Non-current
 
 
 
37,870
 
37,618 
 
 
 
$
38,672
$
38,420 
 
 
 10
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
The reclamation obligations continuity summary is as follows:
 
 
(in thousands of CAD dollars)
 
 
 
 
 
Reclamation
Obligations
 
 
 
 
 
 
 
Balance - December 31, 2020
 
 
 
 
$
38,420
Accretion (note 19)
 
 
 
 
 
672 
Expenditures incurred
 
 
 
 
 
(420) 
Balance – June 30, 2021
 
 
 
 
$
38,672
 
Site Restoration: Elliot Lake
 
Spending on restoration activities at the Elliot Lake site is funded from monies in the Elliot Lake Reclamation Trust fund (see note 8).
 
Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture
 
Under the Mineral Industry Environmental Protection Regulations (1996), the Company is required to provide its pro-rata share of financial assurances to the province of Saskatchewan relating to future decommissioning and reclamation plans that have been filed and approved by the applicable regulatory authorities. As at June 30, 2021, the Company has provided irrevocable standby letters of credit, from a chartered bank, in favour of the Saskatchewan Ministry of Environment, totalling $24,135,000 which relate to the most recently filed reclamation plan dated March 2016.
 
 
14. SHARE PURCHASE WARRANTS LIABILITY
 
In connection with the public offerings of units in February 2021 and March 2021 (see note 16), the Company issued 15,796,975 and 39,215,000 share purchase warrants to unit holders, respectively. The February 2021 warrants entitle the holder to acquire one common share of the Company at an exercise price of USD$2.00 for 24 months after issuance. The March 2021 warrants entitle the holder to acquire one common share of the Company at an exercise price of USD$2.25 for 24 months after issuance.
 
Since both of these warrants are excercisable in U.S. dollars (“USD”), which differs from the Company’s CAD functional currency, they are classified as derivative liabilities and are required to be carried as liabilities at fair value through profit and loss. When the fair value of the warrants is revalued at each reporting period, the change in the liability is recorded through net profit or loss.
 
The fair value of the February 2021 warrants was estimated to be $0.2215 on the date of issue, based on a relative fair value basis approach, using a USD to CAD foreign exchange rate of 0.7928 and incorporating the following assumptions in the Black-Scholes option pricing model – expected volatility of 67.3%, risk-free interest rate of 0.22%, dividend yield of 0% and an expected term of 2 years.
 
At June 30, 2021, the fair value of the February 2021 warrants was estimated to be $0.3793, using a USD to CAD foreign exchange rate of 0.8068 and incorporating the following assumptions in the Black-Scholes option pricing model – expected volatility of 80.1%, risk-free interest rate of 0.44%, dividend yield of 0% and an expected term of 1.64 years.
 
The fair value of the March 2021 warrants was estimated to be $0.2482 on the date of issue, based on a relative fair value basis approach, using a USD to CAD foreign exchange rate of 0.7992 and incorporating the following assumptions in the Black-Scholes option pricing model – expected volatility of 71.54%, risk-free interest rate of 0.27%, dividend yield of 0% and an expected term of 2 years.
 
At June 30, 2021, the fair value of the March 2021 warrants was estimated to be $0.3342, using a USD to CAD foreign exchange rate of 0.8068 and incorporating the following assumptions in the Black-Scholes option pricing model – expected volatility of 78.0%, risk-free interest rate of 0.44%, dividend yield of 0% and an expected term of 1.72 years.
 
 
 11
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The share purchase warrants liability continuity is as follows:
 
 
Number of
 
Warrant
(in thousands of CAD dollars except warrant amounts)
Warrants
 
Liability
 
 
 
 
Balance - December 31, 2020
-
  $
-
Warrants issued on February 19, 2021
15,796,975
 
3,499
Warrants issued on March 22, 2021
39,215,000
 
9,735
Change in fair value estimates
-
 
5,832
Balance – June 30, 2021
55,011,975
$
19,066
 
 
15. OTHER LIABILITIES
 
The other liabilities balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Debt obligations:
 
 
 
 
 
 
Lease liabilities
 
 
$
558
$
582
Loan liabilities
 
 
 
63
 
33
Flow-through share premium obligation (note 17)
 
 
 
-
 
22
 
 
 
$
621
$
637
 
 
 
