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 9, 2024
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.
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DENISON MINES
CORP.
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/s/ Amanda Willett
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Date: August
9, 2024
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Amanda
Willett
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Vice
President Legal and Corporate Secretary
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FORM 6-K
EXHIBIT INDEX
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Exhibit Number
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Description
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99.1
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99.2
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99.3
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99.4
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99.5
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Exhibit 99.1
INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(Unaudited -
Expressed in thousands of Canadian dollars (“CAD”)
except for share amounts)
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At June
30
2024
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At December
31
2023
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ASSETS
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Current
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Cash and cash
equivalents (note 4)
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$
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121,067
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$
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131,054
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Trade and other
receivables
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2,422
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1,913
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Inventories
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3,207
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3,580
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Investments-equity
instruments (note 5)
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7,093
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10,400
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Prepaid expenses
and other
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1,270
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1,594
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135,059
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148,541
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Non-Current
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Inventories-ore
in stockpiles
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2,098
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2,098
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Investments-equity
instruments (note 5)
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-
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117
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Investments-uranium
(note 5)
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257,460
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276,815
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Investments-convertible
debentures (note 5)
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14,130
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15,565
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Investments-joint
venture (note 6)
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18,111
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17,290
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Restricted cash
and investments
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12,061
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11,231
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Property, plant
and equipment (note 7)
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256,438
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254,946
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Total
assets
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$
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695,357
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$
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726,603
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LIABILITIES
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Current
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Accounts payable
and accrued liabilities (note 8)
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$
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12,233
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$
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10,822
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Current portion
of long-term liabilities:
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Deferred revenue
(note 9)
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4,501
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4,535
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Reclamation
obligations (note 10)
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2,257
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2,256
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Other
liabilities
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469
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333
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19,460
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17,946
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Non-Current
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Deferred revenue
(note 9)
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29,860
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30,423
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Reclamation
obligations (note 10)
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32,371
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32,642
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Other
liabilities
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1,876
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1,201
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Deferred income
tax liability
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2,534
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2,607
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Total
liabilities
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86,101
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84,819
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EQUITY
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Share capital
(note 11)
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1,657,089
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1,655,024
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Contributed
surplus
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71,147
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69,823
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Deficit
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(1,120,731)
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(1,084,881)
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Accumulated other
comprehensive income
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1,751
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1,818
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Total
equity
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609,256
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641,784
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Total
liabilities and equity
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$
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695,357
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$
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726,603
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Issued and
outstanding common shares (note 11)
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892,356,433
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890,970,371
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Commitments
and contingencies (note 17)
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The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
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INTERIM CONSOLIDATED FINANCIAL STATEMENTS
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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)
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Three
Months Ended
June
30
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Six
Months Ended
June
30
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2024
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2023
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2024
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2023
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REVENUES (note 14)
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$
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1,326
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$
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968
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$
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2,158
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$
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(14)
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EXPENSES
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Operating
expenses (note 14)
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(1,367)
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(866)
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(2,587)
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(1,770)
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Exploration (note
14)
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(1,755)
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(1,834)
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(7,168)
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(5,781)
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Evaluation (note
14)
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(6,708)
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(4,662)
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(12,409)
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(7,384)
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General and
administrative (note 14)
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(3,741)
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(3,209)
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(7,325)
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(6,463)
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Other (expense)
income (note 13)
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(4,596)
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11,976
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(9,678)
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22,198
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(18,167)
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1,405
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(39,167)
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800
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(Loss)
income before net finance expense, equity accounting
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(16,841)
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2,373
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(37,009)
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786
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Finance income
(expense), net (note 13)
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902
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(438)
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1,743
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(1,288)
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Equity share of
loss of joint venture (note 6)
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(547)
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(2,461)
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(1,128)
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(3,355)
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Loss before
taxes
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(16,486)
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(526)
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(36,394)
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(3,857)
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Income tax
recovery:
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Deferred
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45
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181
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73
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678
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Net loss from
continuing operations
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(16,441)
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(345)
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(36,321)
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(3,179)
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Net income from
discontinued operations,
net
of taxes (note 14)
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471
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406
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471
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840
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Net (loss) income
for the period
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$
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(15,970)
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$
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61
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$
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(35,850)
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$
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(2,339)
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Other
comprehensive (loss) income:
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Items that are or
may be subsequently reclassified to (loss) income:
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Foreign currency
translation change
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(18)
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125
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(67)
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129
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Comprehensive
(loss) income for the period
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$
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(15,988)
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$
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186
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$
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(35,917)
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$
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(2,210)
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Basic and diluted
net (loss) income per share:
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Basic
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$
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(0.02)
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$
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0.00
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$
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(0.04)
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$
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(0.00)
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Diluted
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$
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(0.02)
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$
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0.00
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$
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(0.04)
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$
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(0.00)
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Weighted-average
number of shares outstanding
(in
thousands):
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Basic
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892,230
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835,660
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891,727
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834,243
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Diluted
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892,230
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845,425
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891,727
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834,243
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The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
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INTERIM CONSOLIDATED FINANCIAL STATEMENTS
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
(Unaudited -
Expressed in thousands of CAD dollars)
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Six
Months Ended
June
30
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2024
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2023
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Share capital (note 11)
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Balance-beginning
of period
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$
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1,655,024
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$
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1,539,209
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Shares issued for
cash, net of issue costs
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-
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15,339
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Other shares
issued, net of issue costs
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|
95
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193
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Share options
exercised-cash
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1,082
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452
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Share options
exercised-transfer from contributed surplus
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509
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178
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Share units
exercised-transfer from contributed surplus
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|
379
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182
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Balance-end of
period
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1,657,089
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1,555,553
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Contributed surplus
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Balance-beginning
of period
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69,823
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70,281
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Share-based
compensation expense (note 12)
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2,212
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1,937
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Share options
exercised-transfer to share capital
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(509)
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(178)
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Share units
exercised-transfer to share capital
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(379)
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(182)
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Balance-end of
period
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|
71,147
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71,858
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Deficit
|
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Balance-beginning
of period
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(1,084,881)
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(1,175,256)
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Net
loss
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(35,850)
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(2,339)
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Balance-end of
period
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(1,120,731)
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(1,177,595)
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Accumulated
other comprehensive income (note 13)
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Balance-beginning
of period
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|
1,818
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|
1,782
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Foreign currency
translation
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(67)
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129
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Balance-end of
period
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|
1,751
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1,911
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Total Equity
|
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Balance-beginning
of period
|
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$
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641,784
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$
|
436,016
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Balance-end of
period
|
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$
|
609,256
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$
|
451,727
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The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
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INTERIM CONSOLIDATED FINANCIAL STATEMENTS
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited -
Expressed in thousands of CAD dollars)
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Six
Months Ended
June
30
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2024
|
|
2023
|
|
CASH PROVIDED BY (USED IN):
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OPERATING ACTIVITIES
|
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Net loss for the
period
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$
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(35,850)
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$
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(2,339)
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Adjustments and
items not affecting cash and cash equivalents:
|
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Depletion,
depreciation, amortization and accretion
|
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|
5,219
|
|
4,891
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Fair value change
losses (gains):
|
|
|
|
|
|
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Investments-equity
instruments (notes 5 and 13)
|
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|
3,424
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|
1,885
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|
Investments-uranium
(note 5 and 13)
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|
5,757
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|
(22,821)
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Investments-convertible
debentures (notes 5 and 13)
|
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|
|
1,435
|
|
-
|
|
Joint
venture-equity share of loss (note 6)
|
|
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|
1,128
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|
3,355
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|
(Recognition)
Reversal of deferred revenue (note 9)
|
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|
|
(2,158)
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|
14
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Gain on property,
plant and equipment disposals
|
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|
(130)
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|
(1,299)
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Post-employment
benefit payments
|
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|
(65)
|
|
(57)
|
|
Reclamation
obligation expenditures (note 10)
|
|
|
|
(1,216)
|
|
(1,211)
|
|
Reclamation
liability deposit from joint venture partner
|
|
|
|
-
|
|
99
|
|
Share-based
compensation (note 12)
|
|
|
|
2,212
|
|
1,937
|
|
Foreign exchange
(gain) loss (note 13)
|
|
|
|
(1,111)
|
|
191
|
|
Deferred income
tax recovery
|
|
|
|
(73)
|
|
(678)
|
|
Change in
non-cash operating working capital items (note 13)
|
|
|
|
1,450
|
|
(1,179)
|
|
Net
cash used in operating activities
|
|
|
|
(19,978)
|
|
(17,212)
|
|
|
|
|
|
|
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|
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INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Increase in
restricted cash and investments
|
|
|
|
(830)
|
|
(474)
|
|
Purchase of
investment in joint venture (note 6)
|
|
|
|
(1,949)
|
|
(1,100)
|
|
Additions of
property, plant and equipment (note 7)
|
|
|
|
(3,046)
|
|
(1,351)
|
|
Proceeds on
disposal of investments – uranium (note 5)
|
|
|
|
13,598
|
|
-
|
|
Proceeds on
disposal of property, plant and equipment
|
|
|
|
207
|
|
125
|
|
Net
cash provided by (used in) investing activities
|
|
|
|
7,980
|
|
(2,800)
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds
from share options exercised (note 12)
|
|
|
|
1,082
|
|
452
|
|
Repayment
of debt obligations
|
|
|
|
(119)
|
|
(110)
|
|
Proceeds
from share issues, net of issue costs
|
|
|
|
-
|
|
15,319
|
|
Net
cash provided by financing activities
|
|
|
|
963
|
|
15,661
|
|
|
|
|
|
|
|
|
|
Decrease
in cash and cash equivalents
|
|
|
|
(11,035)
|
|
(4,351)
|
|
Foreign
exchange effect on cash and cash equivalents
|
|
|
|
1,048
|
|
(64)
|
|
Cash
and cash equivalents, beginning of period
|
|
|
|
131,054
|
|
50,915
|
|
Cash
and cash equivalents, end of period
|
|
|
$
|
121,067
|
$
|
46,500
|
|
|
|
The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
|
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2024
|
|
(Unaudited -
Expressed in CAD dollars except for shares and per share
amounts)
|
|
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, development
and mining of uranium bearing properties, as well as the processing
and selling of, and investing in uranium.
