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.
 
 
 
 
 
 
 
 
 
 
 
 
 
DENISON MINES CORP.
 
 
 
 
 
 
 
/s/ Amanda Willett
Date August 9, 2024
 
 
 
Amanda Willett
 
 
 
 
Vice President Legal and Corporate Secretary
 
 
 
 
 
FORM 6-K EXHIBIT INDEX
 
 
 
Exhibit 99.1



                                                                                                                                                                                                                                                                                        INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
(Unaudited - Expressed in thousands of Canadian dollars (“CAD”) except for share amounts)
 
 
 
 
At June 30
2024
 
At December 31
2023
 
ASSETS
 
 
 
 
 
 
Current
 
 
 
 
 
 
Cash and cash equivalents (note 4)
 
 
$
 121,067
$
131,054
Trade and other receivables
 
 
 
 2,422
 
1,913
Inventories
 
 
 
 3,207
 
3,580
Investments-equity instruments (note 5)
 
 
 
 7,093
 
10,400
Prepaid expenses and other
 
 
 
 1,270
 
1,594
 
 
 
 
 135,059
 
148,541
Non-Current
 
 
 
 
 
 
Inventories-ore in stockpiles
 
 
 
 2,098
 
2,098
Investments-equity instruments (note 5)
 
 
 
 -
 
117
Investments-uranium (note 5)
 
 
 
 257,460
 
276,815
Investments-convertible debentures (note 5)
 
 
 
 14,130
 
15,565
Investments-joint venture (note 6)
 
 
 
18,111
 
17,290
Restricted cash and investments
 
 
12,061
 
11,231
Property, plant and equipment (note 7)
 
 
 
 256,438
 
254,946
Total assets
 
 
$
 695,357
 $
726,603
 
LIABILITIES
 
 
 
 
 
 
Current
 
 
 
 
 
 
Accounts payable and accrued liabilities (note 8)
 
 
$
12,233
$
10,822
Current portion of long-term liabilities:
 
 
 
 
 
 
Deferred revenue (note 9)
 
 
 
 4,501
 
4,535
Reclamation obligations (note 10)
 
 
 
 2,257
 
2,256
Other liabilities
 
 
 
469
 
333
 
 
 
 
 19,460
 
17,946
Non-Current
 
 
 
 
 
 
Deferred revenue (note 9)
 
 
 
 29,860
 
30,423
Reclamation obligations (note 10)
 
 
 
 32,371
 
32,642
Other liabilities
 
 
 
 1,876
 
1,201
Deferred income tax liability
 
 
 
 2,534
 
2,607
Total liabilities
 
 
 
 86,101
 
84,819
 
EQUITY
 
 
 
 
 
 
Share capital (note 11)
 
 
 
 1,657,089
 
1,655,024
Contributed surplus
 
 
 
 71,147
 
69,823
Deficit
 
 
 
 (1,120,731)
 
(1,084,881)
Accumulated other comprehensive income
 
 
 
 1,751
 
1,818
Total equity
 
 
 
 609,256
 
641,784
Total liabilities and equity
 
 
$
 695,357
$
726,603
Issued and outstanding common shares (note 11)
 
 
 
892,356,433
 
890,970,371
Commitments and contingencies (note 17)
 
 
 
 
 
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements
 
 
 
1
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
 
(Unaudited - Expressed in thousands of CAD dollars except for share and per share amounts)
 
 
Three Months Ended
June 30
 
Six Months Ended
June 30
 
 
2024
 
2023
 
2024
 
2023
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES (note 14)
$
1,326
$
968
$
2,158
$
(14)
 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
Operating expenses (note 14)
 
 (1,367)
 
 (866)
 
 (2,587)
 
 (1,770)
Exploration (note 14)
 
 (1,755)
 
 (1,834)
 
 (7,168)
 
 (5,781)
Evaluation (note 14)
 
 (6,708)
 
 (4,662)
 
 (12,409)
 
 (7,384)
General and administrative (note 14)
 
 (3,741)
 
 (3,209)
 
 (7,325)
 
 (6,463)
Other (expense) income (note 13)
 
 (4,596)
 
    11,976
 
 (9,678)
 
 22,198
 
 
 (18,167)
 
 1,405
 
 (39,167)
 
 800
(Loss) income before net finance expense, equity accounting
 
 (16,841)
 
 2,373
 
 (37,009)
 
 786
 
 
 
 
 
 
 
 
 
Finance income (expense), net (note 13)
 
 902
 
 (438)
 
 1,743
 
 (1,288)
Equity share of loss of joint venture (note 6)
 
 (547)
 
 (2,461)
 
 (1,128)
 
 (3,355)
Loss before taxes
 
(16,486)
 
 (526)
 
(36,394)
 
 (3,857)
Income tax recovery:
 
 
 
 
 
 
 
 
Deferred
 
 45
 
181
 
 73
 
678
Net loss from continuing operations
 
 (16,441)
 
(345)
 
 (36,321)
 
(3,179)
Net income from discontinued operations,
   net of taxes (note 14)
 
 
           471
 
 
406
 
 
      471
 
 
840
Net (loss) income for the period
$
(15,970)
$
61
$
(35,850)
$
(2,339)
 
 
 
