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
Discretionary fees
 
210
 
-
 
350
 
300
 
$
1,478
$
670
$
2,093
$
1,487
 
At June 30, 2021, accounts receivable includes $1,199,000 (December 31, 2020: $265,000) due from UPC with respect to the fees indicated above.
 
Korea Electric Power Corporation (“KEPCO”) and Korea Hydro & Nuclear Power (“KHNP”)
 
As at June 30, 2021, KEPCO, through its subsidiaries, holds 58,284,000 shares of Denison representing a share interest of approximately 7.23%. KHNP Canada Energy Ltd., a subsidiary of KEPCO’s subsidiary KHNP, is the holder of the majority of Denison’s shares and is also the majority member of Korea Waterbury Uranium Limited Partnership (“KWULP”). KWULP is a consortium of investors that holds the non-Denison owned interests in Waterbury Lake Uranium Corporation (“WLUC”) and Waterbury Lake Uranium Limited Partnership (“WLULP”), entities whose key asset is the Waterbury Lake property.
 
Other
 
During the six months ended June 30, 2021, the Company incurred investor relations, administrative service fees and certain pass-through expenses of $164,000 (June 30, 2020: $96,000) with Namdo Management Services Ltd, a company that a former director of Denison is a shareholder of. These services were incurred in the normal course of operating a public company. At June 30, 2021, an amount of $71,000 (December 31, 2020: $nil) was due to this company.
 
Compensation of Key Management Personnel
 
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers, vice-presidents and members of its Board of Directors.
 
 
 21
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
The following compensation was awarded to key management personnel:
 
 
 
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
$
(494)
$
(371)
$
(1,537)
$
(955)
Share-based compensation
 
(737)
 
(320)
 
(1,057)
 
(750)
Key management personnel compensation
$
(1,231)
$
(691)
$
(2,594)
$
(1,705)
 
 
22. INCOME TAXES
 
For the six months ended June 30, 2021, Denison has recognized deferred tax recoveries of $954,000. The deferred tax recovery includes the recognition of previously unrecognized Canadian tax assets of $247,000 relating to the February 2021 renunciation of the tax benefits associated with the Company’s $930,485 flow-through share issue in December 2020.
 
 
23. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
IFRS requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:
 
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.
 
The fair value of financial instruments which trade in active markets, such as share and warrant equity instruments, is based on quoted market prices at the balance sheet date. The quoted market price used to value financial assets held by the Company is the current closing price. Warrants that do not trade in active markets have been valued using the Black-Scholes pricing model. Debt instruments have been valued using the effective interest rate for the period that the Company expects to hold the instrument and not the rate to maturity.
 
Except as otherwise disclosed, the fair values of cash and cash equivalents, trade and other receivables, accounts payable and accrued liabilities, restricted cash and cash equivalents and debt obligations approximate their carrying values as a result of the short-term nature of the instruments, or the variable interest rate associated with the instruments, or the fixed interest rate of the instruments being similar to market rates.
 
During the six months ended June 30, 2021, there were no transfers between levels 1, 2 and 3 and there were no changes in valuation techniques.
 
 
 
 
 
 
 
 
 
 22
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The following table illustrates the classification of the Company’s financial assets within the fair value hierarchy as at June 30, 2021 and December 31, 2020:
 
 
 
 
 
 
 
June 30
 
December 31,
 
 
Financial
 
Fair
 
2021
 
2020
 
 
Instrument
 
Value
 
Fair
 
Fair
(in thousands of CAD dollars)
 
Category(1)
 
Hierarchy
 
Value
 
Value
 
 
 
 
 
 
 
 
 
Financial Assets:
 
 
 
 
 
 
 
 
Cash and equivalents
 
Category B
 
 
$
84,852
$
24,992
Trade and other receivables
 
Category B
 
 
 
4,639
 
3,374
Investments
 
 
 
 
 
 
 
 
Equity instruments-shares
 
Category A
 
Level 1
 
21,847
 
16,657
Equity instruments-warrants
 
Category A
 
Level 2
 
245
 
293
Restricted cash and equivalents
 
 
 
 
 
 
 
 
Elliot Lake reclamation trust fund
 
Category B
 
 
 
3,201
 
2,883
Credit facility pledged assets
 
Category B
 
 
 
9,000
 
9,000
Reclamation letter of credit collateral
 
Category B
 
 
 
135
 
135
 
 
 
 
 
$
123,919
$
57,334
 
 
 
 
 
 
 
 
 
Financial Liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
Category C
 
 
 
17,069
 
7,178
Share purchase warrants liabilty
 
Category A
 
Level 2
 
19,066
 
-
Debt obligations
 
Category C
 
 
 
621
 
615
 
 
 
 
 
$
36,756
$
7,793
 
(1)
Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category B=Financial assets at amortized cost; and Category C=Financial liabilities at amortized cost.
 
 
24. COMMITMENTS AND CONTINGENCIES
 
Specific Legal Matters
 
Mongolia Mining Division Sale – Arbitration Proceedings with Uranium Industry
 
In November 2015, the Company sold all of its mining assets and operations located in Mongolia to Uranium Industry a.s (“UI”) pursuant to an amended and restated share purchase agreement (the “GSJV Agreement”). The primary assets at that time were the exploration licenses for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects. As consideration for the sale per the GSJV Agreement, the Company received cash consideration of USD$1,250,000 prior to closing and the rights to receive additional contingent consideration of up to USD$12,000,000.
 
On September 20, 2016, the Mineral Resources Authority of Mongolia (“MRAM”) formally issued mining license certificates for all four projects, triggering Denison’s right to receive contingent consideration of USD$10,000,000 (collectively, the “Mining License Receivable”). The original due date for payment of the Mining License Receivable by UI was November 16, 2016.
 
Under an extension agreement between UI and the Company, the payment due date of the Mining License Receivable was extended from November 16, 2016 to July 16, 2017 (the “Extension Agreement”). As consideration for the extension, UI agreed to pay interest on the Mining License Receivable amount at a rate of 5% per year, payable monthly up to July 16, 2017 and they also agreed to pay a USD$100,000 instalment amount towards the balance of the Mining License Receivable amount. The required payments were not made.
 
On February 24, 2017, the Company served notice to UI that it was in default of its obligations under the GSJV Agreement and the Extension Agreement and on December 12, 2017, the Company filed a Request for Arbitration between the Company and UI under the Arbitration Rules of the London Court of International Arbitration. Hearings in front of the arbitration panel were held in December 2019. The final award was rendered by an arbitration panel on July 27, 2020, with the panel finding in favour of Denison and ordering UI to pay the Company USD$10,000,000 plus interest at a rate of 5% per annum from November 16, 2016, plus certain legal and arbitration costs. Denison and UI have exchanged correspondence, and award recovery options are being considered.
 
 
 23
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Uranium Purchase Commitments
 
Denison has entered into agreements to purchase 2,500,000 pounds of U3O8 for delivery in 2021. As at June 30th, Denison has taken delivery of 2,300,000 pounds with the remaining 200,000 pounds to be delivered at various times between July 1, 2021 and October 31, 2021. The purchase commitment for the remaining deliveries is valued at USD$6,100,000 ($7,560,000 using the June 30, 2021 foreign exchange rate of 1.2394).
 
25. SUBSEQUENT EVENTS
 
Uranium Participation Corporation
 
On July 19, 2021, UPC and Sprott Asset Management LP (“Sprott”) completed a plan of arrangement whereby UPC shareholders became unitholders of the Sprott Physical Uranium Trust, a newly formed entity managed by Sprott (the “UPC Transaction”). In conjunction with the completion of the UPC Transaction, the MSA between Denison and UPC was terminated and Denison received a termination payment from UPC of $5,848,000.
 
Acquisition of 50% of JCU (Canada) Exploration Company, Limited (“JCU”) from UEX Corporation (“UEX”)
 
On August 3, 2021, Denison acquired 50% ownership of JCU from UEX for cash consideration of $20.5 million. JCU holds a portfolio of twelve uranium project joint venture interests in Canada, including a 10% interest in Wheeler River, a 30.099% interest in the Millenium project, a 33.8123% interest in the Kiggavik project and a 34.4508% interest in the Christie Lake project.
 
On August 3, 2021, UEX acquired 100% of JCU from OURD for $40.5 million, which was funded by Denison providing UEX an interest-free term loan for three-months in the amount of $41.0 million (“UEX Term Loan”). Half of the amount owing from UEX to Denison was settled on the transfer of 50% of the shares of JCU to Denison, with UEX continuing to owe Denison $20.5 million. The UEX Term Loan is secured by all of the shares of JCU owned by UEX. UEX may extend the term of the loan by an additional three months, in which case interest will be charged at a rate of 4% from the original start date of the UEX Term Loan.
 
Denison and UEX have entered into a shareholder’s agreement which governs the operating activities of JCU, including provisions for future funding, dilution and the resolution of management deadlock situations.
 
At June 30, 2021, Denison has capitalized $76,000 of transaction costs related to the JCU acquisition on its statement of financial position.
 
 
 
 
 
 
 
 
 
 
 
 
24
 
 
 
 
 
Exhibit 99.2
 
 
 
 
 
 
MANAGEMENT’S DISCUSSION & ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2021
 
 
 
 
 
 TABLE OF CONTENTS
 
 2021 SECOND QUARTER PERFORMANCE HIGHLIGHTS
 2
 ABOUT DENISON
 2
 RESULTS OF OPERATIONS
 4
             Wheeler River Project
 6
 LIQUIDITY AND CAPITAL RESOURCES
 13
 OUTLOOK FOR 2021
 17
 ADDITIONAL INFORMATION
 18
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 18
 
 

 
 
 
 
This Management’s Discussion and Analysis (‘MD&A’) of Denison Mines Corp. and its subsidiary companies and joint arrangements (collectively, ‘Denison’ or the ‘Company’) provides a detailed analysis of the Company’s business and compares its financial results with those of the previous year. This MD&A is dated as of August 5, 2021 and should be read in conjunction with the Company’s unaudited interim condensed consolidate0d financial statements and related notes for the three and six months ended June 30, 2021. The unaudited interim condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’). Readers are also encouraged to consult the audited consolidated financial statements and MD&A for the year ended December 31, 2020. All dollar amounts in this MD&A are expressed in Canadian dollars, unless otherwise noted.
 