The Company has
an effective 95.0% interest in the Wheeler River Joint Venture
(“WRJV”), a 69.44% interest in the Waterbury Lake
Uranium Limited Partnership (“WLULP”), a 22.5% interest
in the McClean Lake Joint Venture (“MLJV”) (which
includes the McClean Lake 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 9).
Through its 50%
ownership of JCU (Canada) Exploration Company, Limited
(“JCU”), Denison holds further indirect interests in
various uranium project joint ventures in Canada, including the
Millennium project (JCU 30.099%), the Kiggavik project (JCU
33.8118%), and the Christie Lake project (JCU 34.4508%). See note 6
for details.
DMC is
incorporated under the Business Corporations Act (Ontario) and
domiciled in Canada. The address of its registered head office is
40 University Avenue, Suite 1100, Toronto, Ontario, Canada, M5J
1T1.
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, 2023. The
Company’s presentation currency is Canadian dollars
(“CAD”).
These financial
statements were approved by the board of directors for issue on
August 8, 2024.
3.
MATERIAL
ACCOUNTING POLICIES
The material
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, 2023.
The Company has
adopted the amendments to IAS 1: Presentation of Financial
Statements, IAS 7: Statement of Cash Flows and Errors, IFRS 7:
Financial Instruments: Disclosures and IFRS 16: Leases, which are
effective for annual periods beginning on or after January 1, 2024
and has concluded that these amendments have no impact on the
Company’s condensed interim consolidated financial
statements.
4.
CASH AND
CASH EQUIVALENTS
The cash and cash
equivalent balance consists of:
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
1,307
|
$
|
2,650
|
|
Cash in MLJV and
MWJV
|
|
|
|
2,459
|
|
1,036
|
|
Cash
equivalents
|
|
|
|
117,301
|
|
127,368
|
|
|
|
|
$
|
121,067
|
$
|
131,054
|
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
The investments
balance consists of:
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
Equity
instruments
|
|
|
|
|
|
|
|
Shares
|
|
|
$
|
7,052
|
$
|
10,390
|
|
Warrants
|
|
|
|
41
|
|
127
|
|
Convertible
Debentures
|
|
|
|
14,130
|
|
15,565
|
|
Physical
Uranium
|
|
|
|
257,460
|
|
276,815
|
|
|
|
|
$
|
278,683
|
$
|
302,897
|
|
|
|
|
|
|
|
|
|
Investments-by
balance sheet presentation:
|
|
|
|
|
|
|
|
Current
|
|
|
$
|
7,093
|
$
|
10,400
|
|
Long-term
|
|
|
|
271,590
|
|
292,497
|
|
|
|
|
$
|
278,683
|
$
|
302,897
|
The investments
continuity summary is as follows:
|
(in
thousands)
|
|
Equity
Instruments
|
|
Convertible
Debentures
|
|
Physical
Uranium
|
|
Total
Investments
|
|
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2023
|
$
|
10,517
|
$
|
15,565
|
$
|
276,815
|
$
|
302,897
|
|
Sale of
investments
|
|
-
|
|
-
|
|
(13,598)
|
|
(13,598)
|
|
Change in fair
value gain to profit and (loss) (note 13)
|
|
(3,424)
|
|
(1,435)
|
|
(5,757)
|
|
(10,616)
|
|
Balance-June 30,
2024
|
$
|
7,093
|
$
|
14,130
|
$
|
257,460
|
$
|
278,683
|
Investment
in equity instruments and debentures
At June 30, 2024,
the Company holds equity instruments consisting of shares and
warrants in publicly traded companies as well as convertible debt
instruments. The convertible debt instruments are classified as
non-current as they are convertible and redeemable for a period
more than one year after the balance sheet date.
Investment
in uranium
At June 30, 2024,
the Company holds a total of 2,200,000 pounds of physical uranium
as uranium oxide concentrates (“U3O8“) at a cost
of $80,729,000 (USD$65,289,000 or USD$29.67 per pound of
U3O8) and market value
of $257,460,000 (USD$188,100,000 or USD$85.50 per pound of
U3O8).
During the second
quarter of 2024, the Company settled a sale of 100,000 pounds of
U3O8 for proceeds of
$13,598,000 (USD$10,000,000).
6.
INVESTMENT
IN JOINT VENTURE
The investment in
joint venture balance consists of:
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Investment in
joint venture:
|
|
|
|
|
|
|
|
JCU
|
|
|
$
|
18,111
|
$
|
17,290
|
|
|
|
|
$
|
18,111
|
$
|
17,290
|
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
A summary of the
investment in JCU is as follows:
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2023
|
|
|
|
|
$
|
17,290
|
|
Investment at
cost:
|
|
|
|
|
|
|
|
Additional
investment in JCU
|
|
|
|
|
|
1,949
|
|
Equity
share of loss
|
|
|
|
|
|
(1,128)
|
|
Balance-June 30,
2024
|
|
|
|
|
$
|
18,111
|
JCU is a private
company that holds a portfolio of twelve uranium project joint
venture interests in Canada, including a 10% interest in the WRJV,
a 30.099% interest in the Millennium project (Cameco Corporation
69.901%), a 33.8118% interest in the Kiggavik project (Orano Canada
Inc. 66.1882%), and a 34.4508% interest in the Christie Lake
project (UEC 65.5492%).
During the six
months ended June 30, 2024, each shareholder of JCU funded
operations with an investment in JCU of $1,949,000. The investment
was made by share subscription, where each shareholder acquired
additional common shares in JCU in accordance with each
shareholder’s pro-rata ownership interest in JCU. As a
result, the Company’s ownership interest in JCU remained
unchanged at 50%.
The following
tables summarize the consolidated financial information of JCU on a
100% basis, taking into account adjustments made by Denison for
equity accounting purposes (including fair value adjustments and
differences in accounting policies). Denison records its equity
share of earnings (loss) in JCU one month in arrears (due to the
information not yet being available), adjusted for any known
material transactions that have occurred up to the period end date
on which Denison is reporting.
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Total current
assets(1)
|
|
|
$
|
2,281
|
$
|
525
|
|
Total non-current
assets
|
|
|
|
38,644
|
|
38,666
|
|
Total current
liabilities
|
|
|
|
(355)
|
|
(381)
|
|
Total non-current
liabilities
|
|
|
|
(4,349)
|
|
(4,230)
|
|
Total net
assets
|
|
|
$
|
36,221
|
$
|
34,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
May 31,
2024(2)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$
|
-
|
|
Net
loss
|
|
|
|
|
|
(2,257)
|
|
Other
comprehensive income
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
JCU net assets to Denison investment carrying value:
|
|
|
|
Adjusted net assets of
JCU–at December 31, 2023
|
|
|
$
|
34,580
|
|
Net
loss
|
|
|
|
|
|
(2,257)
|
|
Investment from
owners
|
|
|
|
|
|
3,898
|
|
Net assets of
JCU-at May 31, 2024
|
|
|
|
|
$
|
36,221
|
|
Denison ownership
interest
|
|
|
|
|
|
50%
|
|
Investment in
JCU
|
|
|
|
|
$
|
18,111
|
(1)
The current assets presented
are entirely cash and cash equivalents for June 30, 2024, and
December 31, 2023.
(2)
Represents JCU net loss for
the six months ended May 31, 2024 (recorded one month in arrears),
adjusted for differences in fair value allocations and accounting
policies.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
7.
