2016 ANNUAL REPORT
Focused.
Experienced.
Growing.
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2016
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANAYLSI
PERFORMANCE HIGHLIGHTS
ABOUT DENISON
URANIUM INDUSTRY OVERVIEW
RESULTS OF CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
OUTLOOK FOR 2017
ADDITIONAL INFORMATION
CAUTIONARY STATEMENT REGARDING FORWARD‐LOOKING STATEMENTS
RESPONSIBILITY FOR FINANCIAL STATEMENTS
INDEPENDENT AUDITORS REPORT
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
2
4
4
6
6
9
21
29
31
42
43
44
46
LETTER TO THE SHAREHOLDERS
March 8, 2017,
Dear Shareholders,
In 2016, the uranium market forced even the strongest supporters of the uranium mining business to test their resolve
as to the belief that the uranium price must rise given the fundamental imbalance of declining primary supplies against
growing global demand for nuclear energy – particularly as the spot price of U3O8 dipped below $20/lb U3O8 to a level
that would, by most estimates, make even the lowest cost uranium mine lose money on an all-in cost per pound basis.
Production curtailments announced in 2016 had little impact on the downward trajectory of the uranium price, and by
the second half of the year, the falling price of uranium had picked up momentum and dropped quickly to a 12 year low.
Arguably, the steep decline in the spot price was exactly what the industry needed – setting a bottom to several years
of declining prices and positioning the sector to move upwards for the next cycle of significant long term utility
contracting.
Despite the difficult year for uranium in 2016, we cannot lose sight of the fact that more new nuclear power was added
to the global power grid in each of 2015 and 2016, on net, than in any other year over the past 25 years, and that utility
contracting volumes must increase in future years to secure over 800 million pounds U3O8 in estimated uncovered
requirements between 2017 and 2025. This is all happening at a time when new primary sources of uranium supplies
are struggling to be developed amidst a sustained period of historically low prices – which could ultimately lead to a
supply shortage and potential panic amongst utilities from the lack of security of supply. That said, the uranium price is
already on the rise in the early part of 2017, following the announcement of a 10% production cut by the world’s largest
producer of uranium. This is a positive development following a year of challenges, in which Denison made a number
of bold moves to position ourselves to benefit from the eventual return to a bull-market for uranium.
To this end, 2016 was in fact a tremendous year for Denison. Not only did our share price defy a 40% drop in the
uranium spot price during the year, but the Company thrived as it maintained its focus on positioning itself to become
the next large-scale uranium producer in Canada.
The year began with the completion of a Preliminary Economic Assessment (“PEA”)1 for the company’s flag-ship, 60%
owned, Wheeler River property – studying the economic merit of co-developing the high-grade Gryphon and Phoenix
uranium deposits. We ran a base case economic model using the then current long term price for uranium and returned
a robust pre-tax Internal Rate of Return (“IRR”) and initial CAPEX to Denison estimated at under CAD$350 million. The
PEA highlighted the importance of existing regional infrastructure throughout the eastern portion of the Athabasca
Basin and the potential for Wheeler River to be economic in a low to moderate price environment. The results clearly
justified advancement to a Pre-Feasibility Study (“PFS”), which was launched later in 2016.
While the PEA was being finalized and as work began on the PFS, our Saskatoon based exploration team delivered
once again – as part of an Athabasca exploration program that included over 75,000 metres of drilling in 2016 – with
the discovery of new uranium mineralization northwest of the Gryphon deposit at Wheeler River, leading to what has
now been categorized as the D-series of mineralized lenses, which are ultimately expected to add to the A, B and C-
series of lenses that make up the current resource estimate for the Gryphon deposit. New mineralization discovered in
2016 at Wheeler River was not included in the PEA, and speaks to the considerable exploration potential that remains
on the property.
Also in 2016, the Company completed the sale of its African uranium interests to GoviEx Uranium Inc. (“GoviEx”) in
exchange for a significant shareholding in GoviEx. While African uranium assets are a much different proposition from
Denison’s core Athabasca assets, they are certainly still assets of value. Rather than selling these assets outright, at
the bottom of the market, Denison has retained considerable leverage to a rising uranium price through its interest in
GoviEx, which now controls one of the largest undeveloped uranium resource bases globally and is poised to become
a significant player in the market in future years.
1 “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, prepared by SRK Consulting
(Canada) Inc. (Ken Reipas P.Eng.), with an effective date of March 31, 2016. A copy of the PEA is available on the Company’s
website and on both SEDAR and EDGAR. The PEA is preliminary in nature and includes inferred mineral resources that are
considered too speculative geologically to have the economic considerations applied to them to be categorized as mineral reserves,
and there is no certainty that the PEA will be realized. Mineral resources are not mineral reserves and do not have demonstrated
economic viability.
2
LETTER TO THE SHAREHOLDERS
In the Athabasca in 2016, while our focus remained on Wheeler, we were active building our project portfolio, adding
an 80% interest in the highly prospective Hook-Carter project from ALX Uranium Corp. Hook-Carter is located on trend
of the Triple R deposit, Arrow deposit and Spitfire discovery, and includes approximately 15 kilometres of coverage
along the Patterson Lake Corridor. In addition, Denison also optioned its 100% interest in the Moore Lake property to
Skyharbour Resources Ltd. (“Skyharbour”), in exchange for cash, stock, and an exploration commitment. As one of the
largest shareholders of Skyharbour, and with certain back-in rights on the property, we remain exposed to a potential
discovery on the Moore Lake property, while focusing our capital on advancing Wheeler River.
With a three-year renewal of the management services agreement with Uranium Participation Corp. and the
revitalization of our environmental services business in Elliot Lake, Ontario, Denison continues to be uniquely positioned
with significant sources of internal cash flow, which allows us to keep our balance sheet in good order and to battle
dilution to our shareholders, while still advancing the Company towards a development decision on Wheeler River.
Denison promises to deliver more of the same opportunistic and ambitious developments in 2017. With 68,000 metres
of exploration drilling planned, including our first drill-holes at Hook-Carter, success in 2017 will again be driven by the
drill bit as we work towards a PFS for Wheeler River and continue to explore our highest priority projects for a new
discovery. Already in the first few months of the year, we’ve announced (1) an agreement with our joint venture partners
at Wheeler River to effectively earn-in to up to approximately a 66% interest in the project (currently 60%), and (2) two
financing transactions that have fortified our balance sheet for the next several years, generating over CAD$60 million
in gross proceeds – including a non-dilutive financing that raised CAD$43.5 million in gross proceeds and de-risked a
critical source of cash-flow. This capital gives us considerable financial flexibility as we look to move forward with
Wheeler River.
Ultimately, Denison believes that nuclear energy must play an important role in the global energy mix, as the world
works together to fight greenhouse gas emissions and crisis level air quality issues. We also believe that the spot price
and long-term price of uranium is irrationally low at present and that a proper cycle of long-term uranium contracting
from global electric utilities will lead to a realization that uranium producers may not be able to meet growing demands,
even if the price rises dramatically. With few large-scale projects, outside of Wheeler River, moving forward in the
development pipeline and having the potential to be producing uranium by 2025, we also believe that Denison is
uniquely positioning itself to offer investors significant torque to a rising uranium price in 2017 and beyond.
As always, thank you for your continued support of the Company and the management team,
Best regards,
David Cates
President & CEO
3
MANAGEMENT’S DISCUSSION & ANALYSIS
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 March 8, 2017 and should be
read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended
December 31, 2016. The audited consolidated financial statements are prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All dollar
amounts are expressed in U.S. dollars, unless otherwise noted.
Additional information about Denison, including the Company’s press releases, quarterly and annual reports, Annual
Information Form and Form 40-F is available through the Company’s filings with the securities regulatory authorities in
Canada at www.sedar.com ("SEDAR") and the United States at www.sec.gov/edgar.shtml ("EDGAR").
PERFORMANCE HIGHLIGHTS
Positive results from the Preliminary Economic Assessment on the Wheeler River Property
The Preliminary Economic Assessment (“PEA”) on Denison’s 60% owned Wheeler River project resulted in a base
case pre-tax Internal Rate of Return (“IRR”) of 20.4%, an indicative post-tax IRR to Denison of 17.8%, and a pre-tax
Net Present Value (“NPV”) of CAD$513 million (Denison’s share – CAD$308 million), based on the then current long
term contract price for uranium of $44 per pound U3O8. Illustrating the project’s exposure to rising uranium prices,
the PEA also included a production scenario based on a uranium price of $62.60 per pound U3O8, resulting in a pre-
tax IRR of 34.1% and a pre-tax NPV of CAD$1,420 million (Denison’s share – CAD$852 million).
The PEA considers the potential economic merit of co-developing the high-grade Gryphon and Phoenix deposits as
a single underground mining operation, and assumes processing will occur at Denison’s 22.5% owned McClean
Lake mill, which is located in the infrastructure rich eastern portion of the Athabasca Basin. Project risk and initial
project capital expenditures (“CAPEX”), estimated to be CAD$560 million (Denison’s share – CAD$336 million), are
both minimized by utilizing existing regional infrastructure. The PEA was prepared based on the estimated uranium
mineral resources at Wheeler as at the end of 2015, including an indicated resource of 70.2 million pounds U3O8 at
an average grade of 19.1% at the Phoenix deposit and a further inferred resource of 43.0 million pounds U3O8 at the
Gryphon deposit. The PEA is preliminary in nature and includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations applied to them to be categorized as mineral reserves,
and there is no certainty that the PEA will be realized. Mineral resources are not mineral reserves and do not have
demonstrated economic viability.
Launched Pre-Feasibility Study for Wheeler and initiated infill and delineation drilling at Gryphon
During 2016, the Company commenced pre-feasibility study (“PFS”) activities for the Wheeler River project, including
engineering data collection for geotechnical and hydrological field studies, environmental baseline data collection,
and community consultations. To support the PFS, Denison commenced infill drilling at the Gryphon deposit using a
directional drilling method. Infill drilling at the Gryphon deposit is designed to increase the confidence in the mineral
resources estimated from an inferred to an indicated level.
Completed a highly successful 2016 exploration program at Wheeler River leading to potential resource
expansion beyond PEA levels
During 2016, Denison completed a total of 47,169 metres of drilling in 73 holes, with work focused at or near the
Gryphon deposit during both the summer and the winter drilling programs. The programs demonstrated that the
Gryphon deposit is part of a large and robust mineralizing system that remains open in numerous directions. The
results from 2016 are not included in the current Gryphon resource estimate or the PEA and have the potential to
translate into meaningful resource expansion in the following areas:
Gryphon D Series mineralized lenses
The D Series lenses were discovered in early 2016, and are located within 200 metres north and northwest of the
Gryphon deposit. At the end of 2016, the lenses measured 330 meters in collective strike extent, and mineralization
remains open along strike in both directions. Highlights for the D Series lenses include 5.3% U3O8 over 11.0 metres
including 12.6% U3O8 over 4.5 metres in drill hole WR-641, and 2.9% U3O8 over 6.0 metres and 2.3% U3O8 over 4.0
metres in drill hole WR-633D1.
Gryphon A and B Series mineralized lenses
Toward the end of the summer 2016 drilling program, additional high grade mineralization was discovered
immediately down-dip and up-dip of the Gryphon deposit’s A and B Series lenses. Highlight intersections include
6.97% U3O8 over 4.5 metres in drill hole WR-674 and 0.94% U3O8 over 10.5 metres in drill hole WR-602D1. The
4
MANAGEMENT’S DISCUSSION & ANALYSIS
intersections indicate expansion of the Gryphon deposit A and B Series lenses, which already host the large majority
of the estimated resources of the Gryphon deposit.
Executed Agreement to Increase Ownership of Wheeler River Project Up to 66%
In January 2017, the Company executed an agreement with the partners of the Wheeler River Joint Venture (“WRJV”)
that is expected to result in an increase in Denison's ownership of the Wheeler River project to up to approximately
66% (currently 60%) by the end of 2018. Under this agreement, Denison will fund 50% of Cameco Corp.’s (Cameco)
ordinary share of joint venture expenses in 2017 and 2018. Refer to SUBSEQUENT EVENTS for further details.
Closed non-dilutive financing for CAD$43.5 million to fund future project development activities
In January 2017, Denison also announced and closed a financing arrangement for gross proceeds of CAD$43.5
million, which has the effect of monetizing Denison’s future share of the toll milling revenue earned by the McClean
Lake mill from the processing of ore from the Cigar Lake mine through the combination of a limited recourse loan
and a streaming arrangement. Through this transaction, Denison retains its 22.5% ownership of the McClean Lake
Joint Venture (“MLJV”), but has de-risked its income from certain toll milling revenue, as the Company is not providing
any warranty to the future rate of production at the Cigar Lake mine or the McClean Lake mill. The proceeds from
the financing are expected to fund the Company’s project development costs for Wheeler River to the completion of
a Feasibility Study and ultimately project financing. Refer to SUBSEQUENT EVENTS for further details.
Successfully completed combination of African-based uranium interests with GoviEx Uranium Inc.
In June 2016, GoviEx Uranium Inc. (“GoviEx”) and Denison completed a combination of their respective African
uranium mineral interests under the direct ownership of GoviEx (the “Africa Transaction”). Concurrently, GoviEx
completed a non-brokered private placement equity financing, in which Denison provided the lead order of
approximately $500,000. Following the Africa Transaction and the concurrent financing, Denison became the largest
single shareholder of GoviEx holding a total of 65,144,021 common shares of GoviEx or approximately 24.59% of
GoviEx’s issued and outstanding common shares at the time. Denison’s investment in GoviEx provides the Company
with leverage to a diversified portfolio of African uranium interests with potential for a significant increase in value in
a rising uranium market.
Acquired the Hook-Carter property and the contiguous Coppin Lake property
In November 2016, Denison completed the acquisition of an immediate 80% ownership of the Hook-Carter property
from ALX Uranium Corp. (“ALX”) in exchange for the issuance of 7.5 million common shares of Denison, and an
agreement to fund ALX’s share of the first CAD$12.0 million in expenditures on the project. Denison also acquired
the contiguous Coppin Lake property ("Coppin Lake") from AREVA Resources Canada Inc. (“ARC”) and UEX
Corporation, with ALX having agreed to acquire its proportional interest in the project from Denison under the terms
of the Hook Carter acquisition. Taken together the Hook-Carter project (including the Coppin Lake claims) consists
of 38 claims, totaling 19,573 hectares, and is located to the northeast and on trend of the Triple R deposit, Arrow
deposit and Spitfire discovery in the southwestern portion of the Athabasca Basin region, in northern Saskatchewan.
Hook-Carter offers Denison exposure to over 15 kilometres of strike length on the Patterson Lake Corridor and an
opportunity to organically add a long-term asset in the western portion of the Athabasca Basin.
Entered into an agreement to option Moore Lake property to Skyharbour for cash and stock
In August 2016, Denison closed an agreement with Skyharbour Resources Ltd. (“Skyharbour”) that grants
Skyharbour an option to acquire a 100% interest in Denison’s Moore Lake property, in exchange for 4,500,000
common shares of Skyharbour and cash payments totaling CAD$500,000 over the next five years. Skyharbour also
agreed to spend CAD$3,500,000 on exploration at the Moore Lake property over the next five years and to grant
Denison various back-in rights to re-acquire a 51% interest in the property.
Obtained financing for the Company’s 2017 Canadian exploration activities
In May 2016, the Company completed a CAD$12.4 million bought deal private placement equity offering for the
issuance of 15,127,805 common shares on a flow-through basis at a price of CAD$0.82 per share. The proceeds
will be used to fund Canadian exploration activities through to the end of 2017.
5
MANAGEMENT’S DISCUSSION & ANALYSIS
ABOUT DENISON
Denison was formed under the laws of Ontario and is a reporting issuer in all Canadian provinces. Denison’s common
shares are listed on the Toronto Stock Exchange (the “TSX”) under the symbol “DML” and on the NYSE MKT exchange
under the symbol “DNN”.
Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of
northern Saskatchewan, Canada. In addition to its 60% owned Wheeler River project, which hosts the high grade
Phoenix and Gryphon uranium deposits, Denison's exploration portfolio consists of numerous projects covering
approximately 380,000 hectares in the Athabasca Basin region. Denison's interests in Saskatchewan also include a
22.5% ownership interest in the McClean Lake joint venture (“MLJV”), which includes several uranium deposits and
the McClean Lake uranium mill, which is currently processing ore from the Cigar Lake mine under a toll milling
agreement, plus a 25.17% interest in the Midwest deposit and a 63.01% interest in the J Zone deposit on the Waterbury
Lake property. Both the Midwest and J Zone deposits are located within 20 kilometres of the McClean Lake mill.
Denison is engaged in mine decommissioning and environmental services through its Denison Environmental Services
(“DES”) division, which manages Denison’s Elliot Lake reclamation projects and provides post-closure mine and
maintenance services to a variety of industry and government clients.
Denison is also the manager of Uranium Participation Corporation (“UPC”), a publicly traded company listed on the
TSX under the symbol “U”, which invests in uranium oxide in concentrates (“U3O8”) and uranium hexafluoride (“UF6”).
STRATEGY
Denison’s strategy is focused on leveraging its uniquely diversified asset base to position the Company to take
advantage of the strong long-term fundamentals of the uranium market. In past years, the Company has built one of
the strongest portfolios of strategic uranium deposits, properties, and investments amongst junior uranium mining
companies. Denison’s assets are highlighted by a controlling interest in the Wheeler River project and a minority interest
in an operating and licensed uranium milling facility, both located in the infrastructure rich eastern portion of the
Athabasca Basin region. While active in exploring for new uranium discoveries in the region, Denison’s present focus
is on advancing the Wheeler River project to a development decision, with the potential to become the next large scale
uranium producer in Canada. With a shortage of low cost uranium development projects in the global project pipeline,
Denison is positioned to offer shareholders exposure to value creation through both the development of a potentially
top tier asset, as well as a rising uranium price in future years.
URANIUM INDUSTRY OVERVIEW
In 2016, the uranium industry weathered one of the most difficult years in recent history. An oversupplied spot market
put dramatic downward pressure on the spot price of U3O8, despite the announcement of various production
curtailments from uranium producers. The spot price started the year at $34.25 per pound U3O8, and lost nearly 20%
by the end of the first quarter of 2016, breaking through the $30.00 per pound U3O8 threshold. Following six months of
steady price declines during the middle of the year, the spot price plummeted from $26.00 per pound U3O8 to a 12-year
low near $18.00 per pound U3O8 by November 2016. At its low for the year, the spot price had fallen nearly 50% from
where it started 2016 at $34.25 per pound U3O8. Needless to say, industry insiders have pointed to multiple reasons
for the dramatic decline in spot prices during 2016 – including the disappointing rate of nuclear reactor restarts in Japan
(following initial restarts in 2015, after the Fukushima Daichii nuclear incident led to a total shut down of nuclear power
generation in Japan in 2011), the deferral of utility contracting expected to commence in 2017, and an abundance of
secondary supplies entering the market (including underfeeding from under-utilized enrichment plants). Even the long-
term contract price of uranium, which is typically less volatile than the spot price, fell over 30%, from a price of $44.00
per pound U3O8 at the beginning of the year, to end 2016 at $30.00 per pound U3O8.
Juxtaposed to statistics from the U.S. Energy Information Administration and American Nuclear Society regarding the
fact that more new nuclear power capacity was added to the global electricity grid, on a net basis, during 2015 and
again in 2016 than in any other year over the last 25 years, a steep decline in the uranium price during 2016 seems
illogical. This view is bolstered by the fact that a uranium price in the low $20.00 per pound range renders even the
lowest cost producing uranium mine in the world, according to UxC, to lose money on an all-in cost per pound basis.
With demand for uranium forecasted to increase steadily through to 2030, meaningful new capacity coming onto the
grid at present, and a uranium mining production pipeline that has been stagnated by several years while uranium
6
MANAGEMENT’S DISCUSSION & ANALYSIS
prices fail to incentivize the majority of undeveloped uranium projects towards construction, logic would suggest that
prices should be on the rise. Underpinning that logic, however, is the assumption that growing demand in the future
translates into increased buying today, and that an oversupplied spot market with historically low prices will be fixed by
opportunistic buying for long-term utility needs. Volumes in the spot market, however, remain relatively steady in the
30 - 45 million pounds U3O8 per year range, and long term utility contracting volumes sit at levels nearly 85% below the
height of the market’s annual contracting volumes from 2007 to 2012 (when annual contracting volumes reached as
high as 250 million pounds U3O8 per year). Without meaningful sales volumes, a truly sustainable uranium price has
been difficult to discover. Instead, sellers simply outnumber buyers and prices have been subject to downward
pressure.
With the world’s largest uranium producer, Kazatomprom, having announced (in early 2017) a 10% reduction in its
planned production for 2017, the uranium market has finally started to show some signs of a potential turn-around.
While the market remains oversupplied, a combination of production cuts from the world’s largest producers, and a
dysfunctional project pipeline that is unlikely to deliver meaningful new sources of primary supply to the market before
2025, has helped to buoy a recovery in the spot price through the end of 2016 and into early 2017. For a recovery to
be sustained, however, utility buying must resume and contracting volumes must increase as utilities work towards
securing over 800 million pounds U3O8 in uncovered uranium requirements for the period between 2017 and 2025.
With few new sources of supply on the horizon over the next 8 to 10 years (and beyond), a significant contracting cycle
is expected to lead to the realization that current uranium prices are well below the level required to incentivize most
new sources of primary supply, thus leading to a potentially sustained market of rising prices as buyers are forced to
bid up the price to secure available supplies of uranium or bring new sources of supply into the market.
Much of the uncovered future demand is estimated to come from non-U.S. utilities, as growth in nuclear energy is
expected to be driven by increasing nuclear generating capacities in Asia – primarily from China, India and South
Korea. According to the World Nuclear Association (“WNA”), as of March 1, 2017, China had 36 operable nuclear
reactors (+6 from January 1, 2016) capable of producing 32.6 gigawatts of electricity. A further 21 reactors are under
construction (-3 from January 1, 2016) and an additional 179 reactors are either planned or proposed (+3 from January
1, 2016). Ux Consulting Company, LLC (“UxC”) estimates that 111 reactors are expected to be operable and capable
of producing over 116 gigawatts of electricity in China by 2030. To achieve this level of production, China’s fleet of
nuclear reactors will have to increase by between 5 and 6 reactors each year for the next 14 years. The WNA is
projecting a similar growth profile for India, where 22 reactors (+1 from January 1, 2016) were operable as of March 1,
2017, capable of producing 6.2 gigawatts of power. Taken together, 69 reactors are either under construction, planned
or proposed in India (+ 3 from January 1, 2016). UxC estimates that India could have over 21 gigawatts of nuclear
energy operable by 2030, representing over 3 times as much power capacity as is currently available from nuclear. To
achieve this level of production, India’s fleet of nuclear reactors will have to increase by at least one additional reactor
each year over the next 14 years.
Although the uranium market is expected to remain oversupplied in the near term, the long term growth projections for
the nuclear industry, combined with the expected depletion of uranium resources in operation today, continue to
suggest that a significant long term supply shortage could emerge, even after factoring in new production sources that
are expected to come online. With a sustained period of low commodity prices, the uranium mining industry has been
challenged to discover and advance the new production sources necessary to meet the expected increase in demand
in future years. This story remains unchanged, and accordingly higher prices are expected to be needed to justify the
construction of new mines. In the absence of a significant price increase in the near term, it is possible that even the
most ambitious development plans could leave the market with an unavoidable supply shortage as soon as the early
2020s.
7
SELECTED ANNUAL FINANCIAL INFORMATION
MANAGEMENT’S DISCUSSION & ANALYSIS
(in thousands, except for per share amounts)
Continuing Operations:
Total revenues
Exploration and evaluation
Impairment of property, plant & equipment
Net loss
Basic and diluted loss per share
Discontinued Operations:
Net loss
Basic and diluted loss per share
(in thousands)
Financial Position:
Cash and cash equivalents
Short term investments
Cash, cash equivalents and investments
Working capital
Property, plant and equipment
Total assets
Total long-term liabilities
Year Ended
Year Ended
December 31,
2016
December 31,
2015
Year Ended
December 31,
2014
$
$
$
$
$
$
$
$
$
$
$
$
$
$
13,833
(11,196)
(2,320)
(11,699)
(0.02)
(5,644)
(0.1)
$
$
$
$
$
$
$
12,670 $
(13,439) $
(2,603) $
(16,717) $
(0.03) $
9,619
(13,488)
(1,658)
(18,485)
(0.04)
(34,843) $
(0.07) $
(13,218)
(0.03)
As at
December 31,
2016
As at
December 31,
2015
As at
December 31,
2014
11,838
-
11,838
9,275
187,982
217,423
36,874
$
$
$
$
$
$
$
5,367 $
7,282 $
12,649 $
12,772 $
188,250 $
212,758 $
38,125 $
18,640
4,381
23,021
22,542
270,388
311,330
42,291
SELECTED QUARTERLY FINANCIAL INFORMATION
(in thousands, except for per share amounts)
2016
Q4
2016
Q3
2016
Q2
2016
Q1
Continuing Operations:
Total revenues
Net loss
Basic and diluted loss per share
Discontinued Operations:
Net income (loss)
Basic and diluted income (loss) per share
(in thousands, except for per share amounts)
Continuing Operations:
Total revenues
Net loss
Basic and diluted loss per share
Discontinued Operations:
Net loss
Basic and diluted loss per share
$
$
$
$
$
$
$
$
$
$
3,351 $
(916) $
- $
3,489 $
(2,506) $
- $
3,663 $
(3,832) $
(0.01) $
3,330
(4,445)
(0.01)
(9,082) $
(0.01) $
9,050 $
0.01 $
(450) $
- $
(5,162)
(0.01)
2015
Q4
2015
Q3
2015
Q2
2015
Q1
3,887 $
(5,274) $
(0.01) $
3,526 $
(3,608) $
(0.01) $
2,929 $
(3,982) $
(0.01) $
2,328
(3,853)
(0.01)
(10,926) $
(0.02) $
(17,824) $
(0.03) $
(152) $
- $
(5,941)
(0.01)
8
MANAGEMENT’S DISCUSSION & ANALYSIS
Significant items causing variations in quarterly results
The Company’s toll milling revenues over the last several quarters have fluctuated due to the timing of uranium
processing at the McClean Lake mill.
Revenues from Denison Environmental Services fluctuate due to the timing of projects which vary throughout
the year in the normal course of business.
Exploration expenses are generally largest in first quarter and third quarter due to the timing of the winter and
summer exploration programs in Saskatchewan.
The Company’s results are also impacted by other non-recurring events arising from its ongoing activities.
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 currently processing ore from the Cigar Lake mine
under a toll milling agreement. The MLJV is a joint venture between ARC with a 70% interest, Denison with a 22.5%
interest and OURD (Canada) Co. Ltd. with a 7.5% interest.
The McClean Lake mill is operated by ARC and obtained regulatory authorization from the Canadian Nuclear Safety
Commission (“CNSC”), in the second quarter of 2016, to increase its annual production capacity from 13 million pounds
U3O8 to 24 million pounds U3O8. The expansion of the McClean Lake mill is substantially complete and remains fully
funded by the CLJV.
During 2016, the McClean Lake mill processed ore received from the Cigar Lake mine and packaged approximately
17.3 million pounds U3O8 for the CLJV. The Company’s share of toll milling revenue during 2016 totaled $4,598,000.
In 2015, the mill packaged approximately 11.3 million pounds of U3O8 for the CLJV and the Company’s share of toll
milling revenue was $3,155,000.
Denison Environmental Services
Mine decommissioning and environmental services are provided through Denison’s DES division – providing long-term
care and maintenance for closed mine sites since 1997. With offices in Elliot Lake, Ontario, the Yukon Territory and
Quebec, DES manages Denison’s Elliot Lake reclamation projects and provides post-closure mine care and
maintenance services to various customers.
Revenue from DES during 2016 was $7,751,000, compared to $7,607,000 in 2015. In 2016, DES experienced an
increase in Canadian dollar revenues due to an increase in activity at certain care and maintenance sites, which was
partly offset by the unfavourable fluctuation in foreign exchange rates applicable on the translation of revenues earned
in Canadian dollars.
Management Services Agreement with Uranium Participation Corporation (“UPC”)
Denison provides general administrative and management services to UPC. Management fees and commissions
earned by the Company provide Denison with a source of cash flow to partly offset corporate administrative
expenditures incurred by the Company. During the second quarter of 2016, the Company entered into a new three-
year management services arrangement with UPC (“New UPC Agreement”).
Revenue from the Company’s management contract with UPC was $1,484,000 during 2016, compared to $1,822,000
in 2015. The decrease in revenues during 2016 was predominantly due to a reduction in the management fees earned
based on UPC’s monthly net asset value. UPC’s balance sheet consists primarily of uranium held either in the form of
U3O8 or UF6, which is accounted for at fair value. The fair value of uranium holdings reduced significantly during 2016,
as a result of an approximately 40% decline in uranium spot prices during the year. The decline in revenues was also
impacted by unfavourable fluctuations in foreign exchange rates applicable to the translation of the Canadian dollar
revenues and was partially offset by an increase in transaction-related commissions and one-time fees associated with
the purchase of uranium and other management services.
9
MANAGEMENT’S DISCUSSION & ANALYSIS
CANADIAN MINERAL PROPERTY EXPLORATION & EVALUATION
During 2016, the Company continued to focus on its significant portfolio of projects in the eastern portion of the
Athabasca Basin region in Saskatchewan. Denison’s share of exploration and evaluation expenditures in 2016 was
$11,196,000 (CAD$14,917,000) compared to expenditures in 2015 of $13,439,000 (CAD$17,036,000). During 2016,
the Company’s exploration and evaluation expenditures decreased as a result of a reduction in winter activities,
compared to the prior year, and a favourable fluctuation in foreign exchange rates applicable on the translation of
expenses incurred in Canadian dollars. The following table summarizes the activities that were completed during 2016.
Property
Denison’s ownership
Drilling in metres (m)
Other activities
CANADIAN EXPLORATION & EVALUATION ACTIVITIES
Wheeler River
Bachman Lake
Bell Lake
Crawford Lake
Hatchet Lake
Mann Lake
Marten
McClean Lake
Murphy Lake
Moon Lake South
Moore Lake
South Dufferin
Torwalt Lake
Turkey Lake
Waterbury Lake
Wolly
Total
60%(1)
100%
100%
100%
70.11%(2)
30%
50%(3)
22.50%
78.96%(2)
nil(4)
100%(5)
100%
100%
100%
63.01%(6)
22.76%(7)
47,169 (73 holes)
-
2,382 (4 holes)
2,810 (4 holes)
2,040 (6 holes)
4,775 (7 holes)
1,021 (4 holes)
2,850 (7 holes)
3,695 (10 holes)
516 (1 hole)
-
-
612 (2 holes)
501 (4 holes)
3,153 (8 holes)
5,339 (27 holes)
76,863 (157 holes)
Completion of Preliminary
Economic Assessment; Initial PFS
activities; Geophysical surveys
Geophysical surveys
Geophysical surveys
Geophysical surveys
Geophysical surveys,
Soil Sampling program
-
-
-
Geophysical surveys
-
Geophysical surveys
Soil Sampling Program
-
-
Geophysical surveys
Geophysical surveys
(1) See SUBSEQUENT EVENTS for discussion of the agreement entered into whereby Denison is expected to increase its ownership of the Wheeler
River project to approximately 66% by the end of 2018.
(2) The Company’s ownership in these projects is as at December 31, 2016. The partner in these projects, Eros Resources Corp. has elected not to
fund the 2017 programs and will dilute their respective ownership interest. As a result, Denison’s interest will increase.
(3) The Company has received notice from its partner that it intends to withdraw from the JV agreement related to this property. The effective date of
the termination is March 17, 2017.
(4) The Company’s ownership is as at December 31, 2016. Refer to Exploration Pipeline Properties below for further details. The property is currently
owned by CanAlaska Uranium Ltd. and Denison is in the process of earning into an initial interest.