 
 
 
 
Other liabilities-by balance sheet presentation:
 
 
 
 
Current
 
 
$
234
$
262
Non-current
 
 
 
387
 
375
 
 
 
$
621
$
637
 
Debt Obligations
 
At June 30, 2021, the Company’s debt obligations are comprised of lease liabilities and loan liabilities. The debt obligations continuity summary is as follows:
 
 
 
 
Lease
 
Loan
 
Total Debt
(in thousands of CAD dollars)
 
 
 
Liabilitites
 
Liabilities
 
Obligations
 
 
 
 
 
 
 
 
 
Balance – December 31, 2020
 
 
$
582
$
33
$
615
Accretion (note 19)
 
 
 
24
 
-
 
24
Additions
 
 
 
72
 
34
 
106
Repayments
 
 
 
(120)
 
(4)
 
(124)
Balance – June 30, 2021
 
 
$
558
$
63
$
621
 
Debt Obligations – Scheduled Maturities
 
The following table outlines the Company’s scheduled maturities of its debt obligations at June 30, 2021:
 
 
 
 
Lease
 
Loan
 
Total Debt
(in thousands of CAD dollars)
 
 
 
Liabilitites
 
Liabilities
 
Obligations
 
 
 
 
 
 
 
 
 
Maturity analysis – contractual undiscounted cash flows:
 
 
 
 
 
 
Next 12 months
 
 
$
217
$
17
$
234
One to five years
 
 
 
431
 
52
 
483
More than five years
 
 
 
-
 
-
 
-
Total obligation – June 30, 2021 – undiscounted
 
648
 
69
 
717
Present value discount adjustment
 
 
 
(90)
 
(6)
 
(96)
Total obligation – June 30, 2021 – discounted
 
 
$
558
$
63
$
621
 
 
 12
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Letters of Credit Facility
 
In January 2021, the Company entered into an amending agreement for its letters of credit facility with BNS (the “2021 Facility”). Under the amendment, the maturity date of the 2021 Facility has been extended to January 31, 2022. All other terms of the 2021 Facility (tangible net worth covenant, pledged cash, investment amounts and security for the facility) remain unchanged from the previous facility. Accordingly, the 2021 Facility continues to provide the Company with access to credit up to $24,000,000 (the use of which is restricted to non-financial letters of credit in support of reclamation obligations) subject to letter of credit fees of 2.40% (0.40% on the $9,000,000 covered by pledged cash collateral) and standby fees of 0.75%.
 
At June 30, 2021, the Company is in compliance with its facility covenants and $24,000,000 (December 31, 2020: $24,000,000) of the facility is being utilized as collateral for letters of credit issued in respect of the reclamation obligations for the MLJV and MWJV. During the six months ended June 30, 2021, the Company incurred letter of credit fees of $196,000 (June 30, 2020: $198,000).
 
 
16. SHARE CAPITAL
 
Denison is authorized to issue an unlimited number of common shares without par value. A continuity summary of the issued and outstanding common shares and the associated dollar amounts is presented below:
 
 
Number of
 
 
 
Common
 
Share
(in thousands of CAD dollars except share amounts)
Shares
 
Capital
 
 
 
 
Balance - December 31, 2020
678,981,882
  $
1,366,710
Issued for cash:
 
 
 
Unit issue proceeds – total
110,023,950
 
144,214
Less: allocation to share warrants liability (note 14)
-
 
(13,234)
Unit issue costs - total
-
 
(8,584)
Less: allocation to share warrants issue expense
-
 
791
Other share issue proceeds – total
10,156,186
 
11,914
Less: other share issue costs
-
 
(1,051)
Share option exercises
5,918,248
 
4,289
Share option exercises – fair value adjustment
-
 
1,473
Share units exercises – fair value adjustment
630,499
 
366
 
126,728,883
 
140,178
Balance – June 30, 2021
805,710,765
$
1,506,888
 
Unit and Other Share Issues
 
In January and February 2021, Denison, through its agents, issued 4,230,186 common shares under its at-the-market (“ATM”) program at an average price of $0.93 per share for aggregate gross proceeds of $3,914,000. The Company also recognized issue costs of $466,000 related to its ATM share issuances which includes $78,000 of commissions and $384,000 associated with the set-up of the ATM program which were previously deferred on the balance sheet and included in Prepaid expenses and other at December 31, 2020. In connection with the public offering completed on March 22, 2021 (see below), the Company terminated its ATM program and has ceased any distributions thereunder.
 