PROPERTY,
PLANT AND EQUIPMENT
The property,
plant and equipment (“PP&E”) continuity summary is
as follows:
|
|
|
Plant
and Equipment
|
|
Mineral
|
|
Total
|
|
(in
thousands)
|
|
Owned
|
|
Right-of-Use
|
|
Properties
|
|
PP&E
|
|
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2023
|
$
|
112,705
|
$
|
769
|
$
|
180,813
|
$
|
294,287
|
|
Additions (note
14)
|
|
2,118
|
|
995
|
|
1,129
|
|
4,242
|
|
Disposals
|
|
(591)
|
|
-
|
|
-
|
|
(591)
|
|
Balance-June 30,
2024
|
$
|
114,232
|
$
|
1,764
|
$
|
181,942
|
$
|
297,938
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
amortization, depreciation:
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2023
|
$
|
(38,833)
|
$
|
(508)
|
$
|
-
|
$
|
(39,341)
|
|
Amortization
|
|
(320)
|
|
-
|
|
-
|
|
(320)
|
|
Depreciation
|
|
(2,264)
|
|
(88)
|
|
-
|
|
(2,352)
|
|
Disposals
|
|
513
|
|
-
|
|
-
|
|
513
|
|
Balance-June 30,
2024
|
$
|
(40,904)
|
$
|
(596)
|
$
|
-
|
$
|
(41,500)
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
value:
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2023
|
$
|
73,872
|
$
|
261
|
$
|
180,813
|
$
|
254,946
|
|
Balance-June 30,
2024
|
$
|
73,328
|
$
|
1,168
|
$
|
181,942
|
$
|
256,438
|
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
$53,494,000, or 73.0%, of the June 30, 2024 total carrying value
amount of owned Plant and Equipment assets.
The additions to
PP&E during the six months ended June 30, 2024 primarily relate
to long lead items for Wheeler River and the purchase of the
MaxPERF Tool Systems.
Plant and
Equipment – Right-of-Use
The Company has
included the cost of various right-of-use (“ROU”)
assets within its plant and equipment ROU carrying value amount.
These assets consist of building, vehicle, and office equipment
leases. The majority of the asset value is attributable to the
building lease assets for the Company’s office in Toronto and
warehousing space in Saskatoon.
Mineral
Properties
As at June 30,
2024, the Company has various interests in development, evaluation
and exploration projects located in Saskatchewan, Canada, which are
either held directly or through contractual arrangements. The
properties with significant carrying values are Wheeler River,
Waterbury Lake, Midwest, Mann Lake, Wolly, Johnston Lake, and
McClean Lake, which together represent $164,646,000, or 90.6%, of
the total mineral property carrying value as at June 30,
2024.
In January 2024,
the Company closed an earn-in agreement with Grounded Lithium Corp
(“Grounded Lithium”). with respect to the Kindersley
Lithium Project in Saskatchewan (“KLP”). The agreement
includes a series of earn-in options, with each earn-in option
being comprised of a cash payment to Grounded Lithium as well as
work expenditures to advance KLP. Should the Company complete all
three earn-in options it will earn a 75% working interest in the
KLP. The Company made a payment of $800,000 to Grounded Lithium,
incurred $61,000 of transaction expenses related to agreement, and
currently holds no interest in KLP. The Company has incurred
expenditures of $216,000 to the end of June 30, 2024, related to
the earn-in option. The expenses incurred are expensed, consistent
with the Company’s accounting policy.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
8. ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES
The accounts
payable and accrued liabilities balance consists of:
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
$
|
5,011
|
$
|
5,037
|
|
Payables in MLJV
and MWJV
|
|
|
|
6,113
|
|
4,843
|
|
Other
payables
|
|
|
|
1,109
|
|
942
|
|
|
|
|
$
|
12,233
|
$
|
10,822
|
9. DEFERRED
REVENUE
The deferred
revenue balance consists of:
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Deferred
revenue-pre-sold toll milling:
|
|
|
|
|
|
|
|
CLJV Toll
Milling-Ecora
|
|
|
$
|
34,361
|
$
|
34,958
|
|
|
|
|
$
|
34,361
|
$
|
34,958
|
|
Deferred
revenue-by balance sheet presentation:
|
|
|
|
|
|
Current
|
|
|
$
|
4,501
|
$
|
4,535
|
|
Non-current
|
|
|
|
29,860
|
|
30,423
|
|
|
|
|
$
|
34,361
|
$
|
34,958
|
The deferred
revenue liability continuity summary is as follows:
|
(in
thousands)
|
|
|
|
|
|
|
Deferred
Revenue
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2023
|
|
|
|
|
$
|
34,958
|
|
Revenue
recognized during the period (note 14)
|
|
|
|
|
|
(2,158)
|
|
Accretion (note
13)
|
|
|
|
|
|
1,561
|
|
Balance-June 30,
2024
|
|
|
|
|
$
|
34,361
|
Arrangement
with Ecora Resources PLC (“Ecora”)
In February 2017,
Denison closed an arrangement with Ecora, 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 up-front payment was based upon an estimate of the
gross toll milling cash receipts to be received by
Denison.
The Ecora
Arrangement represents a contractual obligation of Denison to pay
onward to Ecora any 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. The deferred revenue
balance represents a non-cash liability, which is adjusted as any
toll milling revenue received by Denison is passed through to
Ecora, or any changes in Cigar Lake Phase 1 and Phase 2 tolling
milling production estimates are recognized.
During the six
months ended June 30, 2024, the Company recognized $2,158,000 of
toll milling revenue from the draw-down of deferred revenue, based
on Cigar Lake toll milling production of 9,468,000 pounds
U3O8 (100% basis). The
draw-down in 2024 includes a cumulative decrease in revenue for
prior periods of $207,000 resulting from changes in estimates to
the toll milling rates during 2024.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
For the
comparative six months ended June 30, 2023, the Company recognized
negative toll milling revenue of $14,000. Production-based revenue
of $1,932,000 was recognized based on toll milling production of
7,667,000 pounds U3O8 (100% basis). The
production-based revenue was offset by a $1,946,000 true-up
adjustment to decrease the revenue recognized in prior periods as a
result of changes in the estimates to determine the toll milling
drawdown rate.
During the six
months ended June 30, 2024, the Company recognized accretion
expense of $1,561,000, including a true-up adjustment of $63,000
due to the change in the estimated timing of milling of the Cigar
Lake ore (June 30, 2023, accretion expense of $2,001,000 including
a $483,000 true up adjustment).
The current
portion of the deferred revenue liability 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 is reassessed on a quarterly basis.
10. RECLAMATION
OBLIGATIONS
The reclamation
obligations balance consists of:
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Reclamation
obligations-by item:
|
|
|
|
|
|
|
|
Elliot
Lake
|
|
|
$
|
19,802
|
$
|
19,796
|
|
MLJV and
MWJV
|
|
|
|
12,546
|
|
12,215
|
|
Wheeler River and
other
|
|
|
|
2,280
|
|
2,887
|
|
|
|
|
$
|
34,628
|
$
|
34,898
|
|
|
|
|
|
|
|
|
|
Reclamation
obligations-by balance sheet presentation:
|
|
|
|
|
|
Current
|
|
|
$
|
2,257
|
$
|
2,256
|
|
Non-current
|
|
|
|
32,371
|
|
32,642
|
|
|
|
|
$
|
34,628
|
$
|
34,898
|
The reclamation
obligations continuity summary is as follows:
|
(in
thousands)
|
|
|
|
|
|
Reclamation
Obligations
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2023
|
|
|
|
|
$
|
34,898
|
|
Accretion (note
13)
|
|
|
|
|
|
946
|
|
Expenditures
incurred
|
|
|
|
|
|
(1,216)
|
|
Balance-June 30,
2024
|
|
|
|
|
$
|
34,628
|
Site
Restoration: Elliot Lake
The Elliot Lake
uranium mine was closed in 1992 and capital works to decommission
this site were completed in 1997. The Company is responsible for
monitoring the Tailings Management Areas at the Denison and
Stanrock sites and for treatment of water discharged from these
areas.
Spending on
restoration activities at the Elliot Lake site is funded by the
Elliot Lake Reclamation Trust (“Trust”). The Trust had
a balance of $4,089,000 as at June 30, 2024 (December 31, 2023 -
$3,259,000)
Site
Restoration: McClean Lake Joint Venture and Midwest Joint
Venture
Under the
Saskatchewan 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
with, and approved, by the applicable regulatory authorities. As at
June 30, 2024, the Company has provided irrevocable standby letters
of credit, from a chartered bank, in favour of the Saskatchewan
Ministry of Environment, totalling $22,972,000, which relate to the
most recently filed reclamation plan dated November
2021.