(5) Refer to Exploration Pipeline Properties below for details of option agreement entered into with Skyharbour Resources Ltd on the property.
(6) The Company earned an additional 1.46% interest in the Waterbury Lake property effective August 31, 2016. Refer to RELATED PARTY
TRANSACTIONS below for further details.
(7) During 2016 Denison and ARC elected to fund their pro rata share of JCU’s portion and therefore Denison’s interest in the project increased from
22.5% to 22.76%.
Exploration spending in Canada is seasonal with spending higher during the winter exploration season (January to mid-
April) and summer exploration season (June to mid-October) in the Athabasca Basin. The Company’s land position in
the Athabasca Basin, as of December 31, 2016, is illustrated below. Denison’s high priority exploration properties are
outlined in bold. The Company’s Athabasca land package increased during the fourth quarter from 354,162 hectares
(230 claims) to 371,744 hectares (252 claims) primarily due to the acquisition of the Hook-Carter and Coppin Lake
claims.
10
MANAGEMENT’S DISCUSSION & ANALYSIS
Wheeler River Project
The Wheeler River property is host to the high-grade Phoenix and Gryphon uranium deposits, discovered by Denison
in 2008 and 2014 respectively. The Phoenix deposit is estimated to include indicated resources of 70.2 million pounds
U3O8 (above a cut-off grade of 0.8% U3O8) based on 166,000 tonnes of mineralization at an average grade of 19.1%
U3O8, and is the highest grade undeveloped uranium deposit in the world. The Gryphon deposit is hosted in basement
rock, approximately 3 kilometres to the northwest of Phoenix, and is estimated to contain inferred resources of 43.0
million pounds U3O8 (above a cut-off grade of 0.2% U3O8) based on 834,000 tonnes of mineralization at an average
grade of 2.3% U3O8.
The Wheeler River property lies between the McArthur River Mine and the Key Lake mill complex in the eastern portion
of the Athabasca Basin in northern Saskatchewan – a well-established uranium mining district with infrastructure
including the provincial power grid, all-weather provincial highways and haul roads, air transportation infrastructure and
multiple uranium processing facilities, including the 22.5% Denison owned McClean Lake mill. The ore haul road and
provincial power line between the McArthur River Mine and the Key Lake mill complex runs along the eastern side of
the Wheeler River property. Denison is the operator of the Wheeler River project and holds a 60% interest, while
Cameco holds a 30% interest and JCU (Canada) Exploration Company, Limited (“JCU”) holds a 10% interest. Further
details regarding the Wheeler River Project are provided in the Company’s NI 43-101 technical report entitled
“Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, (the “PEA”) with
11
an effective date of March 31, 2016. A copy of the PEA is available on the Company’s website and on both SEDAR
and EDGAR.
The Wheeler River property location and basement geology map is provided below.
MANAGEMENT’S DISCUSSION & ANALYSIS
Evaluation Program
During 2016, Denison’s share of evaluation costs at Wheeler River amounted to $847,000 (2015 - $241,000) and was
mainly related to the completion of the PEA and the initiation of Pre-feasibility study (“PFS”) activities.
The PEA considers the potential economic merit of co-developing the high-grade Gryphon and Phoenix deposits as a
single underground mining operation, and assumes processing at Denison’s 22.5% owned McClean Lake mill, located
in the infrastructure rich eastern portion of the Athabasca Basin. The strategic development plan is designed to minimize
risk, generate higher up-front margins, and reduce initial capital funding requirements – by development of the
conventionally mined basement hosted Gryphon deposit first, followed by the unconformity hosted Phoenix deposit.
The plan also results in reduced project risk by utilizing existing infrastructure in the eastern Athabasca Basin, which
includes excess milling capacity at the McClean Lake mill, as well as the provincial highways and power grid already
in place.
12
MANAGEMENT’S DISCUSSION & ANALYSIS
PEA Results
The PEA resulted in a base case pre-tax Internal Rate of Return (“IRR”) of 20.4%, an indicative post-tax IRR to Denison
of 17.8%, and a pre-tax Net Present Value (“NPV”) of CAD$513 million (Denison’s share – CAD$308 million), based
on a long term contract price for uranium of $44 per pound U3O8. The PEA also included a production scenario based
on a uranium price of $62.60 per pound U3O8, resulting in a pre-tax IRR of 34.1% and a pre-tax NPV of CAD$1,420
million (Denison’s share – CAD$852 million).
The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them to be categorized as mineral reserves, and there is
no certainty that the PEA will be realized. Mineral resources are not mineral reserves and do not have demonstrated
economic viability.
PFS Activities
In July 2016, Denison announced the initiation of a PFS for the Wheeler River project. An important step in completing
the PFS involves increasing the level of confidence of the previously released inferred resources estimated for the
Gryphon deposit to an indicated level. An infill drilling program was designed to achieve this objective by reducing the
50 x 50 metre drill spacing to an approximate 25 x 25 metre spacing across the A, B and C series lenses of the Gryphon
deposit. The program, which is expected to require approximately 40 drill holes, includes delineation holes designed to
potentially close-off areas where mineralization is still open. Refer to the Exploration Programs section below for results
of the initial infill and delineation drill holes completed during the summer 2016 program.
Engineering Activities
As part of the PFS activities, the Company commenced engineering data collection programs at Wheeler River,
including geotechnical and hydrogeological field studies. Geotechnical data collection programs were initiated to assess
ground conditions in the mineralized zones as well as the surrounding host rock. This information will be used to guide
the location of underground development and the design of ground support systems for both the shafts and the mine.
This information is also expected to be used in the production planning process, including the determination of optimum
stope sizes and mine production sequencing. By the end of the year, a substantial database of geotechnical information
was obtained including:
1,650 metres of geotechnical logging of new cores at the Phoenix deposit;
33,000 metres of geotechnical logging from exploration drilling at Gryphon; and
3,800 metres of geotechnical logging of historic drill cores from both Phoenix and Gryphon.
Hydrogeological data collection was also initiated, during the year, to gather information on sub-surface water
movement in the mineralized zones, host rock, and across major geological structures. Understanding these conditions
at Wheeler River will help to avoid some of the challenges that have been experienced at other underground operations
in the Athabasca Basin. The information collected will be used to: evaluate routine and potential non-routine water
inflows to an underground operation; develop design criteria for mine dewatering and water treatment plant systems;
and understand potential interactions of the project with the environment.
Similar to the geotechnical program, by the end of 2016 a substantial database of hydrogeological information was
obtained including:
92 hydrogeological tests at both Gryphon and Phoenix, completed to better understand groundwater
movement and flow paths, including tests in the sandstone, at the unconformity and in basement zones across
geological structures;
Surface water elevation surveys completed in over 180 boreholes;
The collection of 20 sub-surface water samples for laboratory analysis; and
The installation of two vibrating wire piezometers to facilitate sub-surface hydrogeological data collection
during drilling and pumping programs.
In addition to the engineering field work described above, the Company also initiated engineering investigations into
alternate mining methods at Phoenix, options for shaft and vent raise excavation at both Gryphon and Phoenix, and
possible routes for a site access road from provincial highway 914.
13
MANAGEMENT’S DISCUSSION & ANALYSIS
Environmental Activities
During 2016, the Company commenced the collection of environmental baseline data to help characterize the existing
environment in the project area. Thoroughly understanding and documenting the local environment is essential to
assessing current and future project impacts. This data will form the foundation of the Environmental Assessment for
the project. The information will also be used in the design of various aspects of the project, including the location and
layout of site infrastructure, the location for treated effluent discharge and fresh water intake, and the designs of water
treatment plants, waste storage facilities, and other infrastructure interacting with the environment. Programs conducted
in 2016 and continuing into 2017 include:
Aquatic environment: Lakes and streams near the project area are in the process of being characterized with
key aspects including: water quality, water flow and water levels, lake sediment quality, benthic invertebrate
communities, and fish communities;
Terrestrial environment: Data regarding wildlife, vegetation and soils surrounding the project area is being
captured and characterized;
Waste rock geochemistry: Targeted core samples are being analyzed to determine potential acid and metal
leaching potential from waste rock, which will be used in design of potential waste rock storage facilities;
Atmospheric environment: Collection of air quality measurements was initiated to gather information on pre-
development atmospheric conditions; and
Heritage resources: Investigations are underway to determine the presence of heritage resources in the
project area.
In addition to the environmental baseline programs, the company also initiated the community consultation and
engagement process, including several meetings with key northern Saskatchewan communities.
Exploration Program
Denison’s share of exploration costs at Wheeler River amounted to $4,802,000 during 2016 (2015 - $4,552,000). The
Wheeler River summer drilling program was completed in October 2016. Final assay results were received in early
November and were reported in Denison’s press release dated November 17, 2017. Results for the summer 2016
drilling program are summarized below.
Extension of the Gryphon D Series Lenses
Following on from the discovery of the D Series lenses on Section 5200 GP during the winter 2016 exploration program,
the lenses were successfully extended along strike to the northeast and southwest during the summer 2016 program.
The D Series lenses are located within 200 meters north and northwest of the Gryphon deposit, within the pegmatite-
dominated footwall (Basal Pegmatite), and are interpreted to occur as a series of stacked, parallel lenses conformable
to the stratigraphy and dominant foliation - similar to the A, B and C Series lenses of the Gryphon deposit.
Highlight assay results from the 21 holes completed during the summer 2016 program, testing for D Series lens
mineralization along strike to the northeast and southwest, are presented in the table below. The drill holes are
orientated steeply toward the northwest and therefore test the entire package of prospective southeast dipping
basement stratigraphy, including the Quartz-Pegmatite Assemblage which hosts the A and B Series lenses, the Lower
Graphite which hosts the C Series lenses and the Basal Pegmatite which hosts the D Series lenses. The assay results
indicate the D Series lens mineralization totals 330 meters in collective strike extent, with mineralization still open
along strike in both directions. Highlight D Series lens intersections include 1.39% U3O8 over 5.0 metres in drill hole
WR-671D1, 3.00% U3O8 over 1.0 metre in drill hole WR-669, and 2.93% U3O8 over 1.0 metre in WR-670. As noted,
many of the mineralized intersections in the table below refer to mineralization intersected in the stratigraphic position
of the A or B Series lenses outside of the current NI 43-101 mineral resource estimate. Of particular importance is
drill hole WR-507D2, which intersected 19.31% U3O8 over 1.0 metre approximately 25 metres below the unconformity
in the stratigraphic position of the A Series lenses. This intersection is open to the northeast along strike and down-
plunge, with the potential to represent a new lens of high-grade mineralization.
14
MANAGEMENT’S DISCUSSION & ANALYSIS
HIGHLIGHTS OF DRILLING AND ASSAY RESULTS FOR DRILL HOLE TESTING FOR
EXPANSION OF THE D SERIES LENSES
Hole Number
WR-669
WR-6715
WR-671D1
WR-671D2
WR-661
WR-670
WR-507D1EXT
WR-507D25
From
(m)
747.2
584.5
682.5
659.0
694.7
651.5
723.0
581.0
To
(m)
748.2
585.5
687.5
660.0
695.7
652.5
724.5
582.0
Length4
(m)
U3O8 (wt%)1,2,3
1.0
1.0
5.0
1.0
1.0
1.0
1.5
1.0
3.00
1.61
1.39
1.09
1.39
2.93
1.95
19.31
Notes:
1. U3O8 is chemical assay of mineralized split core sample.
2. Composited above a cut-off grade of 0.05% U3O8.
3. Composites compiled using 1.0 metre minimum mineralization thickness and 2.0 metres maximum waste.
4. As the drill holes are oriented steeply toward the northwest and the basement mineralization is interpreted to dip
moderately to the southeast, the true thickness of the mineralization is expected to be approximately 75% of the
intersection lengths.
5. Mineralization intercept located in the stratigraphic position of the A or B series lenses.
15
MANAGEMENT’S DISCUSSION & ANALYSIS
Expansion of Gryphon A and B Series Lenses
Toward the end of the summer 2016 program, a total of six drill holes were completed, testing for extensions of
mineralization up-dip (WR-673, WR-675 and WR675-D1) and down-dip (WR-674, WR-602D1 and WR-679) of the A
and B Series lenses on the shallower, southwestern portion of the Gryphon deposit. The drill holes were spaced at a
minimum of 50 metres apart and located approximately 50 metres from the previous drill holes that were used to
define the current extents of the deposit. Apart from WR-679, all the holes intersected significant mineralization which
remains open. Highlights of the assay results are provided in the table below.
Hole Number
HIGHLIGHTS OF DRILLING AND ASSAY RESULTS FOR DRILL HOLE TESTING FOR
EXPANSION OF THE A AND B SERIES LENSES
Length5
(m)
10.5
1.5
1.0
3.0
1.0
1.0
4.5
3.5
1.0
WR-602D1
(including)3
(including)3
WR-673
(including)3
WR-6743
(and)
(including)3
WR-6753
From
(m)
693.3
693.3
698.8
628.3
628.3
742.0
746.0
746.5
607.4
To
(m)
703.8
694.8
699.8
631.3
629.3
743.0
750.5
750.0
608.4
0.94
3.25
4.00
0.51
1.31
1.19
6.97
8.89
1.38
U3O8 (wt%)1,2,4
Notes:
1. U3O8 is chemical assay of mineralized split core sample.
2. Composited above a cut-off grade of 0.05% U3O8 unless otherwise indicated.
3. Composited above a cut-off grade of 1.0% U3O8.
4. Composites compiled using 1.0 metre minimum mineralization thickness and 2.0 metres maximum waste.
5. As the drill holes are oriented steeply toward the northwest and the basement mineralization is interpreted to dip
moderately to the southeast, the true thickness of the mineralization is expected to be approximately 75% of the
intersection lengths.
Gryphon Infill and Delineation Drilling
A total of five initial infill and delineation drill holes, totaling 2,620 metres, were completed as part of the summer 2016
program. The drill holes included a single parent hole (WR-668) and subsequent daughter holes (WR-668D1 to WR-
668D4), which were drilled off of the parent hole using directional drilling technology. Highlight assay results for the
initial five infill and delineation drill holes are provided in the table below and drill hole locations are shown in the
inclined longitudinal section below.
HIGHLIGHTS OF DRILLING AND ASSAY RESULTS FOR INFILL AND DELINEATION
DRILL HOLES ON THE GRYPHON DEPOSIT A AND B SERIES LENSES
Hole Number
WR-668
(including)3
(including)3
(and)
(including)3
(including)3
WR-668D2
(including)3
WR-668
From
(m)
754.8
755.3
765.3
772.7
773.7
775.2
771.0
773.0
754.8
To
(m)
769.3
760.3
767.3
778.2
774.7
777.7
783.5
783.0
769.3
Length5
(m)
14.5
5.0
2.0
5.5
1.0
2.5
12.5
10.0
14.5
U3O8 (wt%)1,2,4
1.37
3.02
1.59
3.11
1.49
6.15
2.49
3.01
1.37
Notes:
1. U3O8 is chemical assay of mineralized split core sample.
2. Composited above a cut-off grade of 0.01% U3O8 unless otherwise indicated.
3. Composited above a cut-off grade of 1.0% U3O8.
4. Composites compiled using 1.0 metre minimum mineralization thickness and 2.0 metres maximum waste.
5. As the drill holes are oriented steeply toward the northwest and the basement mineralization is interpreted to dip
moderately to the southeast, the true thickness of the mineralization is expected to be approximately 75% of the
intersection lengths.
16
MANAGEMENT’S DISCUSSION & ANALYSIS
Mineralization at K-West
Mineralization was also intersected, during 2016, approximately 500 metres west of the Gryphon deposit, along the
K-West conductive trend, which runs parallel to the K-North trend hosting the Gryphon deposit. Assay results
confirmed weak uranium mineralization at K-West, in drill hole WR-663, including 0.06% U3O8 over 0.5 metres (from
826.3 to 826.8 metres), 0.06% U3O8 over 1.5 metres (from 858.2 to 859.7 metres) and 0.04% U3O8 over 0.5 metres
(from 867 to 867.5 metres). The two follow-up drill holes, WR-676 and WR-663D1, were drilled approximately 50
metres up-dip and down-dip of WR-663 respectively, and did not encounter any significant mineralization; however,
a similar extensive alteration zone was intersected, indicating continued potential for higher grades. The zone is open
along strike within the basement and, given the proximity to Gryphon and similar favorable geological setting,
additional follow-up is warranted.
Sampling and Assay Procedures
Drill core with anomalous total gamma radioactivity (>500 counts per second) was selected for sampling and uranium
assay over 0.5 metre intervals. Sampling is undertaken on site by splitting the core in half, with one half submitted for
analysis and the other half retained in the core box for future reference. Uranium assays are performed by the
Saskatchewan Research Council ("SRC") Geoanalytical Laboratories using an ISO/IEC 17025:2005 accredited
method for the determination of U3O8 weight %. Sample preparation involves crushing and pulverizing core samples
to 90% passing -106 microns. The resultant pulp is digested using aqua-regia and the solution analyzed for U3O8
weight % using ICP-OES. Core recovery at Gryphon is typically 100% and therefore radiometric equivalent U3O8
grades ("eU3O8") are not required as a substitute for chemical U3O8 assays. In addition to internal checks by SRC
Geoanalytical Laboratories, the Company has rigorous quality assurance and quality control ("QAQC") procedures
including the insertion of standard reference materials, blanks and field duplicates. For further details on the assay
and QAQC procedures see Denison's Annual Information Form dated March 24, 2016 on SEDAR (www.sedar.com).
17
MANAGEMENT’S DISCUSSION & ANALYSIS
Exploration Pipeline Properties
During 2016, the Company managed or participated in 12 other drilling exploration programs (9 operated by Denison)
on the Company’s pipeline properties, as reported in previous quarters. No field exploration programs were conducted
during the fourth quarter; however, desk-top interpretations of 2016 results and planning for 2017 work programs was
carried out. Exploration pipeline property highlights for 2016 include:
Waterbury Lake Project
Denison’s 63.01% owned Waterbury Lake project, which includes the J-Zone uranium deposit, is located within 20
kilometres of the McClean Lake mill, and is situated near the Roughrider, Midwest and Midwest A deposits.
Denison completed the first phase of the 2016 exploration drilling program during the second quarter, comprising a
total of 6 holes for 2,076 metres at the Oban target area. Two drill holes were completed to follow-up on the weak
uranium mineralization intersected previously on the western portion of Oban, which included 0.079% U3O8 over 4.8
metres in drill hole WAT14-406A and 0.050% U3O8 over 1.5 metres in drill hole WAT14-407. The holes were successful
in intersecting their respective targets, but no uranium mineralization was intersected. A further four drill holes tested
the eastern portion of the Oban target area, which was surveyed with ground DC-IP resistivity in winter 2016. The
targets included a basement resistivity low with weak sandstone ‘breach’ anomalies and the associated ground
electromagnetic conductor. The survey outlined the continuation of the parallel set of east-west striking
metasedimentary units that contains variably faulted graphitic pelites. The two holes drilled in the second quarter
successfully intersected graphitic pelites, faulting, and associated alteration; however, no mineralization was
encountered.
During the 2015 ground geophysics program, Denison identified the Hamilton Lake trend located on the western side
of the property. An initial two-hole drill fence was completed during the third quarter of 2016, and identified features
associated with unconformity-related uranium deposits – including highly altered and structured sandstone and
graphitic basement rocks, an unconformity offset, and anomalous geochemistry including 8.3 ppm uranium over the
basal 25 metres of sandstone and 0.5 metre intervals of 389 ppm and 299 ppm uranium immediately above the
unconformity. The Hamilton Lake trend has an interpreted minimum strike length of 4.5 kilometres to the south of the
two holes completed in 2016, and appears to continue for a further 9 kilometres to the north. The trend is considered
highly prospective and no drilling has been conducted along this trend outside of the two holes completed in 2016.
Murphy Lake Project
Exploration drilling during 2016 extended the strike length of mineralization and strong sandstone alteration, originally
encountered during the winter of 2015, from 200 to 850 metres. As outlined in Denison’s press release dated April 21,
2016, highlight mineralized drill intercepts include 0.25% U3O8 over 6.0 metres (drill hole MP-15-03), 0.13% U3O8 over
14.5 metres (drill hole MP-16-11) and 0.19% eU3O8 over 2.9 metres drill hole (MP-16-08). The mineralization occurs
at, or immediately above, the sub-Athabasca unconformity (similar to other Athabasca unconformity-hosted deposits)
and is open along strike both to the east and to the west. The Murphy Lake property is located approximately 30
kilometres northwest of the McClean Lake mill and is a joint venture between Denison (78.96%) and Eros Resources
Corp. (21.04%).
Crawford Lake and Moon Lake South Projects
Denison continues to receive encouraging results from the CR-3 conductive trend located on the Crawford Lake
property (100% Denison) and the Moon Lake South property (Denison earn-in option, currently 100% owned by
CanAlaska Uranium Ltd). The CR-3 trend is located approximately 2 kilometres west of the K-Trend – a highly
prospective trend which hosts the Gryphon deposit on Denison’s adjacent Wheeler River property. Drilling during 2016
at Crawford Lake identified strong alteration and significant structure along the CR-3 trend, both within the Athabasca
sandstone and underlying graphitic basement rocks. An initial hole drilled at Moon Lake South in 2016 (MS-16-01) on
the CR-3 trend intersected 0.1% U3O8 over 0.5 metres at the sub-Athabasca unconformity, and was encompassed by
a significant sandstone alteration and geochemical halo (see Denison’s press release dated April 21, 2016). The CR-
3 trend has been interpreted over a distance of approximately nine kilometres with only six drill holes completed to
date. The trend is completely untested to the northeast of drill hole MS-16-01 on the Moon Lake South property. Work
planned for 2017 along the CR-3 conductive trend includes a resistivity survey at Moon Lake South during the winter
and a four-hole summer drill program (2,300 metres) to test priority targets at both Crawford Lake and Moon Lake
South.
The option agreement for the Moon Lake South property was executed in January 2016 with CanAlaska Uranium Ltd.
(“CanAlaska”) to earn an interest in CanAlaska’s 100% owned Moon Lake South project, located adjacent to Denison’s
18
MANAGEMENT’S DISCUSSION & ANALYSIS
100% owned Crawford Lake property. Under the terms of the option, Denison can earn an initial 51% interest in the
project by incurring CAD$200,000 in exploration expenditures by December 31, 2017, and it can increase its interest
to 75% by incurring an additional CAD$500,000 in exploration expenditures by December 31, 2020. As at December
31, 2016, Denison had incurred CAD$139,000 in exploration expenditures on the Moon Lake South property.
Hook-Carter
In November 2016 Denison completed the acquisition of an immediate 80% ownership of the Hook-Carter property
(“Hook Carter”) from ALX Uranium Corp. (“ALX”) (AL:TSX-V), in exchange for the issuance of 7.5 million common
shares of Denison (the “Consideration Shares”). Under the terms of the acquisition, ALX retains a 20% interest in Hook
Carter, and Denison agrees to fund ALX’s share of the first CAD$12 million in expenditures on the property. The
Consideration Shares are subject to a statutory hold period and an escrow arrangement, whereby 1/6th of the shares
were released to ALX on closing, and a further 1/6th of the shares will be released from escrow in 6 month increments
following the closing. Hook Carter consists of 28 claims, totaling 16,805 hectares, and is located near the southwestern
margin of the Athabasca Basin, in northern Saskatchewan. The property is highlighted by 15 kilometres of strike
potential along the prolific Patterson Lake Corridor – host to the recently discovered Triple R deposit (Fission Uranium
Corp.), Arrow deposit (NexGen Energy Ltd.), and Spitfire discovery (Purepoint Uranium Group Inc., Cameco, and ARC)
which occur within 8 to 20 kilometres of the Property.
In November 2016 Denison also completed the purchase of the Coppin Lake property (“Coppin Lake”) from ARC and
UEX Corporation for CAD$35,000 in cash and a 1.5% net smelter royalty. Coppin Lake is contiguous with Hook-Carter
and comprises ten mineral claims covering an area of 2,768 hectares. The property covers approximately five
kilometres of prospective strike on the Carter corridor. Under the terms of the Hook Carter acquisition, ALX has agreed
to acquire an interest in Coppin Lake from Denison that is equal to ALX’s interest in Hook Carter.
19
MANAGEMENT’S DISCUSSION & ANALYSIS
Moore Lake
In August 2016, the Company closed an option agreement with Skyharbour Resources Ltd. (“Skyharbour”), which
grants Skyharbour an option to acquire a 100% interest in Denison’s wholly owned Moore Lake property in exchange
for cash, stock and exploration spending commitments. Denison received 4,500,000 common shares of Skyharbour
and, under the terms of the agreement, expects to receive staged cash payments of CAD$500,000, in aggregate, over
the next five years. Skyharbour must also spend CAD$3,500,000 in exploration expenditures on the property, over the
same five year period, in order to complete the option.
Under the terms of the option agreement, Denison also maintains various back-in rights on the property to re-acquire
a 51% interest in the property and is entitled to nominate a member to Skyharbour’s Board of Directors as long as
Denison maintains a minimum ownership position of 5%. As at December 31, 2016, Denison held an approximate
11.4% ownership interest in Skyharbour.
OPERATING EXPENSES
Canada Mining
Operating expenses of the Canadian mining segment include depreciation, development and standby costs, as well as
certain adjustments to the estimates of future reclamation liabilities at McClean Lake, Midwest and Elliot Lake, if
applicable.
Operating expenses in 2016 were $3,665,000, compared to $4,555,000 in 2015.
In 2016, operating expenses included depreciation of the McClean Lake mill of $2,411,000, as a result of processing
approximately 17.3 million pounds U3O8 from the CLJV. In 2015, depreciation accounted for $1,627,000 with 11.3
million pounds U3O8 processed from the CLJV and 11,000 pounds U3O8 from the MLJV.
In 2016, the Company also recorded operating expenses related to an increase in the estimate of reclamation liabilities
at Elliot Lake of $461,000 (2015 - $2,262,000) reflecting the impact of increased labour cost estimates and an increase
in the discount rate applicable to the reclamation liability, compared to 2015, where the change was due to an increase
in labour cost estimates coupled with a decrease in the discount rate. Refer to Contractual Obligations and
Contingencies Section for further detail.
Environmental Services
Operating expenses during 2016 totaled $6,669,000, compared to $6,875,000 in 2015. The expenses relate primarily
to care and maintenance and consulting services provided to clients, and include labour and other costs. The decline
in operating expenses in 2016 compared to 2015 is predominantly due to the favourable fluctuation in foreign exchange
rates applicable on the translation of expenses incurred in Canadian dollars.
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and administrative expenses were $4,420,000 during 2016, compared to $5,826,000 in 2015. These
costs are mainly comprised of head office salaries and benefits, office costs in multiple regions, audit and regulatory
costs, legal fees, investor relations expenses, project costs, and all other costs related to operating a public company
with listings in Canada and the United States. The decrease in general and administrative expenses during 2016 was
the result of a significant decrease in project costs associated with non-recurring corporate development initiatives
undertaken in the prior year, combined with the impact of the favourable fluctuation in foreign exchange rates applicable
on the translation of Canadian dollar expenses.
IMPAIRMENT
During 2016, the Company recognized impairment charges of $2,253,000 (2015 - $2,603,000) to impair the carrying
value of two of its Canadian exploration properties (2015 – three Canadian exploration properties). The 2016
impairment charge included $2,174,000 recorded against the value of Moore Lake. The impairment of the Moore Lake
property was based on the terms of the transaction between the Company and Skyharbour (refer to Exploration Pipeline
Properties section above for details). The remaining recoverable amount for the Moore Lake property, estimated to be
CAD$1,700,000, is based on a market-based fair value less costs of disposal assessment of the share and cash
consideration to be received by the Company under the terms of the transaction. The remaining $79,000 impairment
is the result of the Company’s current intention to let the claims on one of its properties lapse in the normal course and
to not carry out the required exploration programs or fund the deficiency deposits needed to maintain the claims. The
20
MANAGEMENT’S DISCUSSION & ANALYSIS
$nil recoverable amount of this property is based on a market-based fair value less costs of disposal assessment using
unobservable inputs including the Company’s data about the property and management’s interpretation of that data.
During 2016, the Company also recorded a $67,000 impairment charge related to the assets of the MLJV.
FOREIGN EXCHANGE INCOME AND EXPENSE
During 2016, a foreign exchange loss of $1,477,000 was recognized, compared with $2,122,000 in foreign exchange
income in 2015. The decrease during 2016 is due primarily to unfavourable fluctuations in foreign exchange rates
impacting the revaluation of intercompany advances and debt.
OTHER INCOME AND EXPENSES
During 2016, the Company recognized $1,473,000 in gains on investments carried at fair value, compared to losses of
$346,000 during 2015. Gains and losses on investments carried at fair value are driven by the closing share price of
the related investee at period end. The gain recorded in 2016 is predominantly driven by a favourable mark-to-market
adjustment on the Company’s investments in GoviEx warrants. Refer to SALE OF AFRICAN-BASED URANIUM
INTERESTS below for further details. The loss in 2015 was predominantly driven by unfavourable mark-to-market
adjustments in several equity investments, one of which has subsequently been sold.
EQUITY SHARE OF INCOME FROM ASSOCIATES
During 2016, the Company recorded its equity share of income in its associate GoviEx, of $453,000. The amount is
comprised of an equity loss of $96,000, which is based on the Company’s share of the change in GoviEx’s net assets
since the date of the investment in the second quarter of 2016. In addition, the Company recorded a dilution gain of
$549,000 as the result of the financing, in which the Company did not take part, completed by GoviEx in the fourth
quarter - having the effect of reducing the Company’s position in GoviEx from 24.59%, at the date of the transaction,
to approximately 20.68% at year-end. See SALE OF AFRICAN-BASED URANIUM INTERESTS below for further
details of the transaction with GoviEx.
INCOME TAX RECOVERY AND EXPENSE
Income tax recovery in 2016 totaled $3,955,000, compared to an income tax recovery of $3,769,000 in 2015. The
increase in the income tax recovery in 2016 was mainly due to a reduced deferred tax expense recognized on the
renunciation of tax-attributes related to 2016 expenditures, as compared to the deferred tax expense recognized on
the renunciation of 2015 expenditures.
DISCONTINUED OPERATIONS
Sale of African-Based Uranium Interests
In June 2016, GoviEx and Denison completed the Africa Transaction to combine their respective African uranium
mineral interests under the direct ownership of GoviEx. Pursuant to the Africa Transaction, GoviEx acquired Denison’s
wholly owned subsidiary, Rockgate Capital Corp., which held all of Denison’s Africa-based uranium interests
(collectively “DML Africa”), in exchange for 56,050,450 common shares (“Consideration Shares”) and 22,420,180
common share purchase warrants (“Consideration Warrants”) of GoviEx.
Each Consideration Warrant is convertible into one common share of GoviEx at a price of $0.15 per share for a period
of three years. The Consideration Warrants include an acceleration clause, which provide that in the event that the
closing price of GoviEx’s common shares on the TSX Venture Exchange is equal to or greater than CAD$0.24 per
share for a period of 15 consecutive trading days, GoviEx may provide holders of the Consideration Warrants with
written notice that holders have 30 days to exercise the Consideration Warrants on the original terms, failing which the
exercise price of the Consideration Warrants will be increased to $0.18 per share and the term of the Consideration
Warrants will be reduced by six months.
As part of the Africa Transaction, GoviEx undertook a concurrent equity financing by means of a non-brokered private
placement ( the “GoviEx Concurrent Financing”), in which Denison provided the lead order for the private placement of
$500,000 for 9,093,571 common shares (“Concurrent Shares”) and 9,093,571 common share purchase warrants
(“Concurrent Warrants”). Each Concurrent Warrant is convertible into one common share of GoviEx for a period of
three years, at a price of $0.12 per share until June 10, 2018 and thereafter at a price of $0.14 per share. The Concurrent
Warrants include an acceleration clause, which provide that in the event that the closing price of GoviEx’s common
shares on the TSX Venture Exchange is equal to or greater than CAD$0.20 per share for a period of 15 consecutive
21
MANAGEMENT’S DISCUSSION & ANALYSIS
trading days, GoviEx may provide holders of the Concurrent Warrants with written notice that holders have 60 days to
exercise the Concurrent Warrants on the original terms, failing which the Concurrent Warrants will expire unexercised.