Additional information about Denison, including the Company’s press releases, quarterly and annual reports, Annual Information Form and Form 40-F is available through the Company’s filings with the securities regulatory authorities in Canada at www.sedar.com (‘SEDAR’) and the United States at www.sec.gov/edgar.shtml (‘EDGAR’).
 
 
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
2021 SECOND QUARTER PERFORMANCE HIGHLIGHTS
 
In-Situ Recovery (‘ISR’) field test activities at the Phoenix uranium deposit (‘Phoenix’) progress
 
A substantial portion of the ISR field test program has been successfully completed, including the installation of all five commercial-scale wells (‘CSWs’) and nine of eleven monitoring wells (‘MWs’) planned for the 5-spot test pattern (the ‘Test Pattern’) located in the Phase 1 area of Phoenix on the Company’s Wheeler River Uranium Project (‘Wheeler River’ or the ‘Project’). Based on the progress to date, multi-day pump and injection tests and ion tracer tests are planned to be initiated and completed on the full-scale Test Pattern during the third quarter.
 
Discovered high-grade uranium outside of the Phoenix Zone A high-grade domain
 
Drill hole GWR-045 was completed as part of the ISR field test program to install MWs to the northwest of the CSW Test Pattern. Based on the mineral resources currently estimated for Phoenix, GWR-045 was expected to intersect low grade uranium mineralization on the northwest margin of the deposit, approximately 5 metres outside of the boundary of the Phoenix Zone A high-grade resource domain. The drill hole, however, intersected a thick interval of high-grade unconformity-associated uranium mineralization with grades of 22.0% eU3O8 over 8.6 metres. The intersection is presently open further to the northwest and represents an area for further exploration and potential mineral resource expansion of Phoenix.
 
Decision to increase anticipated ISR mining head grade at Phoenix by 50%
 
Positive interim results, completed to date, from the ongoing metallurgical test program for the planned ISR mining operation at Phoenix have consistently supported uranium bearing solution (‘UBS’) head-grade for Phoenix well in excess of the 10 grams / Litre (’g/L’) used in the Pre-Feasibility Study (“PFS”) completed for Wheeler River in 2018. Accordingly, the Company has decided to adapt its plans for the remaining metallurgical test work, including the bench-scale tests of the unit operations of the proposed process plant, to reflect a 50% increase in the head-grade of UBS to be recovered from the well-field.
 
Completed acquisition of 50% of JCU (Canada) Exploration Company, Limited (‘JCU’) for $20.5 million
 
In June 2021, Denison announced that it had entered into a binding agreement with UEX Corporation (‘UEX’) to acquire 50% of JCU from UEX for cash consideration of $20.5 million following UEX’s acquisition of 100% of JCU from Overseas Uranium Resources Development Co., Ltd. (‘OURD’) for $41 million. Denison’s acquisition of 50% of JCU was completed on August 3, 2021. JCU holds a portfolio of 12 uranium project joint venture interests in Canada, including a 10% interest in Wheeler River, a 30.099% interest in the Millennium project (Cameco Corporation 69.901%), a 33.8123% interest in the Kiggavik project (Orano Canada Inc. (‘Orano Canada’) 66.1877%), and a 34.4508% interest in the Christie Lake project (UEX 65.5492%).
 
Received $5.8 million in connection with conversion of Uranium Participation Corporation (‘UPC’) into the Sprott Physical Uranium Trust
 
In April 2021, UPC announced that it had reached an agreement with Sprott Asset Management LP (‘Sprott’) to convert UPC into the Sprott Physical Uranium Trust. Upon completion of this transaction on July 19, 2021, Sprott became the manager of the Sprott Physical Uranium Trust, and the management services agreement (‘MSA’) between Denison and UPC was terminated. In accordance with the terms of the MSA, Denison received a cash payment of approximately $5.8 million in connection with the termination.
 
ABOUT DENISON
 
Denison Mines Corp. was formed under the laws of Ontario and is a reporting issuer in all Canadian provinces. Denison’s common shares are listed on the Toronto Stock Exchange (the ‘TSX’) under the symbol ‘DML’ and on the NYSE American exchange under the symbol ‘DNN’.
 
Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, Canada. The Company has an effective 95% interest in its flagship Wheeler River Uranium Project, which is the largest undeveloped uranium project in the infrastructure rich eastern portion of the Athabasca Basin region of northern Saskatchewan. A PFS was completed for Wheeler River in late 2018, considering the potential economic merit of developing Phoenix as an ISR operation and the Gryphon deposit as a conventional underground mining operation. Denison's interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake Joint Venture (‘MLJV’), which includes several uranium deposits and the McClean Lake uranium mill,
 
 
 2
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
which is contracted to process the ore from the Cigar Lake mine under a toll milling agreement (see RESULTS OF OPERATIONS below for more details), plus a 25.17% interest in the Midwest deposits and a 66.90% interest in the THT (formerly J Zone) and Huskie deposits on the Waterbury Lake property. The Midwest, THT and Huskie deposits are located within 20 kilometres of the McClean Lake mill. In addition, Denison has an extensive portfolio of exploration projects in the Athabasca Basin region.
 
Additionally, through its 50% ownership of JCU, Denison also holds interests in various uranium project joint ventures in Canada, including the Millennium project (JCU 30.099%), the Kiggavik project (JCU 33.8123%) and Christie Lake (JCU 34.4508%).
 
Denison is engaged in mine decommissioning and environmental services through its Closed Mines group, which manages Denison’s Elliot Lake reclamation projects and provides post-closure mine and maintenance services to a variety of industry and government clients.
 
Up until July 19, 2021, Denison also served as the manager of UPC. UPC was a publicly traded company listed on the TSX, which invested in uranium oxide in concentrates (‘U3O8’) and uranium hexafluoride (‘UF6’). In April, 2021, UPC announced that it had entered into an agreement with Sprott to convert UPC into the Sprott Physical Uranium Trust. This transaction closed on July 19, 2021, and the MSA between Denison and UPC was terminated.
 
SELECTED QUARTERLY FINANCIAL INFORMATION
 
(in thousands)
 
As at
June 30,
2021
 
As at
December 31,
2020
 
 
 
 
 
Financial Position:
 
 
 
 
Cash and cash equivalents
$
84,852
$
24,992
Working capital(1)
$
92,259
$
37,571
Property, plant and equipment
$
256,484
$
256,870
Total assets
$
478,125
$
320,690
Total long-term liabilities(2)
$
99,561
$
81,565
 
(1)
At June 30, 2021, the Company’s working capital includes $21,847,000 in portfolio investments and a non-cash $4,656,000 deferred revenue liability (December 31, 2020 – $16,657,000 in portfolio investments, and $3,478,000 of non-cash deferred revenue).
(2)
Predominantly comprised of the non-current portion of deferred revenue, non-current reclamation obligations, share purchase warrant liabilities and deferred income tax liabilities.
 
 
 
 
 
 
2021
 
2021
 
2020
 
2020
(in thousands, except for per share amounts)
 
Q2
 
Q1
 
Q4
 
Q3
 
 
 
 
 
 
 
 
 
 
 
Results of Operations:
 
 
 
 
 
 
 
 
Total revenues
$
4,626
  $
2,496
  $
4,094
$
2,743
Net loss
$
(2,357)
  $
(8,884)
  $
(3,095)
$
(5,482)
Basic and diluted loss per share
$
(0.00)
  $
(0.01)
  $
(0.00)
$
(0.01)
 
 
 
 
 
2020
 
2020
 
2019
 
2019
(in thousands, except for per share amounts)
 
Q2
 
Q1
 
Q4
 
Q3
 
 
 
 
 
 
 
 
 
 
 
Results of Operations:
 
 
 
 
 
 
 
 
Total revenues
$
2,926
  $
4,660
  $
3,956
$
3,478
Net loss
$
(1,043)
  $
(6,663)
  $
(1,498)
$
(6,424)
Basic and diluted loss per share
$
(0.00)
  $
(0.01)
  $
(0.00)
$
(0.01)
 
 
 
 
 
 
 
 
 
 
 
 
 3
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
Significant items causing variations in quarterly results
 
The Company’s toll milling revenues fluctuate due to the timing of uranium processing at the McClean Lake mill, as well as changes to the estimated mineral resources of the Cigar Lake mine. Toll milling at McClean Lake was suspended during Q2 and Q3 of 2020 and again during Q1 and the beginning of Q2 of 2021, due to the suspension of mining at the Cigar Lake mine as a result of the COVID-19 pandemic (‘COVID-19’). See RESULTS OF OPERATIONS below for further details.
Revenues from the Closed Mines group fluctuate due to the timing of projects, which vary throughout the year in the normal course of business.
Operating expenses fluctuate due to the timing of projects at both the MLJV and the Closed Mines group, which vary throughout the year in the normal course of business.
Exploration expenses are generally largest in the first and third quarters, due to the timing of the winter and summer exploration seasons in northern Saskatchewan. As a result of COVID-19, the 2020 summer exploration program was deferred to the fourth quarter of 2020.
Other income and expense fluctuates due to changes in the fair value of the Company’s portfolio investments, share purchase warrants, and uranium investments, all of which are recorded at fair value through profit or loss and are subject to fluctuations in the underlying share / commodity price. The Company’s share purchase warrants and uranium investments are also subject to fluctuations in the US dollar to Canadian dollar exchange rate.
The Company’s results are also impacted, from time to time, by other non-recurring events arising from its ongoing activities, as discussed below where applicable.
 
RESULTS OF OPERATIONS
 
REVENUES
 
McClean Lake Uranium Mill
 
McClean Lake is located on the eastern edge of the Athabasca Basin in northern Saskatchewan, approximately 750 kilometres north of Saskatoon. Denison holds a 22.5% ownership interest in the MLJV and its McClean Lake uranium mill, one of the world’s largest uranium processing facilities, which is contracted to process ore from the Cigar Lake mine under a toll milling agreement. The MLJV is a joint venture between Orano Canada with a 77.5% interest and Denison with a 22.5% interest.
 