Site
Restoration: Wheeler River and other
The
Company’s exploration and evaluation activities, including
those related to Wheeler River, are subject to environmental
regulations as set out by the Government of
Saskatchewan.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
11. 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
except share amounts)
|
Shares
|
|
Capital
|
|
|
|
|
|
|
Balance-December
31, 2023
|
890,970,371
|
$
|
1,655,024
|
|
Issued for
cash:
|
|
|
|
|
Share option
exercises
|
871,834
|
|
1,082
|
|
Share option
exercises-transfer from contributed surplus
|
-
|
|
509
|
|
Share unit
exercises-transfer from contributed surplus
|
472,333
|
|
379
|
|
Other share
issues proceeds-total
|
41,895
|
|
95
|
|
|
1,386,062
|
|
2,065
|
|
Balance-June 30,
2024
|
892,356,433
|
$
|
1,657,089
|
12. SHARE-BASED
COMPENSATION
The
Company’s share-based compensation arrangements include share
options, restricted share units (“RSUs”) and
performance share units (“PSUs”).
Share-based
compensation is recorded over the vesting period, and 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)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Share based
compensation expense for:
|
|
|
|
|
|
|
|
|
|
Share
options
|
$
|
(368)
|
$
|
(322)
|
$
|
(745)
|
$
|
(697)
|
|
RSUs
|
|
(925)
|
|
(547)
|
|
(1,467)
|
|
(1,154)
|
|
PSUs
|
|
-
|
|
(24)
|
|
-
|
|
(86)
|
|
Share
based compensation expense
|
$
|
(1,293)
|
$
|
(893)
|
$
|
(2,212)
|
$
|
(1,937)
|
An additional
$5,772,000 in share-based compensation expense remains to be
recognized, up until May 2027, on outstanding share options and
share units at June 30, 2024.
Share
Options
Share options
granted in 2024 vest over a period of three years. A continuity
summary of the share options granted under the Company’s
Share Option Plan is presented below:
|
|
|
|
|
2024
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
|
Number
of
Common
|
|
Price
per
Share
|
|
|
|
|
|
|
|
Shares
|
|
(CAD)
|
|
|
|
|
|
|
|
|
|
|
|
Share options
outstanding-December 31, 2023
|
|
|
|
|
|
5,220,667
|
$
|
1.49
|
|
Grants
|
|
|
|
|
|
1,541,000
|
|
2.62
|
|
Exercises
(1)
|
|
|
|
|
|
(871,834)
|
|
1.24
|
|
Expiries
|
|
|
|
|
|
(16,000)
|
|
0.68
|
|
Forfeitures
|
|
|
|
|
|
(61,333)
|
|
1.50
|
|
Share options
outstanding-June 30, 2024
|
|
|
|
|
|
5,812,500
|
$
|
1.83
|
|
Share
options exercisable-June 30, 2024
|
|
|
|
|
|
2,763,167
|
$
|
1.49
|
(1)
The weighted average share
price at the date of exercise was CAD$2.68.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
A summary of the
Company’s share options outstanding at June 30, 2024 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
Share options
outstanding
|
|
|
|
|
|
|
|
$ 0.25 to $
0.49
|
|
0.69
|
|
36,000
|
$
|
0.46
|
|
$ 0.50 to $
0.74
|
|
|
|
|
0.12
|
|
13,500
|
|
0.58
|
|
$ 0.75 to $
0.99
|
|
|
|
|
-
|
|
-
|
|
-
|
|
$ 1.00 to $
1.49
|
|
|
|
|
2.72
|
|
2,835,666
|
|
1.39
|
|
$ 1.50 to $
1.99
|
|
|
|
|
2.72
|
|
1,213,334
|
|
1.83
|
|
$ 2.00 to $
2.49
|
|
|
|
|
3.57
|
|
173,000
|
|
2.26
|
|
$ 2.50 to $
2.99
|
|
|
|
|
4.68
|
|
1,541,000
|
|
2.62
|
|
Share options
outstanding-June 30, 2024
|
|
3.25
|
|
5,812,500
|
$
|
1.83
|
Share options
outstanding at June 30, 2024 expire between August 2024 and May
2029.
The fair value of
each share option granted is estimated on the date of grant using
the Black-Scholes option pricing model. The following table
outlines the weighted-average assumptions used in the model to
determine the fair value of share options granted:
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
June 30,
2024
|
|
|
|
|
|
|
|
Risk-free
interest rate
|
|
|
|
3.59% -
3.75%
|
|
Expected stock
price volatility
|
|
|
|
62.67% -
66.40%
|
|
Expected
life
|
|
|
|
3.40 years -
3.41 years
|
|
Expected dividend
yield
|
|
|
|
-
|
|
Fair value
per options granted
|
|
|
$1.29 to
$1.38
|
Share
Units
RSUs granted
under the Share Unit Plan in 2024 vest ratably over a period of
three years.
|
|
|
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, 2023
|
|
5,580,919
|
$
|
1.20
|
|
481,500
|
$
|
0.83
|
|
Grants
|
|
1,728,000
|
|
2.62
|
|
-
|
|
-
|
|
Exercises
(1)
|
|
(250,833)
|
|
0.90
|
|
(221,500)
|
|
0.65
|
|
Forfeitures
|
|
(118,000)
|
|
2.21
|
|
-
|
|
-
|
|
Units
outstanding–June 30, 2024
|
|
6,940,086
|
$
|
1.54
|
|
260,000
|
$
|
0.98
|
|
Units
vested–June 30, 2024
|
|
4,104,417
|
$
|
1.06
|
|
260,000
|
$
|
0.98
|
(1)
The weighted average share
price at the date of exercise was $2.44 for RSUs and $2.63 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.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
13. SUPPLEMENTAL
FINANCIAL INFORMATION
The accumulated
other comprehensive income balance consists of:
|
|
|
|
|
At June
30
|
|
At December
31
|
|
(in
thousands)
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Cumulative
foreign currency translation
|
|
|
$
|
389
|
$
|
456
|
|
Experience
gains-post employment liability
|
|
|
|
|
|
Gross
|
|
|
|
1,847
|
|
1,847
|
|
Tax
effect
|
|
|
|
(485)
|
|
(485)
|
|
|
|
|
$
|
1,751
|
$
|
1,818
|
The components of
Other (expense) income are as follows:
|
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
|
(in
thousands)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses)
on:
|
|
|
|
|
|
|
|
|
|
Foreign
exchange
|
$
|
477
|
$
|
(354)
|
$
|
1,111
|
$
|
(191)
|
|
Disposal of
property, plant and equipment
|
|
-
|
|
1,299
|
|
-
|
|
1,299
|
|
Fair value
changes (note 5):
|
|
|
|
|
|
|
|
|
|
Investments-equity
instruments
|
|
(2,628)
|
|
(3,051)
|
|
(3,424)
|
|
(1,885)
|
|
Investments-uranium
|
|
(80)
|
|
13,995
|
|
(5,757)
|
|
22,821
|
|
Investments-convertible
debentures
|
|
(2,074)
|
|
-
|
|
(1,435)
|
|
-
|
|
Gain
on recognition of proceeds–UI
Repayment Agreement
|
|
-
|
|
266
|
|
396
|
|
535
|
|
Uranium
investment carrying charges
|
|
(215)
|
|
(95)
|
|
(426)
|
|
(191)
|
|
Other
|
|
(76)
|
|
(84)
|
|
(143)
|
|
(190)
|
|
Other
(expense) income
|
$
|
(4,596)
|
$
|
11,976
|
$
|
(9,678)
|
$
|
22,198
|
The components of
Finance income (expense) are as follows:
|
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
|
(in
thousands)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
$
|
2,144
|
$
|
776
|
$
|
4,282
|
$
|
1,580
|
|
Interest
expense
|
|
(2)
|
|
(1)
|
|
(3)
|
|
(2)
|
|
Accretion
expense
|
|
|
|
|
|
|
|
|
|
Deferred
revenue (note 9)
|
|
(749)
|
|
(780)
|
|
(1,561)
|
|
(2,001)
|
|
Reclamation
obligations (note 10)
|
|
(473)
|
|
(420)
|
|
(946)
|
|
(840)
|
|
Other
|
|
(18)
|
|
(13)
|
|
(29)
|
|
(25)
|
|
Finance
income (expense)
|
$
|
902
|
$
|
(438)
|
$
|
1,743
|
$
|
(1,288)
|
The
change in non-cash operating working capital items in the
consolidated statements of cash flows is as follows:
|
|
|
|
|
Six
Months Ended
June
30
|
|
(in
thousands)
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Change in
non-cash working capital items:
|
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
|
|
|
|
$
|
(509)
|
$
|
(1,516)
|
|
Inventories
|
|
|
|
|
|
375
|
|
(332)
|
|
Prepaid expenses
and other assets
|
|
|
|
|
|
311
|
|
277
|
|
Accounts payable
and accrued liabilities
|
|
|
|
|
|
1,273
|
|
392
|
|
Change
in non-cash working capital items
|
|
|
|
|
$
|
1,450
|
$
|
(1,179)
|
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
14. SEGMENTED
INFORMATION
Business
Segments
The Company
operates in two primary segments – the Mining 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
Company also previously had a third primary segment of operations,
which segment included the results of the Company’s
environmental services business which provided mine decommissioning
and other services to third parties (see Discontinued Operations
for further information). The Corporate and Other segment includes
general corporate expenses not allocated to the other
segments.