At December 31, 2016, Denison holds a total of 65,144,021 common shares of GoviEx or approximately 20.68% of
GoviEx’s issued and outstanding common shares and a total of 31,513,751 common share purchase warrants. GoviEx
is a publicly traded company and is listed on the TSX Venture Exchange under the symbol “GXU”.
For so long as Denison holds at least 5% of the issued and outstanding common shares of GoviEx, Denison will have
the right to appoint one director to the GoviEx board of directors and will have the right to participate in future GoviEx
equity financings in order to maintain its pro-rata ownership. Denison’s nominee director, Mr. David Cates, President
and Chief Executive Officer of Denison, has been appointed to the GoviEx board of directors.
Loss on sale of African-Based Uranium Interests
Upon the sale of the Company’s African interests to GoviEx during the second quarter, the Company recognized a loss
on disposal of the Africa mining division of $102,000, which includes $637,000 of cumulative foreign currency losses
recognized as translational foreign exchange losses in the period of disposal. The total consideration received at fair
value amounted to $4,946,000 and includes the fair value of the GoviEx Consideration Shares received of $3,954,000,
the fair value of GoviEx consideration warrants received of $1,162,000, less transaction costs of $170,000. The carrying
value of net assets disposed of totaled $4,411,000 and was mainly comprised of mineral properties in Mali, Namibia
and Zambia of $3,427,000.
The fair value of the GoviEx Consideration Shares received was determined using GoviEx’s closing share price on
June 10, 2016 of CAD$0.09 per share converted to USD using the June 10, 2016 foreign exchange rate of 0.7839. The
fair value of the GoviEx Consideration Warrants received, $1,162,000 or $0.0518 per warrant, was determined using
the Black-Scholes option pricing model.
Operating Expenses
In preparation for the Africa Transaction, the Company continued with its objective to maintain its interests in Zambia,
Mali and Namibia in good standing during the first half of 2016. Operating expenses in Africa during 2016 totaled
$64,000 (2015 - $302,000), consisting mainly of camp costs incurred on the Falea project in Mali in the first half of
2016. Operating expenses during 2015 consisted mainly of camp costs incurred on the Falea project in Mali and
community aid programs in Zambia.
Exploration Expenditures
Exploration expenses in Africa during 2016 were $74,000 (2015 - $818,000). Exploration expenses in both 2016 and
2015 included exploration staff personnel costs for the Mutanga Project in Zambia and the Falea Project in Mali.
Additional expenses in 2015 included an excavator trenching program at the Mutanga Project in Zambia and airborne
geophysical (VTEM) survey, soil sampling, scintillometer prospecting and geological mapping at the Falea Project in
Mali.
General and Administrative Expenses
General and administrative expenses in Africa during 2016 totaled $280,000 (2015 - $637,000). General and
administrative expenses in both 2016 and 2015 were mainly comprised of personnel and office expenses.
Impairment – Mineral Properties
During 2016, the Company recognized $nil impairment charges (2015 - $25,164,000) for its African mineral properties.
The impairment charges in 2015 were based on a market-based fair value less costs of disposal analysis of the Falea,
Dome, and Mutanga projects carried out when the Company decided to cease exploration activity in Africa and focus
on its core projects in the Athabasca Basin.
Foreign Exchange Income and Expense
During 2016, foreign exchange losses of $5,154,000 were recognized (2015 – $18,164,000). The losses are due
primarily to fluctuations in foreign exchange rates impacting the revaluation of US dollar intercompany advances and
debt for the Company’s African related operations.
22
MANAGEMENT’S DISCUSSION & ANALYSIS
Sale of Mongolian Interests
In November 2015, Denison completed the sale of its interest in the Gurvan Saihan Joint Venture (“GSJV”) to Uranium
Industry a.s. (“Uranium Industry”), of the Czech Republic, pursuant to an amended and restated share purchase
agreement entered into on November 25, 2015 (the “GSJV Agreement”). Under the terms of the GSJV Agreement,
Denison received $1.25 million in initial payments during 2015, and the right to receive additional contingent
consideration of up to $12.0 million, for total consideration of $13.25 million. The contingent consideration is comprised
of $10,000,000, payable within 60 days of the issuance of certain mining licenses (the “Mining License Receivable”)
and up to an additional $2,000,000 within 365 days following the attainment of certain production targets on the mining
licenses (the “Production Threshold Consideration”), each as more particularly described in Denison’s press release
dated December 1, 2015.
In July 2016, the Mineral Resources Authority of Mongolia (“MRAM”) issued letters to the GSJV notifying it of its
intention to grant mining licenses to the GSJV for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects. In September
2016, the mining license certificates for all four projects were formally issued.
As a result, in the third quarter of 2016 the Company recognized the $10,000,000 fair value of the Mining License
Receivable and it also recognized a corresponding gain on sale, net of additional applicable transaction costs. The
original due date for payment of the Mining License Receivable by Uranium Industry was in November 2016.
Pursuant to a subsequent extension agreement between Uranium Industry and the Company, the payment due date
of the Mining License Receivable was extended from November 16, 2016 to July 16, 2017 (“Extension Agreement”).
As consideration for the extension, Uranium Industry has agreed to pay interest on the Mining License Receivable
amount at a rate of 5% per year, payable monthly up to July 16, 2017 and they also agreed to pay a $100,000 instalment
amount towards the balance of the Mining License Receivable amount. The first payment under the Extension
Agreement was due on or before January 31, 2017. The required payments were not made and Uranium Industry is
now in default of both the GSJV Agreement and the Extension Agreement.
On February 24, 2017, the Company served notice to Uranium Industry that it was in default of its obligations under
the GSJV Agreement and the Extension Agreement and that the Mining License Receivable and all interest payable
thereon are immediately due and payable. The Company intends to explore all proceedings available to it to pursue
the collection of the Mining License Receivable amount.
In light of the uncertainty regarding collectability, Denison has impaired the $10,000,000 Mining License Receivable to
$nil in the fourth quarter, resulting in an adjustment to the previously recognized net gain on sale. The adjustment to
the net gain on sale has been presented within discontinued operations as it directly relates to the proceeds realized
to date on the sale of the Mongolia Mining Division to Uranium Industry. Accordingly, any subsequent payments realized
on the impaired receivable will be recognized within discontinued operations. The Production Threshold Consideration
also continues to be fair valued at $nil and will be re-measured at each subsequent reporting date.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $11,838,000 at December 31, 2016 compared with $5,367,000 at December 31,
2015. At December 31, 2015, the company also held investments in Guaranteed Investment Certificates (“GICs”) of
$7,282,000, which are categorized as short term investments on the balance sheet.
The increase in cash and cash equivalents of $6,471,000 was due to net cash used in operations of $8,130,000, more
than offset by net cash provided by investing activities of $5,787,000, net cash provided by financing activities of
$8,805,000, and a net foreign exchange gain on the translation of foreign currency balances at period end of $9,000.
Net cash used in operating activities of $8,130,000 during 2016 is comprised of a net loss for the period adjusted for
non-cash items and changes in working capital items.
Net cash provided by investing activities of $5,787,000 consists of cash provided by the maturity of debt instrument
investments (GICs) of $7,763,000 and proceeds from the sale of equity instruments of $760,000, offset by cash used
to acquire property, plant and equipment of $1,266,000, cash used in the divestiture of Denison’s African assets of
$830,000, cash used to purchase GoviEx common shares and warrants of $500,000, and an increase of $195,000 in
restricted cash and investments. Property, plant and equipment expenditures include $589,000 to acquire an additional
1.46% interest in the Waterbury Lake property. As at December 31, 2016, the Company holds an ownership interest of
63.01% in the Waterbury Lake property. Refer to TRANSACTIONS WITH RELATED PARTIES for further details.
23
MANAGEMENT DISCUSSION & ANALYSIS
Net cash provided by financing activities of $8,805,000 largely reflects the net proceeds received from the Company’s
May 2016 private placement issuance of 15,127,805 common shares on a flow-through basis, at a price of CAD$0.82
per share, for gross proceeds of CAD$12.4 million. The proceeds will be used to fund the Company’s Canadian
exploration programs through to the end of 2017. As at December 31, 2016, the Company has spent CAD$154,000
toward its obligation to spend CAD$12.4 million on eligible Canadian exploration expenses associated with this
financing.
As at December 31, 2016, the Company has fulfilled its obligation to spend CAD$15,000,000 on eligible Canadian
exploration expenses under the flow-through share financing completed in May 2015.
The Company holds the large majority of its cash, cash equivalents, and investments in Canadian dollars. As at
December 31, 2016, the Company’s cash and cash equivalents amounts to approximately CAD$15.9 million.
Refer to 2017 OUTLOOK for details of the Company’s working capital requirements for the next twelve months.
Subsequent to year-end, the Company has closed a CAD$43.5 million financing arrangement with APG that is
repayable from the Company’s future share of the MLJV toll milling revenue. Further, subsequent to year-end, the
Company announced that it has entered into an agreement with Paradigm Capital Inc. to complete a bought-deal
private placement of 18,337,000 common shares of the Company, for gross proceeds of CAD$20 million. Refer to
SUBSEQUENT EVENTS for further details of these transactions. Refer to RISK FACTORS for a discussion of
circumstances that could affect the Company’s future sources of funding.
Revolving Term Credit Facility
On January 31, 2017, the Company entered into an agreement with the Bank of Nova Scotia to amend the terms of a
revolving term credit facility entered into in 2016 and to extend the maturity date to January 31, 2018 (“2017 Credit
Facility”). Under the 2017 Credit Facility, the Company has access to letters of credit of up to CAD$24,000,000, which
is fully utilized for non-financial letters of credit in support of reclamation obligations.
Amongst the amendments included in the 2017 Credit Facility, a restrictive covenant to maintain CAD$5,000,000 on
deposit with the Bank of Nova Scotia, has been replaced with a pledge of CAD$9,000,000 in restricted cash in the form
of GICs to be held with the Bank of Nova Scotia as collateral against the credit facility. The 2017 Credit Facility is
subject to letter of credit fees of 0.4% on the first CAD$9,000,000 (collateralized by the restricted cash), and 2.4% on
the remaining CAD$15,000,000 of letters of credit issued under the facility.
Contractual Obligations and Contingencies
The Company has the following contractual obligations at December 31, 2016:
(in thousands)
Total
1 Year
2-3 Years
4-5 Years
After
5 Years
Debt Obligations
Operating Leases and
other commitments
$
$
276 $
1,092
$
276
182
$
$
– $
– $
–
318
$
286
$
306
Reclamation Sites
The Company periodically reviews the anticipated costs of decommissioning and reclaiming its mill and mine sites as
part of its environmental planning process. The Company’s reclamation liability, at December 31, 2016, is estimated to
be $20,965,000, which is expected to be sufficient to cover the projected future costs for reclamation of the Company’s
mill and mine operations. There can be no assurance, however, that the ultimate cost of such reclamation obligations
will not exceed the estimated liability contained in the Company’s financial statements.
Elliot Lake – The Elliot Lake uranium mine was closed in 1992 and capital works to decommission the site were
completed in 1997. The remaining provision is for the estimated cost of monitoring the Tailings Management Areas at
the Denison and Stanrock sites and for treatment of water discharged from these areas. The Company conducts its
activities at both sites pursuant to licenses issued by the CNSC. In the fourth quarter of 2016, an adjustment of $461,000
was made to the reclamation liability to reflect the Company’s best estimate of the present value of the total reclamation
cost that will be required in the future. Spending on restoration activities at the Elliot Lake sites is funded from monies
in the Elliot Lake reclamation trust fund. At December 31, 2016, the amount of restricted cash and investments relating
to the Elliot Lake Reclamation Trust fund was $2,213,000.
24
MANAGEMENT DISCUSSION & ANALYSIS
McClean Lake and Midwest – The McClean Lake and Midwest operations are subject to environmental regulations as
set out by the Saskatchewan government and the CNSC. Cost estimates of future decommissioning and reclamation
activities are prepared every 5 years and filed with the applicable regulatory authorities for approval. During 2015, an
adjustment of $2,264,000 was made to the reclamation liability based on the preliminary plan submitted in the CNSC
in November 2015. In March 2016, a final reclamation plan was submitted, incorporating comments received from the
applicable regulatory authorities. As a result, during the first quarter, an adjustment of $71,000 was made to increase
the reclamation liability, to reflect the Company’s best estimate of its share of the present value of its total future
reclamation cost that will be required in the future. At December 31, 2016, the Company reduced the liability by $21,000
to reflect changes in the long-term discount rate used to estimate the present value of the reclamation liability. The
majority of the reclamation costs are expected to be incurred between 2037 and 2055.
Under the Mineral Industry Environmental Protection Regulations, 1996, the Company is required to provide its pro-
rata share of financial assurances to the Province. Under the March 2016 approved plan, the Company increased its
financial assurance to CAD$24,135,000. The Company has in place irrevocable standby letters of credit from The Bank
of Nova Scotia in favour of Saskatchewan’s Ministry of Environment in the amount of CAD$24,135,000. At present, to
provide the required standby letters of credit, the Company is utilizing the full capacity of the 2017 Credit Facility and
has committed an additional CAD$135,000 with the Bank of Nova Scotia as restricted cash collateral.
FINANCIAL INSTRUMENTS
Financial
Instrument
Fair
Value
December 31,
December 31,
2016
(in thousands)
Category (1)
Hierarchy
Fair Value
Financial Assets:
Cash and equivalents
Trade and other
Investments
Equity instruments (shares)
Equity instruments (warrants)
Equity instruments (shares)
Debt instruments
Restricted cash and equivalents
Elliot Lake reclamation trust fund
Reclamation letter of credit collateral
Category D
Category D
Category A
Category A
Category B
Category A
Category C
Category C
Financial Liabilities:
Account payable and accrued liabilities
Debt obligations
Category E
Category E
$
11,838 $
2,403
Level 1
Level 2
Level 1
Level 1
$
1,228
2,517
15
-
2,213
101
20,315 $
4,141
276
2015
Fair Value
5,367
4,826
460
24
12
7,282
2,040
-
20,011
4,574
300
4,874
(1) Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category
B=Available for sale investments; Category C=Held to maturity investments; Category D=Loans and receivables; and Category E=Financial
liabilities at amortized cost.
4,417 $
$
The Company is exposed to credit risk and liquidity risk in relation to its financial instruments. Its credit risk in relation
to its cash and equivalents, debt instruments and restricted cash and equivalents is limited by dealing with credit worthy
financial institutions. The Company’s trade and other receivables balance relates to a small number of customers who
are credit worthy and with whom the Company has established a relationship through its past dealings.
Liquidity risk, in which the Company may encounter difficulties in meeting obligations associated with its financial
liabilities as they become due, is managed through the Company’s planning and budgeting process which determines
the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company
ensures that there is sufficient committed capital to meet its short-term business requirements, taking into account its
anticipated cash flows from operations, its holdings of cash and equivalents and debt instruments and its access to
credit facilities and capital markets, if required.
The Company's investments that are designated as financial assets at fair value through profit or loss have resulted in
other income of $1,473,000 during 2018, compared to expenses of $346,000 during 2015.
25
The Company’s investments designated as available for sale have resulted in an unrealized gains recognized in
accumulated other comprehensive income of $3,000 for 2016, compared to unrealized losses of $4,000 for 2015.
MANAGEMENT’S DISCUSSION & ANALYSIS
TRANSACTIONS WITH RELATED PARTIES
Uranium Participation Corporation
The Company is a party to a management services agreement with UPC. The initial management services agreement
with UPC expired on March 31, 2016 and a new management services agreement was entered into, effective April 1,
2016 for a term of three years. Under the new agreement, Denison receives the following fees from UPC: a) a base
fee of CAD$400,000 per annum, payable in equal quarterly installments; b) a variable fee equal to (i) 0.3% per annum
of UPC’s total assets in excess of CAD$100 million and up to and including CAD$500 million, and (ii) 0.2% per annum
of UPC’s total assets in excess of CAD$500 million; c) a fee, at the discretion of the Board, for on-going monitoring or
work associated with a transaction or arrangement (other than a financing, or the acquisition of or sale of U3O8 or UF6);
and d) a commission of 1.0% of the gross value of any purchases or sales of U3O8 or UF6 or gross interest fees payable
to UPC in connection with any uranium loan arrangements.
The following amounts were earned from UPC for the years ended:
(in thousands)
Management Fee Revenue
Base and variable fees
Discretionary fees
Commission fees
Year Ended
December 31,
2016
Year Ended
December 31,
2015
$
$
1,291
77
116
$
1,484
$
1,747
-
75
1,822
At December 31, 2016, accounts receivable includes $160,000 (December 31, 2015: $157,000) due from UPC with
respect to the fees and transactions discussed above.
Korea Electric Power Corporation (“KEPCO”) and Korea Hydro & Nuclear Power (“KHNP”)
In June 2009, Denison completed definitive agreements with KEPCO including a long-term offtake agreement (which
has been assigned to Energy Fuels Inc. (“EFR”) as part of the U.S. Mining Division transaction completed in June 2012)
and a strategic relationship agreement. Pursuant to the strategic relationship agreement, KEPCO is entitled to
subscribe for additional common shares in Denison’s future share offerings. The strategic relationship agreement also
provides KEPCO with a right of first opportunity if Denison intends to sell any of its substantial assets, a right to
participate in certain purchases of substantial assets which Denison proposes to acquire and a right to nominate one
director to Denison’s board so long as its share interest in Denison is above 5.0%.
As at December 31, 2016, KEPCO, through its subsidiaries including KHNP, holds an aggregate of 58,284,000 shares
of Denison representing a share interest of approximately 10.8%.
At December 31, 2016, Denison also holds a 60% interest in Waterbury Lake Uranium Corporation (“WLUC”) and a
63.01% interest in Waterbury Lake Uranium Limited Partnership (“WLULP”), entities whose key asset is the Waterbury
Lake property. The other 40% and 36.99% respective interests in these entities is held by a consortium of investors
(“KWULP”) of which KHNP is now the primary holder. KEPCO also transferred its ownership interest in KWULP to
KHNP in December 2016. When a spending program is approved by the participants, each participant is required to
fund these entities based upon its respective ownership interest. Spending program approval requires 75% of the voting
interest.
In January 2014, Denison agreed to allow KWULP to defer a decision regarding its funding obligation to WLUC and
WLULP until September 30, 2015 and to not be immediately diluted as per the dilution provisions in the relevant
agreements (“Dilution Agreement”). Instead, under the Dilution Agreement, dilution would be applied as at September
30, 2015 and in each subsequent period, if applicable. In exchange, Denison received authorization to approve
spending programs on the property, up to an aggregate CAD$10,000,000, until September 30, 2016, without obtaining
approval from 75% of the voting interest. In December 2016, Denison and KWULP agreed to extend Denison’s
authorization under the Dilution Agreement to approve spending for an additional year, to September 30, 2017.
26
MANAGEMENT DISCUSSION & ANALYSIS
In September 2015, KWULP notified Denison that it would not fund its deferred funding obligation for 2015 and that it
would accept dilution to its interest in the WLULP in 2015 and 2016 under the Dilution Agreement. As a result, in 2015
Denison funded the entire 2015 program and earned an additional 1.55% interest in the Waterbury Lake project, which
resulted in Denison recording its increased pro-rata share of the net assets of Waterbury Lake, the majority of which
relates to an addition to mineral property assets of $836,000.
In 2016, Denison again funded 100% of the approved fiscal 2016 program for Waterbury Lake, and KWULP continued
to dilute its interest in the WLULP. As a result, in 2016 Denison earned an additional 1.46% interest in the WLULP,
which resulted in Denison recording its increased pro-rata share of the net assets of Waterbury Lake, the majority of
which relates to an addition to mineral property assets of $589,000.
Other
All services and transactions with the following related parties listed below were made on terms equivalent to those
that prevail with arm’s length transactions:
During 2016, the Company incurred investor relations, administrative service fees and other expenses of $140,000
(2015: $159,000) with Namdo Management Services Ltd, which shares a common director with Denison. These
services were incurred in the normal course of operating a public company.
During 2016, the Company incurred office expenses of $23,000 with Lundin S.A, a company which provides office
and administration services to the executive chairman, other directors and management of Denison. No similar
services were provided during 2015. At December 31, 2016, an amount of $6,000 was due to this company.
During 2015, the Company incurred legal fees of $548,000 with Cassels Brock & Blackwell, LLP, a law firm at
which a former member of Denison’s Board of Directors was a partner. These services and associated costs were
mainly related to various acquisition initiatives and internal re-organization activities done by the Company. At
December 31, 2015, an amount of $12,000 was due to this legal firm. This law firm was not a related party for the
duration of 2016.
COMPENSATION OF KEY MANAGEMENT PERSONNEL
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive
officers, vice-presidents and members of its Board of Directors.
The following compensation was awarded to key management personnel:
(in thousands)
Salaries and short-term employee benefits
Share-based compensation
Termination benefits
December 31,
2016
December 31,
2015
$
$
$
1,163
262
-
1,425
$
1,391
370
314
2,075
OFF‐BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements.
SUBSEQUENT EVENTS
Agreement to Increase Ownership of Wheeler River Project up to 66%
On January 10, 2017, Denison executed an agreement with the partners of the WRJV, which will allow Denison to
increase its ownership in the WRJV from 60% up to approximately 66% by the end of fiscal 2018. Under the terms of
27
MANAGEMENT DISCUSSION & ANALYSIS
the agreement, the partners have agreed to allow for a one-time election by Cameco to fund 50% of its ordinary 30%
share of the WRJV expenses for fiscal 2017 and 2018. The shortfall in Cameco's contribution will be funded by Denison,
in exchange for a transfer of a portion of Cameco's interest in the WRJV. Accordingly, Denison’s share of the WRJV
expenses will be 75% in fiscal 2017 and 2018.
In connection with the agreement, the partners have approved a CAD$12.5 million budget for the WRJV for fiscal 2017
and have also agreed to propose a budget for fiscal 2018 that will not exceed CAD$15.6 million (being 125% of the
approved budget for 2017). Based on the approved fiscal 2017 budget, and the maximum allowed fiscal 2018 budget,
Denison expects its ownership interest in the WRJV to increase to approximately 66% by December 31, 2018.
Financing Arrangement with Anglo Pacific Group PLC
On February 13, 2017, Denison closed a financing arrangement with Anglo Pacific Group PLC (“APG”), and its wholly
owned subsidiary Centaurus Royalties Ltd. (“Centaurus”) for aggregate gross proceeds to Denison of CAD$43,500,000
(the “APG Financing”).
The financing is comprised of the following elements: (1) a 13 year limited recourse lending arrangement involving a
loan from APG to 9373721 Canada Inc. (“SPV”)(the “APG Loan”) and a further loan from SPV to Denison Mines Inc.
(“DMI”)(the “SPV Loan”), each for CAD$40,800,000 (collectively, the “Lending Arrangement”); and (2) CAD$2,700,000
in proceeds from the sale, to Centaurus, of a stream equal to Denison’s 22.5% share of proceeds from the toll milling
of Cigar Lake ore by the McClean Lake mill for specified Cigar Lake toll milling throughput in excess of 215 million
pounds U3O8 after July 1, 2016 (the “Stream Arrangement”). DMI and SPV are both wholly owned subsidiaries of
Denison.
Additional details of the financing are as follows:
No Warranty of the Future Rate of Production - No warranty is provided by Denison (including DMI and SPV)
to APG (including Centaurus), under the terms of the Lending Arrangement or the Stream Arrangement,
regarding: the future rate of production at the Cigar Lake mine and / or the McClean Lake mill; or the amount
or collectability of proceeds to be received by the MLJV in respect of toll milling of Cigar Lake ore.
APG Loan Details - The APG Loan will accrue interest at a rate of 10% per annum and does not have a
predetermined principal repayment schedule. The APG Loan is secured by a first priority interest in the assets
of SPV which will essentially consist of the SPV Loan to DMI.
SPV Loan Details - The SPV Loan will accrue interest at a rate of approximately 10% per annum and does
not have a predetermined principal repayment schedule. The SPV Loan is limited in its recourse against DMI
such that it is generally repayable only to the extent of Denison’s share of the toll milling revenues earned by
the MLJV from the processing of the first 215 million pounds of U308 from Cigar Lake ore on or after July 1,
2016. Denison will guarantee the limited recourse loan repayments and will grant a second ranking pledge of
its share of DMI to secure performance by DMI of its obligations to pay the SPV Loan. The share pledge is
second ranking to Denison’s existing pledge of its shares of DMI to the Bank of Nova Scotia (“BNS”) under
the terms of its Letters of Credit Facility.
Immediately on receipt of the proceeds from the APG Loan, SPV repaid APG CAD$2,939,000 representing the Cigar
Lake tolling milling cash receipts received by Denison in respect of toll milling activity for the period July 1, 2016 to
December 31, 2016.
In connection with the closing of the financing, Denison reimbursed APG for $100,000 in due diligence expenses and
granted 1,673,077 share purchase warrants in satisfaction of a CAD$435,000 arrangement fee payable to APG. The
warrants have an exercise price of CAD$1.27 per share and will be exercisable for a period of 3 years from the date of
closing of the financing.
Common Share and Flow Through Share Issues
On February 16, 2017, Denison announced that it has entered into an agreement with Paradigm Capital Inc., on behalf
of a syndicate of underwriters (together the “Underwriters”), under which the Underwriters have agreed to purchase, in
aggregate, 18,337,000 shares of Denison for gross proceeds of CAD$20,000,290.
The aggregate share offering is comprised of the following three elements: (1) a “Common Share” offering, which
consists of 5,790,000 common shares of Denison at a price of CAD$0.95 per share for gross proceeds of
CAD$5,500,500; (2) a “Tranche A Flow-Through” offering which consists of 8,482,000 flow-through shares at a price
of CAD$1.12 per share for gross proceeds of CAD$9,499,840; and (3) a “Tranche B Flow-Through” offering which
consists of 4,065,000 flow-through shares at a price of CAD$1.23 per share for gross proceeds of CAD$4,999,950.
28
MANAGEMENT’S DISCUSSION & ANALYSIS
Denison has granted the Underwriters an option to increase the gross proceeds of the offering by up to 15%, which is
exercisable, in whole or in part, at any time during the period that is 48 hours prior to the closing date. The Underwriter’s
option is exercisable in common shares only. The closing of the offering is expected to occur on or about March 9,
2017.
OUTSTANDING SHARE DATA
At March 8, 2017, there were 540,773,902 common shares issued and outstanding, stock options outstanding for
6,082,089 Denison common shares, and 1,673,077 share purchase warrants outstanding for a total of 548,529,068
common shares on a fully-diluted basis.
OUTLOOK FOR 2017
Following the sale of the Company’s African interests, and the decision to initiate a PFS for the Wheeler River project
after the completion of a successful PEA in 2016, the Company’s plans for 2017 are focused on the activities necessary
to position it as the next uranium producer in Canada. The 2017 winter exploration program commenced in January
with a heavy concentration of the Company’s budget and activities centred on the advancement of the Company’s 60%
owned flagship Wheeler River project.
(in thousands)
Canada (1)
Development & Operations
Mineral Property Exploration & Evaluation
Other (1)
UPC Management Services
DES Environmental Services
Corporate Administration & Other
2017 BUDGET
(2,390)
(10,890)
(13,280)
930
1,320
(4,030)
(1,780)
Total(2)
$
(15,060)
(1) Budget figures have been converted using a US$ to CAD$ exchange rate of 1.33.
(2) Only material operations shown.
Mineral Property Exploration & Evaluation
The Company’s budget for exploration and evaluation activities in 2017 is approximately $10.9 million (CAD$14.5
million). Including partner’s share of expenses, the projected 2017 exploration and evaluation work program is budgeted
to be CAD$20.5 million, and is expected to include approximately 68,000 metres of drilling across eight of Denison’s
projects. The budget is focused on the Company’s 60% owned flagship Wheeler River project, where Denison’s share
of exploration and evaluation activities is expected to be $7.1 million (CAD$9.4 million). Consistent with past years, the
majority of the exploration activity will occur during the winter and summer months, resulting in higher levels of
expenditures in the first and third quarters. Evaluation activities are expected to continue at the Wheeler River project
throughout the year.
Wheeler River
In April 2016, Denison released a PEA for the Wheeler River project, and later in 2016 a Pre-Feasibility Study (“PFS”)
was initiated, with completion originally expected in mid-2017. Since the PEA was released, Denison completed a
highly successful 2016 exploration drilling program, which identified additional mineralization in the immediate vicinity
of the Gryphon deposit – including the newly discovered D Series lenses to the northwest and the up-dip and down-dip
expansion of the A and B Series lenses. These discoveries have the potential to materially increase the estimated
mineral resources at Gryphon, which could extend the mine life in the economic model for the Gryphon deposit and
ultimately improve the economics of the project. As a result, the Company’s original plan for completing infill drilling at
29
MANAGEMENT’S DISCUSSION & ANALYSIS
the Gryphon deposit during the first half of 2017 has been modified to allow for additional exploration and infill drilling
throughout the 2017 winter and summer field seasons. Consequently, the completion of the PFS has also been deferred
from the second half of 2017 to the first half of 2018.
Work planned for Wheeler River in 2017 is expected to not only advance the project towards the completion of a PFS,
but will also go towards increasing Denison’s interest in the project, under the terms of an agreement reached between
the partners of the WRJV, whereby Denison will fund 50% of Cameco’s ordinary share of joint venture expenditures in
2017 and 2018 in order to increase its interest in the project to up to approximately 66% (currently 60%) by the end of
2018. Specific work planned for Wheeler River during 2017 was announced in Denison’s press release dated January
17, 2016, and is summarized below.
Project Development
Project development field programs, including environmental and engineering data collection programs required for the
PFS and Environmental Assessment process, commenced at Wheeler River in June 2016 (see Denison’s press release
dated November 2, 2016 for a detailed update). Existing data collection programs will continue during 2017 and
additional programs, including metallurgical testing and analysis, will be initiated. Further engineering studies related
to shaft sinking methodologies, mining methods and water treatment will also be initiated in 2017. In addition, Denison
expects to continue to advance and strengthen relationships with various northern communities throughout the year.
Gryphon Infill Drilling
Concurrent with project development field programs, infill drilling will continue at the Gryphon deposit in 2017 in order
to upgrade the inferred resources to an indicated level of confidence, which is required for the completion of a PFS.
This drilling program involves increasing the previous 50 x 50 metre drill spacing to an approximate 25 x 25 metre
spacing across the previously defined A, B and C Series lenses of the Gryphon deposit. An initial set of five infill drill
holes was completed during 2016, and approximately 35 infill drill holes are expected to be completed during 2017 to
achieve the 25 x 25 metre spacing. The directional drilling method utilized during 2016, which demonstrated significant
cost savings and reliable accuracy, will continue in 2017.
Gryphon Exploration Drilling
Exploration drilling outside of the Gryphon deposit during 2016 resulted in the discovery of (1) a series of new high
grade lenses of mineralization approximately 200 metres northwest of the Gryphon deposit (termed the D Series
lenses), which have been delineated over approximately 330 metres of strike length, and (2) high grade intersections
down-dip and along strike of the Gryphon deposit A and B Series lenses (see Denison’s press release dated November
17, 2016). These high grade results are located outside of the previously released inferred resources, in areas that
remain open for further expansion and constitute priority target areas for drill testing in 2017.
Exploration Pipeline Properties
While focused on advancing Wheeler River in 2017, Denison remains active on a select group of high-priority
exploration pipeline projects – each with the potential to deliver a meaningful new discovery of uranium mineralization
in the Athabasca Basin region.