In February 2017, Denison closed an arrangement with Anglo Pacific Group PLC and one of its wholly owned subsidiaries (the ‘APG Arrangement’) under which Denison received an upfront payment of $43,500,000 in exchange for its right to receive future toll milling cash receipts from the MLJV under the current toll milling agreement with the Cigar Lake Joint Venture (‘CLJV’) from July 1, 2016 onwards. The APG Arrangement consists of certain contractual obligations of Denison to forward to APG the cash proceeds of future toll milling revenue earned by the Company related to the processing of the specified Cigar Lake ore through the McClean Lake mill, and as such, the upfront payment was accounted for as deferred revenue.
 
In response to the COVID-19 pandemic, the CLJV temporarily suspended production at the Cigar Lake mine from the end of March 2020 until September 2020, and then again from the end of December 2020 until April 2021. The MLJV temporarily suspended operations at the mill for the duration of the CLJV shutdowns. As noted above, Denison sold the toll milling revenue to be earned from the processing of the Cigar Lake ore pursuant to the APG Arrangement. While the temporary suspension of operations at the McClean Lake mill resulted in a decrease in revenue recognized by Denison, the impact is non-cash and is limited to a reduction in the drawdown of the Company’s deferred revenue balance.
 
During the three and six months ended June 30, 2021, the McClean Lake mill processed 2.5 million and 2.5 million pounds U3O8 for the CLJV, respectively (June 30, 2020 – nil and 4.2 million pounds U3O8) and recorded toll milling revenue of $582,000 and $719,000, respectively (June 30, 2020 – $152,000 and $1,115,000). Toll milling revenue reported for the six months ended June 30, 2021, includes a $137,000 non-cash cumulative catch up adjustment recorded in the first quarter of 2021 related to the Cigar Lake mineral resource estimate update published in the first quarter. The increase in toll milling revenue during the three months ended June 30, 2021, as compared to the prior year, is predominantly due to an increase in mill production in the current period. The McClean Lake mill reopened following the second COVID-19-related temporary shutdown in April 2021, while it was shut down for the entirety of the second quarter in 2020. The impact of the increase in mill production in the current quarter was slightly offset by a negative non-cash cumulative catch up adjustment of $76,000, due to a change in the estimated timing of toll milling activity driven by the reopening of the mill in April. The decrease in toll milling revenue during the six months ended June 30, 2021, as compared to the prior period, was predominantly due to a reduction in mill production in the current period.
 
 
 4
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
The mill was in operation for approximately six weeks in the six months ended June 30, 2021, compared to approximately three months of operations in the six months ended June 30, 2020.
 
During the three and six months ended June 30, 2021, the Company also recorded accretion expense of $790,000 and $1,544,000, respectively, on the toll milling deferred revenue balance (June 30, 2020 – $755,000 and $1,537,000). While the annual accretion expense will decrease over the life of the agreement, as the deferred revenue liability decreases over time, accretion expense increased in the current three and six month periods due to the impact of the McClean Lake mill shutdown. With the mill shut down, the deferred revenue balance increased, as accretion expense exceeded the drawdown of deferred revenue.
 
Closed Mine Services
 
Mine decommissioning and environmental services are provided through Denison’s Closed Mines group, which has provided long-term care and maintenance for closed mine sites since 1997. With offices in Ontario, the Yukon Territory and Quebec, the Closed Mines group manages Denison’s Elliot Lake reclamation projects and provides post-closure mine care and maintenance services to various customers.
 
Revenue from Closed Mines services during the three and six months ended June 30, 2021 was $2,566,000 and $4,310,000 (June 30, 2020 - $2,104,000 and $4,132,000). The increase in revenue in the three and six months ended June 30, 2021, as compared to the prior period, was due to an increase in activity at certain care and maintenance sites, slightly offset by a decrease in revenue related to one customer contract that was not renewed for 2021.
 
Management Services Agreement with UPC
 
As discussed in ABOUT DENISON above, up until July 19, 2021, Denison provided general administrative and management services to UPC, and the Management fees and commissions earned by Denison provided a source of cash flow to partly offset corporate administrative expenditures incurred by the Company during the year.
 
During the three and six months ended June 30, 2021, revenue from the Company’s management contract with UPC was $1,478,000 and $2,093,000 (June 30, 2020 - $670,000 and $1,487,000). The increase in revenues during the three and six months ended June 30, 2021, compared to the prior year periods, was due to an increase in management fees earned based on UPC’s monthly net asset value (‘NAV’), as well as an increase in both discretionary management fees and commission-based management fees. UPC’s balance sheet consists primarily of uranium held either in the form of U3O8 or UF6, which is accounted for at its fair value. The increase in NAV-based management fees was due to the increase in the average fair value of UPC’s uranium holdings during the three and six months ended June 30, 2021, compared to the prior year, resulting from higher uranium spot prices. Discretionary management fees are awarded to Denison for non-routine activities performed by the Company. During the three and six months ended June 30, 2021, Denison was awarded $210,000 and $350,000 in discretionary management fees, compared to $nil and $300,000 in the prior periods. Denison also earned a 1% commission on the gross value of UPC’s uranium purchases and sales. The increase in commission-based fees in both the three and six months ended June 30, 2021, as compared to the prior year, was due to an increase in uranium transactions completed for UPC during the current periods.
 
OPERATING EXPENSES
 
Mining
 
Operating expenses of the mining segment include depreciation and development costs, as well as cost of sales related to the sale of uranium.
 
Operating expenses in the three and six months ended June 30, 2021 were $1,353,000 and $1,648,000, respectively (June 30, 2020 – $389,000 and $1,994,000), including depreciation expense relating to the McClean Lake mill of $429,000 and $429,000 (June 30, 2020 - $nil and $736,000), as a result of processing approximately 2.5 million and 2.5 million pounds U3O8, respectively, for the CLJV (June 30, 2020 – nil and 4.2 million pounds).
 
In the three and six months ended June 30, 2021, operating expenses also included development and other operating costs related to the MLJV of $924,000 and $1,219,000 (June 30, 2020 – $389,000 and $1,258,000). The development and other operating costs for the three and six months ended June 30, 2021 predominantly related to the advancement of the Surface Access Borehole Resource Extraction (‘SABRE’) mining technology, as part of a multi-year test mining program operated by Orano Canada within the MLJV.
 
 
 5
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
Closed Mines Services
 
Operating expenses during the three and six months ended June 30, 2021 totaled $2,338,000 and $3,931,000 respectively (June 30, 2020 - $1,659,000 and $3,374,000). The expenses relate primarily to care and maintenance services provided to clients, and include labour and other costs. The increase in operating expenses in the current periods, as compared to the prior year, is predominantly due to an increase in activity at certain care and maintenance sites.
 
MINERAL PROPERTY EVALUATION
 
During the three and six months ended June 30, 2021, Denison’s share of evaluation expenditures was $6,381,000 and $9,142,000 (June 30, 2020 - $364,000 and $1,855,000). The increase in evaluation expenditures, compared to the prior period, was due to an increase in Wheeler River evaluation activities, including the 2021 ISR field program. The following table summarizes the evaluation activities completed during the first half of 2021 and up until the middle of July 2021.
 
PROJECT EVALUATION ACTIVITIES
Property
Denison’s ownership(1)
Evaluation drilling
Other activities
Wheeler River
90%
2,092 metres
 (5 large diameter CSWs(2))
3,431metres
(9 small diameter MWs(3))
 
ISR field testing,
engineering, metallurgical testing, environmental and sustainability activities
 
 
 
 
 
 
   
 
5,523 m (14 holes)
 
Notes:
(1) The Company’s ownership interest as at June 30, 2021. Effective August 3, 2021, the Company has acquired an additional 5% ownership interest in Wheeler River through its acquisition of 50% of JCU (see SUBSEQEUNT EVENTS for further details).
(2) CSW drilling relates to the drilling and installation of new CSWs from surface for the purposes of ISR field testing at Phoenix. Figures include total evaluation meters drilled and total number of holes completed.
(3)  Small diameter evaluation drilling includes HQ/PQ sized diamond drilling either as the widening (reaming) of existing exploration drill holes, or the drilling of new holes, for the purposes of installing MWs for ISR field testing at Phoenix. Figures include total evaluation metres drilled and total number of holes completed.
 
Wheeler River Project
 
A PFS was completed for Wheeler River in late 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.
 
Further details regarding Wheeler River, including the estimated mineral reserves and resources, are provided in the Technical Report for the Wheeler River project titled ‘Pre-feasibility Study Report for the Wheeler River Uranium Project, Saskatchewan, Canada’ with an effective date of September 24, 2018 (‘PFS Technical Report’). A copy of the PFS Technical Report is available on Denison’s website and under its profile on each of SEDAR and EDGAR.
 
Given the social, financial and market disruptions in early 2020, Denison suspended certain activities at Wheeler River, including the Environmental Assessment (‘EA’) program, which is on the critical path to achieving the project development schedule outlined in the PFS. The Company is not currently 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.
 
 
 
 
 
 6
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
The location of the Wheeler River property, as well as the Phoenix and Gryphon deposits, and existing and proposed infrastructure, is shown on the map provided below.
 
 
Engineering Activities
 
2021 Field Program:
 
Drill crews were fully mobilized for the 2021 ISR Field Program in the second quarter. Activities progressed largely on schedule during the quarter as the Wheeler River site managed to prevent any outbreaks or disruptions related to COVID-19 with rigorous application of safety protocols. Interim progress highlights from the 2021 ISR field program include the following:
 
Installation of a 5-spot Test Pattern: The Test Pattern, located in the planned first mining area (‘Phase 1’) of Phoenix, consists of five new CSWs and has been designed to facilitate the further evaluation of the ISR mining conditions at Phoenix – for incorporation into detailed mine planning, expected to be included in a future Feasibility Study (‘FS’) for the Project.
 
During the second quarter of 2021, all five CSWs were drilled to depth and initial hydrogeologic testing was completed. Work planned for the third quarter includes additional permeability enhancement and well screen installations, followed by the commencement of additional comprehensive hydrogeologic testing, as outlined below.
 
Installation of 11 additional MWs: Eleven additional small-diameter MWs are planned to be installed around the Phase 1 area and are designed to surround the Test Pattern on all sides and above the ore zone horizon, in order to facilitate detailed monitoring of pressure changes and observations of fluid flow patterns during active hydrogeological tests. Certain MWs will also allow for water quality sampling over the duration of the test work.
 
 
 7
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
The drilling of the MWs is underway, with the five water sampling MWs and four of the six additional small diameter Vibrating Wire Piezometers (‘VWP’) MWs having been completed.
 