For the six
months ended June 30, 2024, reportable segment results were as
follows:
|
(in
thousands)
|
|
|
Mining
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,158
|
-
|
2,158
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
|
(2,587)
|
-
|
(2,587)
|
|
Exploration
|
|
|
(7,168)
|
-
|
(7,168)
|
|
Evaluation
|
|
|
(12,409)
|
-
|
(12,409)
|
|
General and
administrative
|
|
|
(19)
|
(7,306)
|
(7,325)
|
|
|
|
|
(22,183)
|
(7,306)
|
(29,489)
|
|
Segment
loss
|
|
$
|
(20,025)
|
(7,306)
|
(27,331)
|
|
|
|
|
|
|
|
|
Revenues-supplemental:
|
|
|
|
|
|
|
Toll milling
services-deferred revenue (note 9)
|
|
2,158
|
-
|
2,158
|
|
|
|
$
|
2,158
|
-
|
2,158
|
|
|
|
|
|
|
|
|
Capital additions:
|
|
|
|
|
|
|
Property,
plant and equipment (note 7)
|
$
|
4,136
|
106
|
4,242
|
|
|
|
|
|
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
Plant and
equipment
|
|
|
|
|
|
|
Cost
|
|
$
|
109,348
|
6,648
|
115,996
|
|
Accumulated
depreciation
|
|
|
(40,041)
|
(1,459)
|
(41,500)
|
|
Mineral
properties
|
|
|
181,942
|
-
|
181,942
|
|
|
|
$
|
251,249
|
5,189
|
256,438
|
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
For the three
months ended June 30, 2024, reportable segment results were as
follows:
|
(in
thousands)
|
|
|
Mining
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,326
|
-
|
1,326
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
|
(1,367)
|
-
|
(1,367)
|
|
Exploration
|
|
|
(1,755)
|
-
|
(1,755)
|
|
Evaluation
|
|
|
(6,708)
|
-
|
(6,708)
|
|
General and
administrative
|
|
|
-
|
(3,741)
|
(3,741)
|
|
|
|
|
(9,830)
|
(3,741)
|
(13,571)
|
|
Segment
loss
|
|
$
|
(8,504)
|
(3,741)
|
(12,245)
|
|
|
|
|
|
|
|
|
Revenues-supplemental:
|
|
|
|
|
|
|
Toll milling
services-deferred revenue (note 9)
|
|
1,326
|
-
|
1,326
|
|
|
|
$
|
1,326
|
-
|
1,326
|
For the six
months ended June 30, 2023, reportable segment results were as
follows:
|
(in
thousands)
|
|
|
Mining
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
(14)
|
-
|
(14)
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
|
(1,770)
|
-
|
(1,770)
|
|
Exploration
|
|
|
(5,781)
|
-
|
(5,781)
|
|
Evaluation
|
|
|
(7,384)
|
-
|
(7,384)
|
|
General and
administrative
|
|
|
(19)
|
(6,444)
|
(6,463)
|
|
|
|
|
(14,954)
|
(6,444)
|
(21,398)
|
|
Segment
loss
|
|
$
|
(14,968)
|
(6,444)
|
(21,412)
|
|
|
|
|
|
|
|
|
Revenues-supplemental:
|
|
|
|
|
|
|
Toll milling
services-deferred revenue (note 9)
|
|
(14)
|
-
|
(14)
|
|
|
|
$
|
(14)
|
-
|
(14)
|
|
|
|
|
|
|
|
|
Capital additions:
|
|
|
|
|
|
|
Property,
plant and equipment
|
$
|
551
|
834
|
1,385
|
|
|
|
|
|
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
Plant and
equipment
|
|
|
|
|
|
|
Cost
|
|
$
|
103,360
|
6,291
|
109,651
|
|
Accumulated
depreciation
|
|
|
(36,528)
|
(862)
|
(37,390)
|
|
Mineral
properties
|
|
|
179,357
|
-
|
179,357
|
|
|
|
$
|
246,189
|
5,429
|
251,618
|
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
For the three
months ended June 30, 2023, reportable segment results were as
follows:
|
(in
thousands)
|
|
|
Mining
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
968
|
-
|
968
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
|
(866)
|
-
|
(866)
|
|
Exploration
|
|
|
(1,834)
|
-
|
(1,834)
|
|
Evaluation
|
|
|
(4,662)
|
-
|
(4,662)
|
|
General and
administrative
|
|
|
-
|
(3,209)
|
(3,209)
|
|
|
|
|
(7,362)
|
(3,209)
|
(10,571)
|
|
Segment
loss
|
|
$
|
(6,394)
|
(3,209)
|
(9,603)
|
|
|
|
|
|
|
|
|
Revenues-supplemental:
|
|
|
|
|
|
|
Toll milling
services-deferred revenue (note 9)
|
|
968
|
-
|
968
|
|
|
|
$
|
968
|
-
|
968
|
Discontinued
Operations
The Company
previously provided post-closure mine care and maintenance
services, which were previously reported in a Closed Mines services
segment and now constitute a discontinued operation. The
consolidated statement of income (loss) for the discontinued
operation is as follows:
|
|
|
Three
Month Ended
June
30
|
|
Six
Months Ended
June
30
|
|
(in
thousands)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
-
|
$
|
2,523
|
$
|
-
|
$
|
4,589
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
-
|
|
(2,141)
|
|
-
|
|
(3,797)
|
|
Other
income
|
|
471
|
|
24
|
|
471
|
|
48
|
|
Income
from discontinued operations,
net
of taxes
|
$
|
471
|
$
|
406
|
$
|
471
|
$
|
840
|
15. RELATED
PARTY TRANSACTIONS
Korea
Electric Power Corporation (“KEPCO”) and Korea Hydro
& Nuclear Power (“KHNP”)
Denison and KHNP
Canada Energy Ltd. (“KHNP Canda”, which is an indirect
subsidiary of KEPCO through KHNP) are parties to a strategic
relationship agreement (the “KHNP SRA”). The KHNP SRA
provides for a long-term collaborative business relationship
between the parties, which includes a right of KHNP Canada to
nominate one representative to Denison’s Board of Directors,
provided that its shareholding percentage stays above
5%.
KHNP Canada is
also the majority member of the Korea Waterbury Uranium Limited
Partnership, which 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.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
Compensation
of Key Management Personnel
Key management
personnel are those persons having authority and responsibility for
planning, directing and controlling the activities of the Company,
directly or indirectly. Key management personnel includes the
Company’s executive officers, vice-presidents and members of
its Board of Directors.
The following
compensation was awarded to key management personnel:
|
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
|
(in
thousands)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and
short-term employee benefits
|
$
|
(913)
|
$
|
(546)
|
$
|
(2,608)
|
$
|
(1,644)
|
|
Share-based
compensation
|
|
(900)
|
|
(659)
|
|
(1,653)
|
|
(1,473)
|
|
Key
management personnel compensation
|
$
|
(1,813)
|
$
|
(1,205)
|
$
|
(4,261)
|
$
|
(3,117)
|
16. FAIR
VALUE OF INVESTMENTS AND FINANCIAL INSTRUMENTS
IFRS requires
disclosures about the inputs to fair value measurements, including
their classification within a hierarchy that prioritizes the inputs
to fair value measurement. The three levels of the fair value
hierarchy are:
●
Level 1 - Unadjusted quoted
prices in active markets for identical assets or
liabilities;
●
Level 2 - Inputs other than
quoted prices that are observable for the asset or liability either
directly or indirectly; and
●
Level 3 - Inputs that are not
based on observable market data.
The fair value of
financial instruments which trade in active markets, such as share
and warrant equity instruments, is based on quoted market prices at
the balance sheet date. The quoted market price used to value
financial assets held by the Company is the current closing price.
Warrants that do not trade in active markets have been valued using
the Black-Scholes pricing model. Debt instruments have been valued
using the effective interest rate for the period that the Company
expects to hold the instrument and not the rate to
maturity.
Except as
otherwise disclosed, the fair values of cash and cash equivalents,
trade and other receivables, accounts payable and accrued
liabilities, restricted cash and cash equivalents and debt
obligations approximate their carrying values as a result of the
short-term nature of the instruments, the variable interest rate
associated with the instruments or the fixed interest rate of the
instruments being similar to market rates.