Denison-Operated Projects
Exploration drill programs are planned on five high-priority Denison-operated exploration pipeline projects – including
the recently acquired Hook-Carter project, which is located in the western portion of the Athabasca Basin, as well as
the Waterbury Lake, Murphy Lake, Crawford Lake, and Moon Lake South projects, which are each located in the
infrastructure rich eastern portion of the Athabasca Basin.
Hook-Carter Project
Denison’s work plan for Hook-Carter in 2017 includes initial ground resistivity and electromagnetic surveying during
winter, followed by a reconnaissance five-hole drill program (2,700 metres) during the summer months. Work is
expected to be focused on the southwestern portion of the property on the Patterson Lake Corridor, where Athabasca
sandstone thicknesses vary between 250 and 450 metres. The Patterson Lake Corridor is host to the Arrow deposit,
Triple R deposit, and the Spitfire discovery, all of which are located within 8 to 20 kilometres of the southwestern
boundary of the Hook-Carter project.
30
MANAGEMENT’S DISCUSSION & ANALYSIS
Waterbury Lake Project
A winter drill program of approximately nine holes (4,650 metres) is planned to test priority resistivity targets along the
extensive Hamilton Lake trend, where anomalous unconformity-related uranium was discovered in 2016 while
completing the first drilling on the entire trend, with a two-hole reconnaissance drill fence.
Murphy Lake Project
A drilling program consisting of a total of eight drill holes (3,200 metres) is planned for the winter of 2017, and is
expected to test high-priority geophysical and geological targets along strike of a previously discovered zone of
mineralization and alteration, which was extended to approximately 850 metres in strike length during the 2016
exploration drilling program.
Crawford Lake and Moon Lake South Projects
Work planned for 2017 is centred on the CR-3 conductive trend, and includes a resistivity survey at Moon Lake South
during the winter, as well as a four-hole summer drill program (2,300 metres) designed to test priority targets along the
CR-3 trend at both Crawford Lake and Moon Lake South.
Non-Operated Projects
Drilling programs are also planned in 2017 for joint venture projects operated by ARC, including 4,500 metres of drilling
in approximately 15 holes at Wolly (22.76% Denison), and 4,800 metres of drilling in approximately 18 holes at McClean
Lake (22.5% Denison). Denison will not participate in the Wolly or Waterfound (also operated by ARC) joint ventures
during 2017, and will be subject to minimal dilution as a result. No field exploration work is planned for the Cameco
operated Mann Lake joint venture (30% Denison), with only desktop review activities expected in 2017.
MANAGEMENT AND ENVIRONMENTAL SERVICES
Net management fees expected for 2017 from the management services agreement with UPC are budgeted at $0.9 million
(CAD$1.2 million). A portion of the management fees earned from UPC are based on UPC’s net asset value, and thus the
uranium spot price. Denison’s budget for 2017 assumes a uranium spot price of $20.50 per pound U3O8. Each $5 per
pound U3O8 increase is expected to translate into approximately $0.2 million (CAD$0.3 million) in additional management
fees to Denison.
Revenue from operations at DES during 2017 is budgeted to be $7.3 million (CAD$9.8 million) and operating, overhead
and capital expenditures are budgeted to be $6.0 million (CAD$8.0 million).
CORPORATE ADMINISTRATION AND OTHER
Corporate administration expenses are budgeted to be $3.7 million (CAD$4.9 million) in 2017 and include head office
salaries and benefits, office costs, audit and regulatory costs, legal fees, investor relations expenses and all other costs
related to operating a public company with listings in Canada and the United States.
In addition to Corporate administration expenses in 2017, letter of credit and standby fees relating to the 2017 Credit
Facility are expected to be approximately $375,000 (CAD$500,000).
ADDITIONAL INFORMATION
CONTROLS AND PROCEDURES
The Company carried out an evaluation, under the supervision and with the participation of its management, including
the President and Chief Executive Officer and the Vice-President Finance and Chief Financial Officer, of the
effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the
Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the
President and Chief Executive Officer and the Vice-President Finance and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures are effective as of December 31, 2016.
The Company’s management is responsible for establishing and maintaining an adequate system of internal control
over financial reporting. Management conducted an evaluation of the effectiveness of internal control over financial
reporting based on the Internal Control – Integrated Framework, 2013 issued by the Committee of Sponsoring
31
MANAGEMENT’S DISCUSSION & ANALYSIS
Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s
internal control over financial reporting was effective as of December 31, 2016.
There has not been any change in the Company’s internal control over financial reporting that occurred during 2016
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical
accounting estimates and judgements that affect the amounts reported. It also requires management to exercise
judgement in applying the Company’s accounting policies. These judgements and estimates are based on
management’s best knowledge of the relevant facts and circumstances, taking into account previous experience.
Although the Company regularly reviews the estimates and judgements made that affect the financial statements,
actual results may be materially different.
Significant estimates and judgements made by management relate to:
(a)
Determination of a Mineral Property being Sufficiently Advanced
The Company follows a policy of capitalizing non-exploration related expenditures on properties it considers to be
sufficiently advanced. Once a mineral property is determined to be sufficiently advanced, that determination is
irrevocable and the capitalization policy continues to apply over the life of the property. In determining whether or not
a mineral property is sufficiently advanced, management considers a number of factors including, but not limited to:
current uranium market conditions, the quality of resources identified, access to the resource, the suitability of the
resource to current mining methods, ease of permitting, confidence in the jurisdiction in which the resource is located
and milling complexity.
Many of these factors are subject to risks and uncertainties that can support a “sufficiently advanced” determination as
at one point in time but not support it at another. The final determination requires significant judgment on the part of the
Company’s management and directly impacts the carrying value of the Company’s mineral properties.
(b)
Mineral Property Impairment Reviews and Impairment Adjustments
Mineral properties are tested for impairment when events or changes in circumstances indicate that the carrying amount
may not be recoverable. When an indicator is identified, the Company determines the recoverable amount of the
property, which is the higher of an asset’s fair value less costs of disposal and value in use. An impairment loss is
recognized if the carrying value exceeds the recoverable amount. The recoverable amount of a mineral property may
be determined by reference to estimated future operating results and discounted net cash flows, current market
valuations of similar properties or a combination of the above. In undertaking this review, management of the Company
is required to make significant estimates of, amongst other things: reserve and resource amounts, future production
and sale volumes, forecast commodity prices, future operating, capital and reclamation costs to the end of the mine’s
life and current market valuations from observable market data which may not be directly comparable. These estimates
are subject to various risks and uncertainties, which may ultimately have an effect on the expected recoverable amount
of a specific mineral property asset. Changes in these estimates could have a material impact on the carrying value of
the mineral property amounts and the impairment losses recognized.
(c)
Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are computed in respect of taxes that are based on taxable profit. Taxable profit will
often differ from accounting profit and management may need to exercise judgement to determine whether some taxes
are income taxes (and subject to deferred tax accounting) or operating expenses.
Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply
when the temporary differences between accounting carrying values and tax basis are expected to be recovered or
settled. The determination of the ability of the Company to utilize tax loss carry forwards to offset deferred tax liabilities
requires management to exercise judgment and make certain assumptions about the future performance of the
Company. Management is required to assess whether it is “probable” that the Company will benefit from these prior
losses and other deferred tax assets. Changes in economic conditions, commodity prices and other factors could result
in revisions to the estimates of the benefits to be realized or the timing of utilizing the losses.
32
MANAGEMENT’S DISCUSSION & ANALYSIS
(d)
Reclamation Obligations
Asset retirement obligations are recorded as a liability when the asset is initially constructed or a constructive or legal
obligation exists and typically involve identifying costs to be incurred in the future and discounting them to the present
using an appropriate discount rate for the liability. The determination of future costs involves a number of estimates
relating to timing, type of costs, mine closure plans, and review of potential methods and technical advancements.
Furthermore, due to uncertainties concerning environmental remediation, the ultimate cost of the Company’s
decommissioning liability could differ materially from amounts provided. The estimate of the Company’s obligation is
subject to change due to amendments to applicable laws and regulations and as new information concerning the
Company’s operations becomes available. The Company is not able to determine the impact on its financial position,
if any, of environmental laws and regulations that may be enacted in the future.
NEW ACCOUNTING PRONOUNCEMENTS
Accounting Standards Issued But Not Yet Applied
The Company has not yet adopted the following new accounting pronouncements which are effective for fiscal periods
of the Company beginning on or after January 1, 2017:
International Accounting Standard 7, Statement of Cash Flows (“IAS 7”) – Amendments
IAS 7 requires an entity to present a statement of cash flows as an integral part of its primary financial statements.
Cash flows are classified and presented into operating activities (either using the “direct” or “indirect” method), investing
activities and financing activities, with the latter two categories generally presented on a gross basis. The amendments
require additional disclosures with respect to changes in liabilities arising from financing activities. It is effective for
annual periods beginning on or after January 1, 2017.
The Company has early adopted the amendments to this standard and has added additional continuity schedule
disclosures for the change in Debt Obligation liabilities.
International Financial Reporting Standard 9, Financial Instruments (“IFRS 9”)
In July 2014, the IASB published the final version of IFRS 9 Financial Instruments (“IFRS 9”), which brings together the
classification, measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial
Instruments: Recognition and Measurement. IFRS 9 replaces the multiple classifications for financial assets in IAS 39
with a single principle based approach for determining the classification of financial assets based on how an entity
manages its financial instruments in the context of its business model and the contractual cash flow characteristics of
the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple
impairment methods in IAS 39. The final version of IFRS 9 is effective for periods beginning on or after January 1,
2018; however, it is available for early adoption.
The Company has not evaluated the impact of adopting this standard.
International Financial Reporting Standard 15, Revenue from Contracts with Customers (“IFRS 15”)
IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s
contracts with customers. Under IFRS 15, revenue is recognized when a customer obtains control of a good or service.
The standard replaces IAS 18 “Revenue” and IAS 11”Construction Contracts” and related interpretations. The standard
is effective for annual periods beginning on or after January 1, 2018 and earlier application is permitted.
The Company has not evaluated the impact of adopting this standard.
International Financial Reporting Standard 16, Leases (“IFRS 16”)
In January 2016, the IASB issued IFRS 16 which replaces existing standards and interpretations under IAS 17 “Leases”.
IFRS 16 requires all leases, including financing and operating leases, to be reported on the balance sheet with the
intent of providing greater transparency for a company’s lease assets and liabilities. IFRS 16 is effective for annual
periods beginning on or after January 1, 2019 with early adoption permitted.
The Company has not evaluated the impact of adopting this standard.
33
MANAGEMENT’S DISCUSSION & ANALYSIS
RISK FACTORS
There are a number of factors that could negatively affect Denison’s business and the value of Denison’s common
shares, including the factors listed below. The following information pertains to the outlook and conditions currently
known to Denison that could have a material impact on the financial condition of Denison. Other factors may arise in
the future that are currently not foreseen by management of Denison, which may present additional risks in the future.
Current and prospective security holders of Denison should carefully consider these risk factors.
Nature of Exploration and Development
Exploration for and development of mineral properties is speculative, and involves significant uncertainties and financial
risks that even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery
of an ore body may result in substantial rewards, few properties which are explored are commercially mineable or
ultimately developed into producing mines. Major expenses may be required to establish mineral reserves by drilling,
constructing mining and processing facilities at a site, developing metallurgical processes and extracting uranium from
ore. It is impossible to ensure that the Denison’s current exploration and development programs will result in profitable
commercial mining operations.
Denison’s current and future uranium production is dependent in part on the successful development of new ore bodies
and/or expansion of existing mining operations. The economic feasibility of development projects is based upon many
factors, including, among others: the accuracy of mineral reserve and resource estimates; metallurgical recoveries;
capital and operating costs of such projects; government regulations relating to prices, taxes, royalties, infrastructure,
land tenure, land use, importing and exporting, and environmental protection; and uranium prices, which are historically
cyclical. Development projects are also subject to the successful completion of engineering studies, issuance of
necessary governmental permits and availability of adequate financing.
Development projects have no operating history upon which to base estimates of future cash flow. Denison’s estimates
of mineral reserves and resources and cash operating costs are, to a large extent, based upon detailed geological and
engineering analysis. Denison also conducts economic analyses and feasibility studies which derive estimates of
capital and operating costs based upon many factors, including, among others: anticipated tonnage and grades of ore
to be mined and processed; the configuration of the ore body; ground and mining conditions; expected recovery rates
of the uranium from the ore; and alternate mining methods.
The results of economic analyses for Denison's projects may be preliminary in nature and could include inferred mineral
resources, which are considered too speculative geologically to have the economic considerations applied that would
enable them to be categorized as mineral reserves. There is no certainty that any forecasts in an economic analysis,
including the PEA and the results of the planned PFS for Wheeler River, would be realizable or that any resources
would ever be upgraded to reserves. Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
It is possible that actual costs and economic returns of current and new mining operations may differ materially from
Denison’s best estimates. It is not unusual in the mining industry for new mining operations to experience unexpected
problems during the start-up phase, take much longer than originally anticipated to bring into a producing phase, and
to require more capital than anticipated.
Benefits Not Realized From Transactions
Denison has completed a number of transactions over the last several years, including without limitation the acquisition
of International Enexco Ltd, the acquisition of Fission Energy Corp., the acquisition of JNR Resources Inc., the sale of
the its mining assets and operations located in the United States to Energy Fuels Inc. the sale of its interest in the
GSJV, the sale of its interest in Rockgate Capital Corp., the optioning of the Moore Lake property to Skyharbour, and
entering into the APG Financing. Despite Denison’s belief that these transactions, and others which may be completed
in the future, will be in Denison’s best interest and benefit the Company and Denison’s shareholders, Denison may not
realize the anticipated benefits of such transactions or realize the full value of the consideration paid or received to
complete the transactions. This could result in significant accounting impairments or write-downs of the carrying values
of mineral properties or other assets and could adversely impact the Company and the price of its common shares.
Inability to Expand and Replace Mineral Reserves and Resources
Denison’s mineral reserves and resources at its McClean Lake, Midwest, Wheeler River, and Waterbury Lake projects
are Denison’s future sources of uranium concentrates. Unless other mineral reserves or resources are discovered,
Denison’s sources of future production for uranium concentrates will decrease over time when its current mineral
34
MANAGEMENT’S DISCUSSION & ANALYSIS
reserves and resources are depleted. There can be no assurance that Denison’s future exploration, development and
acquisition efforts will be successful in replenishing its mineral reserves and resources. In addition, while Denison
believes that many of its properties will eventually be put into production, there can be no assurance that they will be
put into production or that they will be able to replace production in future years.
Imprecision of Mineral Reserve and Resource Estimates
Mineral reserve and resource figures are estimates, and no assurances can be given that the estimated levels of
uranium will be produced or that Denison will receive the prices assumed in determining its mineral reserves and
resources. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling
results and industry practices. Valid estimates made at a given time may significantly change when new information
becomes available. While Denison believes that the mineral reserve and resource estimates included are well
established and reflect management’s best estimates, by their nature, mineral reserve and resource estimates are
imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable.
Furthermore, market price fluctuations, as well as increased capital or production costs or reduced recovery rates, may
render mineral reserves and resources containing lower quantities or lower grades of mineralization uneconomic, and
may ultimately result in a restatement of mineral reserves and resources. The evaluation of mineral reserves or
resources is always influenced by economic and technological factors, which may change over time.
Volatility and Sensitivity to Market Prices
The long and short term market prices of U3O8 affect the value of Denison’s mineral resources and the market price of
Denison’s common shares. Historically, these prices have fluctuated and have been and will continue to be affected by
numerous factors beyond Denison’s control.
Such factors include, among others: demand for nuclear power, political and economic conditions in uranium producing
and consuming countries, public and political response to nuclear incidents, reprocessing of used reactor fuel and the
re-enrichment of depleted uranium tails, sales of excess civilian and military inventories (including from the dismantling
of nuclear weapons) by governments and industry participants, uranium supplies from other secondary sources, and
production levels and costs of production from primary uranium suppliers.
Public Acceptance of Nuclear Energy and Competition from Other Energy Sources
Growth of the uranium and nuclear power industry will depend upon continued and increased acceptance of nuclear
technology as a clean means of generating electricity. Because of unique political, technological and environmental
factors that affect the nuclear industry, including the risk of a nuclear incident, the industry is subject to public opinion
risks that could have an adverse impact on the demand for nuclear power and increase the regulation of the nuclear
power industry. Nuclear energy competes with other sources of energy, including oil, natural gas, coal and hydro-
electricity. These other energy sources are, to some extent, interchangeable with nuclear energy, particularly over the
longer term. Sustained lower prices of oil, natural gas, coal and hydroelectricity may result in lower demand for uranium
concentrates. Technical advancements in renewable and other alternate forms of energy, such as wind and solar
power, could make these forms of energy more commercially viable and put additional pressure on the demand for
uranium concentrates.
Current estimates project significant increases in the world’s nuclear power generating capacities, primarily as a result
of a significant number of nuclear reactors that are under construction, planned, or proposed in China, India and various
other countries around the world. Market projections for future demand for uranium are based on various assumptions
regarding the rate of construction and approval of new nuclear power plants, as well as continued public acceptance
of nuclear energy around the world. The rationale for adopting nuclear energy can be varied, but often includes the
clean and environmentally friendly operation of nuclear power plants, as well as the affordability and round-the-clock
reliability of nuclear power. A change in public sentiment regarding nuclear energy could have a material impact on the
number of nuclear power plants under construction, planned or proposed, which could have a material impact on the
market’s and the Company’s expectations for the future demand for uranium and the future price of uranium.
Market Price of Shares
Securities of mining companies have experienced substantial volatility in the past, often based on factors unrelated to
the financial performance or prospects of the companies involved. These factors include macroeconomic conditions in
North America and globally, and market perceptions of the attractiveness of particular industries. The price of Denison's
securities is also likely to be significantly affected by short-term changes in commodity prices, other mineral prices,
currency exchange fluctuation, or changes in its financial condition or results of operations as reflected in its periodic
earnings reports and/or news releases. Other factors unrelated to the performance of Denison that may have an effect
35
MANAGEMENT’S DISCUSSION & ANALYSIS
on the price of the securities of Denison include the following: the extent of analytical coverage available to investors
concerning the business of Denison; lessening in trading volume and general market interest in Denison's securities;
the size of Denison's public float and its inclusion in market indices may limit the ability of some institutions to invest in
Denison's securities; and a substantial decline in the price of the securities of Denison that persists for a significant
period of time could cause Denison's securities to be delisted from an exchange. If an active market for the securities
of Denison does not continue, the liquidity of an investor's investment may be limited and the price of the securities of
the Company may decline such that investors may lose their entire investment in the Company. As a result of any of
these factors, the market price of the securities of Denison at any given point in time may not accurately reflect the
long-term value of Denison. Securities class-action litigation often has been brought against companies following
periods of volatility in the market price of their securities. Denison may in the future be the target of similar litigation.
Securities litigation could result in substantial costs and damages and divert management's attention and resources.
Dilution from Further Equity Financing
If Denison raises additional funding by issuing additional equity securities, such financing may substantially dilute the
interests of shareholders of Denison and reduce the value of their investment.
Reliance on Other Operators
At some of its properties, Denison is not the operator and therefore is not in control of all of the activities and operations
at the site. As a result, Denison is and will be, to a certain extent, dependent on the operators for the nature and timing
of activities related to these properties and may be unable to direct or control such activities.
As an example, ARC is the operator and majority owner of the MLJV and Midwest joint venture in Saskatchewan,
Canada. The McClean Lake mill employs unionized workers who work under collective agreements. ARC, as the
operator, is responsible for all dealings with unionized employees. ARC may not be successful in its attempts to
renegotiate the collective agreements, which may impact mill and mining operations. Similarly, ARC is responsible for
all licensing and dealings with various regulatory authorities. Any lengthy work stoppages, or disruption to the operation
of the mill or mining operations as a result of a licensing matter or regulatory compliance may have a material adverse
impact on the Company’s future cash flows, earnings, results of operations and financial condition.
Property Title Risk
The Company has investigated its rights to explore and exploit all of its material properties and, to the best of its
knowledge, those rights are in good standing. However, no assurance can be given that such rights will not be revoked,
or significantly altered, to its detriment. There can also be no assurance that the Company’s rights will not be challenged
or impugned by third parties, including the Canadian, provincial, and local governments, as well as the First Nations
and Métis.
There is also a risk that Denison's title to, or interest in, its properties may be subject to defects or challenges. This may
be true particularly in countries where there may be less developed legal systems or where ownership interests may
become subject to political interference or changes in laws. If such defects cover a material portion of Denison's
property, they could materially and adversely affect Denison's results of operations and financial condition, its reported
mineral reserves and resources or its long term business prospects.
Competition for Properties
Significant competition exists for the limited supply of mineral lands available for acquisition. Many participants in the
mining business include large, established companies with long operating histories. The Company may be at a
disadvantage in acquiring new properties as competitors may have greater financial resources and more technical staff.
Accordingly, there can be no assurance that the Company will be able to compete successfully to acquire new
properties or that any such acquired assets would yield resources or reserves or result in commercial mining operations.
Global Financial Conditions
Global financial conditions continue to be subject to volatility arising from international geopolitical developments and
global economic phenomenon, as well as general financial market turbulence. Access to public financing and credit
can be negatively impacted by the effect of these events on Canadian and global credit markets. The health of the
global financing and credit markets may impact the ability of Denison to obtain equity or debt financing in the future and
the terms at which financing or credit is available to Denison. These increased levels of volatility and market turmoil
could adversely impact Denison's operations and the trading price of the common shares.
36
MANAGEMENT’S DISCUSSION & ANALYSIS
Ability to Maintain Obligations under the 2017 Credit Facility and Other Debt
Denison is required to satisfy certain financial covenants in order to maintain its good standing under the 2017 Credit
Facility. Denison is also subject to a number of restrictive covenants under the APG Financing. Denison may from time
to time enter into other arrangements to borrow money in order to fund its operations and expansion plans, and such
arrangements may include covenants that have similar obligations or that restrict its business in some way. Events may
occur in the future, including events out of Denison's control that would cause Denison to fail to satisfy its obligations
under the 2017 Credit Facility, APG Financing or other debt instruments. In such circumstances, the amounts drawn
under Denison's debt agreements may become due and payable before the agreed maturity date, and Denison may
not have the financial resources to repay such amounts when due. The 2017 Credit Facility and APG Financing are
secured by DMI's main properties by a pledge of the shares of DMI. If Denison were to default on its obligations under
the 2017 Credit Facility, APG Financing or other secured debt instruments in the future, the lender(s) under such debt
instruments could enforce their security and seize significant portions of Denison's assets.
Change of Control Restrictions
The APG Financing and certain other of Denison’s agreements contain provisions that could adversely impact Denison
in the case of a transaction that would result in a change of control of Denison or certain of its subsidiaries. In the event
that consent is required from our counterparty and our counterparty chooses to withhold its consent to a merger or
acquisition, then such party could seek to terminate certain agreements with Denison, including certain agreements
forming part of the APG Financing or require Denison to buy the counterparty’s rights back from them, which could
adversely affect Denison’s financial resources and prospects. If applicable, these restrictive contractual provisions
could delay or discourage a change in control of our company that could otherwise be beneficial to Denison or its
shareholders.
Capital Intensive Industry and Uncertainty of Funding
The exploration and development of mineral properties and the ongoing operation of mines requires a substantial
amount of capital and may depend on Denison’s ability to obtain financing through joint ventures, debt financing, equity
financing or other means. General market conditions, volatile uranium markets, a claim against the Company, a
significant disruption to the Company’s business or operations or other factors may make it difficult to secure financing
necessary for the expansion of mining activities or to take advantage of opportunities for acquisitions. There is no
assurance that the Company will be successful in obtaining required financing as and when needed on acceptable
terms.
Decommissioning and Reclamation
As owner of the Elliot Lake decommissioned sites and part owner of the McClean Lake mill, McClean Lake mines, the
Midwest uranium project and certain exploration properties, and for so long as the Company remains an owner thereof,
the Company is obligated to eventually reclaim or participate in the reclamation of such properties. Most, but not all, of
the Company’s reclamation obligations are secured, and cash and other assets of the Company have been reserved
to secure this obligation. Although the Company’s financial statements record a liability for the asset retirement
obligation, and the bonding requirements are generally periodically reviewed by applicable regulatory authorities, there
can be no assurance or guarantee that the ultimate cost of such reclamation obligations will not exceed the estimated
liability contained on the Company’s financial statements.
As Denison’s properties approach or go into decommissioning, regulatory review of the Company’s decommissioning
plans may result in additional decommissioning requirements, associated costs and the requirement to provide
additional financial assurances. It is not possible to predict what level of decommissioning and reclamation (and
financial assurances relating thereto) may be required from Denison in the future by regulatory authorities.
Technical Innovation and Obsolescence
Requirements for Denison’s products and services may be affected by technological changes in nuclear reactors,
enrichment and used uranium fuel reprocessing. These technological changes could reduce the demand for uranium
or reduce the value of Denison’s environmental services to potential customers. In addition, Denison’s competitors may
adopt technological advancements that give them an advantage over Denison.
Mining and Insurance
Denison’s business is capital intensive and subject to a number of risks and hazards, including environmental pollution,
accidents or spills, industrial and transportation accidents, labour disputes, changes in the regulatory environment,
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MANAGEMENT’S DISCUSSION & ANALYSIS
natural phenomena (such as inclement weather conditions, earthquakes, pit wall failures and cave-ins) and
encountering unusual or unexpected geological conditions. Many of the foregoing risks and hazards could result in
damage to, or destruction of, Denison’s mineral properties or processing facilities, personal injury or death,
environmental damage, delays in or interruption of or cessation of production from Denison’s mines or processing
facilities or in its exploration or development activities, delay in or inability to receive regulatory approvals to transport
its uranium concentrates, or costs, monetary losses and potential legal liability and adverse governmental action. In
addition, due to the radioactive nature of the materials handled in uranium mining and processing, additional costs and
risks are incurred by Denison on a regular and ongoing basis.
Although Denison maintains insurance to cover some of these risks and hazards in amounts it believes to be
reasonable, such insurance may not provide adequate coverage in the event of certain circumstances. No assurance
can be given that such insurance will continue to be available, that it will be available at economically feasible premiums
or that it will provide sufficient coverage for losses related to these or other risks and hazards.
Denison may be subject to liability or sustain loss for certain risks and hazards against which it cannot insure or which
it may reasonably elect not to insure because of the cost. This lack of insurance coverage could result in material
economic harm to Denison.
Dependence on Issuance of License Amendments and Renewals
ARC maintains the regulatory licenses in order to operate the McClean Lake mill, all of which are subject to renewal
from time to time and are required in order for the mill to operate in compliance with applicable laws and regulations.
In addition, depending on ARC’s or the Company’s business requirements, it may be necessary or desirable to seek
amendments to one or more of its licenses from time to time. While ARC and the Company have been successful in
renewing its licenses on a timely basis in the past and in obtaining such amendments as have been necessary or
desirable, there can be no assurance that such license renewals and amendments will be issued by applicable
regulatory authorities on a timely basis or at all in the future.
Governmental Regulation and Policy Risks
Uranium mining and milling operations and exploration activities, as well as the transportation and handling of the
products produced are subject to extensive regulation by state, provincial and federal governments. Such regulations
relate to production, development, exploration, exports, imports, taxes and royalties, labour standards, occupational
health, waste disposal, protection and remediation of the environment, mine decommissioning and reclamation, mine
safety, toxic substances, transportation safety and emergency response, and other matters. Compliance with such laws
and regulations has increased the costs of exploring, drilling, developing, constructing, operating and closing Denison’s
mines and processing facilities. It is possible that, in the future, the costs, delays and other effects associated with such
laws and regulations may impact Denison’s decision with respect to exploration and development properties, whether
to proceed with exploration or development, or that such laws and regulations may result in Denison incurring significant
costs to remediate or decommission properties that do not comply with applicable environmental standards at such
time. Denison expends significant financial and managerial resources to comply with such laws and regulations.
Denison anticipates it will have to continue to do so as the historic trend toward stricter government regulation may
continue. Because legal requirements are frequently changing and subject to interpretation, Denison is unable to predict
the ultimate cost of compliance with these requirements or their effect on operations. Furthermore, future changes in
governments, regulations and policies, such as those affecting Denison’s mining operations and uranium transport
could materially and adversely affect Denison’s results of operations and financial condition in a particular period or its
long term business prospects.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions.
These actions may result in orders issued by regulatory or judicial authorities causing operations to cease or be
curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or
remedial actions. Companies engaged in uranium exploration operations may be required to compensate others who
suffer loss or damage by reason of such activities and may have civil or criminal fines or penalties imposed for violations
of applicable laws or regulations.
Worldwide demand for uranium is directly tied to the demand for electricity produced by the nuclear power industry,
which is also subject to extensive government regulation and policies. The development of mines and related facilities
is contingent upon governmental approvals that are complex and time consuming to obtain and which, depending upon
the location of the project, involve multiple governmental agencies. The duration and success of such approvals are
subject to many variables outside Denison’s control. Any significant delays in obtaining or renewing such permits or
licenses in the future could have a material adverse effect on Denison. In addition, the international marketing of
38
MANAGEMENT’S DISCUSSION & ANALYSIS
uranium is subject to governmental policies and certain trade restrictions. Changes in these policies and restrictions
may adversely impact Denison’s business.
Aboriginal Title and Consultation Issues
First Nations and Métis title claims as well as related consultation issues may impact Denison’s ability and that of its
joint venture partners to pursue exploration, development and mining at its Saskatchewan properties. Pursuant to
historical treaties, First Nations bands in Northern Saskatchewan ceded title to most traditional lands but continue to
assert title to the minerals within the lands. Managing relations with the local native bands is a matter of paramount
importance to Denison. There may be no assurance however that title claims as well as related consultation issues will
not arise on or with respect to the Company’s properties.
Anti-Bribery and Anti-Corruption Laws
The Company is subject to anti-bribery and anti-corruption laws, including the Corruption of Foreign Public Officials Act
(Canada). Failure to comply with these laws could subject the Company to, among other things, reputational damage,
civil or criminal penalties, other remedial measures and legal expenses which could adversely affect the Company’s
business, results from operations, and financial condition. It may not be possible for the Company to ensure compliance
with anti-bribery and anti-corruption laws in every jurisdiction in which its employees, agents, sub-contractors or joint
venture partners are located or may be located in the future.
Environmental, Health and Safety Risks
Denison has expended significant financial and managerial resources to comply with environmental protection laws,
regulations and permitting requirements in each jurisdiction where it operates, and anticipates that it will be required to
continue to do so in the future as the historical trend toward stricter environmental regulation may continue. The uranium
industry is subject to, not only the worker health, safety and environmental risks associated with all mining businesses,
including potential liabilities to third parties for environmental damage, but also to additional risks uniquely associated
with uranium mining and processing. The possibility of more stringent regulations exists in the areas of worker health
and safety, the disposition of wastes, the decommissioning and reclamation of mining and processing sites, and other
environmental matters each of which could have a material adverse effect on the costs or the viability of a particular
project.
Denison’s facilities operate under various operating and environmental permits, licenses and approvals that contain
conditions that must be met, and Denison’s right to continue operating its facilities is, in a number of instances,
dependent upon compliance with such conditions. Failure to meet any such condition could have a material adverse
effect on Denison’s financial condition or results of operations.
Although the Company believes its operations are in compliance, in all material respects, with all relevant permits,
licenses and regulations involving worker health and safety as well as the environment, there can be no assurance
regarding continued compliance or ability of the Company to meet stricter environmental regulation, which may also
require the expenditure of significant additional financial and managerial resources.
Mining companies are often targets of actions by non-governmental organizations and environmental groups in the
jurisdictions in which they operate. Such organizations and groups may take actions in the future to disrupt Denison's
operations. They may also apply pressure to local, regional and national government officials to take actions which are
adverse to Denison's operations. Such actions could have an adverse effect on Denison's ability to produce and sell
its products, and on its financial position and results.