 
 
 
 
 
 
Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Items that are or may be subsequently reclassified to (loss) income:
 
 
 
 
 
 
 
 
Foreign currency translation change
 
(18)
 
125
 
(67)
 
129
Comprehensive (loss) income for the period
$
(15,988)
$
186
$
(35,917)
$
(2,210)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net (loss) income per share:
 
 
 
 
 
 
 
 
Basic
$
(0.02)
$
0.00
$
(0.04)
$
(0.00)
Diluted
$
(0.02)
$
0.00
$
(0.04)
$
(0.00)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding
(in thousands):
 
 
 
 
 
 
 
 
Basic
 
 892,230
 
835,660
 
891,727
 
834,243
Diluted
 
 892,230
 
845,425
 
891,727
 
834,243
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements
 
 
 
 
 2
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 
(Unaudited - Expressed in thousands of CAD dollars)
 
 
 
 
Six Months Ended
June 30
 
 
 
 
 
 
2024
 
2023
 
 
 
 
 
 
 
 
 
Share capital (note 11)
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
$
 1,655,024
$
1,539,209
Shares issued for cash, net of issue costs
 
 
 
 
 
 -
 
15,339
Other shares issued, net of issue costs
 
 
 
 
 
 95
 
193
Share options exercised-cash
 
 
 
 
 
 1,082
 
452
Share options exercised-transfer from contributed surplus
 
 
 
 509
 
 178
Share units exercised-transfer from contributed surplus
 
 
 
 379
 
 182
Balance-end of period
 
 
 
 
 
 1,657,089
 
1,555,553
 
 
 
 
 
 
 
 
 
Contributed surplus
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
 69,823
 
70,281
Share-based compensation expense (note 12)
 
 
 
 
 
 2,212
 
1,937
Share options exercised-transfer to share capital
 
 
 
 
 
 (509)
 
(178)
Share units exercised-transfer to share capital
 
 
 
 
 
 (379)
 
(182)
Balance-end of period
 
 
 
 
 
 71,147
 
71,858
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
 (1,084,881)
 
(1,175,256)
Net loss
 
 
 
 
 
 (35,850)
 
(2,339)
Balance-end of period
 
 
 
 
 
 (1,120,731)
 
(1,177,595)
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income (note 13)
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
 
 1,818
 
1,782
Foreign currency translation
 
 
 
 
 
 (67)
 
129
Balance-end of period
 
 
 
 
 
 1,751
 
1,911
 
 
 
 
 
 
 
 
 
Total Equity
 
 
 
 
 
 
 
 
Balance-beginning of period
 
 
 
 
$
 641,784
$
436,016
Balance-end of period
 
 
 
 
$
609,256
$
451,727
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of the condensed interim consolidated financial statements
 
 
 
 3
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
 
(Unaudited - Expressed in thousands of CAD dollars)
 
 
 
 
Six Months Ended
June 30
 
 
 
 
2024
 
2023
CASH PROVIDED BY (USED IN):
 
 
 
 
 
 
 
OPERATING ACTIVITIES
 
 
 
 
 
 
Net loss for the period
 
 
$
(35,850)
$
(2,339)
Adjustments and items not affecting cash and cash equivalents:
 
 
 
 
 
 
Depletion, depreciation, amortization and accretion
 
 
 
 5,219
 
4,891
Fair value change losses (gains):
 
 
 
 
 
 
         Investments-equity instruments (notes 5 and 13)
 
 
 
 3,424
 
1,885
         Investments-uranium (note 5 and 13)
 
 
 
 5,757
 
(22,821)
         Investments-convertible debentures (notes 5 and 13)
 
 
 
 1,435
 
-
Joint venture-equity share of loss (note 6)
 
 
 
 1,128
 
3,355
(Recognition) Reversal of deferred revenue (note 9)
 
 
 
 (2,158)
 
14
Gain on property, plant and equipment disposals
 
 
 
 (130)
 
(1,299)
Post-employment benefit payments
 
 
 
 (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)
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 4
 
  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)
 
 
1.
NATURE OF OPERATIONS
 
Denison Mines Corp. (“DMC”) and its subsidiary companies and joint arrangements (collectively, “Denison” or the “Company”) are engaged in uranium mining related activities, which can include acquisition, exploration, 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

 

 
 
 5
 
  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
5.
INVESTMENTS
 
     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
 
 
 
 6
 
 
  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.
 
 
 
 
 
 7
 
 
  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.
 
 
 
 8
 
 
  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.
 
 
 9
 
 
  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.
 
 
 10
 
 
  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.
 
 
 11
 
 
  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.
 
 
 
 12
 
 
  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)
 
 
 13
 
 
  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
 
 
 
 14
 
 
  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
 
 
 15
 
 
  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.
 
 
 16
 
 
  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.
 
 
 17
 
 
  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.
 
 
  18
 
  Exhibit 99.2

 
 
 
 
 
 
 
 
 
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.
 
 
 
 
 2
 
 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.
 
 
 
 
 
 
 3
 
 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.
 
 
 
 4
 
 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.
 
 
 
 
 5
 
 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.
 
 
 
 6
 
 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.
 
 
 
 
 7
 
 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