During 2024 and
2023, there were no transfers between levels 1, 2 and 3 and there
were no changes in valuation techniques.
|
|
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
The following
table illustrates the classification of the Company’s
financial assets and liabilities within the fair value hierarchy as
at June 30, 2024 and December 31, 2023:
|
|
|
Financial
|
|
Fair
|
|
June
30,
|
|
December
31,
|
|
|
|
Instrument
|
|
Value
|
|
2024
|
|
2023
|
|
(in
thousands)
|
|
Category(1)
|
|
Hierarchy
|
|
Fair
Value
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Assets:
|
|
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
Category
B
|
|
|
$
|
121,067
|
$
|
131,054
|
|
Trade and other
receivables
|
|
Category
B
|
|
|
|
2,422
|
|
1,913
|
|
Investments
|
|
|
|
|
|
|
|
|
|
Equity
instruments-shares
|
|
Category
A
|
|
Level
1
|
|
7,052
|
|
10,390
|
|
Equity
instruments-warrants
|
|
Category
A
|
|
Level
2
|
|
41
|
|
127
|
|
Convertible
Debentures
|
|
Category
A
|
|
Level
3
|
|
14,130
|
|
15,565
|
|
Restricted
cash and equivalents
|
|
|
|
|
|
|
|
|
|
Elliot Lake
reclamation trust fund
|
|
Category
B
|
|
|
|
4,089
|
|
3,259
|
|
Credit
facility pledged assets
|
|
Category
B
|
|
|
|
7,972
|
|
7,972
|
|
|
|
|
|
|
$
|
156,773
|
$
|
170,280
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities:
|
|
|
|
|
|
|
|
|
|
Account
payable and accrued liabilities
|
|
Category
C
|
|
|
|
12,233
|
|
10,822
|
|
Debt
obligations
|
|
Category
C
|
|
|
|
1,282
|
|
417
|
|
|
|
|
|
|
$
|
13,515
|
$
|
11,239
|
(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.
Investments in
uranium are categorized in Level 2. Investments in uranium are
measured at fair value at each reporting period based on the
month-end spot price for uranium published by UxC and converted to
Canadian dollars during the period-end indicative foreign exchange
rate.
Letters of
Credit Facility
In December 2023,
the Company entered into an agreement with The Bank of Nova Scotia
to amend the terms of the Company’s Credit Facility to extend
the maturity date to January 31, 2025 (the “Credit
Facility”). All other terms of the Credit Facility (amount of
credit facility, tangible net worth covenant, investment amounts,
pledged assets and security for the facility) remain unchanged by
the amendment and the Credit Facility remains subject to letter of
credit and standby fees of 2.40% (0.40% on the $7,972,000 covered
by pledged cash collateral) and 0.75% respectively. During the six
months ended June 30, 2024, the Company incurred letter of credit
fees of $207,000 (June 30, 2023 - $209,000).
At June 30, 2024,
the Company is in compliance with its facility covenants and has
access to letters of credit of up to $23,964,000 (December 31, 2023
- $23,964,000). The facility is fully utilized as collateral for
non-financial letters of credit issued in support of reclamation
obligations for the MLJV, MWJV and Wheeler River (see note
10).
17. COMMITMENTS
AND CONTINGENCIES
General
Legal Matters
The Company is
involved, from time to time, in various legal actions and claims in
the ordinary course of business.
In the opinion of
management, the aggregate amount of any potential liability is not
expected to have a materialadverse effect on the Company’s
financial position or results.
MANAGEMENT’S DISCUSSION & ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2024
|
TABLE OF
CONTENTS
|
|
|
Q2
2024 PERFORMANCE HIGHLIGHTS
|
2
|
|
ABOUT
DENISON
|
3
|
|
RESULTS
OF CONTINUING OPERATIONS
|
4
|
|
Wheeler
River Uranium Project
|
6
|
|
LIQUIDITY
AND CAPITAL RESOURCES
|
18
|
|
DISCONTINUED
OPERATIONS
|
20
|
|
OUTLOOK
FOR 2024
|
20
|
|
ADDITIONAL
INFORMATION
|
21
|
|
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
|
21
|
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 8,
2024 and should be read in conjunction with the Company’s
unaudited interim condensed consolidated financial statements and
related notes for the three and six months ended June 30, 2024. 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’), including IAS 34,
Interim Financial
Reporting. Readers are also encouraged to consult the
audited consolidated financial statements and MD&A for the year
ended December 31, 2023. 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.sedarplus.ca
(‘SEDAR+’) and the United States at
www.sec.gov/edgar.shtml (‘EDGAR’).
|
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
Q2 2024 PERFORMANCE
HIGHLIGHTS
■
Completion of Inaugural ISR Field Test Program at
Midwest
In June 2024,
Denison and Orano Canada Inc. (‘Orano Canada’)
announced the completion of an In-Situ Recovery (‘ISR’)
field test program at the Company’s 25.17% owned Midwest
Uranium Project (‘Midwest’). The program involved
drilling ten small diameter boreholes within the Midwest Main
deposit primarily undertaken to evaluate site-specific conditions
for ISR mining. A series of tests were successfully performed on
each borehole, creating an extensive database of geological,
hydrogeological, geotechnical, and metallurgical data and
validating certain key assumptions in the previously completed
internal conceptual mining study (the ‘Concept Study’)
evaluating the potential use of ISR mining at Midwest (see Press
Release dated April 12, 2023).
Denison carried
out the Program in collaboration with Orano Canada, as operator and
owner of 74.83% of the Midwest Joint Venture (‘MWJV’).
Highlights from the program include:
●
Confirmation of Hydraulic Conductivity:
Pump and injection tests validated hydraulic connectivity in the
test wells within the mineralized zone and achieved hydraulic
conductivity values (a measure of permeability) consistent with the
Concept Study. Sufficient permeability within the mineralized zone
is a key criterion for the successful deployment of the ISR mining
method.
●
Demonstrated the Effectiveness of Permeability
Enhancement: One method of permeability enhancement was
successfully deployed within two wells, demonstrating the
suitability of the method to the Midwest Main deposit. The
efficiency of permeability enhancement was verified by comparison
of pre- and post-permeability enhancement hydraulic
testing.
●
Metallurgical Samples Defined and Collected for
Leaching Characteristics: Core samples representative of the
Midwest Main deposit were collected during the program for use in
future metallurgical tests to assess leaching
characteristics.
■
Signing of Wheeler River Benefit Agreements with Kineepik
Métis Local #9 and the Village of Pinehouse Lake
In early July
2024, Denison announced the signing of a Mutual Benefits Agreement
(‘MBA’) with Kineepik Métis Local #9
(‘KML’), and a Community Benefit Agreement
(‘CBA’) with the northern Village of Pinehouse Lake
(the ‘Village’), in support of the development and
operation of Denison’s 95% owned Wheeler River
Project.
The MBA
acknowledges that the project is located within KML’s Land
and Occupancy Area in northern Saskatchewan and provides
KML’s consent and support to advance the project.
Additionally, the MBA recognizes that the development and operation
of the project can support KML in advancing its social and economic
development aspirations, while mitigating the impacts on the local
environment and KML members. The MBA provides KML and its
Métis members an important role in environmental monitoring
and commits to the sharing of benefits from the successful
operation of the project – including benefits from community
investment, business opportunities, employment and training
opportunities, and financial compensation.
The CBA
acknowledges that the Village is the closest residential community
to the project by road, which relies on much of the same regional
infrastructure that Denison will rely on as it advances the
project. The Village has provided its consent and support for the
project, while Denison, on behalf of the Wheeler River Joint
Venture, is committed to help the Village develop its own capacity
to take advantage of economic and other development opportunities
in connection with the advancement and operation of the
project.
■
Appointment of New Board Chair
In May 2024,
following the results of the Annual General Meeting of Shareholders
(‘AGM’) held in Toronto, Denison announced the
appointment of Ms. Jennifer Traub as the Company’s new Board
Chair. The former Board Chair, Mr. Ron Hochstein, did not stand for
re-election at the AGM. Ms. Traub, who joined the Denison Board in
2021, is a partner in the Securities Group, and Co-Chair of the
Mining Group, at Cassels Brock & Blackwell LLP, and has been
recognized as a legal leader in the Canadian resource
sector.
|
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
ABOUT DENISON
Denison Mines
Corp. was formed under the laws of Ontario and is a reporting
issuer in all Canadian provinces and territories. 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 mining, 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. In mid-2023, a
Feasibility Study (‘FS’) was completed for the Phoenix
deposit as an ISR mining operation, and an update to the previously
prepared 2018 Pre-Feasibility Study (‘PFS’) was
completed for Wheeler River’s Gryphon deposit as a
conventional underground mining operation (the ‘Gryphon
Update’). Based on the respective studies, both deposits have
the potential to be competitive with the lowest cost uranium mining
operations in the world. Permitting efforts for the planned Phoenix
ISR operation commenced in 2019 and have advanced significantly,
with licensing in progress and a draft Environmental Impact
Statement (‘EIS’) submitted for regulatory and public
review in October 2022.