Information Systems and Cyber Security
The Company's operations depend upon the availability, capacity, reliability and security of its information technology
(IT) infrastructure, and its ability to expand and update this infrastructure as required, to conduct daily operations.
Denison relies on various IT systems in all areas of its operations, including financial reporting, contract management,
exploration and development data analysis, human resource management, regulatory compliance and communications
with employees and third parties.
These IT systems could be subject to network disruptions caused by a variety of sources, including computer viruses,
security breaches and cyber-attacks, as well as network and/or hardware disruptions resulting from incidents such as
unexpected interruptions or failures, natural disasters, fire, power loss, vandalism and theft. The Company's operations
also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software,
as well as pre-emptive expenses to mitigate the risks of failures.
39
MANAGEMENT’S DISCUSSION & ANALYSIS
The ability of the IT function to support the Company’s business in the event of any such event and the ability to recover
key systems from unexpected interruptions cannot be fully tested. There is a risk that, if such an event actually occurs,
the Company’s continuity plan may not be adequate to immediately address all repercussions of the disaster. In the
event of a disaster affecting a data centre or key office location, key systems may be unavailable for a number of days,
leading to inability to perform some business processes in a timely manner. As a result, the failure of Denison’s IT
systems or a component thereof could, depending on the nature of any such failure, adversely impact the Company's
reputation and results of operations.
Although to date the Company has not experienced any material losses relating to cyber-attacks or other information
security breaches, there can be no assurance that the Company will not incur such losses in the future. Unauthorized
access to Denison’s IT systems by employees or third parties could lead to corruption or exposure of confidential,
fiduciary or proprietary information, interruption to communications or operations or disruption to the Company’s
business activities or its competitive position. Further, disruption of critical IT services, or breaches of information
security, could have a negative effect on the Company’s operational performance and its reputation. The Company's
risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of
these threats. As a result, cyber security and the continued development and enhancement of controls, processes and
practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized
access remain a priority.
The Company applies technical and process controls in line with industry-accepted standards to protect information,
assets and systems; however these controls may not adequately prevent cyber-security breaches. There is no
assurance that the Company will not suffer losses associated with cyber-security breaches in the future, and may be
required to expend significant additional resources to investigate, mitigate and remediate any potential vulnerabilities.
As cyber threats continue to evolve, the Company may be required to expend additional resources to continue to modify
or enhance protective measures or to investigate and remediate any security vulnerabilities.
Dependence on Key Personnel and Qualified and Experienced Employees
Denison’s success depends on the efforts and abilities of certain senior officers and key employees. Certain of
Denison’s employees have significant experience in the uranium industry, and the number of individuals with significant
experience in this industry is small. While Denison does not foresee any reason why such officers and key employees
will not remain with Denison, if for any reason they do not, Denison could be adversely affected. Denison has not
purchased key man life insurance for any of these individuals.
Denison’s success also depends on the availability of qualified and experienced employees to work in Denison’s
operations and Denison’s ability to attract and retain such employees.
Conflicts of Interest
Some of the directors and officers of Denison are also directors of other companies that are similarly engaged in the
business of acquiring, exploring and developing natural resource properties. Such associations may give rise to
conflicts of interest from time to time. In particular, one of the consequences would be that corporate opportunities
presented to a director or officer of Denison may be offered to another company or companies with which the director
or officer is associated, and may not be presented or made available to Denison. The directors of Denison are required
by law to act honestly and in good faith with a view to the best interests of Denison, to disclose any interest which they
may have in any project or opportunity of Denison, and to abstain from voting on such matter. Conflicts of interest that
arise will be subject to and governed by the procedures prescribed in the Company’s Code of Ethics and by the Ontario
Business Corporations Act (“OBCA”).
Disclosure and Internal Controls
Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions
are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly
recorded and reported. Disclosure controls and procedures are designed to ensure that information required to be
disclosed by a company in reports filed with securities regulatory agencies is recorded, processed, summarized and
reported on a timely basis and is accumulated and communicated to the company’s management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with
respect to the reliability of reporting, including financial reporting and financial statement preparation.
40
MANAGEMENT’S DISCUSSION & ANALYSIS
Potential Influence of KEPCO and KHNP
As at the date hereof, KEPCO holds indirectly a large shareholding in Denison and is contractually entitled to Board
representation. Provided KEPCO holds over 5% of Denison's common shares, it is entitled to nominate one director for
election to the Board at any shareholder meeting. In connection with its transfer of its indirect interest in Denison to its
subsidiary, KHNP, KEPCO nominated a representative of KHNP in 2017.
KEPCO’s shareholding level gives it a large vote on decisions to be made by shareholders of Denison, and its right to
nominate a director may give KEPCO influence on decisions made by Denison's Board. Although KEPCO's or KHNP’s
director nominee, as applicable, will be subject to duties under the OBCA to act in the best interests of Denison as a
whole, such director nominee is likely to be an employee of KEPCO or KHNP and he or she may give special attention
to KEPCO's or KHNP’s interests as an indirect shareholder. The interests of KEPCO and KHNP as indirect
shareholders of Denison may not always be consistent with the interests of Denison's other shareholders.
The KEPCO strategic relationship agreement also includes provisions that will provide KEPCO with a right of first offer
for certain asset sales and the right to be approached to participate in certain potential acquisitions. The right of first
offer and participation right of KEPCO may negatively affect Denison's ability or willingness to entertain certain business
opportunities, or the attractiveness of Denison as a potential party for certain business transactions. KEPCO's large
shareholding block may also make Denison less attractive to third parties considering an acquisition of Denison if those
third parties are not able to negotiate terms with KEPCO to support such an acquisition.
QUALIFIED PERSON
The disclosure regarding the PEA was reviewed and approved by Peter Longo, P. Eng, MBA, PMP, Denison’s Vice-
President, Project Development, who is a Qualified Person in accordance with the requirements of NI 43-101. The
balance of the disclosure of scientific and technical information regarding Denison’s properties in the MD&A was
prepared by or reviewed by Dale Verran, MSc, Pr.Sci.Nat., the Company’s Vice President, Exploration, a Qualified
Person in accordance with the requirements of NI 43-101. For a description of the quality assurance program and
quality control measures applied by Denison, please see Denison’s Annual Information Form dated March 24, 2016
available under Denison's profile on SEDAR at www.sedar.com, and its Form 40-F available on EDGAR at
www.sec.gov/edgar.shtml.
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MANAGEMENT’S DISCUSSION & ANALYSIS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this MD&A constitutes “forward-looking information", within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and similar Canadian legislation concerning the business, operations and financial
performance and condition of Denison.
Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects",
"budget", "scheduled", "estimates", “forecasts", "intends", "anticipates", or "believes", or the negatives and/or variations of such words
and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur", "be achieved"
or “has the potential to”.
In particular, this MD&A contains forward-looking information pertaining to the following: the likelihood of completing and benefits to
be derived from corporate transactions; including the potential for receipt of any contingent payments; use of proceeds of financing
activities; the estimates of Denison's mineral reserves and mineral resources; exploration, development and expansion plans and
objectives, including the results of the PEA, the completion of the PFS, and statements regarding anticipated budgets, fees and
expenditures; expectations regarding Denison’s joint venture ownership interests and the continuity of its agreements with its partners;
expectations regarding adding to its mineral reserves and resources through acquisitions and exploration; expectations regarding the
toll milling of Cigar Lake ores; expectations regarding revenues and expenditures from operations at DES; capital expenditure
programs, estimated exploration and development expenditures and reclamation costs and Denison's share of same; expectations of
market prices and costs; supply and demand for uranium; possible impacts of litigation and regulatory actions on Denison. Statements
relating to "mineral reserves" or "mineral resources" are deemed to be forward-looking information, as they involve the implied
assessment, based on certain estimates and assumptions that the mineral reserves and mineral resources described can be profitably
produced in the future.
Forward looking statements are based on the opinions and estimates of management as of the date such statements are made, and
they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity,
performance or achievements of Denison to be materially different from those expressed or implied by such forward-looking
statements. Denison believes that the expectations reflected in this forward-looking information are reasonable but no assurance can
be given that these expectations will prove to be accurate and may differ materially from those anticipated in this forward looking
information. For a discussion in respect of risks and other factors that could influence forward-looking events, please refer to the
factors discussed in this MD&A under the heading "Risk Factors". These factors are not, and should not be construed as being
exhaustive.
Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking information contained in
this MD&A is expressly qualified by this cautionary statement. Any forward-looking information and the assumptions made with respect
thereto speaks only as of the date of this MD&A. Denison does not undertake any obligation to publicly update or revise any forward-
looking information after the date of this MD&A to conform such information to actual results or to changes in Denison's expectations
except as otherwise required by applicable legislation.
Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Mineral Resources:
This MD&A may use the terms “measured”, “indicated” and “inferred” mineral resources. United States investors are advised that
while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does
not recognize them. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and as to their economic
and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United
States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be
converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred
mineral resource exists, or is economically or legally mineable.
42
Responsibility for Financial Statements
The Company’s management is responsible for the integrity and fairness of presentation of these consolidated financial
statements. The consolidated financial statements have been prepared by management, in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board, for review by
the Audit Committee and approval by the Board of Directors.
The preparation of financial statements requires the selection of appropriate accounting policies in accordance with
International Financial Reporting Standards and the use of estimates and judgements by management to present fairly
and consistently the consolidated financial position of the Company. Estimates are necessary when transactions
affecting the current period cannot be finalized with certainty until future information becomes available. In making
certain material estimates, the Company’s management has relied on the judgement of independent specialists.
The Company’s management has developed and maintains a system of internal accounting controls to ensure, on a
reasonable and cost-effective basis, that the financial information is timely reported and is accurate and reliable in all
material respects and that the Company’s assets are appropriately accounted for and adequately safeguarded.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, our independent auditor.
Its report outlines the scope of its examination and expresses its opinions on the consolidated financial statements and
internal control over financial reporting.
David D. Cates
President and Chief Executive Officer
Gabriel (Mac) McDonald
Vice-President Finance and Chief Financial Officer
March 8, 2017
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining an adequate system of internal control
over financial reporting. Management conducted an evaluation of the effectiveness of internal control over financial
reporting based on the Internal Control – Integrated Framework, 2013 issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s
internal control over financial reporting was effective as of December 31, 2016.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2016 has been audited
by PricewaterhouseCoopers LLP, our independent auditor, as stated in its report which appears herein.
Changes to Internal Control over Financial Reporting
There has not been any change in the Company’s internal control over financial reporting that occurred during 2016
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
43
March 8, 2017
Independent Auditor’s Report
To the Shareholders of
Denison Mines Corp.
We have completed integrated audits of Denison Mines Corp.’s and its subsidiaries’ December 31, 2016 and December
31, 2015 consolidated financial statements and their internal control over financial reporting as at December 31, 2016.
Our opinions, based on our audits, are presented below.
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Denison Mines Corp. and its subsidiaries,
which comprise the consolidated statements of financial position as at December 31, 2016 and December 31, 2015 and
the consolidated statements of income (loss) and comprehensive income (loss), changes in equity and cash flow for the
years then ended, and the related notes, which comprise a summary of significant accounting policies and other
explanatory information.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and for such internal control as management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement. Canadian generally accepted auditing standards also require that we comply with ethical requirements.
An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting principles and policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for
our audit opinion on the consolidated financial statements.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Denison Mines Corp. and its subsidiaries as at December 31, 2016 and December 31, 2015 and their financial
performance and their cash flows for the years then in accordance with IFRS as issued by the IASB.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Report on internal control over financial reporting
We have also audited Denison Mines Corp’s and its subsidiaries’ internal control over financial reporting as at
December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013), issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Management’s responsibility for internal control over financial reporting
Management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on
Internal Control over Financial Reporting.
Auditor’s responsibility
Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our
audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
An audit of internal control over financial reporting includes obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control, based on the assessed risk, and performing such other procedures as we consider
necessary in the circumstances.
We believe that our audit provides a reasonable basis for our audit opinion on the company’s internal control over
financial reporting.
Definition of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Inherent limitations
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may
deteriorate.
Opinion
In our opinion, Denison Mines Corp. and its subsidiaries maintained, in all material respects, effective internal control
over financial reporting as at December 31, 2016, based on criteria established in Internal Control - Integrated
Framework (2013) issued by COSO.
Chartered Professional Accountants, Licensed Public Accountants
45
Consolidated Statements of Financial Position
(Expressed in thousands of U.S. dollars except for share amounts)
At December 31
2016
At December 31
2015
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
ASSETS
Current
Cash and cash equivalents (note 6)
Investments (note 9)
Trade and other receivables (note 7)
Inventories (note 8)
Prepaid expenses and other
Non-Current
Inventories-ore in stockpiles (note 8)
Investments (note 9)
Investments in associates (note 10)
Restricted cash and investments (note 11)
Property, plant and equipment (note 12)
Intangibles (note 13)
Total assets
LIABILITIES
Current
Accounts payable and accrued liabilities
Current portion of long-term liabilities:
Post-employment benefits (note 14)
Reclamation obligations (note 15)
Debt obligations (note 16)
Other liabilities (note 17)
Non-Current
Post-employment benefits (note 14)
Reclamation obligations (note 15)
Other liabilities (note 17)
Deferred income tax liability (note 18)
Total liabilities
EQUITY
Share capital (note 19)
Contributed surplus (note 21)
Deficit
Accumulated other comprehensive loss (note 22)
Total equity
Total liabilities and equity
$
$
$
$
11,838
-
2,403
2,381
491
17,113
1,562
3,760
4,692
2,314
187,982
-
217,423
$
$
4,141
$
186
1,388
276
1,847
7,838
1,646
19,577
630
15,021
44,712
5,367
7,282
4,826
2,256
619
20,350
1,515
496
-
2,040
188,250
107
212,758
4,574
217
624
300
1,863
7,578
2,172
18,836
652
16,465
45,703
1,140,631
54,306
(961,440)
(60,786)
172,711
217,423
$
1,130,779
53,965
(944,097)
(73,592)
167,055
212,758
Issued and outstanding common shares (note 19)
540,722,365
518,438,669
Commitments and contingencies (note 27)
Subsequent events (note 29)
The accompanying notes are an integral part of the consolidated financial statements
On behalf of the Board of Directors:
William A. Rand
Director
Catherine J.G. Stefan
Director
46
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Income (Loss) and
Comprehensive Income (Loss)
(Expressed in thousands of U.S. dollars except for share and per share amounts)
Year Ended
December 31
December 31
2016
2015
REVENUES (note 24)
$
13,833 $
12,670
EXPENSES
Operating expenses (note 23, 24)
Exploration and evaluation (note 24)
General and administrative (note 24)
Impairment of property, plant and equipment (note 12)
Foreign exchange
Other income (expense) (note 23)
Loss before finance charges, equity accounting
Finance expense (note 23)
Equity share of income of associate (note 10)
Loss before taxes
Income tax recovery (expense) (note 18):
Deferred
Loss from continuing operations
Net loss from discontinued operations (note 5)
Net loss for the period
Other comprehensive income (loss) (note 22):
Items that may be reclassified to loss:
Unrealized gain (loss) on investments-net of tax
Continuing operations
Unamortized experience gain – post employment liability
Continuing operations
Foreign currency translation change
Continuing operations
Discontinued operations
Comprehensive loss for the period
Basic and diluted net income (loss) per share:
Continuing operations
Discontinued operations
All operations
(10,622)
(11,196)
(4,420)
(2,320)
(1,477)
906
(29,129)
(15,296)
(811)
453
(15,654)
3,955
(11,699)
(5,644)
(17,343) $
$
(12,106)
(13,439)
(5,826)
(2,603)
2,122
(590)
(32,442)
(19,772)
(714)
-
(20,486)
3,769
(16,717)
(34,843)
(51,560)
3
428
(4)
-
6,155
6,220
(4,537) $
(38,580)
(9,149)
(99,293)
(0.02) $
(0.01) $
(0.03) $
(0.03)
(0.07)
(0.10)
$
$
$
$
Weighted-average number of shares outstanding (in thousands):
Basic and diluted
529,053
513,415
The accompanying notes are an integral part of the consolidated financial statements
47
Consolidated Statements of Changes in Equity
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars)
Share capital
Balance-beginning of period
Share issues-net of issue costs
Flow-through share premium
Shares issued on acquisition of Hook Carter property
Share options exercised-cash
Share options exercised-non cash
Share purchase warrants exercised-cash
Share purchase warrants exercised–non-cash
Balance-end of period
Share purchase warrants
Balance-beginning of period
Warrants exercised
Warrants expired
Balance-end of period
Contributed surplus
Balance-beginning of period
Stock-based compensation expense
Share options exercised-non-cash
Warrants expired
Balance-end of period
Deficit
Balance-beginning of period
Net loss
Balance-end of period
Accumulated other comprehensive loss
Balance-beginning of period
Unrealized gain (loss) on investments
Unamortized experience gain – post employment liability
Foreign currency translation
Foreign currency translation realized in net income (loss)
Balance-end of period
Total Equity
Balance-beginning of period
Balance-end of period
Year Ended
December 31
2016
December 31
2015
$ 1,130,779 $ 1,120,758
11,318
(2,028)
-
5
4
406
316
1,130,779
8,841
(1,843)
2,854
-
-
-
-
1,140,631
-
-
-
-
53,965
341
-
-
54,306
376
(316)
(60)
-
53,321
588
(4)
60
53,965
(944,097)
(17,343)
(961,440)
(892,537)
(51,560)
(944,097)
(73,592)
3
428
13,012
(637)
(60,786)
(25,859)
(4)
-
(61,399)
13,670
(73,592)
$
$
167,055 $
172,711 $
256,059
167,055
The accompanying notes are an integral part of the consolidated financial statements
48
Consolidated Statements of Cash Flow
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars)
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss for the period
Items not affecting cash and cash equivalents:
Depletion, depreciation, amortization and accretion
Impairment of property, plant and equipment (note 12)
Stock-based compensation
Loss on divestiture of Africa Mining Division (note 5)
Gain on divestiture of Mongolia Mining Division (note 5)
Losses (gains) on property, plant and equipment disposals
Losses (gains) on investments
Losses on reclamation obligation revisions
Equity loss of associate
Dilution loss (gain) of associate
Non-cash inventory adjustments
Deferred income tax recovery
Foreign exchange losses
Change in non-cash working capital items (note 23)
Net cash used in operating activities
INVESTING ACTIVITIES
Divestiture of asset group, net of cash and cash equivalents divested:
Africa Mining Division (note 5)
Mongolia Mining Division (note 5)
Sale and maturity of investments
Purchase of investments
Expenditures on property, plant and equipment
Proceeds on sale of property, plant and equipment
Increase in restricted cash and investments
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES
Issuance of debt obligations
Repayment of debt obligations
Issuance of common shares for:
New share issues-net of issue costs (note 19)
Share options exercised (note 19)
Share purchase warrants exercised (note 19)
Net cash provided by financing activities
Increase (decrease) in cash and cash equivalents
Foreign exchange effect on cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental cash flow disclosure:
Interest paid
Income taxes paid
Year Ended
December 31
2016
December 31
2015
$
(17,343) $
(51,560)
4,024
2,320
341
102
-
113
(1,473)
461
96
(549)
-
(3,955)
6,631
1,102
(8,130)
(830)
-
8,523
(500)
(1,266)
55
(195)
5,787
312
(348)
8,841
-
-
8,805
6,462
9
5,367
$
11,838 $
3,626
27,767
588
-
(8,374)
(85)
346
2,262
-
-
169
(3,769)
13,169
(1,872)
(17,733)
-
897
4,033
(8,134)
(1,987)
115
(346)
(5,422)
340
(64)
11,318
5
406
12,005
(11,150)
(2,123)
18,640
5,367
$
3 $
-
2
-
The accompanying notes are an integral part of the consolidated financial statements
49
Notes to the consolidated financial statements for the years ended
December 31, 2016 and 2015
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars except for shares and per share amounts)
1. NATURE OF OPERATIONS
Denison Mines Corp. (“DMC”) and its subsidiary companies and joint arrangements (collectively, the “Company”)
are engaged in uranium mining related activities, including acquisition, exploration and development of uranium
properties, extraction, processing and selling of uranium.
The Company has a 60% interest in the Wheeler River Joint Venture (“WRJV”), 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 provides toll milling services to the Cigar Lake Joint Venture
(“CLJV”) under the terms of a toll milling agreement between the parties. In addition, the Company has varying
ownership interests in a number of development and exploration projects located in Canada.
The Company provides mine decommissioning and decommissioned site monitoring services to third parties
through its Denison Environmental Services (“DES”) division and is also the manager of Uranium Participation
Corporation (“UPC”), a publicly-listed investment holding company formed to invest substantially all of its assets in
uranium oxide concentrates (“U3O8“) and uranium hexafluoride (“UF6”). The Company has no ownership interest
in UPC but receives fees for management services and commissions from the purchase and sale of U3O8 and UF6
by UPC.
DMC is incorporated under the Business Corporations Act (Ontario) and domiciled in Canada. The address of its
registered head office is 40 University Avenue, Suite 1100, Toronto, Ontario, Canada, M5J 1T1.
References to “2016” and “2015” refer to the year ended December 31, 2016 and the year ended December 31,
2015 respectively.
2. BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The Company’s presentation currency is U.S dollars.
These financial statements were approved by the board of directors for issue on March 8, 2017.
3. ACCOUNTING POLICIES AND COMPARATIVE NUMBERS
Significant Accounting Policies
The significant accounting policies used in the preparation of these consolidated financial statements are described
below:
(a) Consolidation
The financial statements of the Company include the accounts of DMC and its subsidiaries and joint
operations. Subsidiaries are all entities (including structured entities) over which the group has control. The
group controls an entity where the group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the group and are
deconsolidated from the date that control ceases. Intercompany transactions, balances and unrealized gains
and losses from intercompany transactions are eliminated.
Joint operations include various mineral property interests which are held through option or contractual
agreements. These arrangements involve joint control of one or more of the assets acquired or contributed
for the purpose of the joint operation. The consolidated financial statements of the Company include its share
50
of the assets in such joint operations, together with its share of the liabilities, revenues and expenses arising
jointly or otherwise from those operations. All such amounts are measured in accordance with the terms of
each arrangement.
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(b) Investment in Associates
An associate is an entity over which the Company has significant influence and is neither a subsidiary, nor an
interest in a joint operation. Significant influence is the ability to participate in the financial and operating policy
decisions of the entity without having control or joint control over those policies.
Associates are accounted for using the equity method. Under this method, the investment in associates is
initially recorded at cost and adjusted thereafter to record the Company’s share of post-acquisition earnings
or loss of the associate as if the associate had been consolidated. The carrying value of the investment is
also increased or decreased to reflect the Company’s share of capital transactions, including amounts
recognized in other comprehensive income, and for accounting changes that relate to periods subsequent to
the date of acquisition. Dilution gains or losses arising from changes in the interest in investments in
associates are recognized in the statement of income or loss.
The Company assesses at each period-end whether there is any objective evidence that its investment in
associate is impaired. If impaired, the carrying value of the Company's share of the underlying assets of the
associate is written down to its estimated recoverable amount, being the higher of fair value less costs of
disposal or value in use, and charged to the statement of income or loss.
(c) Foreign currency translation
(i)
Functional and presentation currency
Items included in the financial statements of each entity in the DMC group are measured using the
currency of the primary economic environment in which the entity operates (“the functional currency”).
Primary and secondary indicators are used to determine the functional currency. Primary indicators
include the currency that mainly influences sales prices, labour, material and other costs. Secondary
indicators include the currency in which funds from financing activities are generated and in which
receipts from operating activities are usually retained. Typically, the local currency has been determined
to be the functional currency of Denison’s entities.
The consolidated financial statements are presented in U.S. dollars, unless otherwise stated.
The financial statements of entities that have a functional currency different from the presentation
currency of DMC (“foreign operations”) are translated into U.S. dollars as follows: assets and liabilities-
at the closing rate at the date of the statement of financial position, and income and expenses-at the
average rate of the period (as this is considered a reasonable approximation to actual rates). All resulting
changes are recognized in other comprehensive income or loss as cumulative foreign currency
translation adjustments.
When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or
significant influence over a foreign operation, the foreign currency gains or losses accumulated in other
comprehensive income or loss related to the foreign operation are recognized in the statement of income
or loss as translational foreign exchange gains or losses.
(ii)
Transactions and balances
Foreign currency transactions are translated into an entity’s functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of foreign currency transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in currencies other than an operation’s functional currency
are recognized in the statement of income or loss as transactional foreign exchange gains or losses.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid
investments with original maturities of three months or less which are subject to an insignificant risk of changes
in value.
51
(e) Financial instruments
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the financial instrument. Financial assets are derecognized when the rights to receive cash flows
from the assets have expired or have been transferred and the Company has transferred substantially all risks
and rewards of ownership. Financial liabilities are derecognized when the obligations specified in the contract
is discharged, cancelled or expires.
At initial recognition, the Company classifies its financial instruments in the following categories:
(i)
Financial assets and liabilities at fair value through profit or loss (“FVPL”)
A financial asset or liability is classified in this category if acquired principally for the purpose of selling
or repurchasing in the short-term. Financial instruments in this category are recognized initially and
subsequently at fair value. Transaction costs are expensed in the statement of income or loss. Gains
and losses arising from changes in fair value are presented in the statement of income or loss in the
period in which they arise.
(ii) Available-for-sale investments
Available-for-sale investments are recognized initially at fair value plus transaction costs and are
subsequently carried at fair value. Gains or losses arising from re-measurement are recognized in other
comprehensive income or loss. When an available-for-sale investment is sold or impaired, the
accumulated gains or losses are moved from accumulated other comprehensive income or loss to the
statement of income or loss.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that are intended to be held to maturity. Held-to-maturity investments are initially
recognized at fair value plus transaction costs and subsequently measured at amortized cost using the
effective interest method less a provision for impairment.
(iv)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Loans and receivables are initially recognized at the amount expected
to be received, less a discount (when material) to reduce the loans and receivables to fair value.
Subsequently, loans and receivables are measured at amortized cost using the effective interest method
less a provision for impairment.
(v)
Financial liabilities at amortized cost
Financial liabilities are initially recognized at the amount required to be paid, less a discount (when
material) to reduce the financial liabilities to fair value. Subsequently, financial liabilities are measured
at amortized cost using the effective interest method.
The Company has designated its financial assets and liabilities as follows:
(i)
“Cash and cash equivalents” and “Trade and other receivables” are classified as loans and receivables
and are measured at amortized cost using the effective interest rate method, with the exception of
contingent consideration which is classified as a financial asset at fair value through profit and loss (note
3(t)). Interest income is recorded in net income through finance income (expense), as applicable;
(ii) A portion of “Investments” are classified as FVPL and any period change in fair value is recorded in net
income within other income (expense). The remaining amount is classified as available-for-sale and any
period change in fair value is recorded in other comprehensive income. When the investment’s value
becomes impaired, the loss is recognized in net income within other income (expense) in the period of
impairment;
“Restricted cash and investments” is classified as held-to-maturity investments; and
“Accounts payable and accrued liabilities” and “Debt obligations” are classified as other financial liabilities
and are measured at amortized cost using the effective interest rate method. Interest expense is recorded
in net income through finance income (expense), as applicable.
(iii)
(iv)
52
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(f)
Impairment of financial assets
At each reporting date, the Company assesses whether there is objective evidence that a financial asset (other
than a financial asset classified as fair value through profit and loss) is impaired. Objective evidence of an
impairment loss includes: i) significant financial difficulty of the debtor; ii) delinquencies in interest or principal
payments; iii) increased probability that the borrower will enter bankruptcy or other financial reorganization;
and (iv) in the case of equity investments, a significant or prolonged decline in the fair value of the security
below its cost.
If such evidence exists, the Company recognizes an impairment loss, as follows:
(i)
Financial assets carried at amortized cost: The loss is the difference between the amortized cost of the
loan or receivable and the present value of the estimated future cash flows, discounted using the
instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount
either directly or indirectly through the use of an allowance account.
(ii) Available-for-sale financial assets: The impairment loss is the difference between the original cost of the
asset and its fair value at the measurement date, less any impairment losses previously recognized in
the statement of income. This amount represents the cumulative loss in accumulated other
comprehensive income that is reclassified to net income.
(g) Inventories
Expenditures, including depreciation, depletion and amortization of production assets, incurred in the mining
and processing activities that will result in the future concentrate production are deferred and accumulated as
ore in stockpiles and in-process and concentrate inventories. These amounts are carried at the lower of
average costs or net realizable value (“NRV”). NRV is the difference between the estimated future concentrate
price (net of selling costs) and estimated costs to complete production into a saleable form.
Stockpiles are comprised of coarse ore that has been extracted from the mine and is available for further
processing. Mining production costs are added to the stockpile as incurred and removed from the stockpile
based upon the average cost per tonne of ore produced from mines considered to be in commercial
production. The current portion of ore in stockpiles represents the amount expected to be processed in the
next twelve months.
In-process and concentrate inventories include the cost of the ore removed from the stockpile, a pro-rata share
of the amortization of the associated mineral property, as well as production costs incurred to process the ore
into a saleable product. Processing costs typically include labor, chemical reagents and directly attributable
mill overhead expenditures. Items are valued at weighted average cost.
Materials and other supplies held for use in the production of inventories are carried at average cost and are
not written down below that cost if the finished products in which they will be incorporated are expected to be
sold at or above cost. However, when a decline in the price of concentrates indicates that the cost of the
finished products exceeds net realizable value, the materials are written down to net realizable value. In such
circumstances, the replacement cost of the materials may be the best available measure of their net realizable
value.
(h) Property, plant and equipment
Property, plant and equipment are recorded at acquisition or production cost and carried net of depreciation
and impairments. Cost includes expenditures incurred by the Company that are directly attributable to the
acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Company and the cost can be measured reliably. The carrying amount of a replaced asset is
derecognized when replaced. Repairs and maintenance costs are charged to the statement of income during
the period in which they are incurred.
Depreciation is calculated on a straight line or unit of production basis as appropriate. Where a straight line
methodology is used, the assets are depreciated to their estimated residual value over an estimated useful
life which ranges from three to twenty years depending upon the asset type. Where a unit of production
methodology is used, the assets are depreciated to their estimated residual value over the useful life defined
by management’s best estimate of recoverable reserves and resources in the current mine plan. When assets
are retired or sold, the resulting gains or losses are reflected in the statement of income or loss as a component
53
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
of other income or expense. The Company allocates the amount initially recognized in respect of an item of
property, plant and equipment to its significant parts and depreciates separately each such part. Residual
values, method of depreciation and useful lives of the assets are reviewed at least annually and adjusted if
appropriate.
Where straight-line depreciation is utilized, the range of useful lives for various asset classes is generally as
follows:
Buildings
Production machinery and equipment
Other
15 - 20 years;
5 - 7 years;
3 - 5 years;
(i) Mineral property acquisition, exploration, evaluation and development costs
Costs relating to the acquisition of acquired mineral rights and acquired exploration rights are capitalized.
Exploration expenditures are expensed as incurred.
Evaluation expenditures are expensed as incurred, until an area of interest is considered by management to
be sufficiently advanced. Once this determination is made, the area of interest is classified as an evaluation
stage mineral property, a component of the Company’s mineral properties, and all further non-exploration
expenditures for the current and subsequent periods are capitalized. These expenses include further
evaluation expenditures such as mining method selection and optimization, metallurgical sampling test work
and costs to further delineate the ore body to a higher confidence level.
Once commercial and technical viability has been established for a property, the property is classified as a
development stage mineral property and all further development costs are capitalized to the asset. Further
development costs include costs related to constructing a mine, such as shaft sinking and access, lateral
development, drift development, engineering studies and environmental permitting,
infrastructure
development and the costs of maintaining the site until commercial production.