In addition, some historical exploration drill holes have been re-purposed for monitoring fluid flows within the Test Pattern.
 
Refer to the map below for the placement of the CSWs and the MWs.
 
Discovery of High-Grade Mineralization in GWR-045: GWR-045, a MW located to the northwest of the Test Pattern, intersected a thick interval of high-grade unconformity-associated uranium mineralization, with grades of 22.0% eU3O8 over 8.6 metres (see Denison press release dated July 29, 2021). Based on the mineral resources currently estimated for Phoenix, GWR-045 was expected to intersect low grade uranium mineralization on the northwest margin of the deposit, approximately 5 metres outside of the boundary of the Phoenix Zone A high-grade resource domain. The intersection is presently open further to the northwest and represents an area for potential resource expansion of Phoenix.
 
Extensive Hydrogeologic Testing: Approximately twenty-five hydrogeologic tests are planned to be completed during the 2021 Field Program. Tests will first evaluate baseline conditions and the effectiveness of permeability enhancement tools deployed on an individual well basis, and are then expected to progress to assessing the Test Pattern’s total permeability on a full-scale basis with multi-day pump and injection tests. Tests using ion tracers are also expected to be conducted on the full Test Pattern to establish breakthrough times for each CSW and confirm sub-surface pathways. These tests are expected to provide a more complete understanding of the hydrogeologic characteristics expected throughout Phase 1 in order to support the permitting and design of a lixiviant test, utilizing the existing Test Pattern, planned for 2022.
 
The initial qualitative tests to evaluate baseline conditions were completed in the second quarter.
 
The full-scale hydrogeological testing is planned to commence after the installation of all the MWs has been completed. This work is currently scheduled to take place in the third quarter.
 
 
 8
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
Permeameter Analysis: Permeameter analysis of additional areas within Phoenix resumed in 2021 to refine the understanding of the mineralized hydrogeologic horizons. To date, analysis has been completed from 16 of the planned program of 47 holes, consisting of 383 permeameter tests. The 47 holes planned for testing represents different mineralization zones across all of Phoenix Zone A.
 
Metallurgical Testing
 
Metallurgical test work continued in the second quarter of 2021 with multiple tests carried out at the SRC Laboratories in Saskatoon (‘SRC’).
 
Core Leach Tests:
 
The core leach tests are specialized leach tests involving the testing of intact mineralized core samples, representative of the in-situ conditions at Phoenix, designed to evaluate uranium recovery specifically for the ISR mining method.
 
During the first half of 2021, four core leach samples were tested at SRC.
 
Three cores representing the high grade/low clay characteristics of the majority of the mineralization in the Phase 1 mining area have been tested to date with results showing steady-state and average UBS head grades significantly above the 10g/L level used in the PFS.
 
In addition to the high-grade/low clay characteristics of Phase 1, the Phoenix ISR operation is also expected to encounter comparatively rare and isolated areas with lower uranium grades and high clay content, which is expected to result in a limited number of zones of reduced permeability. In order to understand the ISR leach dynamics in these areas, test work was also initiated on a sample representing high clay characteristics (above 25% clay). Results obtained from these tests confirm that high clay content can impact the natural permeability of the ore body and lead to lower UBS head-grades. Importantly, these tests also confirm that permeability enhancement techniques have the potential to normalize these areas and significantly improve UBS head-grade concentrations to levels that align with core leach tests carried out using samples with higher grades and lower clay content.
 
The test work completed to date has consistently supported an ISR mining uranium head-grade for Phoenix in excess of the 10g/L assumed in the PFS. Accordingly, the Company has decided to adapt its plans for the remaining metallurgical test work, including the bench-scale tests of the unit operations for the processing plant, to reflect an assumed UBS head-grade recovered from the wellfield of 15g/L, which represents a 50% increase from the UBS head-grade used in the PFS.
 
Column Leach Tests:
 
The primary purpose of the column leach tests was to recover sufficient volumes of UBS to facilitate bench-scale tests of the unit operations outlined in the flowsheet for the Phoenix processing plant. Over 900 litres of UBS were produced from 64 Kilograms (“kg”) of Phoenix core samples. Combined results from the four column leach tests are highly positive, with calculated UBS head-grade from the four columns averaging 19g/L, which further supports the decision to increase the overall UBS head-grade assumption for Phoenix.
 
While not the primary purpose of the column leach tests, average reagent addition rates from the column leach tests (1.3 kg acid / kg U3O8 and 1.2 kg oxidant / kg U3O8) have also provided useful information that is supportive of the values published in the PFS.
 
Environmental and Sustainability Activities
 
EA Activities
 
Technical studies related to the hydrogeological model continued in the second quarter of 2021, with the Denison technical team validating the assumptions in the model provided by the Company’s consultant to ensure that the model is aligned with Denison’s current mining strategy and decommissioning plans. During the second quarter, the groundwater sampling required to support the hydrogeological assessment was completed.
 
Also during the second quarter, the team commenced the development of a Caribou Protection Plan with the selection of a trial location, and progressed both terrestrial and air quality assessment efforts.
 
 
 9
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
Community Engagement Activities
 
At the end of the first quarter of 2021, Denison executed two agreements with the English River First Nation (‘ERFN’): a Participation and Funding Agreement, which outlines a framework and funding agreement to facilitate ERFN’s participation and engagement in the Wheeler EA process, and an Exploration Agreement, whereby the ERFN consents to the Company’s exploration and evaluation activities, provided Denison meets the commitments made in the Exploration Agreement, which include Denison providing support for ERFN's interests in relation to community development and benefits, environmental protection and monitoring, as well as a sustainable and predictable consultation and engagement process.
 
During the second quarter, a Letter Agreement was completed between Denison and the Ya’thi Néné Lands and Resources Office, allowing the parties to undertake engagement activities in the communities in the northernmost portion of the Athabasca Basin region (Black Lake First Nation, Fond du Lac First Nation, Hatchet Lake First Nation, Camsell Portage, Uranium City, Stony Rapids and Wollaston Lake) for the Project. Engagement meetings are currently scheduled to occur in the third quarter.
 
MINERAL PROPERTY EXPLORATION
 
During the three and six months ended June 30, 2021, Denison’s share of exploration expenditures was $528,0000 and $1,876,000, (June 30, 2020 – $481,000 and $2,181,000). The decrease in exploration expenditures in the six months ended June 30, 2021 compared to the prior year was due to a decrease in winter exploration activities.
 
Exploration spending in the Athabasca Basin is generally seasonal in nature, reflecting increased field activity during the winter exploration season (January to mid-April) and summer exploration season (June to mid-October).
 
The following table summarize the exploration activities completed during the first half of 2021. The exploration drilling relates to the winter drilling programs at three of the Company’s non-operated properties.
 
EXPLORATION & EVALUATION ACTIVITIES
Property
Denison’s ownership
Drilling in metres (m)(1)
Other activities
Ford Lake
100.00%
-
Geophysical Survey
 
McClean Lake
22.50%
4,083.0 (15 holes)
-
 
Midwest
25.17%
2,669.0 (8 holes)
Geophysical Survey
 
Waterfound
12.32%(2)
-
Geophysical Survey
 
Wolly
21.89%(3)
2,118.5 (11 holes)
-
 
 
 
 
 
 
     Total
 
8,870.5 (34 holes)
 
 
(1)
The Company reports total exploration metres drilled and the number of holes that were successfully completed to their target depth.
(2)
Represents Denison’s ownership position at December 31, 2020. Denison has elected not to funds its 12.32% share of the 2021 exploration program implemented by the operator, Orano Canada. Accordingly, Denison’s ownership share will decrease.
(3)
Represents Denison’s ownership position at December 31, 2020. Denison has elected not to funds its 21.89% share of the 2021 exploration program implemented by the operator, Orano Canada. Accordingly, Denison’s ownership share will decrease.
 
The Company’s land position in the Athabasca Basin, as of June 30, 2021, is illustrated in the figure below. The size of the Company’s Athabasca land package did not change during the second quarter of 2021, remaining at 280,107 hectares (207 claims).
 
 
 
 
 
 
 
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
 
 
Wheeler River Exploration
 
Denison’s share of exploration costs at Wheeler River was $186,000 and $446,000 during the three and six months ended June 30, 2021, respectively (June 30, 2020 – $188,000 and $394,000), which includes a portion of camp support and stand-by costs.
 
During the three and six months ended June 30, 2020, exploration work related to Wheeler River included desktop analysis and interpretation of the results of the 2020 exploration program and the detailed planning for the upcoming 2021 exploration drilling program – which is expected to begin in the third quarter of 2021 and include an estimated 7,500 metres in approximately 12 to 15 drill holes.
 
Given the recent intersection of a thick interval of high-grade unconformity-associated uranium mineralization in GWR-045, which returned 22.0% eU3O8 over 8.6 metres, the exploration team is currently carrying out further geologic interpretation, updates to the geologic model, and planning for follow-up drilling, which could be completed as part of the exploration field work planned for 2021.
 
Regional exploration during 2021 will be focused at the K West and M Zone target areas, where additional exploration drilling is required to follow up on mineralization encountered in each of these areas from the 2020 exploration drilling program.
 
Exploration Pipeline Properties
 
Ford Lake
 
The final data sets for the 2021 Ford Lake SML-EM survey were received during the quarter. Denison’s exploration team is currently analyzing the data to develop a conductivity model for the survey area, and to identify targets for future drilling programs.
 
 
 11
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
McClean Lake
 
The McClean Lake property is operated by Orano Canada and is host to the McClean mill and several unmined uranium deposits. A diamond drilling program consisting of 15 drill holes totaling 4,083 metres was completed at McClean Lake during the first quarter, which was highlighted by the discovery of high-grade uranium mineralization in the McClean South target area.
 
Following completion of the field programs, Orano Canada has initiated a further review and analysis of all drilling data (historical and recent) in the McClean South area in order to develop a comprehensive and consistent geological interpretation reflective of the mineralization intersected during the winter drill program.
 
Assay results from drilling at McClean South were received for the mineralized intersections reported in Denison’s news release dated April 14, 2021. Final assays reflect a significant increase in the U3O8 grades previously reported for hole MCS-34, which returned 33.54% U3O8 over 3.0 metres (as compared to previously disclosed preliminary radiometric equivalent grades of 14.86% eU3O8 over 3.9 metres). The following table summarizes the assay results from the mineralized intersections for the winter 2021 McClean Lake exploration drill program.
 