Denison’s
interests in Saskatchewan also include a 22.5% ownership interest
in the McClean Lake Joint Venture (‘MLJV’), which
includes unmined uranium deposits (planned for extraction via the
MLJV’s SABRE mining method starting in 2025) and the McClean
Lake uranium mill (currently utilizing a portion of its licensed
capacity to process the ore from the Cigar Lake mine under a toll
milling agreement), plus a 25.17% interest in the Midwest Main and
Midwest A deposits held by the Midwest Joint Venture
(‘MWJV’), and a 69.44% interest in the Tthe Heldeth
Túé (‘THT’) and Huskie deposits on the
Waterbury Lake Property (‘Waterbury’). The Midwest
Main, Midwest A, THT and Huskie deposits are located within 20
kilometres of the McClean Lake mill. Taken together, the Company
has direct ownership interests in properties covering ~384,000
hectares in the Athabasca Basin region.
Additionally,
through its 50%
ownership of JCU (Canada) Exploration Company, Limited
(‘JCU’), Denison holds further interests in various
uranium project joint ventures in Canada, including the Millennium
project (JCU, 30.099%), the Kiggavik project (JCU, 33.8118%) and
Christie Lake (JCU, 34.4508%).
In 2024, Denison
is celebrating its 70th year in uranium
mining, exploration, and development, which began in 1954 with
Denison’s first acquisition of mining claims in the Elliot
Lake region of northern Ontario.
SELECTED FINANCIAL INFORMATION
|
(in
thousands)
|
|
As at
June 30,
2024
|
|
As at
December 31,
2023
|
|
|
|
|
|
|
|
Financial Position:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
121,067
|
$
|
131,054
|
|
Working
capital(1)
|
$
|
120,100
|
$
|
135,130
|
|
Investments in
uranium
|
$
|
257,460
|
$
|
276,815
|
|
Property, plant
and equipment
|
$
|
256,438
|
$
|
254,946
|
|
Total
assets
|
$
|
695,357
|
$
|
726,603
|
|
Total long-term
liabilities(2)
|
$
|
66,641
|
$
|
66,873
|
(1)
Working capital is a non-IFRS
financial measure and is calculated as the value of current assets
less the value of current liabilities, excluding non-cash current
liabilities. Working capital as at June 30, 2024 excludes
$4,501,000 from the current portion of deferred revenue (December
31, 2023 – $4,535,000).
(2)
Predominantly comprised of
the non-current portion of deferred revenue, non-current
reclamation obligations, and deferred income tax
liabilities.
|
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
SELECTED QUARTERLY FINANCIAL INFORMATION
|
|
|
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
(in
thousands, except for per share amounts)
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
1,326
|
$
|
832
|
$
|
1,092
|
$
|
777
|
|
Net earnings
(loss)
|
$
|
(16,441)
|
$
|
(19,880)
|
$
|
34,627
|
$
|
57,916
|
|
Basic and diluted
earnings (loss) per share
|
$
|
(0.02)
|
$
|
(0.02)
|
$
|
0.04
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
|
471
|
$
|
-
|
$
|
(150)
|
$
|
321
|
|
Basic and diluted
earnings (loss) per share
|
$
|
0.00
|
$
|
-
|
$
|
(0.00)
|
$
|
0.00
|
|
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
(in
thousands, except for per share amounts)
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations:
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
968
|
$
|
(982)
|
$
|
1,015
|
$
|
996
|
|
Net
loss
|
$
|
(345)
|
$
|
(2,834)
|
$
|
(6,247)
|
$
|
(6,854)
|
|
Basic and diluted
loss per share
|
$
|
(0.00)
|
$
|
(0.00)
|
$
|
(0.01)
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
406
|
$
|
434
|
$
|
506
|
$
|
471
|
|
Basic and diluted
earnings per share
|
$
|
0.00
|
$
|
0.00
|
$
|
0.00
|
$
|
0.00
|
Significant items causing variations in quarterly
results
●
The Company’s revenues
are based on a draw-down of deferred toll milling revenue, the rate
of which fluctuates 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. The rate of draw-down for the
toll milling deferred revenue was updated for changes to expected
future toll milling production rates at McClean Lake in the first
quarter of 2023. This update resulted in negative revenue, which is
uncommon. See RESULTS OF OPERATIONS below for further
details.
●
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.
●
Evaluation expenses have
generally increased over the past eight quarters as the Company
advances towards a Final Investment Decision (‘FID’)
for Phoenix, however, the highest evaluation expenses were incurred
in the third quarter of 2022 as the Company completed the
substantive stages of the Phoenix Feasibility Field Test
(‘FFT’).
●
Other income and expense
fluctuates due to changes in the fair value of the Company’s
portfolio investments, convertible debentures, and uranium
investments, all of which are recorded at fair value through profit
or loss and are subject to fluctuations in the underlying share and
commodity prices. The Company’s uranium investments are also
subject to fluctuations in the US dollar to Canadian dollar
exchange rate. The impact of fair value changes on the
Company’s net earnings / loss was particularly significant in
the second, third and fourth quarters of 2023. See OTHER INCOME
below for more details.
●
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 CONTINUING
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 the
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.
|
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
In February 2017,
Denison closed an arrangement with Ecora Resources PLC
(‘Ecora’, then known as Anglo Pacific Group PLC) and
one of its wholly owned subsidiaries (the ‘Ecora
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 then current toll
milling agreement with the Cigar Lake Joint Venture
(‘CLJV’) from July 1, 2016 onwards. The Ecora
Arrangement consists of certain contractual obligations of Denison
to forward to Ecora 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.
During the three
and six months ended June 30, 2024, the McClean Lake mill processed
5.3 million and 9.5 million pounds U3O8, respectively,
for the CLJV (June 30, 2023 – 3.8 million and 7.6 million
pounds U3O8) and Denison
recorded toll milling revenue of $1,326,000 and $2,158,000,
respectively (June 30, 2023 – $968,000 and negative toll
milling revenue of $14,000). The increase in toll milling revenue
in the current quarter, as compared to the prior year, is due to
the mill processing more pounds of U3O8 for the CLJV. The
increase in toll milling revenue in the six months ended June 30,
2024, as compared to the prior year, is due to both the increase in
production in the current year-to-date period as well as a
$1,946,000 negative non-cash cumulative accounting adjustment that
was recorded in the prior year. In the first quarter of 2022, the
operators of the Cigar Lake mine announced a reduction in
forecasted mine production from 18 million pounds U3O3 per year to 15
million pounds U3O8 per year in 2022
and 2023, and then to 13.5 million pounds U3O3 per year
thereafter. In the first quarter of 2023, the operators of the
Cigar Lake mine announced that forecasted future mine production
was increased back to 18 million pounds U3O3 per year. Under
IFRS 15, Revenue from Contracts
with Customers, the change in the estimated timing of the
toll milling of the CLJV ores in 2022 resulted in an increase to
the implied financing component of the toll milling transaction,
thus increasing the total deferred revenue to be recognized over
the life of the toll milling contract as well as the deferred
revenue draw-down rate. The updated draw-down rate was applied
retrospectively to all pounds produced for the CLJV since the
inception of the Ecora Arrangement in July 2016, resulting in an
increase in revenue in the first quarter of 2022, which was
effectively reversed in the first quarter of 2023, resulting in the
reduction in revenue.
During the three
and six months ended June 30, 2024, the Company also recorded
accounting accretion expense of $749,000 and $1,561,000,
respectively, on the toll milling deferred revenue balance (June
30, 2023 – $780,000 and $2,001,000). While the annual
accretion expense will decrease over the life of the contract as
the deferred revenue liability decreases over time, the decrease in
accretion expense in the six months ended June 30, 2024, as
compared to the prior year, was predominantly due to a $483,000
true up recognized in the prior year to increase the life-to-date
accretion expense due to the change in the timing in the estimated
CLJV toll milling activities discussed above. During the six months
ended June 30, 2024, a true-up of only $63,000 was recorded as a
result of the update to the Cigar Lake mineral resource
estimate.
The impact of the
current and prior period true-ups to revenue and accretion are
non-cash.
OPERATING EXPENSES
Mining
Operating
expenses of the mining segment include depreciation and development
costs, costs relating to Denison’s legacy mine sites in
Elliot Lake, as well as cost of sales related to the sale of
uranium, when applicable. Operating expenses in the three and six
months ended June 30, 2024 were $1,367,000 and $2,587,000,
respectively (June 30, 2023 – $866,000 and
$1,770,000).