Such capital costs represent the net expenditures incurred and capitalized as at the balance sheet date and
do not necessarily reflect present or future values.
Once a development stage mineral property goes into commercial production, the property is classified as
“Producing” and the accumulated costs are amortized over the estimated recoverable resources in the current
mine plan using a unit of production basis. Commercial production occurs when a property is substantially
complete and ready for its intended use.
Proceeds received from the sale of an interest in a property are credited against the carrying value of the
property, with any difference recorded as a gain or loss on sale.
(j)
Identifiable Intangible assets
The Company’s identifiable intangible assets are stated at cost less accumulated amortization. These assets
are capitalized and amortized on a straight-line basis in the statement of income or loss over the period of
their expected useful lives. The useful lives of the assets are reviewed at least annually and adjusted if
appropriate.
(k) Impairment of non-financial assets
Property, plant and equipment and intangible assets are assessed at the end of each reporting period to
determine if there is any indication that the asset may be impaired. If any such indication exists, an estimate
of the recoverable amount of the asset is made. For the purpose of measuring recoverable amounts, assets
are grouped at the lowest levels for which there are separately identifiable cash inflows or CGUs. The
recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use (being the
present value of the expected future cash flows of the relevant asset or CGU, as determined by management).
An impairment loss is recognized for the amount by which the CGU’s carrying amount exceeds its recoverable
amount.
Mineral property assets are tested for impairment using the impairment indicators under IFRS 6 “Exploration
for and Evaluation of Mineral Resources” up until the commercial and technical feasibility for the property is
54
established. From that point onwards, mineral property assets are tested for impairment using the impairment
indicators of IAS 36 “Impairment of Assets”.
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(l) Employee benefits
(i) Post-employment benefit obligations
The Company assumed the obligation of a predecessor company to provide life insurance, supplemental
health care and dental benefits, excluding pensions, to its former Canadian employees who retired from
active service prior to 1997. The estimated cost of providing these benefits is actuarially determined
using the projected benefits method and is recorded on the balance sheet at its estimated present value.
The interest cost on this unfunded liability is being accreted over the remaining lives of this retiree group.
Experience gains and losses are being deferred as a component of accumulated other comprehensive
income or loss and are adjusted, as required, on the obligations re-measurement date.
(ii) Stock-based compensation
The Company uses a fair value-based method of accounting for stock options to employees and to non-
employees. The fair value is determined using the Black-Scholes option pricing model on the date of the
grant. The cost is recognized on a graded method basis, adjusted for expected forfeitures, over the
applicable vesting period as an increase in stock-based compensation expense and the contributed
surplus account. When such stock options are exercised, the proceeds received by the Company,
together with the respective amount from contributed surplus, are credited to share capital.
(iii)
Termination benefits
The Company recognizes termination benefits when it is demonstrably committed to either terminating
the employment of current employees according to a detailed formal plan without possibility of
withdrawal, or providing benefits as a result of an offer made to encourage voluntary termination.
Benefits falling due more than twelve months after the end of the reporting period are discounted to their
present value.
(m) Reclamation provisions
Reclamation provisions, any legal and constructive obligation related to the retirement of tangible long-lived
assets, are recognized when such obligations are incurred and if a reasonable estimate of the value can be
determined. These obligations are measured initially at the present value of expected cash flows using a pre-
tax discount rate reflecting risks specific to the liability and the resulting costs are capitalized and added to the
carrying value of the related assets. In subsequent periods, the liability is adjusted for the accretion of the
discount and the expense is recorded in the statement of income or loss. Changes in the amount or timing of
the underlying future cash flows or changes in the discount rate are immediately recognized as an increase
or decrease in the carrying amounts of the related asset and liability. These costs are amortized to the results
of operations over the life of the asset. Reductions in the amount of the liability are first applied against the
amount of the net reclamation asset on the books with any excess value being recorded in the statement of
income or loss.
The Company’s activities are subject to numerous governmental laws and regulations. Estimates of future
reclamation liabilities for asset decommissioning and site restoration are recognized in the period when such
liabilities are incurred. These estimates are updated on a periodic basis and are subject to changing laws,
regulatory requirements, changing technology and other factors which will be recognized when appropriate.
Liabilities related to site restoration include long-term treatment and monitoring costs and incorporate total
expected costs net of recoveries. Expenditures incurred to dismantle facilities, restore and monitor closed
resource properties are charged against the related reclamation and remediation liability.
(n) Provisions
Provisions for restructuring costs and legal claims, where applicable, are recognized in liabilities when the
Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are
measured at management’s best estimate of the expenditure required to settle the obligation at the end of the
reporting period, and are discounted to present value where the effect is material. The Company performs
evaluations to identify onerous contracts and, where applicable, records provisions for such contracts.
55
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(o) Current and Deferred Income tax
Current income tax payable is based on taxable income for the period. Taxable income differs from income
as reported in the statement of income or loss because it excludes items of income or expense that are taxable
or deductible in other periods and it further excludes items that are never taxable or deductible. The
Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.
Deferred income taxes are accounted for using the balance sheet liability method. Deferred income tax assets
and liabilities are computed based on temporary differences between the financial statement carrying values
of the existing assets and liabilities and their respective income tax bases used in the computation of taxable
income. Computed deferred tax liabilities are generally recognized for all taxable temporary differences and
deferred tax assets are recognized to the extent that it is probable that taxable income will be available against
which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects neither the taxable income nor the accounting income.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries
and investments, and interests in joint ventures, except where the Company is able to control the reversal of
the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable
future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of
the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled
or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is charged or credited to income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also recorded within equity.
Income tax assets and liabilities are offset when there is a legally enforceable right to offset the assets and
liabilities and when they relate to income taxes levied by the same tax authority on either the same taxable
entity or different taxable entities where there is an intention to settle the balance on a net basis.
(p) Flow-Through Common Shares
The Company’s Canadian exploration activities have been financed in part through the issuance of flow-
through common shares whereby the Canadian income tax deductions relating to these expenditures are
claimable by the subscribers and not by the Company. The proceeds from issuing flow-through shares are
allocated between the offering of shares and the sale of tax benefits. The allocation is based on the difference
(“premium”) between the quoted price of the Company’s existing shares and the amount the investor pays for
the actual flow-through shares. A liability is recognized for the premium when the shares are issued, and is
extinguished when the tax effect of the temporary differences, resulting from the renunciation, is recorded -
with the difference between the liability and the value of the tax assets renounced being recorded as a deferred
tax expense. The tax effect of the renunciation is recorded at the time the Company makes the renunciation
to its subscribers – which may differ from the effective date of renunciation. If the flow-through shares are not
issued at a premium, a liability is not established, and on renunciation the full value of the tax assets renounced
is recorded as a deferred tax expense.
(q) Revenue recognition
Revenue from the sale of mineral concentrates is recognized when it is probable that the economic benefits
will flow to the Company. This is generally the case once delivery has occurred, the sales price and costs
incurred with respect to the transaction can be measured reliably and collectability is reasonably assured. For
uranium, revenue is typically recognized when delivery is evidenced by book transfer at the applicable uranium
storage facility.
Revenue from toll milling services is recognized as material is processed in accordance with the specifics of
the applicable toll milling agreement. Revenue and unbilled accounts receivable are recorded as related costs
are incurred, using billing formulas included in the applicable toll milling agreement.
Revenue on environmental service contracts is recognized using the percentage of completion method,
whereby sales, earnings and unbilled accounts receivable are recorded as related costs are incurred.
Earnings rates are adjusted periodically as a result of revisions to projected contract revenues and estimated
56
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
costs of completion. Losses, if any, are recognized fully when first anticipated. Revenues from engineering
services are recognized as the services are provided in accordance with customer agreements.
Management fees from UPC are recognized as management services are provided under the contract on a
monthly basis. Commission revenue earned on acquisition or sale of U3O8 and UF6 on behalf of UPC (or
other parties where Denison acts as an agent) is recognized on the date when title passes.
(r) Earnings (loss) per share
Basic earnings per share (“EPS”) is calculated by dividing the net income or loss for the period attributable to
equity owners of DMC by the weighted average number of common shares outstanding during the period.
Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for
dilutive instruments. The number of shares included with respect to options, warrants and similar instruments
is computed using the treasury stock method.
(s) Discontinued Operations
A discontinued operation is a component of the Company that has either been disposed of or that is classified
as held for sale. A component of the Company is comprised of operations and cash flows that can be clearly
distinguished, operationally and for financial reporting purposes, from the rest of the Company. Net income
or loss of a discontinued operation and any gain or loss on disposal are combined and presented as net
income or loss from discontinued operations, net of tax, in the statement of income or loss.
(t)
Contingent Consideration
Contingent consideration receivable on the sale of assets is recognized, as a financial asset through income
or loss, at fair value on the date of sale. Subsequent changes to the fair value of contingent consideration will
be recognized in the statement of income or loss at each reporting date and on settlement.
Accounting Standards Issued But Not Yet Applied
The Company has not yet adopted the following new accounting pronouncements which are effective for fiscal
periods of the Company beginning on or after January 1, 2017:
International Accounting Standard 7, Statement of Cash Flows (“IAS 7”) – Amendments
IAS 7 requires an entity to present a statement of cash flows as an integral part of its primary financial
statements. Cash flows are classified and presented into operating activities (either using the “direct” or
“indirect” method), investing activities and financing activities, with the latter two categories generally
presented on a gross basis. The amendments require additional disclosures with respect to changes in
liabilities arising from financing activities. It is effective for annual periods beginning on or after January 1,
2017.
The Company has early adopted the amendments to this standard and has added additional continuity
schedule disclosures to its Debt Obligation liability movements (see note 16).
International Financial Reporting Standard 9, Financial Instruments (“IFRS 9”)
In July 2014, the IASB published the final version of IFRS 9 Financial Instruments (“IFRS 9”), which brings
together the classification, measurement, impairment and hedge accounting phases of the IASB’s project to
replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 replaces the multiple
classifications for financial assets in IAS 39 with a single principle based approach for determining the
classification of financial assets based on how an entity manages its financial instruments in the context of its
business model and the contractual cash flow characteristics of the financial assets. The new standard also
requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. The
final version of IFRS 9 is effective for periods beginning on or after January 1, 2018; however, it is available
for early adoption.
The Company has not evaluated the impact of adopting this standard.
57
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
International Financial Reporting Standard 15, Revenue from Contracts with Customers (“IFRS 15”)
IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of
financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from
an entity’s contracts with customers. Under IFRS 15, revenue is recognized when a customer obtains control
of a good or service. The standard replaces IAS 18 “Revenue” and IAS 11”Construction Contracts” and related
interpretations. The standard is effective for annual periods beginning on or after January 1, 2018 and earlier
application is permitted.
The Company has not evaluated the impact of adopting this standard.
International Financial Reporting Standard 16, Leases (“IFRS 16”)
In January 2016, the IASB issued IFRS 16 which replaces existing standards and interpretations under IAS
17 “Leases”. IFRS 16 requires all leases, including financing and operating leases, to be reported on the
balance sheet with the intent of providing greater transparency on a company’s lease assets and liabilities.
IFRS 16 is effective for annual periods beginning on or after January 1, 2019 with early adoption permitted.
The Company has not evaluated the impact of adopting this standard.
Comparative Numbers – Change in Presentation due to Discontinued Operations
On June 10, 2016, the Company completed a transaction with GoviEx Uranium Inc. (“GoviEx”) to sell all of its
mining assets and operations located in Africa. On November 30, 2015, the Company completed a transaction
with Uranium Industry a.s. (“Uranium Industry”) to sell all of its mining assets and operations located in Mongolia.
Refer to note 5 for more information on both transactions. The Company is accounting for both sales as
discontinued operations and has adjusted the presentation of its consolidated statement of comprehensive income
(loss) in accordance with its accounting policy for discontinued operations. Adjustments have also been made to
the supplemental note disclosure relating to the statement of comprehensive income (loss). The consolidated
statements of financial position and the consolidated statement of cash flows have not been revised.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical
accounting estimates and judgements that affect the amounts reported. It also requires management to exercise
judgement in applying the Company’s accounting policies. These judgements and estimates are based on
management’s best knowledge of the relevant facts and circumstances taking into account previous experience.
Although the Company regularly reviews the estimates and judgements made that affect these financial
statements, actual results may be materially different.
Significant estimates and judgements made by management relate to:
(a) Determination of a Mineral Property being Sufficiently Advanced
The Company follows a policy of capitalizing non-exploration related expenditures on properties it considers
to be sufficiently advanced. Once a mineral property is determined to be sufficiently advanced, that
determination is irrevocable and the capitalization policy continues to apply over the life of the property. In
determining whether or not a mineral property is sufficiently advanced, management considers a number of
factors, including, but not limited to: current uranium market conditions, the quality of resources identified,
access to the resource, the suitability of the resource to current mining methods, ease of permitting, confidence
in the jurisdiction in which the resource is located and milling complexity.
Many of these factors are subject to risks and uncertainties that can support a “sufficiently advanced”
determination as at one point in time but not support it at another. The final determination requires significant
judgment on the part of the Company’s management and directly impacts the carrying value of the Company’s
mineral properties.
(b) Mineral Property Impairment Reviews and Impairment Adjustments
Mineral properties are tested for impairment when events or changes in circumstances indicate that the
carrying amount may not be recoverable. When an indicator is identified, the Company determines the
recoverable amount of the property, which is the higher of an asset’s fair value less costs of disposal and
58
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
value in use. An impairment loss is recognized if the carrying value exceeds the recoverable amount. The
recoverable amount of a mineral property may be determined by reference to estimated future operating
results and discounted net cash flows, current market valuations of similar properties or a combination of the
above. In undertaking this review, management of the Company is required to make significant estimates of,
amongst other things: reserve and resource amounts, future production and sale volumes, forecast commodity
prices, future operating, capital and reclamation costs to the end of the mine’s life and current market
valuations from observable market data which may not be directly comparable. These estimates are subject
to various risks and uncertainties, which may ultimately have an effect on the expected recoverable amount
of a specific mineral property asset. Changes in these estimates could have a material impact on the carrying
value of the mineral property amounts and the impairment losses recognized.
(c) Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are computed in respect of taxes that are based on taxable profit. Taxable
profit will often differ from accounting profit and management may need to exercise judgement to determine
whether some taxes are income taxes (and subject to deferred tax accounting) or operating expenses.
Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to
apply when the temporary differences between accounting carrying values and tax basis are expected to be
recovered or settled. The determination of the ability of the Company to utilize tax loss carry forwards to offset
deferred tax liabilities requires management to exercise judgment and make certain assumptions about the
future performance of the Company. Management is required to assess whether it is “probable” that the
Company will benefit from these prior losses and other deferred tax assets. Changes in economic conditions,
commodity prices and other factors could result in revisions to the estimates of the benefits to be realized or
the timing of utilizing the losses.
(d) Reclamation Obligations
Asset retirement obligations are recorded as a liability when the asset is initially constructed or a constructive
or legal obligation exists and typically involve identifying costs to be incurred in the future and discounting
them to the present using an appropriate discount rate for the liability. The determination of future costs
involves a number of estimates relating to timing, type of costs, mine closure plans, and review of potential
methods and technical advancements. Furthermore, due to uncertainties concerning environmental
remediation, the ultimate cost of the Company’s decommissioning liability could differ materially from amounts
provided. The estimate of the Company’s obligation is subject to change due to amendments to applicable
laws and regulations and as new information concerning the Company’s operations becomes available. The
Company is not able to determine the impact on its financial position, if any, of environmental laws and
regulations that may be enacted in the future.
5. DISCONTINUED OPERATIONS
Discontinued Operation – Africa Mining Division
On June 10, 2016, the Company completed a transaction with GoviEx Uranium Inc. (“GoviEx”) to sell its mining
assets and operations located in Africa (the “Africa Mining Division”). The primary assets of the African Mining
Division at that time were the mineral property rights for the Falea, Mutanga and Dome projects.
Under the terms of the transaction, GoviEx acquired Denison’s wholly owned subsidiary, Rockgate Capital Corp,
which held all of the assets of the African Mining Division, in exchange for 56,050,450 common shares (the
“Consideration Shares”) of GoviEx plus 22,420,180 share purchase warrants (the “Consideration Warrants”). Each
Consideration Warrant is convertible into one common share of GoviEx for a period of three years at a price of
$0.15 per share. The Consideration Warrants include an acceleration clause based on GoviEx’s share price,
which, if triggered, give the holders 30 days within which to exercise the Consideration Warrants under the terms
outlined above. If the holders do not exercise within that period, the exercise price of the Consideration Warrants
increases to $0.18 per share and the term is reduced by six months.
At closing, Denison ensured that the Africa Mining Division was capitalized with a minimum working capital of
$700,000 and it provided the lead order, representing approximately 22.7% of the total financing, in a concurrent
equity financing by GoviEx done in conjunction with the transaction. Under the concurrent equity financing by
GoviEx, Denison acquired an additional 9,093,571 units of GoviEx for $500,000. Each unit consists of one common
share (“Concurrent Share”) and one common share purchase warrant (“Concurrent Warrant”). Each Concurrent
Warrant is convertible into one common share of GoviEx for a period of three years at a price of $0.12 per share
59
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
until June 10, 2018 and $0.14 per share thereafter. The Concurrent Warrants include an acceleration clause based
on GoviEx’s share price, which, if triggered, give the holders 60 days within which to exercise the Concurrent
Warrants under the terms outlined above. If the holders do not exercise within that period, the Concurrent Warrants
will expire unexercised.
After the completion of the transaction and concurrent equity financing, Denison holds 65,144,021 of the
outstanding shares of GoviEx (which equated to approximately 24.59% of GoviEx’s issued and outstanding shares
at June 10, 2016) and it is entitled to appoint one director to the GoviEx board so long as its share interest in
GoviEx is 5% or higher. At December 31, 2016, Denison’s share interest has been diluted to 20.68% due to the
impact of a December 2016 financing by GoviEx in which Denison did not participate (see note 10).
Denison has reported the value attributed to the Consideration Warrants and the Concurrent Warrants as a
component of “Investments” (see note 9) while the value attributed to the Consideration Shares and the Concurrent
Shares is reported within “Investment in Associates” (see note 10). Denison is accounting for its share investment
in GoviEx using the equity method.
The details of the net assets of the African Mining Division sold to GoviEx on June 10, 2016 are as follows:
(in thousands, except share amounts)
Consideration received at fair value:
Fair value of 56,050,450 GoviEx Consideration Shares received
Fair value of 22,420,180 GoviEx Consideration Warrants received
Transaction costs
Consideration received at fair value
Net assets disposed of at carrying value:
Cash and cash equivalents
Prepaid and other current assets
Property, plant and equipment
Plant and equipment
Mineral properties-Mali, Namibia and Zambia
Total assets
Accounts payable and accrued liabilities
Net assets disposed of at carrying value
Cumulative foreign currency loss translation adjustment realized in income
Loss on disposal of Africa Mining Division
2016
3,954
1,162
(170)
4,946
(660)
(109)
(258)
(3,427)
(4,454)
43
(4,411)
(637)
(102)
$
$
$
$
$
The fair value of the GoviEx Consideration Shares received was determined using GoviEx’s closing share price
on June 10, 2016 of CAD$0.09 per share converted to USD using the June 10, 2016 foreign exchange rate of
0.7839.
The fair value of the GoviEx Consideration Warrants received totaled $1,162,000 or $0.0518 per warrant. The fair
value was determined using the Black-Scholes option pricing model with the following assumptions: risk-free rate
of 0.50%, expected stock price volatility of 151.97%, expected life of 3.0 years and expected dividend yield of nil%.
No fair value adjustment has been made for the acceleration clause included in the Consideration Warrants.
The loss on disposal of $102,000 includes $637,000 of cumulative foreign currency losses recognized as
translational foreign exchange losses in the period of disposal.
60
The consolidated statement of income (loss) for the Africa Mining Division discontinued operation for 2016 and
2015 is as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Expenses
Operating expenses
Exploration and evaluation
General and administrative
Impairment of property, plant and equipment
Foreign exchange
Transactional
Translational
Other income (expense)
Gains on disposal of plant and equipment
Other
Loss before taxes
Income tax recovery (expense)
Net loss for the period
Loss on disposal
Loss from discontinued operations
Year Ended
December 31
2016
December 31
2015
$
$
(64) $
(74)
(280)
-
(5,154)
-
49
(19)
(5,542)
-
(5,542)
(102)
(5,644) $
(302)
(818)
(637)
(25,164)
(18,154)
(10)
65
-
(45,020)
-
(45,020)
-
(45,020)
Cash flows for the Africa Mining Division discontinued operation for 2016 and 2015 is as follows:
(in thousands)
Cash inflow (outflow):
Operating activities
Investing activities
Net cash outflow for the period
Year Ended
December 31
2016
December 31
2015
$
$
(442) $
(854)
(1,296) $
(1,513)
(209)
(1,722)
Discontinued Operation - Mongolia Mining Division
On November 30, 2015, the Company completed its transaction with Uranium Industry to sell all of its mining
assets and operations located in Mongolia (the “Mongolia Mining Division”) pursuant to an amended and restated
share purchase agreement entered into on November 25, 2015 (the “GSJV Agreement”). The primary assets of
the Mongolia Mining Division at that time were the exploration licenses for the Hairhan, Haraat, Gurvan Saihan
and Ulzit projects.
As consideration for the sale per the GSJV Agreement, the Company received cash consideration of $1,250,000
prior to closing and the rights to receive additional contingent consideration of $12,000,000. The contingent
consideration is payable as follows:
$5,000,000 (the “First Contingent Payment”) within 60 days of the issuance of a mining license for an area
covered by any of the exploration licenses in the Mongolia Mining Division (the “First Project”);
$5,000,000 (the “Second Contingent Payment”) within 60 days of the issuance of a mining license for an area
covered by any of the other exploration licenses held by the Mongolia Mining Division (the “Second Project”);
$1,000,000 (the “Third Contingent Payment”) within 365 days following the production of an aggregate of
1,000 pounds U3O8 from the operation of the First Project; and
$1,000,000 (the “Fourth Contingent Payment”) within 365 days following the production of an aggregate of
1,000 pounds U3O8 from the operation of the Second Project.
61
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
On December 2, 2015, Uranium Industry submitted applications for mining licenses for all four projects to the
Mongolian government. On July 22, 2016, the Mineral Resources Authority of Mongolia (“MRAM”) issued letters
to the Gurvan Saihan Joint Venture (“GSJV”) notifying it of its intention to grant mining licenses to the GSJV for
the Hairhan, Haraat, Gurvan Saihan and Ulzit projects. On September 20, 2016, the mining license certificates for
all four projects were formally issued, triggering the First Contingent Payment and the Second Contingent Payment
(collectively, the “Mining License Receivable”).
In the third quarter of 2016, the Company recognized the $10,000,000 fair value of the Mining License Receivable
and it also recognized a corresponding gain on sale, net of additional applicable transaction costs. The original
due date for payment of the Mining License Receivable by Uranium Industry was November 16, 2017.
Pursuant to a subsequent extension agreement between Uranium Industry and the Company, the payment due
date of the Mining License Receivable was extended from November 16, 2016 to July 16, 2017 (the “Extension
Agreement”). As consideration for the extension, Uranium Industry agreed to pay interest on the Mining License
Receivable amount at a rate of 5% per year, payable monthly up to July 16, 2017 and they also agreed to pay a
$100,000 instalment amount towards the balance of the Mining License Receivable amount. The first payment
under the Extension Agreement was due on or before January 31, 2017. The required payments were not made
and Uranium Industry is now in default of both the GSJV Agreement and the Extension Agreement.
On February 24, 2017, the Company served notice to Uranium Industry that it was in default of its obligations under
the GSJV Agreement and the Extension Agreement and that the Mining License Receivable and all interest
payable thereon are immediately due and payable. The Company intends to explore all proceedings available to
it to pursue the collection of the Mining License Receivable amount.
In light of the uncertainty regarding collectability, Denison has impaired the $10,000,000 Mining License
Receivable amount to $nil in the fourth quarter of 2016, resulting in an adjustment to the previously recognized net
gain on sale. The adjustment to the net gain on sale has been presented within discontinued operations as it
directly relates to the proceeds realized to date on the sale of the Mongolia Mining Division to Uranium Industry.
Accordingly, any subsequent payments realized on the impaired receivable will be recognized within discontinued
operations. The production related contingent consideration amounts continue to be fair valued at $nil and will be
re-measured at each subsequent reporting date.
The details of the net assets of the Mongolia Mining Division sold to Uranium Industry on November 30, 2015 are
as follows:
(in thousands, except share amounts)
Consideration received or receivable at fair value:
Cash consideration prior to closing
Fair value of contingent consideration owing
Transaction costs
Consideration received or receivable at fair value
Net assets disposed of at carrying value:
Cash
Property, plant and equipment
Plant and equipment
Mineral properties-Mongolia
Total assets
Accounts payable and accrued liabilities
Net assets disposed of at carrying value
Cumulative foreign currency gain translation adjustment
Gain on disposal of Mongolia Mining Division
62
2015
1,250
-
(337)
913
(16)
(90)
(6,130)
(6,236)
17
(6,219)
13,680
8,374
$
$
$
$
$
$
The consolidated statement of income (loss) for the Mongolia Mining Division discontinued operation for 2015 is
as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Expenses
Operating expenses
Mineral property exploration
General and administrative
Foreign exchange
Transactional
Other income (expense)
Other
Income before finance charges
Finance income
Income before taxes
Income tax recovery (expense)
Net income for the period
Gain on disposal
Income from discontinued operations
Year Ended
December 31
2015
$
$
(15)
(384)
(692)
2,873
20
1,802
1,802
1
1,803
-
1,803
8,374
10,177
The gain on disposal of $8,374,000 in 2015 includes $13,680,000 of cumulative foreign currency gains recognized
as translational foreign exchange gains in the period of disposal.
Cash flows for the Mongolia Mining Division discontinued operation for 2015 is as follows:
(in thousands)
Cash inflow (outflow):
Operating activities
Investing activities
Net cash outflow for the period
6. CASH AND CASH EQUIVALENTS
The cash and cash equivalent balance consists of:
(in thousands)
Cash
Cash in MLJV and MWJV
Cash equivalents
Year Ended
December 31
2015
$
$
(1,060)
(523)
(1,583)
At December 31
2016
5,159
1,160
5,519
11,838
$
$
At December 31
2015
$
$
3,092
9
2,266
5,367
Cash equivalents consist of various investment savings account instruments and money market funds all of which
are readily convertible into cash.
63
7. TRADE AND OTHER RECEIVABLES
The trade and other receivables balance consists of:
(in thousands)
Trade receivables
Receivables in MLJV and MWJV
Sales tax receivables
Sundry receivables
8.
INVENTORIES
The inventories balance consists of:
(in thousands)
Uranium concentrates and work-in-progress
Inventory of ore in stockpiles
Mine and mill supplies
Inventories-by duration:
Current
Long term-ore in stockpiles
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
At December 31
2016
1,792
583
18
10
2,403
$
$
At December 31
2016
392
1,562
1,989
3,943
2,381
1,562
3,943
$
$
$
$
At December 31
2015
1,860
2,824
8
134
4,826
At December 31
2015
380
1,515
1,876
3,771
2,256
1,515
3,771
$
$
$
$
$
$
Long-term ore in stockpile inventory represents an estimate of the amount of ore on the stockpile in excess of the
next twelve months of planned mill production.
9.
INVESTMENTS
The investments balance consists of:
(in thousands)
Investments:
Equity instruments-fair value through profit and loss
Equity instruments-available for sale
Debt instruments-fair value through profit and loss
Investments-by duration
Current
Long-term
At December 31
2016
At December 31
2015
$
$
$
$
3,745
15
-
3,760
-
3,760
3,760
$
$
$
$
484
12
7,282
7,778
7,282
496
7,778
At December 31, 2016, investments include equity instruments in publicly-traded companies with a fair value of
$3,760,000 (December 31, 2015: $496,000) and debt instruments with a fair value of $Nil (December 31, 2015:
$7,282,000). The debt instruments at December 31, 2015 consist of guaranteed investment certificates (“GIC’s”)
with rates of interest ranging between 1.15% to 1.80% and maturity dates occurring up to May 2016.
64
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Investment Purchases, Sales, Maturities, Impairments and Other Movements
During 2016, the Company received GoviEx Consideration Warrants valued at $1,162,000 in connection with the
sale of the Africa Mining Division and received shares of Skyharbour Resources Ltd. Valued at $1,242,000
pursuant to an option agreement involving Denison’s Moore Lake property (see note 12). The Company purchased
GoviEx Concurrent Warrants at a cost of $215,000. During 2015, the Company purchased debt instruments,
consisting of GIC’s, at a cost of $8,134,000.
During 2016, the Company had debt instrument maturities of $7,763,000 and sold equity instruments for $760,000.
During 2015, the Company had debt instrument maturities of $4,029,000 and sold equity instruments for $4,000.
10. INVESTMENT IN ASSOCIATES
The investment in associates balance consists of:
(in thousands)
Investment in associates-by investee:
GoviEx
A summary of the investment in GoviEx is as follows:
(in thousands)
Balance-December 31, 2015
Investment at cost:
Acquisition of 56,050,450 Consideration Shares (note 5)
Purchase of 9,093,571 Concurrent Shares (note 5)
Share of equity loss
Dilution gain
Balance-December 31, 2016
At December 31
2016
At December 31
2015
$
$
4,692
4,692
$
$
-
-
$
$
-
3,954
285
(96)
549
4,692
GoviEx is a mineral resource company focused on the exploration and development of its uranium properties
located in Africa. GoviEx maintains a head office located in Canada and is a public company listed on the TSX
Venture Exchange. At December 31, 2016, Denison holds a 20.68% interest in GoviEx and has one director
appointed to the GoviEx board of directors. Through the extent of its share ownership interest and its seat on the
board of directors, Denison has the ability to exercise significant influence over GoviEx and accordingly, is using
the equity method to account for this investment.
The trading price of GoviEx on December 31, 2016 was CAD$0.15 per share which corresponds to a quoted
market value of CAD$9,772,000 ($7,278,000) for the Company’s investment in GoviEx common shares.
The following table is a summary of the consolidated financial information of GoviEx on a 100% basis taking into
account adjustments made by Denison for equity accounting purposes for fair value adjustments and differences
in accounting policy. A reconciliation of GoviEx’s summarized information to Denison’s investment carrying value
is also included.
65
(in thousands)
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Total net assets
Revenue
Net loss
Other comprehensive income (loss)
Reconciliation of GoviEx net assets to Denison investment carrying value:
Net assets of GoviEx – at acquisition
Share issue proceeds
Contributed surplus change
Share-based payment reserve change
Net loss
Net assets of GoviEx – at December 31, 2016
Denison ownership interest
Denison share of net assets of GoviEx
Other adjustments
Investment in GoviEx
(1) Based on available June 30, 2016 financial information.
11. RESTRICTED CASH AND INVESTMENTS
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
At December 31
2016
At
Acquisition (1)
$
$
4,480
23,937
(7,220)
(503)
20,694
$
$
2,701
23,952
(430)
(8,983)
17,240
6 Months Ended
December 31,2016
$
$
$
$
$
-
(392)
-
17,240
3,440
95
311
(392)
20,694
20.68%
4,280
412
4,692
The Company has certain restricted cash and investments deposited to collateralize a portion of its reclamation
obligations. The restricted cash and investments balance consists of:
(in thousands)
Cash
Investments
Restricted cash and investments-by item:
Elliot Lake reclamation trust fund
Reclamation letter of credit collateral
At December 31
2016
277
2,037
2,314
2,213
101
2,314
$
$
$
$
$
$
$
$
At December 31
2015
234
1,806
2,040
2,040
-
2,040
The investments at December 31, 2016 consist of a term deposit and a guaranteed investment certificate.