On February 19, 2021, the Company completed a public offering by way of a prospectus supplement to the 2020 Shelf Prospectus of 31,593,950 units of the Company at USD$0.91 per unit for gross proceeds of $36,265,000 (USD$28,750,000), including the full exercise of the underwriters’ over-allotment option of 4,120,950 units. Each unit consisted of one common share and one-half of one transferable common share purchase warrant of the Company. Each full warrant is exercisable to acquire one common share of the Company at an exercise price of USD$2.00 for 24 months after issuance. A portion of the gross proceeds ($3,499,000 – see note 14) has been allocated to share warrant liabilities on a relative fair value basis and the pro-rata share of the issue costs associated with the offering has been expensed within Other expense (see note 19).
 
On March 3, 2021, the Company completed a private placement of 5,926,000 flow-through common shares at a price of $1.35 per share for gross proceeds of approximately $8,000,000. The income tax benefits of this issue will be renounced to subscribers with an effective date of December 31, 2021. The related flow-through share premium liability was valued at $Nil as the issue price was less than the Company’s observed share price on the date of issue.
 
 
 14
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
On March 22, 2021, the Company completed a public offering by way of a prospectus supplement to the 2020 Shelf Prospectus of 78,430,000 units of the Company at USD$1.10 per unit for gross proceeds of $107,949,000 (USD$86,273,000), including the full exercise of the underwriters’ over-allotment option of 10,230,000 units. Each unit consisted of one common share and one-half of one transferable common share purchase warrant of the Company. Each full warrant is exercisable to acquire one common share of the Company at an exercise price of USD$2.25 for 24 months after issuance. A portion of the gross proceeds ($9,735,000 – see note 14) has been allocated to share warrant liabilities on a relative fair value basis and the pro-rata share of the issue costs associated with the offering has been expensed within Other expense (see note 19).
 
Flow-Through Share Issues
 
The Company finances a portion of its exploration programs through the use of flow-through share issuances. Canadian income tax deductions relating to these expenditures are claimable by the investors and not by the Company.
 
As at June 30, 2021, the Company estimates that it has satisfied its obligation to spend $930,485 on eligible exploration expenditures in fiscal 2021 due to the issuance of flow-through shares in December 2020. The Company renounced the income tax benefits of this issue in February 2021, with an effective date of renunciation to its subscribers of December 31, 2020. In conjunction with the renunciation, the flow-through share premium liability at December 31, 2020 has been extinguished and a deferred tax recovery has been recognized in the first quarter of 2021 (see notes 15 and 22).
 
As at June 30, 2021, the Company estimates that it has incurred $377,000 of expenditures towards its obligation to spend $8,000,000 on eligible exploration expenditures by the end of fiscal 2022 due to the issuance of flow-through shares in March 2021.
 
 
17. SHARE-BASED COMPENSATION
 
The Company’s share based compensation arrangements include stock options, restricted share units (“RSUs”) and performance share units (“PSUs”).
 
A summary of share based compensation expense recognized in the statement of income (loss) is as follows:
 
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Share based compensation expense for:
 
 
 
 
 
 
 
 
Stock options
$
(420)
$
(139)
$
(615)
$
(296)
RSUs
 
(457)
 
(259)
 
(663)
 
(487)
PSUs
 
(43)
 
(23)
 
(17)
 
(121)
Share based compensation expense
$
(920)
$
(421)
$
(1,295)
$
(904)
 
An additional $4,153,000 in share-based compensation expense remains to be recognized, up until May 2024, on outstanding options and share units at June 30, 2021.
 