Included in
operating expenses is depreciation expense relating to the McClean
Lake mill of $826,000 and $1,493,000, respectively (June 30, 2023
– $614,000 and $1,268,000), as a result of processing
approximately 5.3 million and 9.5
million pounds U3O8 for the CLJV in
the applicable periods (June 30, 2023 – 3.8 million and 7.6
million pounds U3O8). Also included
in operating expenses are costs related to the Company’s
Elliot Lake legacy mine sites of $368,000 and $690,000,
respectively (June 30, 2023 – $141,000 and $291,000), and
development costs of the MLJV and other operating costs of $173,000
and $404,000, respectively (June 30, 2023 – $110,000 and
$212,000).
During the first
quarter of 2024, the MLJV began planning work for the 2024 SABRE
program, the goal of which is to prepare the McClean North site for
the commencement of SABRE mining activities in 2025. The site work
commenced during the second quarter of 2024.
MINERAL PROPERTY EVALUATION
During the three
and six months ended June 30, 2024, Denison’s share of
evaluation expenditures was $6,708,000 and $12,409,000,
respectively (June 30, 2023 – $4,662,000 and $7,384,000). The
increase in evaluation expenditures, compared to the prior period,
was primarily due to the continuation and acceleration of project
engineering activities associated with the Phoenix detailed design
engineering phase, as well as an increase staffing levels to
support the advancement of the Company’s various evaluation
projects.
|
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
The following
table summarizes the evaluation activities completed during the six
months ended June 30, 2024.
|
PROJECT EVALUATION ACTIVITIES
|
|
Property
|
Denison’s ownership
|
Evaluation activities
|
|
Wheeler
River
|
95%(1)
|
Engineering,
detailed design, metallurgical testing, FFT decommissioning,
project planning for 2024 field program activities, environmental
and sustainability activities, and EIS regulatory
reviews.
|
|
|
Waterbury
Lake
|
69.44%(2)
|
Project planning
for 2024 field activities and progression of the PFS for the THT
deposit.
|
|
|
Midwest
|
25.17%
|
Project planning
and completion of the 2024 inaugural ISR field test, and
progression of the Preliminary Economic Assessment
(‘PEA’) report.
|
|
|
Kindersley
Lithium Project (‘KLP’)
|
Earn-in(3)
|
Project planning
for 2024 activities.
|
|
|
|
|
|
|
Notes
(1)
The Company’s effective
ownership interest as at June 30, 2024, including the indirect 5%
ownership interest held through JCU.
(2)
Represents Denison’s
ownership position as at June 30, 2024.
(3)
Pursuant to an earn-in
agreement executed in January 2024, Denison can earn up to a 75%
interest in the KLP through a series of options exercisable with
direct payments and work expenditures. As at June 30, 2024, Denison
has not yet vested an ownership interest in the
project.
Wheeler River Uranium
Project
On June 26, 2023,
Denison announced the results of (i) the Phoenix FS completed for
ISR mining of the high-grade Phoenix deposit and (ii) an updated
Gryphon PFS for conventional underground mining of the
basement-hosted Gryphon deposit.
The Phoenix FS
was completed by Wood, WSP USA Environment and Infrastructure Inc.,
SRK Consulting (Canada) Inc., and Newmans Geotechnique Inc. The
study confirms robust economics and the technical viability of an
ISR uranium mining operation with low initial capital costs and a
high rate of return.
The Phoenix FS
reflects several design changes and the results of a rigorous
technical de-risking program completed by Denison over the 4.5
years following the publication of the 2018 PFS, which was
highlighted by the then-novel selection of the ISR mining method
for Phoenix.
With the benefit
of extensive lab and field testing of all key elements of the
proposed ISR mining operation, and 2023 cost estimates reflecting
recent inflationary pressures, the Phoenix FS is expected to
provide an excellent basis to advance engineering designs in
support of an FID.
|
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
See the following
tables for the highlights of the Phoenix FS.
|
Summary of Economic Results (100% Basis) – Base
Case
|
|
Uranium selling
price
|
UxC Spot Price(1)
(~US$66 to
US$70/lb U3O8)
|
|
Exchange Rate
(US$:CAD$)
|
1.35
|
|
Discount
Rate
|
8%
|
|
Operating profit
margin(2)
|
90.9%
|
|
|
|
|
Pre-tax
NPV8%(3) (Change from 2018 PFS)(4)
|
$2.34 billion
(+150%)
|
|
Pre-tax
IRR(3)
|
105.9%
|
|
Pre-tax payback
period(5)
|
~10
months
|
|
|
|
|
Post-tax
NPV8%(3)
|
$1.43
billion
|
|
Post-tax
IRR(3)
|
82.3%
|
|
Post-tax payback
period(5)
|
~11
months
|
|
|
|
|
Adjusted Post-tax
NPV8%(3)(6)
|
$1.56
billion
|
|
Adjusted Post-tax
IRR(3)(6)
|
90.0%
|
|
Adjusted Post-tax
payback period(3)(6)
|
~10
months
|
Notes
(1)
Spot price forecast is based
on “Composite Midpoint” scenario from UxC’s UMO
(defined below) and is stated in constant (not-inflated) dollars.
See Denison news releases dated June 26, 2023 and August 9, 2023
and the Wheeler Technical Report (defined below) for
details.
(2)
Operating profit margin is
calculated as aggregate uranium revenue less aggregate operating
costs, divided by aggregate uranium revenue. Operating costs
exclude all royalties, surcharges and income taxes.
(3)
NPV and IRR are calculated to
the start of construction activities for the Phoenix operation and
excludes $67.4 million in pre-FID expenditures.
(4)
Change from 2018 PFS is
computed by reference to the same scenario from the 2018 PFS,
adjusted to incorporate certain pre-FID costs for consistent
comparability.
(5)
Payback period is stated as
number of months to payback from the start of uranium
production.
(6)
The Adjusted Post-tax NPV,
IRR and payback period are based on the “adjusted
post-tax” scenario, which includes the benefit of certain
entity level tax attributes which are expected to be available and
used to reduce taxable income from the Phoenix operation. See
Denison news release dated June 26, 2023 and the Wheeler Technical
Report (defined below) for details.
|
Summary of Key Phoenix Operational Parameters (100%
basis)
|
|
Mine
life
|
10
years
|
|
Proven &
Probable reserves(1)
|
56.7 million lbs
U3O8 (219,000 tonnes
at 11.7% U3O8)
|
|
First 5 years of
reserves(2)
|
41.9 million lbs
U3O8 (Average 8.4
million lbs U3O8 /
year)
|
|
Remaining years
of reserves
|
14.8 million lbs
U3O8 (Average 3.0
million lbs U3O8 /
year)
|
|
Initial capital
costs(3)
|
$419.4
million
|
|
Average cash
operating costs
|
$8.51 (US$6.28)
per lb U3O8
|
|
All-in
cost(4)
|
$21.73 (US$16.04)
per lb U3O8
|
Notes
(1)
See Denison press release
dated June 26, 2023 for additional details regarding Proven &
Probable reserves.
(2)
The first five years is
determined by reference to the 60-month period that commences at
the start of operations.
(3)
Initial capital costs exclude
$67.4 million in estimated pre-FID expenditures expected to be
incurred before the project’s FID has been made.
(4)
All-in cost is estimated on a
pre-tax basis and includes all project operating costs, capital
costs post-FID, and decommissioning costs divided by the estimated
number of pounds U3O8 to be
produced.
The Gryphon
Update was prepared by Engcomp Engineering and Computing
Professionals Inc., SLR International Corporation, Stantec
Consulting Ltd., and Hatch Ltd., and is largely based on the 2018
PFS, with efforts targeted at the review and update of capital and
operating costs, as well as various minor scheduling and design
optimizations. The study remains at the PFS level of
confidence.
Overall, the
Gryphon Update demonstrates that the underground development of
Gryphon is a positive potential future use of cash flows generated
from Phoenix, as it can leverage existing infrastructure to provide
an additional source of low-cost production.
|
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
See the following
tables for the highlights of the Gryphon Update.
|
Summary of Economic Results (100% Basis) – Base
Case
|
|
Uranium selling
price
|
US$75/lb U3O8(1)
(Fixed selling
price)
|
|
Exchange Rate
(US$:CAD$)
|
1.35
|
|
Discount
Rate
|
8%
|
|
Operating profit
margin(3)
|
83.0%
|
|
|
|
|
Pre-tax
NPV8%(3) (Change from 2018 PFS)(4)
|
$1.43 billion
(+148%)
|
|
Pre-tax
IRR(3)
|
41.4%
|
|
Pre-tax payback
period(5)
|
~ 20
months
|
|
|
|