Elliot Lake Reclamation Trust Fund
The Company has the obligation to maintain its decommissioned Elliot Lake uranium mine pursuant to a
Reclamation Funding Agreement effective December 21, 1995 (“Agreement”) with the Governments of Canada
and Ontario. The Agreement, as further amended in February 1999, requires the Company to maintain funds in
the Reclamation Trust Fund equal to estimated reclamation spending for the succeeding six calendar years, less
interest expected to accrue on the funds during the period. Withdrawals from this Reclamation Trust Fund can
only be made with the approval of the Governments of Canada and Ontario to fund Elliot Lake monitoring and site
restoration costs.
66
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
In 2016, the Company deposited an additional $555,000 (CAD$762,000) into the Elliot Lake Reclamation Trust
Fund and withdrew $472,000 (CAD$622,000). In 2015, the Company deposited an additional $832,000
(CAD$1,042,000) into the Elliot Lake Reclamation Trust Fund and withdrew $511,000 (CAD$651,000).
Reclamation Letter of Credit Collateral
In 2016, the Company deposited $105,000 (CAD$135,000) with the Bank of Nova Scotia as cash collateral for the
portion of its issued reclamation letters of credit in excess of the collateral available under its line of credit (see
notes 14 and 15).
12. PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment balance consists of:
(in thousands)
Plant and equipment:
Cost
Construction-in-progress
Accumulated depreciation
Net book value
Mineral properties:
Cost
Accumulated amortization
Net book value
Net book value
The plant and equipment continuity summary is as follows:
(in thousands)
Plant and equipment:
Balance-January 1, 2015
Additions
Amortization
Asset divestitures (note 5)
Depreciation
Disposals
Reclamation adjustment (note 15)
Foreign exchange
Balance-December 31, 2015
Additions
Amortization
Asset divestitures (note 5)
Depreciation
Disposals
Impairment
Reclamation adjustment (note 15)
Foreign exchange
Balance-December 31, 2016
Cost
89,940
604
-
(260)
-
(423)
2,186
(14,789)
77,258
536
-
(1,358)
-
(1,231)
(67)
(90)
2,374
77,422
$
$
$
67
At December 31
At December 31
2016
2015
$
$
$
$
$
$
$
$
72,601
4,821
(12,609)
64,813
123,340
(171)
123,169
187,982
Accumulated
Amortization /
Depreciation
(12,205)
-
(82)
170
(2,216)
393
78
2,222
(11,640)
-
(140)
1,100
(2,812)
1,063
-
140
(320)
(12,609)
$
$
$
$
$
$
$
$
72,716
4,542
(11,640)
65,618
122,797
(165)
122,632
188,250
Net
Book Value
77,735
604
(82)
(90)
(2,216)
(30)
2,264
(12,567)
65,618
536
(140)
(258)
(2,812)
(168)
(67)
50
2,054
64,813
The mineral property continuity summary is as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Mineral properties:
Balance-January 1, 2015
Additions
Asset divestitures (note 5)
Impairment
Foreign exchange
Balance-December 31, 2015
Additions
Asset divestitures (note 5)
Impairment
Recoveries
Foreign exchange
Balance-December 31, 2016
Plant and Equipment - Mining
Cost
Accumulated
Amortization
Net
Book Value
$
$
$
192,851
1,436
(6,130)
(27,767)
(37,593)
122,797
3,586
(3,427)
(2,253)
(1,242)
3,879
123,340
$
$
$
(198)
-
-
-
33
(165)
-
-
-
-
(6)
(171)
$
$
$
192,653
1,436
(6,130)
(27,767)
(37,560)
122,632
3,586
(3,427)
(2,253)
(1,242)
3,873
123,169
The Company has a 22.5% interest in the McClean Lake mill located in the Athabasca Basin of Saskatchewan,
Canada. A toll milling agreement has been signed with the participants in the CLJV that provides for the processing
of the future output of the Cigar Lake mine at the McClean Lake mill, for which the owners of the McClean Lake
mill receive a toll milling fee and other benefits. In determining the units of production amortization rate for the
McClean Lake mill, the amount of production attributable to the mill assets has been adjusted to include Denison’s
expected share of mill feed related to the CLJV toll milling contract.
In March 2014, the first ore from the Cigar Lake mine was received at the mill. In September 2014, after being on
stand-by since August 2010, milling activities were restarted at the McClean Lake mill and uranium packaging
began in October 2014 and has continued during 2015 and 2016.
During 2016, the Company recorded an impairment charge of $67,000 associated with the planned
decommissioning and disposal of certain of its mining and milling assets at the McClean Lake site.
Plant and Equipment - Services and Other
The environmental services division of the Company provides mine decommissioning and decommissioned site
monitoring services for third parties.
Mineral Properties
The Company has various interests in exploration and evaluation projects located in Canada which are held directly
or through option or various contractual agreements.
Canada Mining Segment
As at December 31, 2016, the Company’s mineral property interests located in Saskatchewan, Canada with
significant carrying values are:
a) McClean Lake - the Company has a 22.5% interest in the project (includes the Sue D, Sue E, Caribou,
McClean North and McClean South deposits);
b) Midwest - the Company has a 25.17% interest in the project (includes the Midwest and Midwest A deposits);
c) Wheeler River - the Company has a 60% interest in the project (includes the Phoenix and Gryphon deposits)
– see note 29 for more information;
d) Waterbury Lake - the Company has a 63.01% interest in the project (includes the J Zone deposit) and also
has a 2.0% net smelter return royalty on the portion of the project it does not own;
e) Johnston Lake – the Company has a 100% interest in the project;
f) Mann Lake - the Company has a 30% interest in the project; and
g) Wolly - the Company has a 22.76% interest in the project.
68
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Waterbury Lake
In September 2015, the Company increased its interest in the Waterbury Lake property from 60.00% to 61.55%
and further increased it again in August 2016 to 63.01% under the terms of the dilution provisions in the agreements
governing the project (see note 25).
Moon Lake South
In January 2016, the Company entered into an option agreement with CanAlaska Uranium Ltd (“CanAlaska”) to
earn an interest in CanAlaska’s Moon Lake South project located in the Athabasca Basin in Saskatchewan. Under
the terms of the option, Denison can earn an initial 51% interest in the project by spending CAD$200,000 by
December 31, 2017 and it can increase its interest to 75% by spending an additional CAD$500,000 by December
31, 2020. As at December 31, 2016, the Company has spent CAD$139,000 towards the first stage of the option.
Moore Lake
In June 2016, the Company recognized an impairment charge of $2,174,000 based on the terms of an announced
agreement to option its 100% interest in the Moore Lake property to Skyharbour Resources Ltd (“Skyharbour”) in
exchange for cash, stock and exploration spending commitments. The remaining recoverable amount for the
property was estimated to be CAD$1,700,000 and was based on a market-based fair value less costs of disposal
assessment of the share and cash consideration to be received by the Company under the terms of the option.
While the fair value of the share consideration to be received has been determined from observable inputs, the fair
value of the cash consideration has not and, as such, management has classified the fair value determination
within Level 2 of the fair value hierarchy.
In August 2016, the Company closed the option agreement with Skyharbour. On closing, Denison received
4,500,000 common shares of Skyharbour and a recovery of $1,242,000 (CAD$1,620,000) was recognized. To
complete the option, Skyharbour is required to make staged cash payments of CAD$500,000 in aggregate over
the next five years and spend CAD$3,500,000 in exploration expenditures on the property over the same five year
period.
Under the terms of the option agreement, Denison also maintains various back-in rights to re-acquire a 51%
interest in the Moore Lake property and is entitled to nominate a member to Skyharbour’s Board of Directors as
long as Denison maintains a minimum ownership position of 5%. As at December 31, 2016, Denison’s ownership
interest in Skyharbour is approximately 11.35%.
Hook Carter
In November 2016, Denison completed the purchase of an 80% interest in the Hook-Carter property, located in
the southwestern portion of the Athabasca Basin region in northern Saskatchewan, from ALX Uranium Corp
(“ALX”).
Under the terms of the agreement, Denison issued 7,500,000 common shares with a value of $2,854,000
(CAD$3,825,000) in exchange for an immediate 80% interest in the property. ALX will retain a 20% interest in the
property and Denison has agreed to fund ALX’s share of the first CAD$12,000,000 in expenditures. Denison has
also agreed to a work commitment of CAD$3,000,000 over 3 years – should Denison not meet this commitment,
Denison’s interest in the property will decrease from 80% to 75% and ALX’s interest will increase from 20% to
25%.
In November 2016, Denison also purchased the Coppin Lake property from ARC and UEX Corporation for cash
payments of $26,000 (CAD$35,000) and a 1.5% net smelter royalty. Under the terms of the Hook Carter
agreement, Denison and ALX have elected to have these claims form part of the Hook Carter property and ALX’s
interest in these claims will be the same as its interest in Hook Carter.
69
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Other Properties
In 2015, due to the Company’s intention to let claims on three of its Canadian properties lapse in the normal course
and to not carry out the required exploration programs or make deficiency deposit payments needed to maintain
the claims, the Company has recognized impairment charges of $2,603,000. The $nil recoverable amount of the
properties is based on a market-based fair value less costs of disposal assessment using unobservable inputs
including the Company’s data about the properties and management’s interpretation of that data. As such, it is
classified within Level 3 of the fair value hierarchy. A value in use calculation is not applicable as the Company
does not have any expected cash flows from using these properties at this stage.
In 2016, due to the Company’s current intention to let claims on one of its Canadian properties lapse in the normal
course and to not carry out the required exploration programs or make deficiency deposit payments needed to
maintain the claims, the Company has recognized impairment charges of $79,000 to reduce the carrying value of
the property to $nil. The $nil recoverable amount of the property is based on a market-based fair value less costs
of disposal assessment using unobservable inputs and, as such, it is classified within Level 3 of the fair value
hierarchy.
Africa Mining Segment - Mali, Namibia and Zambia
Prior to June 2016, the Company had mineral property interests in Africa which included a 100% interest in the
Falea project in Mali, a 90% interest in the Dome project in Namibia and a 100% interest in the Mutanga project in
Zambia.
In December 2015, in light of the intention to pursue a spin-out or disposal strategy and the adoption of minimal
exploration plans for its African properties for the upcoming fiscal year, the Company completed an impairment
test of its African properties and recognized impairment charges of $25,164,000. The Company used a market-
based fair value less costs of disposal analysis, adjusted for certain unobservable inputs, to determine the
recoverable amount of $3,264,000 for the Falea, Dome and Mutanga projects combined. As a result of these
unobservable inputs, it is classified within Level 3 of the fair value hierarchy. A value in use calculation was not
applicable as the Company did not have any expected cash flows from using its African properties at this stage of
operations.
In June 2016, the Company divested its mineral property assets in Africa as part of the sale of the Africa Mining
Division to GoviEx (see note 5).
Asia Mining Segment - Mongolia
Prior to November 2015, the Company had an 85% interest in and was the managing partner of the Gurvan Saihan
Joint Venture (“GSJV”) in Mongolia (which included the Hairhan and Haraat deposits and the Hairhan, Haraat,
Gurvan Saihan and Ulzit exploration licenses).
In November 2015, the Company divested its mineral property assets in Mongolia as part of the sale of the
Mongolia Mining Division to Uranium Industry (see note 5).
70
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
13. INTANGIBLES
The intangibles balance consists of:
(in thousands)
Cost
Accumulated amortization
Net book value
Net book value-by item:
UPC management services agreement
Net book value
The intangibles continuity summary is as follows:
(in thousands)
Balance-January 1, 2015
Amortization
Foreign exchange
Balance-December 31, 2015
Amortization
Extinguishment on initial agreement expiry
Foreign exchange
Balance-December 31, 2016
UPC Management Services Agreement
Cost
6,379
-
(1,032)
5,347
-
(5,348)
1
-
$
$
$
At December 31
2016
At December 31
2015
$
$
$
$
$
$
$
-
-
-
-
-
$
$
$
$
5,347
(5,240)
107
107
107
Accumulated
Amortization
Net
Book Value
(5,741)
(464)
965
(5,240)
(108)
5,348
-
-
$
$
$
638
(464)
(67)
107
(108)
-
1
-
The intangible from the UPC management services agreement is associated with the acquisition of Denison Mines
Inc (“DMI”) in 2006 and the value assigned to the initial agreement. The initial agreement has been amortized over
its useful life. An amended agreement was entered into in March 2016 with an effective date of April 1, 2016 (see
note 25).
14. POST-EMPLOYMENT BENEFITS
The Company provides post-employment benefits for former Canadian employees who retired on immediate
pension prior to 1997. The post-employment benefits provided include life insurance and medical and dental
benefits as set out in the applicable group policies but does not include pensions. No post-employment benefits
are provided to employees outside the employee group referenced above. The post-employment benefit plan is
not funded.
The effective date of the most recent actuarial valuation of the accrued benefit obligation is October 1, 2016. The
amount accrued is based on estimates provided by the plan administrator which are based on past experience,
limits on coverage as set out in the applicable group policies and assumptions about future cost trends. The
significant assumptions used in the most recent valuation are listed below:
Discount rate of 3.10%;
Medical cost trend rates at 7.00% per year in 2017, grading down by 0.125% per year to 4.625% in 2036 and
using a rate at 4.00% per year thereafter; and
Dental cost trend rates at 4.00% per year for ten years, followed by 3.50% for the next ten years and 3.00%
per year thereafter.
71
The post-employment benefits balance consists of:
(in thousands)
Accrued benefit obligation
Post-employment benefits liability-by duration:
Current
Non-current
The post-employment benefits continuity summary is as follows:
(in thousands)
Balance-January 1, 2015
Benefits paid
Interest cost
Foreign exchange
Balance-December 31, 2015
Benefits paid
Interest cost
Experience loss (gain) adjustment
Foreign exchange
Balance-December 31, 2016
15. RECLAMATION OBLIGATIONS
The reclamation obligations balance consists of:
(in thousands)
Reclamation liability-by location:
Elliot Lake
McClean and Midwest Joint Ventures
Other
Reclamation and remediation liability-by duration:
Current
Non-current
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
At December 31
2016
At December 31
2015
$
$
$
$
1,832
1,832
186
1,646
1,832
$
$
$
$
$
$
$
2,389
2,389
217
2,172
2,389
2,921
(160)
95
(467)
2,389
(137)
82
(580)
78
1,832
At December 31
2016
At December 31
2015
$
$
$
$
12,470
8,479
16
20,965
1,388
19,577
20,965
$
$
$
$
11,610
7,834
16
19,460
624
18,836
19,460
72
The reclamation obligations continuity summary is as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Balance-January 1, 2015
Accretion
Expenditures incurred
Liability adjustments-income statement (note 23)
Liability adjustments-balance sheet (note 12)
Foreign exchange
Balance-December 31, 2015
Accretion
Expenditures incurred
Liability adjustments-income statement (note 23)
Liability adjustments-balance sheet (note 12)
Foreign exchange
Balance-December 31, 2016
Site Restoration: Elliot Lake
$
$
$
17,659
836
(517)
2,262
2,264
(3,044)
19,460
903
(502)
461
50
593
20,965
The Elliot Lake uranium mine was closed in 1992 and capital works to decommission this site were completed in
1997. The remaining provision is for the estimated cost of monitoring the Tailings Management Areas at the
Denison and Stanrock sites and for treatment of water discharged from these areas. The Company conducts its
activities at both sites pursuant to licenses issued by the Canadian Nuclear Safety Commission (“CNSC”). The
above accrual represents the Company’s best estimate of the present value of the total future reclamation cost
based on assumptions as to levels of treatment, which will be required in the future, discounted at 4.61% (2015:
4.43%). As at December 31, 2016, the undiscounted amount of estimated future reclamation costs is $24,254,000
(CAD$32,564,000) (December 31, 2015: $21,657,000 (CAD$29,975,000)). Revisions to the reclamation liability
for Elliot Lake are recognized in the income statement as there is no net reclamation asset associated with this
site.
Spending on restoration activities at the Elliot Lake site is funded from monies in the Elliot Lake Reclamation Trust
fund (see note 11).
Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture
The McClean Lake and Midwest operations are subject to environmental regulations as set out by the
Saskatchewan government and the CNSC. Cost estimates of the estimated future decommissioning and
reclamation activities are prepared periodically and filed with the applicable regulatory authorities for approval.
The above accrual represents the Company’s best estimate of the present value of the future reclamation cost
contemplated in these cost estimates discounted at 4.61% (2015: 4.43%). As at December 31, 2016, the
undiscounted amount of estimated future reclamation costs is $16,774,000 (CAD$22,522,000) (December 31,
2015: $15,699,000 (CAD$21,728,000)). The majority of the reclamation costs are expected to be incurred between
2037 and 2055.
Under the Mineral Industry Environmental Protection Regulations (1996), the Company is required to provide its
pro-rata share of financial assurances to the province of Saskatchewan. As at December 31, 2016, the Company
has in place irrevocable standby letters of credit, from a chartered bank, in favour of the Saskatchewan Ministry of
the Environment, totalling CAD$24,135,000 which relate to the most recently filed reclamation plan dated March
2016.
73
16. DEBT OBLIGATIONS
The debt obligations balance consists of:
(in thousands)
Notes payable and other financing
Debt obligations-by duration:
Current
Non-current
The debt obligations continuity summary is as follows:
(in thousands)
Balance-January 1, 2015
New issuances
Repayments
Foreign exchange
Balance-December 31, 2015
New issuances
Repayments
Foreign exchange
Balance-December 31, 2016
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
At December 31
2016
At December 31
2015
$
$
$
$
276
276
276
-
276
$
$
$
$
$
$
$
300
300
300
-
300
39
340
(64)
(15)
300
312
(348)
12
276
At December 31, 2016, the debt obligation amount represents a loan payable to CAFO Inc. which was used by the
Company to finance its annual insurance premium renewals. The loan bears interest at an effective annual rate
of 3.04% and is repayable, in full, by August 2017.
Letters of Credit Facility
In 2016, the Company had a facility in place with the Bank of Nova Scotia for credit of up to CAD$24,000,000 with
a one year term and a maturity date of January 31, 2017 (the “2016 facility”). Use of the 2016 facility is restricted
to non-financial letters of credit in support of reclamation obligations.
The 2016 facility contains a covenant to maintain a level of tangible net worth greater than or equal to the sum of
$150,000,000 and a covenant to maintain a minimum balance of cash and equivalents of CAD$5,000,000 on
deposit with the Bank of Nova Scotia. As security for the 2016 facility, DMC has provided an unlimited full recourse
guarantee and a pledge of all of the shares of DMI. DMI has provided a first-priority security interest in all present
and future personal property and an assignment of its rights and interests under all material agreements relative
to the McClean Lake and Midwest projects subject to an allowance to sell the Cigar Lake toll milling revenue
stream. The 2016 facility is subject to letter of credit and standby fees of 2.40% and 0.75% respectively.
At December 31, 2016, the Company was in compliance with its 2016 facility covenants and CAD$24,000,000 of
the 2016 facility was being utilized as collateral for certain letters of credit (December 31, 2015 - CAD$9,698,000).
During 2016 and 2015, the Company incurred letter of credit and standby fees of $363,000 and $260,000,
respectively.
The Company has entered into an agreement with the Bank of Nova Scotia to amend the terms of the 2016 facility
and extend the maturity date to January 31, 2018 (see note 29).
Scheduled Debt Obligation Maturities
The table below represents scheduled maturities of the Company’s debt obligations over the next year after which
74
its debt obligations will be paid in full:
(in thousands)
2017
17. OTHER LIABILITIES
The other liabilities balance consists of:
(in thousands)
Unamortized fair value of toll milling contracts
Flow-through share premium obligation
Other long-term liabilities-by duration:
Current
Non-current
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
$
$
276
276
At December 31
2016
At December 31
2015
$
$
$
$
674
1,803
2,477
1,847
630
2,477
$
$
$
$
694
1,821
2,515
1,863
652
2,515
Unamortized fair values of toll milling contracts are amortized to revenue on a pro-rata basis over the estimated
volume of the applicable contract.
18. INCOME TAXES
The income tax recovery balance from continuing operations consists of:
(in thousands)
2016
2015
Current income tax:
Based on taxable income for the period
Prior period under provision
Deferred income tax:
Origination of temporary differences
Tax benefit-previously unrecognized tax assets
Change in tax rates / legislation
Prior year over (under) provision
Income tax recovery
$
$
$
-
-
-
922
3,016
-
17
3,955
3,955
$
-
-
-
835
2,977
-
(43)
3,769
3,769
75
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
The Company operates in multiple industries and jurisdictions, and the related income is subject to varying rates
of taxation. The combined Canadian tax rate reflects the federal and provincial tax rates in effect in Ontario,
Canada for each applicable year. A reconciliation of the combined Canadian tax rate to the Company’s effective
rate of income tax is as follows:
(in thousands)
2016
2015
Loss before taxes from continuing operations
Combined Canadian tax rate
Income tax recovery at combined rate
Difference in foreign tax rates
Non-deductible amounts
Allowable capital loss on disposal of subsidiary
Non-taxable amounts
Previously unrecognized deferred tax assets (1)
Renunciation of tax attributes-flow through shares
Change in deferred tax assets not recognized
Prior year under provision
Other
Income tax recovery
$
$
(15,654)
26.50%
4,148
(20,486)
26.50%
5,429
9,679
(6,523)
1,397
1,381
3,016
(667)
(8,193)
17
(300)
3,955
$
2,576
(2,038)
-
1,252
2,977
(1,025)
(4,981)
(43)
(378)
3,769
$
(1) The Company has recognized certain previously unrecognized Canadian tax assets in 2016 and 2015 as a result of the renunciation of certain
tax benefits to subscribers pursuant to its May 2015 CAD$15,000,000 and August 2014 CAD$14,997,000 flow-through share offerings.
The deferred income tax assets (liabilities) balance reported on the balance sheet is comprised of the temporary
differences as presented below:
(in thousands)
Deferred income tax assets:
Property, plant and equipment, net
Post-employment benefits
Reclamation and remediation obligations
Other long-term liabilities
Tax loss carry forwards
Other
Deferred income tax assets-gross
Set-off against deferred income tax liabilities
Deferred income tax assets-per balance sheet
Deferred income tax liabilities:
Inventory
Investments
Investments in associates
Property, plant and equipment, net
Intangibles
Other
Deferred income tax liabilities-gross
Set-off of deferred income tax assets
Deferred income tax liabilities-per balance sheet
At December 31
2016
At December 31
2015
$
$
$
$
662
480
6,120
177
8,781
4,530
20,750
(20,750)
-
(554)
(274)
(60)
(33,949)
-
(934)
(35,771)
20,750
(15,021)
$
$
$
$
247
624
5,657
182
8,231
4,308
19,249
(19,249)
-
(515)
-
-
(34,391)
(28)
(780)
(35,714)
19,249
(16,465)
76
The deferred income tax liability continuity summary is as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Balance-January 1, 2015
Recognized in income (loss)
Recognized in other liabilities (flow-through shares)
Other, including foreign exchange gain (loss)
Balance-December 31, 2015
Recognized in income (loss)
Recognized in comprehensive income (loss)
Recognized in other liabilities (flow-through shares)
Other, including foreign exchange gain (loss)
Balance-December 31, 2016
$
$
$
(21,826)
3,769
(1,790)
3,382
(16,465)
3,955
152
(1,836)
(827)
(15,021)
Management believes that it is not probable that sufficient taxable profit will be available in future years to allow
the benefit of the following deferred tax assets to be utilized:
(in thousands)
Deferred income tax assets not recognized
Investments
Property, plant and equipment
Tax losses – capital
Tax losses – operating
Tax credits
Other deductible temporary differences
Deferred income tax assets not recognized
At December 31 At December 31
2016
2015
$
$
-
4,974
27,544
19,833
860
582
53,793
$
$
94
23,108
22,548
22,850
891
418
69,909
A geographic split of the Company’s tax losses and tax credits not recognized and the associated expiry dates of
those losses and credits is as follows:
(in thousands)
Tax losses - gross
Canada
Zambia
Other
Tax losses - gross
Tax benefit at tax rate of 25% - 37.5%
Set-off against deferred tax liabilities
Total tax loss assets not recognized
Tax credits
Canada
Total tax credit assets not recognized
Expiry
Date
At December 31
2016
At December 31
2015
2025-2036
$
Unlimited
2025-2034
$
$
107,337
-
-
107,337
28,614
(8,781)
19,833
860
860
$
$
$
109,970
6,575
13
116,558
31,081
(8,231)
22,850
891
891
77
19. 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:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share amounts)
Balance-January 1, 2015
Issued for cash:
New issue gross proceeds
New issue gross issue costs
Share options exercised
Share purchase warrants exercised
Share options exercised-fair value adjustment
Share purchase warrants exercised-fair value adjustment
Flow-through share premium liability
Balance-December 31, 2015
Issued for cash:
New issue gross proceeds
New issue gross issue costs
Acquisition of Hook Carter (Note 12)
Flow-through share premium liability
Share cancellations
Balance-December 31, 2016
New Issues
Number of
Common
Shares
505,868,894
$
1,120,758
12,000,000
-
7,100
562,675
-
-
-
12,569,775
518,438,669
15,127,805
-
7,500,000
-
(344,109)
22,283,696
540,722,365
$
$
12,069
(751)
5
406
4
316
(2,028)
10,021
1,130,779
9,444
(603)
2,854
(1,843)
-
9,852
1,140,631
In May 2015, the Company completed a private placement of 12,000,000 flow-through common shares at a price
of CAD$1.25 per share for gross proceeds of $12,069,000 (CAD$15,000,000). The income tax benefits of this
issue were renounced to subscribers with an effective date of December 31, 2015. The related flow-through share
premium liability is included as a component of other liabilities on the balance sheet at December 31, 2015 and
was extinguished during 2016 (note 17).
In May 2016, the Company completed a private placement of 15,127,805 flow-through common shares at a price
of CAD$0.82 per share for gross proceeds of $9,444,000 (CAD$12,405,000). The income tax benefits of this issue
were renounced to subscribers with an effective date of December 31, 2016. The related flow-through share
premium liability is included as a component of other liabilities on the balance sheet at December 31, 2016 and
will be extinguished during 2017 (see note 17).
Acquisition Related Issues
In November 2016, the Company issued 7,500,000 shares at a value of $2,854,000 (CAD$3,825,000) to acquire
an 80% interest in the Hook Carter property (see note 12).
Share Cancellations
In June 2016, 147,481 shares were cancelled in connection with the June 2014 acquisition of International Enexco
Limited (“IEC”). IEC shareholders were entitled to exchange their IEC shares for shares of Denison in accordance
with the share exchange ratio established for the acquisition. In June 2016, this right expired and the un-
exchanged shares for which shareholders had not elected to exercise their exchange rights were subsequently
cancelled.
In December 2016, 196,628 shares were cancelled in connection with the December 2006 acquisition of Denison
Mines Inc (“DMI”). DMI shareholders were entitled to exchange their DMI shares for shares of Denison according
to the share exchange ratio established for the acquisition. In December 2016, this right expired and the un-
78
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
exchanged shares for which shareholders had not elected to exercise their exchange rights were subsequently
cancelled.
Flow-Through Share Issues
The Company finances a portion of its exploration programs through the use of flow-through share issuances.
Canadian income tax deductions relating to these expenditures are claimable by the investors and not by the
Company.
As at December 31, 2016, the Company estimates that it has satisfied its obligation to spend CAD$15,000,000 on
eligible exploration expenditures as a result of the issuance of flow-through shares in May 2015. The Company
renounced the income tax benefits of this issue in February 2016, with an effective date of renunciation to its
subscribers of December 31, 2015. In conjunction with the renunciation, the flow-through share premium liability
has been reversed and recognized as part of the deferred tax recovery in 2016 (see note 18).
As at December 31, 2016, the Company estimates that it has incurred CAD$154,000 of its obligation to spend
CAD$12,405,000 on eligible exploration expenditures as a result of the issuance of flow-through shares in May
2016. The Company renounced the income tax benefits of this issue in February 2017, with an effective date of
renunciation to its subscribers of December 31, 2016.
20. SHARE PURCHASE WARRANTS
A continuity summary of the issued and outstanding share purchase warrants in terms of common shares of the
Company and the associated dollar amounts is presented below:
Weighted
Average
Exercise
Price Per
Share (CAD$)
$
$
1.17
0.84
1.54
-
Number of
Common
Shares
Issuable
Fair
Value
Amount
1,079,802
$
376
(562,675)
(517,127)
-
$
(316)
(60)
-
(in thousands except share amounts)
Balance-January 1, 2015
Warrants exercised
Warrants expired
Balance-December 31, 2015 and 2016
21. STOCK OPTIONS
The Company’s stock-based compensation plan (the “Plan”) provides for the granting of stock options up to 10%
of the issued and outstanding common shares at the time of grant, subject to a maximum of 39,670,000 common
shares. As at December 31, 2016, an aggregate of 13,676,450 options have been granted (less cancellations)
since the Plan’s inception in 1997.
Under the Plan, all stock options are granted at the discretion of the Company’s board of directors, including any
vesting provisions if applicable. The term of any stock option granted may not exceed ten years and the exercise
price may not be lower than the closing price of the Company’s shares on the last trading day immediately
preceding the date of grant. In general, stock options granted under the Plan have five year terms and vesting
periods up to thirty months.
79
A continuity summary of the stock options of the Company granted under the Plan for 2016 is presented below:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Stock options outstanding - beginning of period
Granted
Expiries
Forfeitures
Stock options outstanding - end of period
Stock options exercisable - end of period
Weighted-
Average
Exercise
Price per
Share
(CAD$)
Number of
Common
Shares
7,074,459 $
2,136,250
(1,208,835)
(1,063,695)
6,938,179 $
4,067,429 $
1.56
0.64
3.11
1.25
1.06
1.28
A summary of the Company’s stock options outstanding at December 31, 2016 is presented below:
Range of Exercise
Prices per Share
(CAD$)
Stock options outstanding
$ 0.50 to $ 0.99
$ 1.00 to $ 1.19
$ 1.20 to $ 1.39
$ 1.40 to $ 1.99
Stock options outstanding - end of period
Weighted
Average
Remaining
Contractual
Life
(Years)
Weighted-
Average
Exercise
Price per
Share
(CAD$)
Number of
Common
Shares
3.63
2.71
1.18
1.37
2.62
3,000,655 $
1,534,524
857,000
1,546,000
6,938,179 $
0.64
1.09
1.30
1.70
1.06
Options outstanding at December 31, 2016 expire between January 2017 and August 2021.
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing
model. The following table outlines the range of assumptions used in the model to determine the fair value of
options granted:
2016
2015
Risk-free interest rate
Expected stock price volatility
Expected life
Estimated forfeiture rate
Expected dividend yield
Fair value per share under options granted
0.57% - 0.69%
43.07% - 43.98%
3.4 to 3.6 years
3.46% - 3.97%
–
CAD$0.21 - CAD$0.22
0.56% - 0.88%
43.23% - 47.00%
3.6 years
3.34% - 3.40%
–
CAD$0.18 - CAD$0.39
The fair values of stock options with vesting provisions are amortized on a graded method basis as stock-based
compensation expense over the applicable vesting periods. Included in the statement of income (loss) is stock-
based compensation of $341,000 for 2016 and $588,000 for 2015. At December 31, 2016, an additional $237,000
in stock-based compensation expense remains to be recognized up until August 2018.