HIGHLIGHTS OF ASSAY RESULTS FOR MCLEAN LAKE DRILL HOLES
Hole Number
From
(m)
To
(m)
Length
(m)
Grade
(% U3O8)
MCS-31(1)
224.7
225.2
0.5(3)
0.26
MCS-34(1)
183.1
196.6
13.5(4)
8.67
Including(2)
190.1
190.6
0.5(4)
18.5
Including(2)
193.1
196.1
3.0(4)
33.54
MCS-36(1)
165.7
168.7
3.0(5)
0.51
Mcs-37(1)
164.9
170.9
6.0(5)
0.64
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 2.0% U3O8
3.
True thickness is estimated to be approximately 65% of stated downhole length.
4.
True thickness is estimated to be approximately 85% of stated downhole length.
5.
True thickness is estimated to be approximately 90% of stated downhole length.
 
 
GENERAL AND ADMINISTRATIVE EXPENSES
 
During the three and six months ended June 30, 2021, total general and administrative expenses were $2,362,000 and $4,987,000, respectively (June 30, 2020 - $1,421,000 and $3,609,000). These costs are mainly comprised of head office salaries and benefits, office costs in multiple regions, audit and regulatory costs, legal fees, investor relations expenses, project costs, and all other costs related to operating a public company with listings in Canada and the United States. The increase in general and administrative expenses during the three and six months ended June 30, 2021 was predominantly due to an increase in employee costs, as well as an increase in compliance costs driven by an increase in retail investor trading and ownership in Denison shares and the costs related to their participation in Denison’s annual general meeting.
 
The increase in employee costs in the three months ended June 30, 2021, was due to an increase in the non-cash stock-based compensation expense driven by the impact of the Company’s increased share price and share price volatility on the valuation of stock-based compensation awarded in late March 2021. The increase in employee costs in the six months ended June 30, 2021, is due to an increase in stock-based compensation expense, as well as an increase in bonus expense. In order to preserve cash in early 2020, the Company settled 2019 bonuses for the executive team and the majority of staff with a grant of restricted share units (‘RSUs’). The cost of RSUs is expensed over the three-year vesting period of the units, whereas cash bonuses, by comparison, are fully expensed at the time of approval. During 2021, the 2020 bonuses awarded to staff and executives were paid in cash resulting in a change in the timing of the recognition of the expense.
 
OTHER INCOME AND EXPENSES
 
During the three and six months ended June 30, 2021, the Company recognized gains of $6,348,000 and $4,307,000 in other income/expense, respectively (June 30, 2020 – gain of $2,163,000 and a loss of $1,029,000).
 
 
 12
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
The main drivers of other income/expense are as follows:
 
Fair value gains or losses on uranium investments
 
A portion of the proceeds from the Company’s March 2021 unit offering (see below for further details) is intended to fund the purchase of 2,500,000 pounds of U3O8 to be held as a long-term investment to strengthen the Company’s balance sheet and potentially enhance its ability to access future project financing in support of the future advancement and/or construction of Wheeler River. Given that they are held for long-term capital appreciation, these investments are accounted for by analogy to IAS 40 investment property and are measured at fair value with changes in fair value between reporting dates recorded through profit and loss. During the second quarter, the Company completed the purchase of 2,300,000 pounds U3O8 at a weighted average cost of $36.51 (US$29.58) per pound U3O8 (including purchase commissions of $0.05 (US$0.04) per pound U3O8). As at June 30, 2021, the spot price of U3O8 was $39.79 (US$32.10) per pound U3O8, resulting in mark-to-market gains for the three and six months ended June 30, 2021 of $7,534,000, on these uranium investments (June 30, 2020 - $nil).
 
Fair value gains or losses on share purchase warrants
 
In February and March 2021, Denison completed two equity offerings involving the issuance of units, which were comprised of one common share and one half of a common share purchase warrant. Each full warrant entitles the holder to acquire one common share of the Company at a pre-determined exercise price for 24 months after issuance. The exercise prices for the share purchase warrants are denominated in US dollars, which differs from Company’s Canadian dollar functional currency, and therefore the warrants are classified as a non-cash derivative liability, rather than equity, on the Company’s statement of financial position.
 
At the date of issuance of the units, the gross proceeds of each offering were allocated between the common shares and the common share purchase warrants issued using the relative fair value basis approach, and the amount related to the warrants was recorded as a non-current derivative liability. At each period end until the common share purchase warrants are exercised or expire, the warrants are revalued with the revaluation gains or losses recorded in other income and expense.
 
During the three and six months ended June 30, 2021, the Company recorded fair value losses of $4,268,000 and $5,832,000, respectively (June 30, 2020 - $nil and $nil). Fair value gains and losses on the share purchase warrants are predominantly driven by the Company’s share price at period end, changes in the volatility of the Company’s share price, and the US dollar to Canadian dollar exchange rate.
 
Fair value gains or losses on portfolio investments
 
During the three and six months ended June 30, 2021, the Company recognized gains on investments carried at fair value of $5,233,000 and $5,142,000 (June 30, 2020 – a gain of $1,989,000 and a loss of $961,000). Gains and losses on investments carried at fair value are driven by the closing share price of the related investee at the end of the quarter.
 
Foreign exchange gains or losses
 
During the three and six months ended June 30, 2021, the Company recognized FX losses of $2,059,000 and $1,618,000 respectively (June 30, 2020 – FX losses of $98,000 and $78,000). The increase in FX loss in the current year is predominantly driven by the impact of the decrease in the US dollar to Canadian dollar exchange rate on the US dollar cash balances and US-dollar payables.
 
 
LIQUIDITY AND CAPITAL RESOURCES
 
Cash and cash equivalents were $84,852,000 at June 30, 2021 (December 31, 2020 – $24,992,000).
 
The increase in cash and cash equivalents of $59,860,000 was predominantly due to net cash provided by financing activities of $150,692,000, offset by net cash used in operations of $12,840,000, and net cash used in investing activities of $77,061,000.
 
Net cash used in operating activities of $12,840,000 was predominantly due to the net loss for the period, adjusted for non-cash items and changes in working capital items.
 
 13
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
Net cash used in investing activities of $77,061,000 consists primarily of expenditures for uranium investments, as well as expenditures for property, plant and equipment, and an increase in restricted cash related to the Company’s funding the Elliot Lake reclamation trust fund.
 
Net cash provided by financing activities of $150,692,000 was due to the net proceeds from the Company’s ATM program, February 2021 unit offering, March flow-through share offering, March 2021 unit offering, as well as stock option exercises. See below for further details regarding these transactions.
 
On June 2, 2020, the Company filed a short form base shelf prospectus (‘2020 Shelf Prospectus’) with the securities regulatory authorities in each of the provinces and territories in Canada and in the United States. Under the 2020 Shelf Prospectus, the Company was allowed to issue securities, in amounts, at prices, and on terms to be determined based
on market conditions at the time of sale and as set forth in the 2020 Shelf Prospectus, for an aggregate offering amount of up to $175,000,000 during the 25 month period beginning on June 2, 2020.
 
In November 2020, Denison entered into an equity distribution agreement providing for an ATM equity offering program, qualified by a prospectus supplement to the 2020 Shelf Prospectus. The ATM was to allow Denison, through its agents, to, from time to time, offer and sell, in Canada and the United States, such number of common shares as would have an aggregate offering price of up to USD$20,000,000. In January and February 2021, Denison issued 4,230,186 common shares under the ATM program, at an average price of $0.93 per share, for aggregate gross proceeds of $3,914,000, and incurred issue expenses of $466,000, including commissions of $78,000. The ATM program was terminated in connection with the March 2021 unit offering (described below).
 
In February 2021, Denison issued 31,593,950 units, pursuant to a public offering of units qualified by a prospectus supplement to the 2020 Base Shelf Prospectus. The units were issued at a price of US$0.91 for gross proceeds of $36,265,000 (US$28,750,000) and consisted of one common share and one half warrant. Each full warrant entitles the holder to acquire one common share of the Company at an exercise price of US$2.00 over a 24 month period.
 
In March 2021, Denison issued 78,430,000 units of the Company pursuant to a public offering of units qualified by a prospectus supplement to the 2020 Base Shelf Prospectus. The units were issued at a price of US$1.10 for gross proceeds of $107,949,000 (US$86,273,000) and consisted of one common share and one half warrant. Each full warrant entitles the holder to acquire one common share of the Company at an exercise price of US$2.25 over a 24 month period.
 
In March 2021, Denison issued 5,926,000 common shares on a flow-through basis at a price of $1.35 for gross proceeds of $8,000,000.
 
Also during the first half of 2021, the Company received share issue proceeds of $4,289,000 related to the issuance of 5,918,248 shares upon the exercise of employee stock options.
 
Use of Proceeds
 
2020 Flow Through Financing
 
As at June 30, 2021, the Company has fulfilled its obligation to spend $930,000 on eligible Canadian exploration expenditures as a result of the issuance of common shares on a flow-through basis in December 2020.
 
October 2020 Equity Financing
 
As disclosed in the Company’s prospectus supplement to the 2020 Base Shelf Prospectus (‘October 2020 Prospectus Supplement’) dated October 8, 2020, the net proceeds of the October 2020 Offering will be utilized to fund Wheeler River evaluation and EA activities as well as general, corporate and administrative expenses. During the period between the close of the financing in October 2020 and June 30, 2021, the Company’s use of proceeds has been in line with that disclosed in the October 2020 Prospectus Supplement.
 
February 2021 Unit Financing
 
As disclosed in the Company’s prospectus supplement to the 2020 Base Shelf Prospectus (‘February 2021 Prospectus Supplement’) dated February 16, 2021, the net proceeds of the February 2021 Offering will be utilized to fund Wheeler River evaluation and detailed project engineering activities as well as general, corporate and administrative expenses. During the period between the close of the financing in February 2021 and June 30, 2021, the Company’s use of proceeds has been in line with that disclosed in the February 2021 Prospectus Supplement.
 
 
 14
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
Subsequent to quarter end, a portion of the proceeds from the February 2021 unit offering were utilized to fund the acquisition of JCU (see SUBSEQUENT EVENTS).
 