 
 
 
 
 
 
 
 
 14
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Stock Options
 
Stock options granted in 2021 vest over a period of 24 months. A continuity summary of the stock options granted under the Company’s stock-based compensation plan is presented below:
 
 
 
 
 
 
 
 
 
 
Weighted-
 
 
 
 
 
 
 
 
 
Average
 
 
 
 
 
 
 
 
 
Exercise
 
 
 
 
 
 
 
Number of
 
Price per
 
 
 
 
 
 
 
Common
 
Share
 
 
 
 
 
 
 
Shares
 
(CAD)
 
 
 
 
 
 
 
 
 
 
Stock options outstanding – December 31, 2020
 
 
 
15,077,243
$
0.67
Grants
 
 
 
 
 
 
3,969,000
 
1.27
Exercises (1)
 
 
 
 
 
 
(5,918,248)
 
0.72
Expiries
 
 
 
 
 
 
(15,000)
 
0.64
Forfeitures
 
 
 
 
 
 
(693,000)
 
0.69
Stock options outstanding – June 30, 2021
 
 
 
12,419,995
$
0.83
Stock options exercisable – June 30, 2021
 
 
 
6,863,995
$
0.68
 
(1)
The weighted average share price at the date of exercise was $1.23.
 
A summary of the Company’s stock options outstanding at June 30, 2021 is presented below:
 
 
 
 
 
 
Weighted
 
 
 
Weighted-
 
 
 
 
 
Average
 
 
 
Average
 
 
 
 
 
Remaining
 
 
 
Exercise
Range of Exercise
 
 
 
 
Contractual
 
Number of
 
Price per
Prices per Share
 
 
 
 
Life
 
Common
 
Share
(CAD)
 
 
 
 
(Years)
 
Shares
 
(CAD)
 
 
 
 
 
 
 
 
 
 
Stock options outstanding
 
 
 
 
 
 
$ 0.25 to $ 0.49
 
3.72
 
2,722,000
$
0.45
$ 0.50 to $ 0.74
 
 
 
 
2.28
 
3,503,395
 
0.64
$ 0.75 to $ 0.99
 
 
 
 
0.69
 
2,383,600
 
0.85
$ 1.00 to $ 1.39
 
 
 
 
4.69
 
3,508,000
 
1.26
$ 1.40 to $ 1.99
 
 
 
 
4.86
 
303,000
 
1.43
Stock options outstanding – June 30, 2021
 
 
3.03
 
12,419,995
$
0.83
 
Options outstanding at June 30, 2021 expire between August 2021 and May 2026.
 
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model. The following table outlines the assumptions used in the model to determine the fair value of options granted during the current period:
 
 
 
 
 
Six Months Ended
 
 
 
 
June 30, 2021
 
 
 
 
 
Risk-free interest rate
 
 
 
0.70% - 0.76%
Expected stock price volatility
 
 
 
66.11% - 68.86%
Expected life
 
 
 
3.4 years
Expected dividend yield
 
 
 
-
Fair value per share under options granted
 
 
$0.59 - $0.69
 
Share Units
 
RSUs granted under the plan in 2021 vest ratably over a period of three years. No PSUs have been granted in 2021 as at June 30, 2021.
 
 
 15
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
A continuity summary of the RSUs and PSUs of the Company granted under the share unit plan is presented below:
 
 
 
RSUs
 
PSUs
 
 
 
 
Weighted
 
 
 
Weighted
 
 
 
 
Average
 
 
 
Average
 
 
Number of
 
Fair Value
 
Number of
 
Fair Value
 
 
Common
 
Per RSU
 
Common
 
Per PSU
 
 
Shares
 
(CAD)
 
Shares
 
(CAD)
 
 
 
 
 
 
 
 
 
Units outstanding – December 31, 2020
 
5,691,899
$
0.52
 
2,020,000
$
0.63
Grants
 
1,886,000
 
1.42
 
-
 
-
Exercises (1)
 
(420,499)
 
0.54
 
(210,000)
 
0.66
Forfeitures
 
(767,228)
 
0.56
 
(180,000)
 
0.69
Units outstanding – June 30, 2021
 
6,390,172
$
0.78
 
1,630,000
$
0.62
Units vested – June 30, 2021
 
2,319,173
$
0.59
 
870,000
$
0.63
 
(1)
The weighted average share price at the date of exercise was $1.35 for RSUs and $1.41 for PSUs.
 
The fair value of each RSU and PSU granted is estimated on the date of grant using the Company’s closing share price on the day before the grant date.
 