80
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
22. ACCUMULATED OTHER COMPREHENSIVE INCOME
The accumulated other comprehensive income balance consists of:
(in thousands)
Cumulative foreign currency translation
Unamortized experience gain – post employment liability
Gross
Tax effect
Unrealized gains on investments
Gross
At December 31
2016
At December 31
2015
$
(61,371)
$
(73,746)
786
(208)
206
(56)
7
(60,786)
$
4
(73,592)
$
23. SUPPLEMENTAL FINANCIAL INFORMATION
The components of operating expenses for continuing operations are as follows:
(in thousands)
Cost of goods and services sold:
Cost of goods sold-mineral concentrates
Operating Overheads:
Mining, other development expense
Milling, conversion expense
Mill feed cost:
-Stockpile depletion
Less absorption:
-Mineral properties
-Concentrates
Cost of services
Inventory-non cash adjustments
Cost of goods and services sold
Reclamation asset amortization
Reclamation liability adjustments (note 16)
Selling expenses
Sales royalties and non-income taxes
Operating expenses
Year Ended
December 31
2016
December 31
2015
$
- $
(35)
(689)
(2,414)
(416)
(1,655)
-
(24)
39
-
(6,957)
-
(10,021)
(140)
(461)
-
-
$
(10,622) $
53
54
(7,551)
(168)
(9,742)
(82)
(2,262)
(14)
(6)
(12,106)
The components of other income (expense) for continuing operations are as follows:
(in thousands)
Gains (losses) on:
Year Ended
December 31
2016
December 31
2015
Disposal of property, plant and equipment
Investment disposals / fair value through profit (loss)
Other
Other income (expense)
$
$
(162) $
1,473
(405)
906 $
-
(346)
(244)
(590)
81
The components of finance income (expense) for continuing operations are as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Interest income
Interest expense
Accretion expense-reclamation obligations
Accretion expense-post-employment benefits
Finance expense
Year Ended
December 31
2016
December 31
2015
$
$
177 $
(3)
(903)
(82)
(811) $
219
(2)
(836)
(95)
(714)
A summary of depreciation expense recognized in the statement of income (loss) is as follows:
(in thousands)
Continuing operations:
Operating expenses:
Mining, other development expense
Milling, conversion expense
Cost of services
Mineral property exploration
General and administrative
Discontinued operations
Depreciation expense-gross
Year Ended
December 31
2016
December 31
2015
$
$
(13) $
(2,411)
(268)
(60)
(34)
(26)
(2,812) $
(58)
(1,627)
(254)
(94)
(25)
(158)
(2,216)
A summary of employee benefits expense recognized in the statement of income (loss) is as follows:
(in thousands)
Continuing operations:
Salaries and short-term employee benefits
Share-based compensation
Termination benefits
Discontinued operations
Employee benefits expense-gross
Year Ended
December 31
2016
December 31
2015
$
$
(6,200) $
(341)
(46)
(269)
(6,856) $
(6,389)
(588)
(318)
(992)
(8,287)
The change in non-cash working capital items in the consolidated statements of cash flows is as follows:
(in thousands)
Change in non-cash working capital items:
Trade and other receivables
Inventories
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Post-employment benefits
Reclamation obligations
Change in non-cash working capital items
82
Year Ended
December 31
2016
December 31
2015
$
$
2,519 $
(67)
13
(724)
(137)
(502)
1,102 $
3,240
(622)
119
(3,932)
(160)
(517)
(1,872)
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
24. SEGMENTED INFORMATION
Business Segments
The Company operates in three primary segments – the Mining segment, the Environmental Services segment
and the Corporate and Other segment. The Mining segment has historically been further subdivided into
geographic regions, being Canada, Africa and Asia, and includes activities related to exploration, evaluation and
development, mining, milling (including toll milling) and the sale of mineral concentrates. The Africa and Asia
Mining segments were disposed of in 2016 and 2015 respectively and are reported under discontinued operations
in the tables below (see note 5). The Environmental Services segment includes the results of the Company’s
environmental services business, DES. The Corporate and Other segment includes management fee income
earned from UPC and general corporate expenses not allocated to the other segments. Management fee income
has been included with general corporate expenses due to the shared infrastructure between the two activities.
For the year ended December 31, 2016, reportable segment results were as follows:
(in thousands)
Statement of Operations:
Revenues
Expenses:
Operating expenses
Exploration and evaluation
General and administrative
Impairment of property, plant and
equipment (note 12)
Segment income (loss)
Revenues – supplemental:
Environmental services
Management fees
Toll milling services
Capital additions:
Property, plant and equipment
Long-lived assets:
Plant and equipment
Cost
Accumulated depreciation
Mineral properties
Canada
Mining
DES
Corporate
and Other
Total
Continuing
Operations
Total
Discontinued
Operations
4,598
7,751
1,484
13,833
-
(3,665)
(11,196)
(17)
(2,320)
(17,198)
(12,600)
-
-
4,598
4,598
(6,669)
-
-
-
(6,669)
1,082
7,751
-
-
7,751
(288)
-
(4,403)
-
(4,691)
(3,207)
(10,622)
(11,196)
(4,420)
(2,320)
(28,558)
(14,725)
-
1,484
-
1,484
7,751
1,484
4,598
13,833
(64)
(74)
(280)
-
(418)
(418)
-
-
-
-
3,909
135
-
4,044
78
73,942
(10,680)
123,169
186,431
3,261
(1,858)
-
1,403
219
(71)
-
148
77,422
(12,609)
123,169
187,982
-
-
-
-
83
For the year ended December 31, 2015, reportable segment results were as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Statement of Operations:
Revenues
Expenses:
Operating expenses
Exploration and evaluation
General and administrative
Impairment of property, plant and
equipment (note 12)
Segment income (loss)
Revenues – supplemental:
Uranium concentrates
Environmental services
Management fees
Toll milling services
Capital additions:
Property, plant and equipment
Long-lived assets:
Plant and equipment
Cost
Accumulated depreciation
Mineral properties
Intangibles
Revenue Concentration
Canada
Mining
DES
Corporate
and Other
Total
Continuing
Operations
Total
Discontinued
Operations
3,241
7,607
1,822
12,670
-
(4,555)
(13,439)
(17)
(2,603)
(20,614)
(17,373)
86
-
-
3,155
3,241
(6,875)
-
-
-
(6,875)
732
-
7,607
-
-
7,607
(676)
-
(5,809)
-
(6,485)
(4,663)
-
-
1,822
-
1,822
(12,106)
(13,439)
(5,826)
(2,603)
(33,974)
(21,304)
86
7,607
1,822
3,155
12,670
(317)
(1,202)
(1,329)
(25,164)
(28,012)
(28,012)
-
-
-
-
-
1,028
318
147
1,493
547
72,386
(8,711)
119,368
-
183,043
3,162
(1,675)
-
-
1,487
212
(37)
-
107
282
75,760
(10,423)
119,368
107
184,812
1,498
(1,217)
3,264
-
3,545
The Company’s business from continuing operations is such that, at any given time, it sells its environmental and
other services to a relatively small number of customers. During 2016, one customer from the corporate and other
segment, one customer from the DES segment and one customer from the mining segment accounted for
approximately 83% of total revenues consisting of 11%, 39% and 33% individually. During 2015, one customer
from the corporate and other segment, one customer from the DES segment and one customer from the mining
segment accounted for approximately 83% of total revenues consisting of 14%, 44% and 25% individually.
25. RELATED PARTY TRANSACTIONS
Uranium Participation Corporation
The Company is a party to a management services agreement with UPC. The initial management services
agreement with UPC expired on March 31, 2016 and a new management services agreement was entered into,
effective April 1, 2016 for a term of three years. Under the new agreement, Denison receives the following fees
from UPC: a) a base fee of CAD$400,000 per annum, payable in equal quarterly installments; b) a variable fee
equal to (i) 0.3% per annum of UPC’s total assets in excess of CAD$100 million and up to and including CAD$500
million, and (ii) 0.2% per annum of UPC’s total assets in excess of CAD$500 million; c) a fee, at the discretion of
the Board, for on-going monitoring or work associated with a transaction or arrangement (other than a financing,
or the acquisition of or sale of U3O8 or UF6); and d) a commission of 1.0% of the gross value of any purchases or
sales of U3O8 or UF6 or gross interest fees payable to UPC in connection with any uranium loan arrangements.
84
The following transactions were incurred with UPC for the periods noted:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Management fees:
Base and variable fees
Discretionary fees
Commission fees
Year Ended
December 31
2016
December 31
2015
$
$
1,291 $
77
116
1,484 $
1,747
-
75
1,822
At December 31, 2016, accounts receivable includes $160,000 (December 31, 2015: $157,000) due from UPC
with respect to the fees and transactions indicated above.
Korea Electric Power Corporation (“KEPCO”) and Korea Hydro & Nuclear Power (“KHNP”)
In June 2009, Denison completed definitive agreements with KEPCO including a long-term offtake agreement
(which has been assigned to Energy Fuels Inc. (“EFR”) as part of the U.S. Mining Division transaction completed
in June 2012) and a strategic relationship agreement. Pursuant to the strategic relationship agreement, KEPCO
is entitled to subscribe for additional common shares in Denison’s future share offerings. The strategic relationship
agreement also provides KEPCO with a right of first opportunity if Denison intends to sell any of its substantial
assets, a right to participate in certain purchases of substantial assets which Denison proposes to acquire and a
right to nominate one director to Denison’s board so long as its share interest in Denison is above 5.0%.
In December 2016, Denison was notified that KEPCO’s indirect ownership of Denison’s shares had been
transferred from an affiliate of KEPCO to an affiliate of KEPCO’s wholly owned subsididary, KHNP. In connection
therewith, KHNP will benefit from KEPCO’s rights under the strategic relationship agreement.
As at December 31, 2016, KEPCO, through its subsidiaries, including KHNP, holds 58,284,000 shares of Denison
representing a share interest of approximately 10.8%.
At December 31, 2016, Denison also holds a 60% interest in Waterbury Lake Uranium Corporation (“WLUC”) and
a 63.01% interest in Waterbury Lake Uranium Limited Partnership (“WLULP”), entities whose key asset is the
Waterbury Lake property. The other 40% and 36.99% respective interests in these entities is held by a consortium
of investors (“KWULP”) of which KHNP is now the primary holder after the transfer of ownership from KEPCO to
KHNP in December 2016 (see note 28). When a spending program is approved by the participants, each
participant is required to fund these entities based upon its respective ownership interest. Spending program
approval requires 75% of the voting interest.
In January 2014, Denison agreed to allow KWULP to defer a decision regarding its funding obligation to WLUC
and WLULP until September 30, 2015 and to not be immediately diluted as per the dilution provisions in the relevant
agreements (“Dilution Agreement”). Instead, under the Dilution Agreement, dilution would be applied as at
September 30, 2015 and in each subsequent period, if applicable. In exchange, Denison received authorization
to approve spending programs on the property, up to an aggregate CAD$10,000,000, until September 30, 2016
without obtaining approval from 75% of the voting interest. In December 2016, Denison and KWULP agreed to
extend Denison’s authorization under the Dilution Agreement to approve spending for an additional year, to
September 30, 2017.
In September 2015, KWULP notified Denison that it would not fund its deferred funding obligation for 2015 and
that it would accept dilution to its interest in the WLULP in 2015 and 2016 under the Dilution Agreement. As a
result, Denison funded the entire 2015 program and earned an additional 1.55% interest in the Waterbury Lake
project. The additional interest has been accounted for using an effective date of September 30, 2015 and has
resulted in Denison recording its increased pro-rata share of the net assets of Waterbury Lake, the majority of
which relates to an addition to mineral property assets of $836,000.
In August 2016, Denison funded 100% of the approved fiscal 2016 program for Waterbury Lake and KWULP
continued to dilute its interest in the WLULP. As a result, Denison earned an additional 1.46% interest in the
WLULP which has been accounted for using an effective date of August 31, 2016 and has resulted in Denison
recording its increased pro-rata share of the net assets of Waterbury Lake, the majority of which relates to an
addition to mineral property assets of $589,000.
85
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Other
During 2016, the Company incurred investor relations, administrative service fees and other expenses of $140,000
(2015: $159,000) with Namdo Management Services Ltd, which shares a common director with Denison. These
services were incurred in the normal course of operating a public company. At December 31, 2016, an amount of
$nil (December 31, 2015: $nil) was due to this company.
During 2016, the Company incurred office expenses of $23,000 with Lundin S.A, a company which provides office
and administration services to the executive chairman, other directors and management of Denison. No similar
services were provided during 2015. At December 31, 2016, an amount of $6,000 was due to this company.
During 2015, the Company incurred legal fees of $548,000 with Cassels Brock & Blackwell, LLP, a law firm at
which a former member of Denison’s Board of Directors was a partner. These services and associated costs were
mainly related to various acquisition initiatives and internal re-organization activities done by the Company. At
December 31, 2015, an amount of $12,000 was due to this legal firm.
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:
(in thousands)
Salaries and short-term employee benefits
Share-based compensation
Termination benefits
Key management personnel compensation
26. CAPITAL MANAGEMENT AND FINANCIAL RISK
Capital Management
Year Ended
December 31
2016
December 31
2015
$
$
1,163 $
262
-
1,425 $
1,391
370
314
2,075
The Company’s capital includes cash, cash equivalents, investments in debt instruments and debt obligations.
The Company’s primary objective with respect to its capital management is to ensure that it has sufficient capital
to maintain its ongoing operations, to provide returns for shareholders and benefits for other stakeholders and to
pursue growth opportunities.
Planning, annual budgeting and controls over major investment decisions are the primary tools used to manage
the Company’s capital. The Company’s cash is managed centrally and disbursed to the various regions and / or
business units via a system of cash call requests which are reviewed by the key decision makers. Under the
Company’s delegation of authority guidelines, significant debt obligations require the approval of both the CEO
and the CFO before they are entered into.
The Company manages its capital by review of the following measure:
(in thousands)
Net cash:
Cash and cash equivalents
Investments in debt instruments (note 9)
Debt obligations-current
Net cash
At December 31
2016
At December 31
2015
$
$
11,838
-
(276)
11,562
$
$
5,367
7,282
(300)
12,349
86
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Financial Risk
The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood
of those risks. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and price risk.
(a) Credit Risk
Credit risk is the risk of loss due to a counterparty’s inability to meet its obligations under a financial instrument
that will result in a financial loss to the Company. The Company believes that the carrying amount of its cash and
cash equivalents, trade and other receivables, investments in debt instruments and restricted cash and
investments represents its maximum credit exposure.
The maximum exposure to credit risk at the reporting dates is as follows:
(in thousands)
Cash and cash equivalents
Trade and other receivables
Investments in debt instruments
Restricted cash and investments
At December 31 At December 31
2016
2015
$
$
11,838
2,403
-
2,314
16,555
$
$
5,367
4,826
7,282
2,040
19,515
The Company limits cash and cash equivalents, investment in debt instruments and restricted cash and investment
risk by dealing with credit worthy financial institutions. The majority of the Company’s trade and other receivables
balance relates to a small number of customers whom have established credit worthiness with the Company
through past dealings.
(b) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with its
financial liabilities as they become due. The Company has in place a planning and budgeting process to help
determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The
Company ensures that there is sufficient committed capital to meet its short-term business requirements, taking
into account its anticipated cash flows from operations, its holdings of cash and cash equivalents, its financial
covenants and its access to credit and capital markets, if required.
The maturities of the Company’s financial liabilities are as follows:
(in thousands)
Accounts payable and accrued liabilities
Debt obligations (Note 16)
(c) Currency Risk
Within 1
Year
1 to 5
Years
$
$
4,141
276
4,417
$
$
-
-
-
Foreign exchange risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. With the disposal of the Mongolian and African Mining Divisions
in 2015 and 2016 respectively, the Company’s foreign exchange risk has decreased as the number of functional
currencies in which it operates has also decreased. As at December 31, 2016, the Company predominantly
operates in Canada and incurs the majority of its operating and capital costs in Canadian dollars. Some small
foreign exchange risk exists from assets and liabilities that are denominated in a currency that is not the functional
currency for the relevant subsidiary company but the risk is minimal.
87
Currently, the Company does not have any foreign exchange hedge programs in place and manages its operational
foreign exchange requirements through spot purchases in the foreign exchange markets. The impact of the U.S
dollar strengthening or weakening (by 10%) at December 31, 2016 against the Company’s foreign currencies, with
all other variables held constant, is as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except foreign exchange rates)
Currency risk
Canadian dollar (“CAD”) weakens
Canadian dollar (“CAD”) strengthens
(d) Interest Rate Risk
Dec.31’2016
Foreign
Exhange
Rate
Sensitivity
Foreign
Exchange
Rate
Change in
net income
(loss)
1.3426
1.3426
1.4769
1.2084
$
$
909
(909)
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company is exposed to interest rate risk on its liabilities through its
outstanding borrowings and on its assets through its investments in debt instruments. The Company monitors its
exposure to interest rates and has not entered into any derivative contracts to manage this risk.
(e) Price Risk
The Company is exposed to equity price risk as a result of holding equity investments in other exploration and
mining companies. The Company does not actively trade these investments. The sensitivity analysis below has
been determined based on the exposure to equity price risk at December 31, 2016:
(in thousands)
Equity price risk
10% increase in equity prices
10% decrease in equity prices
Fair Value of Financial Instruments
Change in
net income
(loss)
Change in
Comprehensive
income (loss)
$
375
(375)
$
376
(376)
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 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.
Except as otherwise disclosed, the fair values of cash and cash equivalents, trade and other receivables, accounts
payable and accrued liabilities, restricted cash and cash equivalents and debt obligations approximate their
carrying values as a result of the short-term nature of the instruments, or the variable interest rate associated with
the instruments, or the fixed interest rate of the instruments being similar to market rates.
During 2016, there were no transfers between levels 1, 2 and 3 and there were no changes in valuation techniques.
88
The following table illustrates the classification of the Company’s financial assets within the fair value hierarchy as
at December 31, 2016 and December 31, 2015:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Financial Assets:
Cash and equivalents
Trade and other receivables
Trade and other
Contingent consideration
Investments
Equity instruments (shares)
Equity instruments (warrants)
Equity instruments (shares)
Debt instruments
Restricted cash and equivalents
Financial
Instrument
Category(1)
Fair
Value
Hierarchy
December 31,
2016
Fair Value
December 31,
2015
Fair Value
Category D
$
11,838 $
5,367
Category D
Category A
Category A
Category A
Category B
Category A
Level 3
Level 1
Level 2
Level 1
Level 1
2,403
-
1,228
2,517
15
-
4,826
-
460
24
12
7,282
Elliot Lake reclamation trust fund
Reclamation letter of credit collateral
Category C
Category C
Financial Liabilities:
Account payable and accrued liabilities
Debt obligations
Category E
Category E
2,213
101
20,315 $
2,040
-
20,011
4,141
276
4,417 $
4,574
300
4,874
$
$
(1) Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category
B=Available for sale investments; Category C=Held to maturity investments; Category D=Loans and receivables; and Category E=Financial
liabilities at amortized cost.
27. 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 material
adverse effect on the Company’s financial position or results.
Third Party Indemnities
The Company remains a guarantor under a sales contract included in the sale of the U.S. Mining Division to Energy
Fuels Inc. (“EFR”) in June 2012. The sales contract requires deliveries of 200,000 pounds of U3O8 per year from
2013 to 2017 at a selling price of 95% of the long-term U3O8 price at the time of delivery. Should EFR not be able
to deliver for any reason other than “force majeure” as defined under the contract, the Company may be liable to
the customer for incremental costs incurred to replace the contracted quantities if the unit price of the replacement
quantity is greater than the contracted unit price selling amount. EFR has agreed to indemnify the Company for
any future liabilities it may incur related to this guarantee.
The Company has agreed to indemnify EFR against any future liabilities it may incur in connection with ongoing
litigation between Denison Mines (USA) Corp (“DUSA”) (a company acquired by EFR as part of the sale of the
U.S. Mining Division) and a contractor in respect of a construction project at the White Mesa mill. In the event that
the matter is decided in DUSA’s favour, the Company is entitled to any proceeds that are received or recovered
by EFR pursuant to its indemnity. Both parties agreed to resolve the dispute via binding arbitration and arbitration
hearings for this matter were held in November 2013. In January 2014 an arbitration order was issued in DUSA’s
and Denison’s favour. The contractor later filed a motion to vacate the arbitration award to which Denison filed a
response in opposition and, in July 2014, the Utah state court denied the contractor’s motion to vacate the
arbitration award and confirmed the arbitrator’s award in favour of Denison. The contractor subsequently filed a
motion to appeal the decision of the Utah state court. In January 2016, appeal arguments were heard by the Utah
Court of Appeals and a decision was issued in August 2016 affirming the Utah state court’s decision in favour of
Denison. The Company does not expect to recover a material amount of damages related to this issue.
89
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Performance Bonds and Letters of Credit
In conjunction with various contracts, reclamation and other performance obligations, the Company may be
required to issue performance bonds and letters of credit as security to creditors to guarantee the Company’s
performance. Any potential payments which might become due under these items would be related to the
Company’s non-performance under the applicable contract. As at December 31, 2016, the Company had
outstanding letters of credit of CAD$24,135,000 of which CAD$24,000,000 is collateralized by the Company’s 2016
credit facility (see note 16) and the remainder is collateralized by cash (see note 11).
Others
The Company has committed to payments under various operating leases and other commitments. Excluding
spending amounts which may be required to maintain the Company’s mineral properties in good standing, the
future minimum payments are as follows:
(in thousands)
2017
2018
2019
2020
2021
2022 and thereafter
$
$
182
170
148
143
143
306
1,092
28. INTEREST IN OTHER ENTITIES
The significant subsidiaries, associates and joint operations of the Company at December 31, 2016 are listed
below.
Subsidiaries
Denison Mines Inc.
Denison AB Holdings Corp.
Denison Waterbury Corp
9373721 Canada Inc.
Denison Mines (Bermuda) I Ltd
Associates
GoviEx Uranium Inc.
Joint Operations
Waterbury Lake Uranium Corp
Waterbury Lake Uranium LP
McClean Joint Venture Agreement
Midwest Joint Venture Agreement
Wheeler River
Mann Lake
Wolly
Place
Of
Business
Canada
Canada
Canada
Canada
Bermuda
Entity Ownership Participating
Type (1)
Interest (3)
Interest (2)
2016
100.00%
100.00%
100.00%
100.00%
100.00%
N/A
N/A
N/A
N/A
N/A
Accounting
Method (4)
Consolidation
Consolidation
Consolidation
Consolidation
Consolidation
Africa
20.68%
N/A
Equity Method
Canada
Canada
Canada
Canada
Canada
Canada
Canada
JO-1
JO-1
JO-2
JO-2
JO-2
JO-2
JO-2
60.00%
63.01%
22.50%
25.17%
60.00%
30.00%
22.76%
100%
100%
22.50%
25.17%
60.00%
30.00%
26.35%
Voting Share
Voting Share
Proportionate Share
Proportionate Share
Proportionate Share
Proportionate Share
Proportionate Share
(1)
Joint operations are further subdivided into the following two entity types: JO-1=Joint Operations having joint control as defined by IFRS 11;
and JO-2=Joint Operations not having joint control and beyond the scope of IFRS 11;
(2) Ownership Interest represents Denison’s percentage ownership / voting interest in the entity or contractual arrangement;
(3) Participating interest represents Denison’s percentage funding contribution to the particular joint operation arrangement. This percentage
can differ from voting interest in instances where other parties to the arrangement have carried interests in the arrangement and / or are
earning-in or diluting their voting interest in the arrangement; and
(4) Voting share or proportionate share is where Denison accounts for its share of assets, liabilities, revenues and expenses of the arrangement
in relation to its voting interest or participating interest, respectively.
90
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
WLUC and WLULP were acquired by Denison as part of the Fission Energy Corp acquisition in April 2013. Denison
uses its voting interest to account for its share of assets, liabilities, revenues and expenses for these joint
operations. In 2016, Denison funded 100% of the activities in these joint operations pursuant to the terms of an
agreement that allows it to approve spending for the WLULP without having the required 75% of the voting interest
(see note 25).
29. SUBSEQUENT EVENTS
Agreement to Increase Ownership of Wheeler River Project up to 66%
On January 10, 2017, Denison executed an agreement with the partners of the WRJV that will result in Denison
having the potential to increase its ownership in the WRJV from 60% up to approximately 66% by the end of fiscal
2018. Under the terms of the agreement, the partners have agreed to allow for a one-time election by Cameco
Corp. (“Cameco”) to fund 50% of its ordinary 30% share of the WRJV expenses for fiscal 2017 and 2018. The
shortfall in Cameco’s contribution will be funded by Denison in exchange for a transfer of a portion of Cameco’s
interest in the WRJV. Accordingly, Denison’s share of the WRJV expenses will be 75% in fiscal 2017 and 2018.
In connection with the agreement, the partners have approved a CAD$12.5 million budget for the WRJV for fiscal
2017 and have also agreed to propose a budget for fiscal 2018 that will not exceed CAD$15.6 million (being 125%
of the approved budget). Based on the approved fiscal 2017 budget, and the maximum allowed fiscal 2018 budget,
Denison expects its ownership interest in the WRJV to increase to approximately 66% by December 31, 2018.
Financing Arrangement with Anglo Pacific Group PLC / Bank of Nova Scotia Credit Facility Amendments
On February 13, 2017, Denison closed a financing arrangement with Anglo Pacific Group PLC (“APG”), and its
wholly owned subsidiary Centauras Royalties Ltd. (“Centaurus”) for aggregate gross proceeds to Denison of
CAD$43,500,000 under which it has sold its rights to receive proceeds from the toll milling of specified Cigar Lake
ore at the McClean Lake mill.
The financing is comprised of the following elements: (1) a 13 year limited recourse lending arrangement involving
a loan from APG to 9373721 Canada Inc. (“SPV”)(the “APG Loan”) and a further loan from SPV to Denison Mines
Inc. (“DMI”)(the “SPV Loan”), each for CAD$40,800,000 (collectively, the “Lending Arrangement”); and (2)
CAD$2,700,000 in proceeds from the sale, to Centaurus, of a stream equal to Denison’s 22.5% share of proceeds
from the toll milling of Cigar Lake ore by the McClean Lake mill for specified Cigar Lake toll milling throughput in
excess of 215 million pounds U3O8 after July 1, 2016 (the “Stream Arrangement”). DMI and SPV are both wholly
owned subsidiaries of Denison.
Additional details of the financing are as follows:
No Warranty of the Future Rate of Production - No warranty is provided by Denison (including DMI and SPV)
to APG (including Centaurus), under the terms of the Lending Arrangement or the Stream Arrangement,
regarding: the future rate of production at the Cigar Lake mine and / or the McClean Lake mill; or the amount
or collectability of proceeds to be received by the MLJV in respect of toll milling of Cigar Lake ore.
APG Loan Details - The APG Loan will accrue interest at a rate of 10% per annum and does not have a
predetermined principal repayment schedule. The APG Loan is secured by a first priority interest in the assets
of SPV which will essentially consist of the SPV Loan to DMI.
SPV Loan Details - The SPV Loan will accrue interest at a rate of approximately 10% per annum and does
not have a predetermined principal repayment schedule. The SPV Loan is limited in its recourse against DMI
such that it is generally repayable only to the extent of Denison’s share of the toll milling revenues earned by
the MLJV from the processing of the first 215 million pounds of U308 from Cigar Lake ore on or after July 1,
2016. Denison will guarantee the limited recourse loan repayments and will grant a second ranking pledge of
its share of DMI to secure performance by DMI of its obligations to pay the SPV Loan. The share pledge is
second ranking to Denison’s existing pledge of its shares of DMI to the Bank of Nova Scotia (“BNS”) under
the terms of its Letters of Credit Facility.
Amendment and Extension of BNS Letters of Credit Facility – In conjunction with the financing, the terms of
the 2016 Facility have been amended to reflect certain changes required to facilitate an Intercreditor
Agreement between APG, Centaurus, BNS, DMI and SPV. Under the new letters of credit facility (“2017
Facility”), the following key changes have occurred: a) BNS and DMI have agreed to replace the restrictive
covenant to maintain CAD$5,000,000 on deposit with BNS with a pledge of CAD$9,000,000 in restricted cash
91
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
or GIC’s as collateral; b) the letters of credit fee on the first CAD$9,000,000 (associated with restricted cash)
of the 2017 Facility has been reduced from 2.4% to 0.4%; and c) the maturity date for the 2017 Facility has
been extended to January 31, 2018.
Immediately on receipt of the proceeds from the APG Loan, SPV repaid APG CAD$2,939,000 representing the
Cigar Lake tolling milling cash receipts received by Denison in respect to toll milling activity for the period July 1,
2016 to December 31, 2016.
In connection with the closing of the financing, Denison has reimbursed APG for $100,000 in due diligence costs
and it has granted 1,673,077 share purchase warrants to APG in satisfaction of a CAD$435,000 arrangement fee
payable. The warrants have an exercise price of CAD$1.27 per share and will be exercisable for a period of 3
years from the date of closing of the financing.
Common Share and Flow Through Share Issues
On February 16, 2017, Denison announced that it has entered into an agreement with Paradigm Capital Inc, on
behalf of a syndicate of underwriters (together the “Underwriters”), under which the Underwriters have agreed to
purchase, in aggregate, 18,337,000 shares of Denison for gross proceeds of CAD$20,000,290.
The aggregate share offering is comprised of the following three elements: (1) a “Common Share” offering which
consists of 5,790,000 common shares of Denison at a price of CAD$0.95 per share for gross proceeds of
CAD$5,500,500; (2) a “Tranche A Flow-Through” offering which consists of 8,482,000 flow-through shares at a
price of CAD$1.12 per share for gross proceeds of CAD$9,499,840; and (3) a “Tranche B Flow-Through” offering
which consists of 4,065,000 flow-through shares at a price of CAD$1.23 per share for gross proceeds of
CAD$4,999,950.
Denison has granted the Underwriters an option to increase the gross proceeds of the offering by up to 15%, which
is exercisable, in whole or in part, at any time during the period that is 48 hours prior to the closing date. The
Underwriter’s option is exercisable in common shares only. The closing of the offering is expected to occur on or
about March 9, 2017.
92
Corporate Information
BOARD OF DIRECTORS
OFFICES
STOCK EXCHANGE LISTINGS
Head Office
Denison Mines Corp.
1100 – 40 University Ave
Toronto, Ontario M5J 1T1
Telephone: 416-979-1991
Facsimile: 416-979-5893
www.denisonmines.com
Denison Mines Corp.
885 West Georgia Street, Suite 2000
Vancouver, British Columbia V6C 3E8
Telephone: 604-689-7842
Toll Free: 1-888-689-7842
Facsimile: 604-689-4250
Denison Mines Corp.
230 – 22nd Street East, Suite 200
Saskatoon, Saskatchewan S7K 0E9
Telephone: 306-652-8200
Facsimile: 306-652-8202
Denison Environmental Services
1 Horne Walk, Suite 200
Elliot Lake, Ontario P5A 2A5
Telephone: 705-848-9191
Facsimile: 705-848-5814
www.denisonenvironmental.com
The Toronto Stock Exchange (TSX)
Trading Symbol: DML
NYSE MKT LLC
Trading Symbol: DNN
SHARE REGISTRAR AND
TRANSFER AGENT
Computershare Investor Services Inc.
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
Telephone: 1-800-564-6253
AUDITOR
PricewaterhouseCoopers LLP
PwC Tower
18 York Street, Suite 2600
Toronto, Ontario M5J 0B2
Telephone: 416-863-1133
ADDITIONAL INFORMATION
Further information about Denison
is available by contacting Investor
Relations at the head office listed
above or by email to:
info@denisonmines.com
W. Robert Dengler
Ontario, Canada
Brian D. Edgar
British Columbia, Canada
Ron F. Hochstein
British Columbia, Canada
Kwang Hee Jeong
Gyeonggi-do, Korea
Lukas H. Lundin
Vaud, Switzerland
William A. Rand
British Columbia, Canada
Catherine J.G. Stefan
Ontario, Canada
OFFICERS
Lukas H. Lundin
Executive Chairman
David D. Cates
President and
Chief Executive Officer
Mac McDonald
Vice President, Finance
Chief Financial Officer
Peter Longo
Vice President, Project Development
Michael J. Schoonderwoerd
Vice President, Controller
Dale Verran
Vice President, Exploration
Amanda Willett
Corporate Counsel
& Corporate Secretary
Denison Mines Corp.
#1100—40 University Avenue
Toronto ON M5J 1T1
T 416 979 1991 F 416 979 5893
www.denisonmines.com
TSX: DML | NYSE MKT: DNN