March 2021 Unit Financing
 
As disclosed in the Company’s prospectus supplement to the 2020 Base Shelf Prospectus (‘March 2021 Prospectus Supplement’) dated March 17, 2021, the majority of the net proceeds of the March 2021 Offering will be utilized to purchase physical uranium as well as general, corporate and administrative expenses, including storage costs for the purchased uranium. During the period between the close of the financing in March 2021 and June 30, 2021, the Company’s use of proceeds has been in line with that disclosed in the March 2021 Prospectus Supplement. As at June 30. 2021, the Company has completed the purchase of 2,300,000 pounds of U3O8 at a weighted average price of $36.51 per pound U3O8 (US$29.58 per pound U3O8) and has committed to the purchase of an additional 200,000 pounds of U3O8 at a weighted average price of US$30.50 per pound U3O8.
 
2021 Flow Through Financing
 
As at June 30, 2021, the Company has spent $377,000 towards its obligation to spend $8,000,000 on eligible Canadian exploration expenditures as a result of the issuance of common shares on a flow-through basis in March 2021.
 
Revolving Term Credit Facility
 
On January 14, 2021, the Company entered into an agreement with the Bank of Nova Scotia (‘BNS’) to extend the maturity date of the Company’s credit facility to January 31, 2022 (‘2021 Credit Facility’). Under the 2021 Credit Facility, the Company continues to have access to letters of credit of up to $24,000,000, which is fully utilized for non-financial letters of credit in support of reclamation obligations. All other terms of the 2021 Credit Facility (tangible net worth covenant, pledged cash, investments amount and security for the facility) remain unchanged by the amendment – including a requirement to provide $9,000,000 in cash collateral on deposit with BNS to maintain the 2021 Credit Facility.
 
TRANSACTIONS WITH RELATED PARTIES
 
Uranium Participation Corporation
 
The Company’s management services agreement with UPC (‘MSA’) included a term of five years (the ‘Term’), expiring on March 31, 2024. Under the MSA, Denison is entitled to receive 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.
 
On June 3, 2021, Denison received notice from UPC that, conditional on the successful completion of the transaction with Sprott (see ABOUT DENISON above for further details), the MSA would be terminated and Denison would receive the termination amount calculated in accordance with the agreement. See SUBSEQUENT EVENTS below for further details.
 
The following amounts were earned from UPC for the periods ended:
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
 
 
June 30,
 
June 30,
 
June 30,
 
June 30,
(in thousands)
 
 
 
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
Management Fee Revenue
 
 
 
 
 
 
 
 
 
 
 
Base and variable fees
 
 
 
$
571
$
551
$
1,046
$
1,014
Discretionary fees
 
 
 
 
210
 
-
 
350
 
300
Commission fees
 
 
 
 
697
 
119
 
697
 
173
 
 
 
 
$
1,478
$
670
$
2,093
$
1,487
 
At June 30, 2021, accounts receivable includes $1,199,000 (December 31, 2020 – $265,000) due from UPC with respect to the fees and transactions discussed above.
 
 15
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
Korea Electric Power Corporation (‘KEPCO’)
As at June 30, 2021, KEPCO, through its subsidiaries including KHNP Canada Energy Ltd., holds 58,284,000 shares of Denison representing a share interest of approximately 7.23% and is also the largest member of the consortium of investors that make up KWULP. The Waterbury Lake property is owned by Denison and KWULP through their respective interests in Waterbury Lake Uranium Corporation (‘WLUC’) and Waterbury Lake Uranium Limited Partnership (‘WLULP’), entities whose key asset is the Waterbury Lake Property.
 
Other
 
All services and transactions with the following related parties listed below were made on terms equivalent to those that prevail with arm’s length transactions:
 
During the three and six months ended June 30, 2021, the Company incurred investor relations, administrative service fees and certain pass-through expenses of $144,000 and $164,000, respectively (June 30, 2020 – $75,000 and $96,000) with Namdo Management Services Ltd, a company of which a former director of Denison is a shareholder. These services were incurred in the normal course of operating a public company. At June 30, 2021, an amount of $71,000 (December 31, 2020 – $nil) was due to this company.
 
COMPENSATION OF KEY MANAGEMENT PERSONNEL
 
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers, vice-presidents and members of its Board of Directors.
 
The following compensation was awarded to key management personnel:
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
June 30,
 
June 30,
(in thousands)
 
2021
 
2020
 
2021
 
2020
 
 
 
 
 
 
 
 
 
Salaries and short-term employee benefits
$
(494)
$
(371)
$
(1,537)
$
(955)
Share-based compensation
 
(737)
 
(320)
 
(1,057)
 
(750)
 
$
(1,231)
$
(691)
$
(2,594)
$
(1,705)
 
OFF-BALANCE SHEET ARRANGEMENTS
 
The Company does not have any off-balance sheet arrangements.
 
SUBSEQUENT EVENTS
 
Uranium Participation Corporation
 
On July 19, 2021, UPC and Sprott completed a plan of arrangement whereby UPC shareholders became unitholders of the Sprott Physical Uranium Trust, a newly formed entity managed by Sprott (the ‘UPC Transaction’). In conjunction with the completion of the UPC Transaction, the MSA between Denison and UPC was terminated and Denison received a termination payment from UPC of $5,848,000.
 
Acquisition of 50% of JCU from UEX
 
On August 3, 2021, acquired 50% ownership of JCU from UEX for cash consideration of $20.5 million. JCU holds a portfolio of twelve uranium project joint venture interests in Canada, including a 10% interest in Wheeler River, a 30.099% interest in the Millenium project, a 33.8123% interest in the Kiggavik project and a 34.4508% interest in the Christie Lake project.
 
UEX acquired 100% of JCU from OURD for $40.5 million, which was funded by Denison providing UEX with an interest-free term loan for three months in the amount of $41.0 million (the ‘UEX Term Loan’). Half of the amount owing from UEX to Denison was settled by the transfer of 50% of the shares of JCU to Denison, with UEX continuing to owe Denison $20.5 million. The UEX Term Loan is secured by all the shares of JCU owned by UEX.
 
 
 16
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
UEX may extend the term of the loan by an additional three months, in which case interest will be charged at a rate of 4% from the original start date of the UEX Term Loan.
 
Denison and UEX have entered into a shareholder’s agreement which governs the operations of JCU, including provisions for future funding, dilution and the resolution of management deadlock situations.
 
At June 30, 2021, Denison has capitalized $76,000 of transaction costs related to the JCU acquisition on its statement of financial position.
 
OUTSTANDING SHARE DATA
 
Common Shares
 
At August 5, 2021, there were 805,739,098 common shares issued and outstanding and a total of 881,162,907 common shares on a fully-diluted basis.
 
Stock Options and Share Units
 
At August 5, 2021, the Company had 12,393,995 Denison stock options, and 8,017,839 share units outstanding.
 
Share Purchase Warrants
 
At August 5, 2021, the Company had outstanding 15,796,975 share purchase warrants with a US$2.00 strike price and a February 2023 expiry, and 39,215,000 share purchase warrants with a US$2.25 strike price and a March 2023 expiry.
 
OUTLOOK FOR 2021
 
Refer to the Company’s annual MD&A for the year ended December 31, 2020 and the MD&A for the three months ended March 31, 2021 for a detailed discussion of the previously disclosed 2021 budget and outlook.
 
During the second quarter of 2021, the Company increased its outlook for income from UPC management services by $1,395,000. The increase is related to the an increase in commission fees earned in relation to uranium purchase transactions undertaken by Denison on behalf of UPC during the second quarter, as well as an increase in the final termination payment that the Company received upon the termination of the MSA compared to the amount previously estimated (see SUBSEQUENT EVENTS for further details).
 
(in thousands)
 
PREVIOUS 2021 OUTLOOK
CURRENT 2021 OUTLOOK
Actual to
June 30, 2021(2)
Mining Segment
 
 
 
 
Mineral Sales
 
                    3,709
                    3,709
              -
Development & Operations
 
(4,972)
 (4,972)
(1,579)
Exploration
 
(4,178)
(4,178)
(2,086)
Evaluation
 
(19,413)
(19,413)
(9,124)
 
 
(24,854)
(24,854)
(12,789)
Closed Mines Segment
 
 
 
 
Closed Mines Environmental Services
 
964
964
467
 
 
964
964
467
Corporate and Other Segment
 
 
 
 
UPC Management Services
 
6,639
8,034
2,094
Corporate Administration & Other
 
(6,854)
(6,854)
(4,260)
 
 
(215)
1,180
(2,166)
Total(1)
 
$ (24,105)
$ (22,710)
$                        (14,488)
Notes:
1.
Only material operations shown.
2.
The budget is prepared on a cash basis. As a result, actual amounts represent a non-GAAP measure. Compared to segment loss as presented in the Company’s unaudited interim consolidated financial statements for the six months ended June 30, 2021, actual amounts reported above excludes $26,000 net impact of non-cash items and other adjustments.
 
 17
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
ADDITIONAL INFORMATION
 
SIGNIFICANT ACCOUNTING POLICIES
 
QUALIFIED PERSON
 
David Bronkhorst, P.Eng., Denison’s Vice President Operations, who is a ‘Qualified Person’ within the meaning of this term in NI 43-101, has prepared and/or reviewed and confirmed the scientific and technical disclosure pertaining to the Company’s evaluation programs.
 
Andy Yackulic, P.Geo., Denison’s Director Exploration, who is a ‘Qualified Person’ within the meaning of this term in NI 43-101, has prepared and/or reviewed and confirmed the scientific and technical disclosure pertaining to the Company’s exploration programs.
 
For more information regarding each of Denison’s material projects discussed herein, you are encouraged to refer to the applicable technical reports available on the Company’s website and under the Company’s profile on SEDAR (www.sedar.com) and EDGAR (www.sec.gov/edgar.shtml):
 
For the Wheeler River project, the ‘Prefeasibility Study Report for the Wheeler River Uranium Project Saskatchewan, Canada’ dated October 30, 2018;
For the Waterbury Lake project, ‘Preliminary Economic Assessment for the Tthe Heldeth Túé (J Zone) Deposit, Waterbury Lake Property, Northern Saskatchewan, Canada’ with an effective date of October 30, 2020;
For the Midwest project, ‘Technical Report with an Updated Mineral Resource Estimate for the Midwest Property, Northern Saskatchewan, Canada’ dated March 26, 2018; and
For the McClean Lake project, (A) the ‘Technical Report on the Denison Mines Inc. Uranium Properties, Saskatchewan, Canada’ dated November 21, 2005, as revised February 16, 2006, (B) the ‘Technical Report on the Sue D Uranium Deposit Mineral Resource Estimate, Saskatchewan, Canada’ dated March 31, 2006, and (C) the ‘Technical Report on the Mineral Resource Estimate for the McClean North Uranium Deposits, Saskatchewan’ dated January 31, 2007.
 