 
18. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 
The accumulated other comprehensive income (loss) balance consists of:
 
 
 
 
 
At June 30
 
At December 31
(in thousands of CAD dollars)
 
 
 
2021
 
2020
 
 
 
 
 
 
 
Cumulative foreign currency translation
 
 
$
418
$
413
Unamortized experience gain-post employment liability
 
 
 
 
Gross
 
 
 
1,847
 
1,847
Tax effect
 
 
 
(485)
 
(485)
 
 
 
$
1,780
$
1,775
 
 
19. SUPPLEMENTAL FINANCIAL INFORMATION
 
The components of operating expenses are as follows:
 
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Cost of goods and services sold:
 
 
 
 
 
 
 
 
Cost of goods sold – mineral concentrates
$
-
$
-
$
-
$
(526)
Operating overheads:
 
 
 
 
 
 
 
 
Mining, other development expense
 
(823)
 
(334)
 
(1,055)
 
(547)
Milling, conversion expense
 
(471)
 
(6)
 
(475)
 
(746)
Less absorption:
 
 
 
 
 
 
 
 
-Mineral properties
 
11
 
13
 
22
 
25
Cost of services
 
(2,338)
 
(1,659)
 
(3,931)
 
(3,374)
Cost of goods and services sold
 
(3,621)
 
(1,986)
 
(5,439)
 
(5,168)
Reclamation asset amortization
 
(70)
 
(62)
 
(140)
 
(122)
Selling expenses
 
-
 
-
 
-
 
(14)
Sales royalties and non-income taxes
 
-
 
-
 
-
 
(64)
Operating expenses
$
(3,691)
$
(2,048)
$
(5,579)
$
(5,368)
 
 
 16
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The components of other income (expense) are as follows:
 
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Gains (losses) on:
 
 
 
 
 
 
 
 
Foreign exchange
$
(2,059)
$
(98)
$
(1,618)
$
(78)
Disposal of property, plant and equipment
 
2
 
405
 
2
 
407
Fair value changes:
 
 
 
 
 
 
 
 
Investments-equity instruments (note 7)
 
5,233
 
1,989
 
5,142
 
(961)
Investments-uranium (note 7)
 
7,534
 
-
 
7,534
 
-
Warrant liabilities (note 14)
 
(4,268)
 
-
 
(5,832)
 
-
Issue costs-warrant liabilities (note 16)
 
(2)
 
-
 
(791)
 
-
Uranium investment carrying charges
 
(54)
 
-
 
(54)
 
-
Other
 
(38)
 
(133)
 
(76)
 
(397)
Other income (expense)
$
6,348
$
2,163
$
4,307
$
(1,029)
 
The components of finance income (expense) are as follows:
 
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Interest income
$
130
$
64
$
213
$
156
Interest expense
 
(1)
 
(1)
 
(1)
 
(3)
Accretion expense
 
 
 
 
 
 
 
 
Deferred revenue (note 11)
 
(790)
 
(755)
 
(1,544)
 
(1,537)
Post-employment benefits (note 12)
 
(6)
 
(17)
 
(12)
 
(34)
Reclamation obligations (note 13)
 
(336)
 
(338)
 
(672)
 
(676)
Debt obligations (note 14)
 
(12)
 
(14)
 
(24)
 
(30)
Finance income (expense)
$
(1,015)
$
(1,061)
$
(2,040)
$
(2,124)
 
A summary of depreciation expense recognized in the statement of income (loss) is as follows:
 
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
Mining, other development expense
$
-
$
(1)
$
(1)
$
(2)
Milling, conversion expense
 
(429)
 
-
 
(429)
 
(736)
Cost of services
 
(46)
 
(47)
 
(91)
 
(100)
Evaluation
 
(9)
 
(9)
 
(18)
 
(18)
Exploration
 
(50)
 
(37)
 
(80)
 
(78)
General and administrative
 
(30)
 
(32)
 
(55)
 
(64)
Depreciation expense-gross
$
(564)
$
(126)
$
(674)
$
(998)
 
A summary of employee benefits expense recognized in the statement of income (loss) is as follows:
 
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Salaries and short-term employee benefits
$
(2,104)
$
(1,545)
$
(5,138)
$
(3,703)
Share-based compensation (note 17)
 
(920)
 
(421)
 
(1,295)
 
(904)
Termination benefits
 
-
 
-
 
(29)
 
-
Employee benefits expense
$
(3,024)
$
(1,966)
$
(6,462)
$
(4,607)
 
 
 17
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The change in non-cash working capital items in the consolidated statements of cash flows is as follows:
 
 
 
 
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
 
 
 