ASSAY PROCEDURES AND DATA VERIFICATION
 
The Company reports preliminary radiometric equivalent grades (‘eU3O8’), derived from a calibrated down-hole total gamma probe, during or upon completion of its exploration programs and subsequently reports definitive U3O8 assay grades following sampling and chemical analysis of the mineralized drill core. Uranium assays are performed on split core samples by the Saskatchewan Research Council (‘SRC’) Geoanalytical Laboratories using an ISO/IEC 17025:2005 accredited method for the determination of U3O8 weight %. Sample preparation involves crushing and pulverizing core samples to 90% passing -106 microns. The resultant pulp is digested using aqua-regia and the solution analyzed for U3O8 weight % using ICP-OES. Geochemical results from composite core samples are reported as parts per million (‘ppm’) obtained from a partial HNO3:HCl digest with an ICP-MS finish. Boron values are obtained through NaO2/NaCO3 fusion followed by an ICP-OES finish. All data are subject to verification procedures by qualified persons employed by Denison prior to disclosure. For further details on Denison’s sampling, analysis, quality assurance program and quality control measures and data verification procedures please see Denison's Annual Information Form dated March 26, 2021 available on the Company’s website and filed under the Company's profile on SEDAR (www.sedar.com) and in its Form 40-F available on EDGAR at www.sec.gov/edgar.shtml.
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
Certain information contained in this MD&A constitutes ‘forward-looking information’, within the meaning of the applicable United States and Canadian legislation concerning the business, operations and financial performance and condition of Denison.
 
Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as ‘plans’, ‘expects’, ‘budget’, ‘scheduled’, ‘estimates’, ‘forecasts’, ‘intends’, ‘anticipates’, or ‘believes’, or the negatives and/or variations of such words and phrases, or state that certain actions, events or results ‘may’, ‘could’, ‘would’, ‘might’ or ‘will be taken’, ‘occur’, ‘be achieved’ or ‘has the potential to’.
 
 
 18
 
 MANAGEMENT’S DISCUSSION & ANALYSIS
 
In particular, this MD&A contains forward-looking information pertaining to the following: Denison’s plans and objectives for 2021 and beyond, including the proposed use of proceeds of recent equity financings; the benefits to be derived from corporate transactions, including commitments to acquire physical uranium, and estimates of related expenditures, such as projected increases in uranium storage costs; the estimates of Denison's mineral reserves and mineral resources; exploration, development and expansion plans and objectives, including Denison’s planned engineering, environmental assessment and other evaluation programs, the results of, and estimates and assumptions within, the PFS, and statements regarding anticipated budgets, fees, expenditures and timelines; expectations regarding Denison’s community engagement activities and related agreements, including the Participation and Funding Agreement and Exploration Agreement with ERFN and the anticipated continuity thereof; expectations regarding Denison’s joint venture ownership interests and the continuity of its agreements with its partners; expectations regarding adding to its mineral reserves and resources through acquisitions or exploration; expectations regarding the toll milling of Cigar Lake ores, including the impacts of COVID-19; expectations regarding revenues and expenditures from its Closed Mines operations; and the annual operating budget and capital expenditure programs, estimated exploration and development expenditures and reclamation costs and Denison's share of same. Statements relating to ‘mineral reserves’ or ‘mineral resources’ are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the mineral reserves and mineral resources described can be profitably produced in the future.
 
Forward looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Denison to be materially different from those expressed or implied by such forward-looking statements. For example, the results of the Denison’s studies, including the PFS, trade-off study, and field work, may not be maintained after further testing or be representative of actual mining plans for the Phoenix deposit after further design and studies are completed. In addition, Denison may decide or otherwise be required to discontinue testing, evaluation and development work at Wheeler River or other projects or its exploration plans if it is unable to maintain or otherwise secure the necessary resources (such as testing facilities, capital funding, regulatory approvals, etc.) or operations are otherwise affected by COVID-19 and its potentially far-reaching impacts. The UPC Transaction may not be completed or, if completed, may not be on the terms described herein and/or the termination payment may be materially different than the amount stated herein.
 
Denison believes that the expectations reflected in this forward-looking information are reasonable but no assurance can be given that these expectations will prove to be accurate and results may differ materially from those anticipated in this forward-looking information. For a discussion in respect of risks and other factors that could influence forward-looking events, please refer to the factors discussed in Denison’s Annual Information Form dated March 26, 2021 under the heading ‘Risk Factors’. These factors are not, and should not be construed as being exhaustive.
 
Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking information contained in this MD&A is expressly qualified by this cautionary statement. Any forward-looking information and the assumptions made with respect thereto speaks only as of the date of this MD&A. Denison does not undertake any obligation to publicly update or revise any forward-looking information after the date of this MD&A to conform such information to actual results or to changes in Denison's expectations except as otherwise required by applicable legislation.
 
Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Mineral Resources and Probable Mineral Reserves: This MD&A may use the terms 'measured', 'indicated' and 'inferred' mineral resources. United States investors are advised that while such terms have been prepared in accordance with the definition standards on mineral reserves of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in Canadian National Instrument 43-101 Mineral Disclosure Standards (‘NI 43-101’) and are recognized and required by Canadian regulations, these terms are not defined under Industry Guide 7 under the United States Securities Act and, until recently, have not been permitted to be used in reports and registration statements filed with the United States Securities and Exchange Commission (‘SEC’). 'Inferred mineral resources' have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.  In addition, the terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” for the purposes of NI 43-101 differ from the definitions and allowable usage in Industry Guide 7.
 
Effective February 2019, 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 and as a result, 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. However, information regarding mineral resources or mineral reserves in Denison’s disclosure may not be comparable to similar information made public by United States companies.
 
  19
 
  Exhibit 99.3
 
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
 
I, David D. Cates, President and Chief Executive Officer of Denison Mines Corp., certify the following:
 
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Denison Mines Corp. (the "issuer") for the interim period ended June 30, 2021.
 
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
 
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
 
4.
Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
 
5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
 
(a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
 
(i)
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
 
(ii)
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
 
(b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
 
5.1
Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 
5.2
ICFR: Not applicable.
 
5.3
Limitation on scope of design: Not applicable.
 
6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2021 and ended on June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
 
Date: August 5, 2021
 
(signed) "David Cates"  
Name:            
David D. Cates
Title:            
President and Chief Executive Officer
 
 Exhibit 99.4
 
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
 
I, Gabriel (Mac) McDonald, Executive Vice President and Chief Financial Officer of Denison Mines Corp., certify the following:
 
1.
Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Denison Mines Corp. (the "issuer") for the interim period ended June 30, 2021.
 
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
 
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
 
4.
Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
 
5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
 
(a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
 
(i)
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
 
(ii)
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
 
(b)
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
 
5.1
Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 
5.2
ICFR: Not applicable.
 
5.3
Limitation on scope of design: Not applicable.
 
6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2021 and ended on June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
 
Date: August 5, 2021
 
(signed) "Gabriel McDonald"
Name:            
Gabriel (Mac) McDonald
Title:            
Executive Vice President and Chief Financial Officer
 
 
Exhibit 99.5
 
 
Denison Mines Corp.
1100 – 40 University Ave
Toronto, ON M5J 1T1
www.denisonmines.com

PRESS RELEASE
 
DENISON REPORTS RESULTS FROM Q2 2021
 
Toronto, ON – August 5, 2021. Denison Mines Corp. (‘Denison’ or the ‘Company’) (TSX: DML, NYSE American: DNN) today filed its Condensed Consolidated Financial Statements and Management’s Discussion & Analysis (‘MD&A’) for the quarter ended June 30, 2021. Both documents will be available on the Company’s website at www.denisonmines.com or on SEDAR (at www.sedar.com) and EDGAR (at www.sec.gov/edgar.shtml). The highlights provided below are derived from these documents and should be read in conjunction with them. All amounts in this release are in Canadian dollars unless otherwise stated.
 
David Cates, President and CEO of Denison commentedThe Company continues to successfully advance on its ambition of developing the high-grade Phoenix deposit, as potentially one of the lowest cost uranium mines in the world, at a time when the uranium market is showing signs of a sustained recovery and the beginnings of a new contracting cycle.
 
Thus far in 2021, our corporate team has bolstered our balance sheet with our recent financings and uranium purchases, consolidated a further 5% ownership in our flagship Wheeler River project through our acquisition of 50% of JCU, and completed the transition of Uranium Participation Corp. to the Sprott Physical Uranium Trust. On the technical side, in relation to our progress at Phoenix, we have reported several positive updates on ISR field testing activities, metallurgical studies in support of the ISR mining method, and the discovery of additional high-grade uranium in the area of our expected first mining phase. Taken together, we believe that Denison is well positioned to continue de-risking the use of the ISR mining method at Phoenix and ultimately compete with the incumbent uranium producers in the coming years when the market needs additional sources of production.
 
Our focus for the remainder of 2021 is expected to be in the field, where we plan to be active on both the evaluation and exploration front. Our evaluation team is preparing for full-scale pump and injection tests as well as ion tracer tests at Phoenix, making use of the commercial-scale 5-spot test pattern installed earlier this year. Our exploration team is also readying to resume drill testing of various target areas at Wheeler River and nearby properties that are prospective for the discovery of additional potentially ISR amenable uranium resources. With results from these programs expected through the third and fourth quarter, it is an exciting time for investors to follow both the uranium market and Denison’s company-specific activities closely.”
 