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Change in non-cash working capital items:
 
 
 
 
 
 
 
 
Trade and other receivables
 
 
 
 
$
(1,265)
$
890
Inventories
 
 
 
 
 
(1)
 
433
Prepaid expenses and other assets
 
 
 
 
 
262
 
401
Accounts payable and accrued liabilities
 
 
 
 
 
1,622
 
(3,352)
Change in non-cash working capital items
 
 
 
 
$
618
$
(1,628)
 
 
20. SEGMENTED INFORMATION
 
Business Segments
 
The Company operates in three primary segments – the Mining segment, the Closed Mine Services segment and the Corporate and Other segment. The Mining segment includes activities related to exploration, evaluation and development, mining, milling (including toll milling) and the sale of mineral concentrates. The Closed Mine Services segment includes the results of the Company’s environmental services business which provides mine decommissioning and other services to third parties. The Corporate and Other segment includes management fee income earned from UPC and general corporate expenses not allocated to the other segments. Management fee income from UPC has been included with general corporate expenses due to the shared infrastructure between the two activities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 18
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
For the six months ended June 30, 2021, reportable segment results were as follows:
 
 
 
(in thousands of CAD dollars)
 
 
 
 
Mining
Closed
Mine
Services
 
Corporate
and Other
 
 
Total
 
 
 
 
 
 
 
Statement of Operations:
 
 
 
 
 
 
Revenues
 
 
719
4,310
2,093
7,122
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Operating expenses
 
 
(1,648)
(3,931)
-
(5,579)
Evaluation
 
 
(9,142)
-
-
(9,142)
Exploration
 
 
(1,876)
-
-
(1,876)
General and administrative
 
 
(17)
-
(4,970)
(4,987)
 
 
 
(12,683)
(3,931)
(4,970)
(21,584)
Segment income (loss)
 
 
(11,964)
379
(2,877)
(14,462)
 
 
 
 
 
 
 
Revenues – supplemental:
 
 
 
 
 
 
Environmental services
 
 
-
4,310
-
4,310
Management fees
 
 
-
-
2,093
2,093
Toll milling services–deferred revenue (note 11)
 
719
-
-
719
 
 
 
719
4,310
2,093
7,122
 
 
 
 
 
 
 
Capital additions:
 
 
 
 
 
 
Property, plant and equipment
 
 
310
36
83
429
 
 
 
 
 
 
 
Long-lived assets – as at June 30, 2021:
 
 
 
 
 
Plant and equipment
 
 
 
 
 
 
Cost
 
 
101,829
4,465
974
107,268
Accumulated depreciation
 
 
(26,910)
(3,167)
(471)
(30,548)
Mineral properties
 
 
179,764
-
-
179,764
 
 
 
254,683
1,298
503
256,484
 
For the three months ended June 30, 2021, reportable segment results were as follows:
 
 
 
(in thousands of CAD dollars)
 
 
 
 
Mining
Closed
Mine
Services
 
Corporate
and Other
 
 
Total
 
 
 
 
 
 
 
Statement of Operations:
 
 
 
 
 
 
Revenues
 
 
582
2,566
1,478
4,626
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Operating expenses
 
 
(1,353)
(2,338)
-
(3,691)
Evaluation
 
 
(6,381)
-
-
(6,381)
Exploration
 
 
(528)
-
-
(528)
General and administrative
 
 
-
-
(2,362)
(2,362)
 
 
 
(8,262)
(2,338)
(2,362)
(12,962)
Segment income (loss)
 
 
(7,680)
228
(884)
(8,336)
 
 
 
 
 
 
 
Revenues – supplemental:
 
 
 
 
 
 
Environmental services
 
 
-
2,566
-
2,566
Management fees
 
 
-
-
1,478
1,478
Toll milling services–deferred revenue (note 11)
 
582
-
-
582
 
 
 
582
2,566
1,478
4,626
 
 
 19
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
For the six months ended June 30, 2020, reportable segment results were as follows:
 
 
 
(in thousands of CAD dollars)
 
 
 
 
Mining
Closed
Mine
Services
 
Corporate
and Other
 
 
Total
 
 
 
 
 
 
 
Statement of Operations:
 
 
 
 
 
 
Revenues
 
 
1,967
4,132
1,487
7,586
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Operating expenses
 
 
(1,994)
(3,374)
-
(5,368)
Evaluation
 
 
(1,855)
-
-
(1,855)
Exploration
 
 
(2,181)
-
-
(2,181)
General and administrative
 
 
(19)
-
(3,590)
(3,609)
 
 
 
(6,049)
(3,374)
(3,590)
(13,013)
Segment income (loss)
 
 
(4,082)
758
(2,103)
(5,427)
 
 
 
 
 
 
 
Revenues – supplemental:
 
 
 
 
 
 
Environmental services
 
 
-
4,132
-
4,132
Management fees
 
 
-
-
1,487
1,487
Uranium concentrate sales
 
 
852
-
-
852
Toll milling services–deferred revenue (note 11)
 
1,115
-
-
1,115
 
 
 
1,967
4,132
1,487
7,586
 
 
 
 
 
 
 
Capital additions:
 
 
 
 
 
 
Property, plant and equipment
 
 
124
15
-
139
 
 
 
 
 
 
 
Long-lived assets – as at June 30, 2020:
 
 
 
 
 
Plant and equipment
 
 
 
 
 
 
Cost
 
 
99,994
4,546
908
105,448
Accumulated depreciation
 
 
(25,305)
(3,102)
(368)
(28,775)
Mineral properties
 
 
179,605
-
-
179,605
 
 
 
254,294
1,444
540
256,278
 
For the three months ended June 30, 2020, reportable segment results were as follows:
 
 
 
(in thousands of CAD dollars)
 
 
 
 
Mining
Closed
Mine
Services
 
Corporate
and Other
 
 
Total
 
 
 
 
 
 
 
Statement of Operations:
 
 
 
 
 
 
Revenues
 
 
152
2,104
670
2,926
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Operating expenses
 
 
(389)
(1,659)
-
(2,048)
Evaluation
 
 
(364)
-
-
(364)
Exploration
 
 
(481)
-
-
(481)
General and administrative
 
 
(5)
-
(1,416)
(1,421)
 
 
 
(1,239)
(1,659)
(1,416)
(4,314)
Segment income (loss)
 
 
(1,087)
445
(746)
(1,388)
 
 
 
 
 
 
 
Revenues – supplemental:
 
 
 
 
 
 
Environmental services
 
 
-
2,104
-
2,104
Management fees
 
 
-
-
670
670
Toll milling services–deferred revenue (note 11)
 
152
-
-
152
 
 
 
152
2,104
670
2,926
 
 
 
 20
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
21. RELATED PARTY TRANSACTIONS
 
Uranium Participation Corporation
 
The current management services agreement (“MSA”) with UPC became effective on April 1, 2019 and has a term of five years (the “Term”). Under the MSA, Denison receives the following management fees from UPC: a) a base fee of $400,000 per annum, payable in equal quarterly installments; b) a variable fee equal to (i) 0.3% per annum of UPC’s total assets in excess of $100 million and up to and including $500 million, and (ii) 0.2% per annum of UPC’s total assets in excess of $500 million; c) a fee, at the discretion of the Board, for on-going monitoring or work associated with a transaction or arrangement (other than a financing, or the acquisition of or sale of U3O8 or UF6); and d) a commission of 1.0% of the gross value of any purchases or sales of U3O8 or UF6 or gross interest fees payable to UPC in connection with any uranium loan arrangements.
 
The MSA may be terminated during the Term by Denison upon the provision of 180 days written notice. The MSA may be terminated during the Term by UPC (i) in the event of a material breach, (ii) within 90 days of certain events surrounding a change of both of the individuals serving as Chief Executive Officer and Chief Financial Officer of UPC, and / or a change of control of Denison, or (iii) upon the provision of 30 days written notice and, subject to certain exceptions, a cash payment to Denison of an amount equal to the base and variable management fees that would otherwise be payable to Denison (calculated based on UPC’s current uranium holdings at the time of termination) for the lesser period of a) three years, or b) the remaining term of the MSA.
 
See note 25 for further information regarding the UPC MSA.
 
The following transactions were incurred with UPC for the periods noted:
 
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
(in thousands of CAD dollars)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Management fees:
 
 
 
 
 
 
 
 
Base and variable fees
$
571
$
551
$
1,046
$
1,014
Commission fees
 
697
 
119
 
697
 
173