HIGHLIGHTS
 
In-Situ Recovery (‘ISR’) field test activities at the Phoenix uranium deposit (‘Phoenix’) progress
 
A substantial portion of the ISR field test program has been successfully completed, including the installation of all five commercial-scale wells (‘CSWs’) and nine of eleven monitoring wells (‘MWs’) planned for the 5-spot test pattern (the ‘Test Pattern’) located in the Phase 1 area of Phoenix on the Company’s Wheeler River Uranium Project (‘Wheeler River’ or the ‘Project’). Based on the progress to date, multi-day pump and injection tests and ion tracer tests are planned to be initiated and completed on the full-scale Test Pattern during the third quarter.
 
Discovered high-grade uranium outside of the Phoenix Zone A high-grade domain
 
Drill hole GWR-045 was completed as part of the ISR field test program to install MWs to the northwest of the CSW Test Pattern. Based on the mineral resources currently estimated for Phoenix, GWR-045 was expected to intersect low grade uranium mineralization on the northwest margin of the deposit, approximately 5 metres outside of the boundary of the Phoenix Zone A high-grade resource domain. The drill hole, however, intersected a thick interval of high-grade unconformity-associated uranium mineralization with grades of 22.0% eU3O8 over 8.6 metres.
 
 
 
 
The intersection is presently open further to the northwest and represents an area for further exploration and potential mineral resource expansion of Phoenix.
 
Decision to increase anticipated ISR mining head grade at Phoenix by 50%
 
Positive interim results, completed to date, from the ongoing metallurgical test program for the planned ISR mining operation at Phoenix have consistently supported uranium bearing solution (‘UBS’) head-grade for Phoenix well in excess of the 10 grams / Litre used in the Pre-Feasibility Study (“PFS”) completed for Wheeler River in 2018. Accordingly, the Company has decided to adapt its plans for the remaining metallurgical test work, including the bench-scale tests of the unit operations of the proposed process plant, to reflect a 50% increase in the head-grade of UBS to be recovered from the well-field.
 
Completed acquisition of 50% of JCU (Canada) Exploration Company, Limited (‘JCU’) for $20.5 million
 
In June 2021, Denison announced that it had entered into a binding agreement with UEX Corporation (‘UEX’) to acquire 50% of JCU from UEX for cash consideration of $20.5 million following UEX’s acquisition of 100% of JCU from Overseas Uranium Resources Development Co., Ltd. for $41 million. Denison’s acquisition of 50% of JCU was completed on August 3, 2021. JCU holds a portfolio of 12 uranium project joint venture interests in Canada, including a 10% interest in Wheeler River, a 30.099% interest in the Millennium project (Cameco Corporation 69.901%), a 33.8123% interest in the Kiggavik project (Orano Canada Inc. (‘Orano Canada’) 66.1877%), and a 34.4508% interest in the Christie Lake project (UEX 65.5492%).
 
Received $5.8 million in connection with conversion of Uranium Participation Corporation (‘UPC’) into the Sprott Physical Uranium Trust
 
In April 2021, UPC announced that it had reached an agreement with Sprott Asset Management LP (‘Sprott’) to convert UPC into the Sprott Physical Uranium Trust. Upon completion of this transaction on July 19, 2021, Sprott became the manager of the Sprott Physical Uranium Trust, and the management services agreement (‘MSA’) between Denison and UPC was terminated. In accordance with the terms of the MSA, Denison received a cash payment of approximately $5.8 million in connection with the termination.
 
About Wheeler River
Wheeler River is the largest undeveloped uranium project in the infrastructure rich eastern portion of the Athabasca Basin region, in northern Saskatchewan and is a joint venture between Denison and Denison’s 50%-owned JCU (Canada) Exploration Company Limited. Denison is the operator of the project and holds an effective 95% ownership interest. The project is host to the high-grade Phoenix and Gryphon uranium deposits, discovered by Denison in 2008 and 2014, respectively, estimated to have combined Indicated Mineral Resources of 132.1 million pounds U3O8 (1,809,000 tonnes at an average grade of 3.3% U3O8), plus combined Inferred Mineral Resources of 3.0 million pounds U3O8 (82,000 tonnes at an average grade of 1.7% U3O8).
 
The PFS was completed in late 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 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 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 PFS was prepared on a project (100% ownership) and pre-tax basis, as each of the partners to the Wheeler River Joint Venture are subject to different tax and other obligations. 
 
Further details regarding the PFS, including additional scientific and technical information, as well as after-tax results attributable to Denison's ownership interest, are described in greater detail in the NI 43-101 Technical Report titled “Pre-feasibility Study for the Wheeler River Uranium Project, Saskatchewan, Canada” dated October 30, 2018 with an effective date of September 24, 2018. A copy of this report is available on Denison's website and under its profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.
 
Given the social, financial and market disruptions related to COVID-19, and certain fiscally prudent measures, Denison temporarily suspended certain activities at Wheeler River starting in April 2020, including the formal parts of the EA program, which is on the critical path to achieving the project development schedule outlined in the PFS Technical Report. While the formal EA process has resumed in early 2021, the Company is not currently able to estimate the impact to the project development schedule, outlined in the PFS Technical Report, and users are cautioned that certain of the estimates provided therein, particularly regarding the start of pre-production activities in 2021 and first production in 2024 should not be relied upon.
 
 
 
 
About Denison
 
Denison Mines Corp. was formed under the laws of Ontario and is a reporting issuer in all Canadian provinces. Denison’s common shares are listed on the Toronto Stock Exchange (the ‘TSX’) under the symbol ‘DML’ and on the NYSE American exchange under the symbol ‘DNN’.
 
Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, Canada. In addition to its flagship Wheeler River uranium project, Denison's interests in Saskatchewan include a 22.5% ownership interest in the McClean Lake Joint Venture (‘MLJV’), which includes several uranium deposits and the McClean Lake uranium mill, which is contracted to process the ore from the Cigar Lake mine under a toll milling agreement (see RESULTS OF OPERATIONS below for more details), plus a 25.17% interest in the Midwest deposits and a 66.90% interest in the Tthe Heldeth Túé (‘THT’, formerly J Zone) and Huskie deposits on the Waterbury Lake property. The Midwest, THT and Huskie deposits are located within 20 kilometres of the McClean Lake mill. In addition, Denison has an extensive portfolio of exploration projects in the Athabasca Basin region.
 
Through its 50% ownership of JCU, Denison also holds interests in various uranium project joint ventures in Canada, including the Millennium project (JCU 30.099%), the Kiggavik project (JCU 33.8123%) and Christie Lake (JCU 34.4508%).
 
Denison is engaged in mine decommissioning and environmental services through its Closed Mines group, which manages Denison’s Elliot Lake reclamation projects and provides post-closure mine and maintenance services to a variety of industry and government clients.
 
Up until July 19, 2021, Denison also served as the manager of UPC. UPC was a publicly traded company listed on the TSX, which invested in uranium oxide in concentrates (‘U3O8’) and uranium hexafluoride (‘UF6’). In April, 2021, UPC announced that it had entered into an agreement with Sprott to convert UPC into the Sprott Physical Uranium Trust. This transaction closed on July 19, 2021, and the MSA between Denison and UPC was terminated.
 
Technical Disclosure and Qualified Person
 
The technical information contained in this press release has been reviewed and approved by David Bronkhorst, P.Eng, Denison's Vice President, Operations and/or Andrew Yackulic, P. Geo, Denison's Director, Exploration, each of whom is a Qualified Person in accordance with the requirements of NI 43-101.
 
For more information, please contact
 
 David Cates
 (416) 979-1991 ext 362
 President and Chief Executive Officer
 
 
 
 Sophia Shane
 (604) 689-7842
 Investor Relations
 
 
 
 Follow Denison on Twitter
 @DenisonMinesCo
 
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
Certain information contained in this press release constitutes ‘forward-looking information’, within the meaning of the applicable United States and Canadian legislation concerning the business, operations and financial performance and condition of Denison.
 
Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as ‘plans’, ‘expects’, ‘budget’, ‘scheduled’, ‘estimates’, ‘forecasts’, ‘intends’, ‘anticipates’, or ‘believes’, or the negatives and/or variations of such words and phrases, or state that certain actions, events or results ‘may’, ‘could’, ‘would’, ‘might’ or ‘will be taken’, ‘occur’, ‘be achieved’ or ‘has the potential to’.
 
In particular, this press release contains forward-looking information pertaining to the following: projections with respect to use of proceeds of recent financings; exploration, development and expansion plans and objectives, including the plans and objectives for Wheeler River and the related evaluation field program activities and exploration objectives; the plans for metallurgical test work; the impact of COVID-19 on Denison’s operations; the estimates of Denison's mineral reserves and mineral resources or results of exploration; expectations regarding Denison’s joint venture ownership interests; expectations regarding the continuity of its agreements with third parties; and its interpretations of, and expectations for, nuclear energy and uranium demand. Statements relating to ‘mineral reserves’ or ‘mineral resources’ are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the mineral reserves and mineral resources described can be profitably produced in the future.
 
 
 
 
Forward looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Denison to be materially different from those expressed or implied by such forward-looking statements. For example, the results and underlying assumptions and interpretations of the PFS as well as de-risking efforts such as the 2021 Field Program discussed herein may not be maintained after further testing or be representative of actual conditions within the applicable deposits. In addition, Denison may decide or otherwise be required to extend the EA and/or otherwise discontinue testing, evaluation and development work if it is unable to maintain or otherwise secure the necessary approvals or resources (such as testing facilities, capital funding, etc.). Denison believes that the expectations reflected in this forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be accurate and results may differ materially from those anticipated in this forward-looking information. For a discussion in respect of risks and other factors that could influence forward-looking events, please refer to the factors discussed in Denison’s Annual Information Form dated March 26, 2021 under the heading ‘Risk Factors’. These factors are not, and should not be, construed as being exhaustive.
 
Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking information contained in this press release is expressly qualified by this cautionary statement. Any forward-looking information and the assumptions made with respect thereto speaks only as of the date of this press release. Denison does not undertake any obligation to publicly update or revise any forward-looking information after the date of this press release to conform such information to actual results or to changes in Denison's expectations except as otherwise required by applicable legislation.
 
Cautionary Note to United States Investors Concerning Estimates of Mineral Resources and Mineral Reserves: This press release may use terms such as “measured”, “indicated” and/or “inferred” mineral resources and “proven” or “probable” mineral reserves, which are terms defined with reference to the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) CIM Definition Standards on Mineral Resources and Mineral Reserves (“CIM Standards”). The Company’s descriptions of its projects using CIM Standards 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. . United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.